AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1997
REGISTRATION STATEMENT NO. 333-38681
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BANC ONE AUTO GRANTOR TRUST 1997-B
(ISSUER WITH RESPECT TO THE CERTIFICATES)
BANK ONE, TEXAS, NATIONAL ASSOCIATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UNITED STATES 75-2270994
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1717 MAIN STREET
DALLAS, TEXAS 75201
(214) 290-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEVEN ALAN BENNETT, ESQ.
BANC ONE CORPORATION
100 EAST BROAD STREET
COLUMBUS, OHIO 43271-0158
(614) 248-5700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C> <C>
KIM L. SWANSON, ESQ. KENNETH L. WAGNER, ESQ. REED D. AUERBACH, ESQ.
SQUIRE, SANDERS & DEMPSEY L.L.P. BANC ONE CORPORATION STROOCK & STROOCK & LAVAN LLP
1300 HUNTINGTON CENTER 100 EAST BROAD STREET 180 MAIDEN LANE
41 SOUTH HIGH STREET COLUMBUS, OHIO 43271-0158 NEW YORK, NEW YORK 10038
COLUMBUS, OHIO 43215
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1) OFFERING PRICE(1)
- -------------------------------------------------- ------------- ----------- -----------------
<S> <C> <C> <C>
Class A Asset Backed Certificates.................. $572,563,000.00(2) 100% $572,563,000.00
Class B Asset Backed Certificates.................. $ 36,547,423.59(2) 100% $ 36,547,423.59
TOTAL.............................................. $609,110,423.59(2) 100% $609,110,423.59
<CAPTION>
AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTRATION FEE(3)
- -------------------------------------------------- -------------------
<S> <C>
Class A Asset Backed Certificates.................. $168,906.10
Class B Asset Backed Certificates.................. $ 10,781.90
TOTAL.............................................. $179,688.00
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes an indeterminate amount of Certificates as may be offered or sold
in connection with market making activities by an affiliate of the
Registrant.
(3) A registration fee of $303.04 has previously been paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to a public
offering by Banc One Auto Grantor Trust 1997-B of $609,110,423.59 aggregate
principal balance of Asset Backed Certificates (the 'Certificates'). The
Prospectus may be used in connection with offers and sales relating to market
making transactions in the Certificates by an affiliate of the Registrant.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filedwith 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 such State.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 5, 1997
PROSPECTUS
$609,110,423.59
BANC ONE AUTO GRANTOR TRUST 1997-B
$572,563,000.00 CLASS A % ASSET BACKED CERTIFICATES
$36,547,423.59 CLASS B % ASSET BACKED CERTIFICATES
BANK ONE, TEXAS, N.A.
SELLER AND SERVICER
------------------------
Banc One Auto Grantor Trust 1997-B (the 'Trust') will be formed pursuant to
a Pooling and Servicing Agreement dated as of December 1, 1997, between Bank
One, Texas, N.A., a national banking association, as seller and servicer, and
Bankers Trust Company, as trustee, and will issue $572,563,000.00 aggregate
principal balance of % Class A Asset Backed Certificates (the 'Class A
Certificates') and $36,547,423.59 aggregate principal balance of % Class B
Asset Backed Certificates (the 'Class B Certificates' and, together with the
Class A Certificates, the 'Certificates').
The assets of the Trust will include a pool of motor vehicle retail
installment sale contracts (the 'Receivables') secured by new or used
automobiles, vans or light duty trucks, certain payments made thereunder on or
after December 1, 1997 (the 'Cutoff Date'), security interests in the vehicles
financed thereby, and the proceeds thereof. The Trust may also draw on funds on
deposit in the Reserve Fund, to the extent described herein, to meet shortfalls
in amounts due to Certificateholders on any Distribution Date. The Receivables
were originated by the Seller or acquired by the Seller from Bank One, N.A.,
Bank One, Wisconsin or Bank One, Indiana, N.A. or their predecessor banks (each,
including the Seller, an 'Affiliated Bank' and together the 'Affiliated Banks')
in the ordinary course of the Seller's business.
The Class A Certificates will evidence in the aggregate an undivided
ownership interest in approximately 94% of the Trust. The Class B Certificates
will evidence in the aggregate an undivided ownership interest in approximately
6% of the Trust. Principal and interest at the applicable Class A or Class B
Pass-Through Rate will be distributed to Certificateholders on or about the
twentieth day of each month, commencing January 20, 1998. The rights of the
holders of the Class B Certificates to receive distributions are subordinated to
the rights of holders of the Class A Certificates to the extent described
herein. The outstanding principal balance, if any, of the Certificates will be
due and payable on the July 2004 Distribution Date (the 'Final Scheduled
Distribution Date').
------------------------
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE CERTIFICATES, SEE 'RISK FACTORS' BEGINNING ON PAGE
10.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN BANK ONE, TEXAS, N.A. OR ANY OF ITS
AFFILIATES. NONE OF THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS THE SELLER(1)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Class A Certificate........................................ % % %
Per Class B Certificate........................................ % % %
Total.......................................................... $ $ $
</TABLE>
(1) Before deducting expenses, estimated to be $625,000.00.
The Certificates are offered by the Underwriters when, as and if issued by
the Trust, delivered 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
Certificates in book-entry form will be made through the facilities of The
Depository Trust Company on the Same Day Funds Settlement System on or about
December , 1997.
After the initial distribution of the Certificates by the Underwriters, this
Prospectus may be used by Banc One Capital Corporation, an affiliate of the
Seller, in connection with offers and sales relating to market making
transactions in the Certificates. Banc One Capital Corporation may act as
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale. Certain information in
this Prospectus will be updated from time to time as described in 'Incorporation
of Certain Documents by Reference.'
------------------------
BANC ONE CAPITAL CORPORATION SALOMON SMITH BARNEY
UBS SECURITIES
The date of the Prospectus is December , 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CERTIFICATES
OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF
CERTIFICATES TO COVER SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE 'UNDERWRITING.'
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.
('Cede'), as nominee of The Depository Trust Company ('DTC') and registered
holder of the Certificates. Certificateholders will hold their securities
through DTC. DTC will forward such reports to Participants. See 'The
Certificates--Book-Entry Registration' and '--Statements to Certificateholders.'
Such reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The Seller will file with the
Securities and Exchange Commission (the 'Commission') such periodic reports as
are required under the Securities Exchange Act of 1934, as amended (the
'Exchange Act'), and the rules and regulations of the Commission thereunder.
AVAILABLE INFORMATION
The Seller has filed with the Commission a Registration Statement (together
with all amendments and exhibits thereto, referred to herein as the
'Registration Statement') under the Securities Act of 1933, as amended (the
'Securities Act'), with respect to the Certificates offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement which may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at the Commission's regional offices at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington. D.C. 20549, at prescribed rates. In
addition, the Registration Statement may be accessed electronically at the
Commission's site on the World Wide Web located at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates offered hereby shall be deemed incorporated by
reference into this Prospectus and to be a part hereof. After the initial
distribution of the Certificates by the Underwriters and in connection with
market making transactions by Banc One Capital Corporation, this Prospectus will
be distributed together with, and should be read in conjunction with an
accompanying supplement to the Prospectus. Such supplement will contain the
reports described above and generally will include the information contained in
the monthly statements furnished to Certificateholders. See 'The
Certificates--Statements to Certificateholders.' Any statement contained herein
or in a document deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained in any other subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute part of this Prospectus.
The Servicer will provide without charge to each person, including any
beneficial owner of Certificates, 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 the documents incorporated herein by reference (other than exhibits to such
documents). Written requests for such copies should be directed to BANC ONE
CORPORATION, 150 East Gay Street, 23rd Floor, Columbus, Ohio 43271-0138,
Attention: Structured Finance. Telephone requests for such copies should be
directed to BANC ONE CORPORATION at (614) 248-5800.
2
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain capitalized
terms used in this summary are defined elsewhere in this Prospectus on the pages
indicated in the Index of Principal Terms.
<TABLE>
<S> <C>
Issuer.................................... Banc One Auto Grantor Trust 1997-B (the 'Trust' or the 'Issuer').
Seller and Servicer....................... Bank One, Texas, N.A. (in its capacity as seller, the 'Seller' or, in
its capacity as servicer, the 'Servicer'). See 'The Servicer and the
Seller.'
Affiliated Banks.......................... All of the Receivables were originated by the Seller or acquired by
the Seller from Bank One, N.A., Bank One, Wisconsin or Bank One,
Indiana, N.A. or their predecessor banks (each, including the Seller,
an 'Affiliated Bank' and together, the 'Affiliated Banks').
Trustee and Collateral Agent.............. Bankers Trust Company, a New York banking corporation, not in its
individual capacity, but solely as trustee for the Trust (the
'Trustee') and as collateral agent with respect to the Reserve Fund
(the 'Collateral Agent').
Securities Offered........................ Banc One Auto Grantor Trust 1997-B will issue two classes of
Certificates (each, a 'Class') with one class of senior certificates
(the 'Class A Certificates') and one class of subordinated
certificates (the 'Class B Certificates' and, together with the Class
A Certificates, the 'Certificates') pursuant to a Pooling and
Servicing Agreement dated as of December 1, 1997 (the 'Agreement')
among the Seller, the Servicer and the Trustee. Each Certificate will
represent a fractional undivided interest in the assets of the Trust.
The Class A Certificates will be issued in an initial aggregate
principal amount of $572,563,000.00 (the 'Original Class A Principal
Balance') and will evidence in the aggregate an undivided ownership
interest in approximately 94% of the Trust (the 'Class A
Percentage').
The Class B Certificates will be issued in an initial aggregate
principal amount of $36,547,423.59 (the 'Original Class B Principal
Balance') and will evidence in the aggregate an undivided ownership
interest in approximately 6% of the Trust (the 'Class B Percentage').
The Class B Certificates will be subordinated to the Class A
Certificates to the extent described herein. See 'Risk
Factors--Subordination of the Class B Certificates' and 'The
Certificates--Subordination of the Class B Certificates.'
Registration of the Certificates.......... The Certificates will be available for purchase in denominations of
$1,000 and integral multiples of $1 in excess thereof in book-entry
form only. See 'The Certificates--General.' Certificateholders will
not be entitled to receive a Definitive Certificate except in the
event that Definitive Certificates are issued in the limited
circumstances described herein. Persons acquiring beneficial
interests in the Certificates will hold their interests through DTC.
See 'The Certificates--Definitive Certificates.'
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Trust Property............................ The property of the Trust (the 'Trust Property') will include (i) the
Receivables; (ii) all monies received under the Receivables on and
after December 1, 1997 (the 'Cutoff Date'); (iii) certain bank
accounts established and maintained by the Trustee; (iv) security
interests in the Financed Vehicles; (v) the rights to proceeds from
certain insurance policies covering the Financed Vehicles or the
retail purchasers of, or other persons owing payments on, the
Financed Vehicles (the 'Obligors'); (vi) the rights of the Trustee
for the benefit of the Certificateholders under the Agreement; (vii)
the rights to certain payments from the Reserve Fund; and (viii) all
proceeds (within the meaning of the UCC) of the foregoing. The
Reserve Fund will be maintained for the benefit of the
Certificateholders, but will not be part of the Trust.
The Receivables........................... The Receivables will consist of motor vehicle retail installment sale
contracts secured by new or used automobiles, vans or light duty
trucks, including rights to receive certain payments made with
respect to such Receivables on and after the Cutoff Date, security
interests in the vehicles financed thereby (the 'Financed Vehicles'),
and the proceeds thereof. On the date of the issuance of the
Certificates (the 'Closing Date'), the Trustee will purchase from the
Seller pursuant to the Agreement simple interest motor vehicle retail
installment sale contracts (the 'Receivables') having an aggregate
principal balance of $609,110,423.59 as of the Cutoff Date. See 'The
Certificates--Sale and Assignment of the Receivables.'
The Receivables arise from loans originated indirectly by motor
vehicle dealers (the 'Dealers'), purchased by the Affiliated Banks in
the ordinary course of business pursuant to agreements with the
Dealers and, with respect to the Receivables originated by an
Affiliated Bank other than the Seller, acquired by the Seller from
the Affiliated Banks in the ordinary course of the Seller's business.
The Receivables have been selected from the contracts originated by
the Seller or purchased from the Affiliated Banks and owned by the
Seller (the 'Affiliated Bank Portfolio') based on the criteria
specified in the Agreement and described herein. As of the Cutoff
Date, the weighted average annual percentage rate (the 'APR') of the
Receivables was approximately 10.19%, the weighted average remaining
term to maturity of the Receivables was approximately 57.17 months
and the weighted average original term to maturity of the Receivables
was approximately 59.48 months. As of the Cutoff Date, no Receivable
has a scheduled maturity later than January 2004 (the 'Final
Scheduled Maturity Date'). Approximately 49.52% of the aggregate
principal balance of the Receivables as of the Cutoff Date represents
financing of new vehicles; the remainder represents financing of used
vehicles. As of the Cutoff Date, approximately 33.92%, 24.13%, 19.90%
and 10.01% of the aggregate principal balance of the Receivables have
Obligors with billing addresses in the States of Ohio, Wisconsin,
Texas and Indiana, respectively. See 'The Receivables Pool' and 'Risk
Factors--Regional Economic Conditions.'
Class A Pass-Through Rate................. % per annum, calculated on the basis of a 360-day year consisting of
twelve 30-day months (the 'Class A Pass-Through Rate').
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Class B Pass-Through Rate................. % per annum, calculated on the basis of a 360-day year consisting of
twelve 30-day months (the 'Class B Pass-Through Rate').
Distribution Date......................... Distributions of principal and interest will be made on the 20th day
of each month (or, if such 20th day is not a Business Day, the next
succeeding Business Day) (each, a 'Distribution Date'), commencing in
January 1998. The final scheduled Distribution Date is the July 2004
Distribution Date (the 'Final Scheduled Distribution Date'). A
'Business Day' is a day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York
or Dallas, Texas are authorized by law, regulation, executive order
or governmental decree to be closed.
Interest.................................. On each Distribution Date, the Trustee will distribute, to the extent
of funds available therefor, first (i) pro rata to the holders of the
Class A Certificates (the 'Class A Certificateholders') as of the
last day of the immediately preceding calendar month (each such date,
a 'Record Date'), interest in an amount equal to one-twelfth (or, in
the case of the first Distribution Date, a fraction, the numerator of
which is and the denominator of which is 360) of the product of the
Class A Pass-Through Rate and the Class A Principal Balance after
giving effect to distributions of principal made on the preceding
Distribution Date or, in the case of the first Distribution Date, the
Original Class A Principal Balance (the 'Class A Monthly Interest')
plus any unpaid Class A Monthly Interest from any preceding
Distribution Date that remains unpaid and interest on such amount to
the extent permitted by law at the Class A Pass-Through Rate and then
(ii) pro rata to the holders of record of the Class B Certificates
(the 'Class B Certificateholders' and, together with the Class A
Certificateholders, the 'Certificateholders') as of the Record Date,
interest in an amount equal to one-twelfth (or, in the case of the
first Distribution Date, a fraction, the numerator of which is and
the denominator of which is 360) of the product of the Class B
Pass-Through Rate and the Class B Principal Balance after giving
effect to all payments of principal made on the preceding
Distribution Date, or, in the case of the first Distribution Date,
the Original Class B Principal Balance (the 'Class B Monthly
Interest') plus any unpaid Class B Monthly Interest from any
preceding Distribution Date that remains unpaid and interest on such
amount to the extent permitted by law at the Class B Pass-Through
Rate.
The 'Class A Principal Balance' on any date of determination shall
equal the Original Class A Principal Balance reduced by all
distributions actually made to the Class A Certificateholders and
allocable to principal. The 'Class B Principal Balance' on any date
of determination shall equal the Original Class B Principal Balance
reduced by all distributions actually made to the Class B
Certificateholders and allocable to principal.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Principal................................. On each Distribution Date, the Trustee will distribute, to the extent
of funds available therefor, first (i) pro rata to Class A
Certificateholders of record as of the related Record Date an amount
equal to the sum of (x) the Class A Percentage of all payments
received by the Servicer during the preceding Collection Period
allocable to principal on or in respect of the Receivables as
described under 'The Certificates--Distributions on Certificates'
('Principal Collections'), (y) the Class A Percentage of Realized
Losses with respect to Receivables which became Liquidated
Receivables during the related Collection Period (the sum of (x) and
(y), the 'Class A Monthly Principal') and (z) any unpaid Class A
Monthly Principal with respect to any preceding Distribution Date and
then (ii) pro rata to Class B Certificateholders of record as of the
related Record Date an amount equal to the sum of (x) the Class B
Percentage of Principal Collections, (y) the Class B Percentage of
Realized Losses with respect to Receivables which became Liquidated
Receivables during the related Collection Period (the sum of (x) and
(y), the 'Class B Monthly Principal') and (z) any unpaid Class B
Monthly Principal with respect to any preceding Distribution Date.
A 'Collection Period' means, with respect to any Distribution Date
the calendar month immediately preceding the calendar month in which
such Distribution Date occurs.
Subordination of the Class B
Certificates............................ The rights of the Class B Certificateholders to receive distributions
to which they would otherwise be entitled with respect to the assets
of the Trust will be subordinated to the rights of the Class A
Certificateholders, as more fully described under 'Risk Factors--
Subordination of the Class B Certificates' and 'The Certificates--
Subordination of the Class B Certificates.' This subordination is
intended to enhance the likelihood of timely receipt by Class A
Certificateholders of the full amount of interest and principal
required to be paid to them, and to afford such Class A
Certificateholders limited protection against losses in respect of
the Receivables.
The protection afforded to the Class A Certificateholders by the
subordination feature described above will be effected both by the
preferential right of the Class A Certificateholders to receive, to
the extent described below, current distributions from collections on
or in respect of the Receivables and by the establishment of a
segregated trust account held by the Collateral Agent for the benefit
of the Certificateholders (the 'Reserve Fund'). Amounts on deposit in
the Reserve Fund will also be generally available to cover shortfalls
in required distributions to the Class B Certificateholders, in
respect of interest, after payment of interest on the Class A
Certificates and, in respect of principal, after payment of interest
and principal of the Class A Certificates and interest on the Class B
Certificates. The Reserve Fund will be maintained for the benefit of
the Certificateholders, but will not be part of the Trust.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
No interest distribution will be made to the Class B
Certificateholders on any Distribution Date until the full amount of
interest on the Class A Certificates payable on such Distribution
Date has been distributed to the Class A Certificateholders. No
principal distribution will be made to the Class B Certificateholders
on any Distribution Date until the full amount of interest on and
principal of the Class A Certificates and interest on the Class B
Certificates payable on such Distribution Date has been distributed
to the Class A Certificateholders and Class B Certificateholders,
respectively. Distributions of interest on the Class B Certificates,
to the extent of collections on or in respect of the Receivables
allocable to interest and certain available amounts on deposit in the
Reserve Fund, will not be subordinated to the payment of principal on
the Class A Certificates.
Reserve Fund.............................. The Reserve Fund will be created with an initial deposit by the
Seller of cash or Eligible Investments having a value of
$30,455,521.18, or 5.00% of the Pool Balance as of the Cutoff Date
(the 'Original Pool Balance'). The amount initially deposited in the
Reserve Fund will be augmented on each Distribution Date by the
deposit in the Reserve Fund of amounts remaining after distribution
of the Servicing Fee and amounts to be paid to Class A
Certificateholders and Class B Certificateholders. Amounts in the
Reserve Fund on any Distribution Date (after giving effect to all
distributions to be made on such Distribution Date) in excess of the
Specified Reserve Balance for such Distribution Date will be released
to the Seller, on such Distribution Date and upon such release, the
Certificateholders will have no further rights in, or claims to, such
amounts. The 'Specified Reserve Balance' with respect to any
Distribution Date generally will be equal to the greater of (a) 5.00%
of the sum of the Class A Principal Balance and the Class B Principal
Balance (after giving effect to all distributions on the Certificates
on such Distribution Date) or (b) 1.50% of the sum of the Original
Class A Principal Balance and the Original Class B Principal Balance.
Funds will be withdrawn, to the extent available, from the Reserve
Fund for distribution first to Class A Certificateholders to the
extent of shortfalls in the amounts available to make required
distributions of interest on the Class A Certificates and then to
Class B Certificateholders to the extent of shortfalls in the amounts
available to make required distributions of interest on the Class B
Certificates. Thereafter, funds will be withdrawn from the Reserve
Fund for distribution first to Class A Certificateholders to the
extent of shortfalls in the amounts available to make required
distributions of principal on the Class A Certificates and then to
Class B Certificateholders to the extent of shortfalls in the amounts
available to make required distributions of principal on the Class B
Certificates.
The 'Pool Balance' at any time will represent the aggregate principal
balance of the Receivables at the end of the preceding Collection
Period, after giving effect to all payments received from Obligors
and Purchase Amounts to be remitted by the Servicer or the Seller, as
the case may be, all for such Collection Period, and all losses
realized on Receivables liquidated during such Collection Period.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Servicing Fee............................. The Servicer will receive a monthly fee (the 'Servicing Fee'),
payable on each Distribution Date, 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. In addition, the
Servicer will be entitled to certain nonsufficient funds charges and
other administrative fees or similar charges. See 'The Certificates--
Servicing Compensation.'
Optional Purchase......................... The Seller may purchase all the Receivables on any Distribution Date
as of which the Pool Balance is 5% or less of the Original Pool
Balance at a purchase price determined as described under 'The
Certificates--Termination.'
Prepayment Considerations................. All the Receivables are prepayable at any time. The rate of
prepayments on the Receivables may be influenced by a variety of
economic, social and other factors, including changes in interest
rates and the fact that an Obligor generally may not sell or transfer
the Financed Vehicle securing a Receivable without the consent of the
secured party, which generally results in the repayment of the
remaining principal balance of the Receivable. In addition, under
certain circumstances, Receivables may be purchased or repurchased
pursuant to the Agreement as a result of certain uncured breaches of
representations and warranties in the case of the Seller and certain
uncured breaches of covenants in the case of the Servicer.
Accordingly, under certain circumstances it is likely that the
Certificates will be repaid before the Final Scheduled Distribution
Date. Any reinvestment risk (which will vary from investor to
investor, but which may include the risk that principal payments will
have to be reinvested at a lower yield) resulting from the rate of
prepayments in full of the Receivables and the distribution of such
prepayments to Certificateholders will be borne entirely by the
Certificateholders.
Federal Tax Status and State Franchise Tax
Consequences............................ In the opinion of Squire, Sanders & Dempsey L.L.P., special tax
counsel, the Trust will be classified for Federal income tax purposes
as a grantor trust or a partnership and not as an association taxable
as a corporation. Certificateholders must report their respective
allocable shares of income earned on Trust assets (excluding certain
amounts retained by the Seller as described herein) and, subject to
certain limitations applicable to individuals, estates and trusts,
may deduct their respective allocable shares of reasonable servicing
and other fees. See 'Federal Income Tax Consequences.' Squire,
Sanders & Dempsey L.L.P. ('Ohio Tax Counsel') will deliver an opinion
to the effect that the Trust will not be subject to Ohio franchise
taxation and the Certificateholders should not be subject to Ohio
franchise taxation solely as a result of the ownership of a
Certificate. Investors should consult their own tax advisors
regarding state and local tax consequences. See 'State and Local Tax
Consequences.'
</TABLE>
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<TABLE>
<S> <C>
Rating.................................... It is a condition to the issuance of the Certificates that the Class
A Certificates be rated in the highest investment rating category by
at least two nationally recognized rating agencies (each, a 'Rating
Agency') and the Class B Certificates be rated at least 'A' or its
equivalent by each such Rating Agency. The ratings of the
Certificates are based primarily on the quality of the Receivables
and the availability of the Reserve Fund and, in the case of the
Class A Certificates, on the subordination provided by the Class B
Certificates. A security rating is not a recommendation to buy, sell
or hold securities and may be revised or withdrawn at any time by the
assigning Rating Agency. See 'Risk Factors--Ratings of the
Certificates; Possibility of Withdrawal or Downgrading.'
ERISA Considerations...................... The Class A Certificates may be purchased by or on behalf of an
employee benefit plan or other retirement arrangement that is subject
to the Employee Retirement Income Security Act of 1974, as amended
('ERISA'), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the 'Code'), as well as any entity whose source of funds for
the purchase of Class A Certificates includes plan assets by reason
of a plan or account investing in such entity (each, a 'Plan'),
subject to the considerations described herein. Because the Class B
Certificates are subordinated to the Class A Certificates, no Class B
Certificate may be purchased by or on behalf of a Plan other than an
'insurance company general account' as defined in, and which complies
with the provisions of, Prohibited Transaction Exemption 95-60 which
may be deemed to be holding Plan assets. See 'ERISA Considerations.'
</TABLE>
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RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective purchasers of the Certificates should read and carefully consider
the risk factors set forth below prior to making an investment in the
Certificates.
LIMITED ASSETS
The Trust does not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the right
to receive payments under certain circumstances from the Reserve Fund. The
Certificates represent interests solely in the Trust and neither the Class A
Certificates nor the Class B Certificates will be insured or guaranteed by the
Seller, any Affiliated Bank, the Servicer, the Trustee or any other person or
entity. Consequently, holders of the Certificates must rely for payment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the Reserve Fund. Amounts to be deposited in the Reserve Fund are
limited in amount and will be reduced as the Pool Balance declines.
LIMITED OBLIGATIONS OF THE SELLER AND SERVICER
Neither the Seller, the Servicer nor any of the Affiliated Banks is
obligated to make any payments in respect of the Certificates or the
Receivables. In addition, if Bank One, Texas, N.A. were to cease acting as
Servicer, delays in processing payments on the Receivables and information in
respect thereof could occur and result in delays in payments to the
Certificateholders.
In connection with the sale of Receivables by the Seller to the Trustee for
the benefit of the Certificateholders, the Seller makes representations and
warranties with respect to the characteristics of such Receivables. In certain
circumstances, the Seller is required to repurchase Receivables, of the
covenants made by it in the Agreement with respect to a Receivable, the Servicer
may be required to purchase the affected Receivable. Because the Seller and the
Servicer are the same entity, certain conflicts of interest may arise with
respect to such obligations. For example, the Servicer may discover a breach of
one of the representations that would cause the Seller to have to repurchase a
Receivable. Since both the Seller and the Servicer are obligated to give notices
of any breaches of representations to the Trustee, failure by the Servicer to
give such notice could give rise to an Event of Servicing Termination. Neither
the Seller nor the Servicer is otherwise obligated with respect to the
Receivables or the Certificates. See 'The Certificates--Sale and Assignment of
the Receivables' and '--Servicing Procedures.'
RESERVE FUND; SUBORDINATION OF THE CLASS B CERTIFICATES
Amounts on deposit in the Reserve Fund will be available on any
Distribution Date first to cover shortfalls in distributions of interest on the
Class A Certificates and then to cover shortfalls in distributions of interest
on the Class B Certificates. As a result, shortfalls in distributions of
interest on the Class B Certificates will be covered (to the extent of amounts
available in the Reserve Fund after the payment of interest on the Class A
Certificates) prior to the use of the Reserve Fund to cover shortfalls of
principal on the Class A Certificates. After distributions of interest on both
the Class A Certificates and the Class B Certificates have been made, amounts on
deposit in the Reserve Fund will be available first to cover shortfalls in
distributions of principal on the Class A Certificates and then to cover
shortfalls in distributions of principal on the Class B Certificates. If the
Reserve Fund is exhausted, the Trust will depend solely on current payments on
the Receivables to make distributions on the Certificates.
The Class B Certificateholders will not receive any distributions of
interest with respect to a Collection Period until the full amount of interest
on the Class A Certificates relating to such Collection Period has been
deposited in the Class A Distribution Account. Class B Certificateholders will
not receive any distributions of principal with respect to such Collection
Period until the full amount of interest on and principal of the Class A
Certificates relating to such Collection Period has been deposited in the Class
A Distribution Account. However, distributions of interest on the Class B
Certificates, to the extent of collections on the Receivables allocable to
interest and the amount on deposit in the Reserve Fund available after the
payment of interest on the Class A Certificates has been made, will not be
subordinated to the payment of principal on the Class A Certificates. See 'The
Certificates--Distributions on Certificates.'
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RISK OF NOT SEGREGATING RECEIVABLES
The Seller has caused financing statements to be filed with the appropriate
governmental authorities to perfect its interest in the Affiliated Bank
Portfolio in accordance with the requirements of the Uniform Commercial Code in
effect in the applicable States. The Seller will cause financing statements to
be filed with the appropriate governmental authorities to perfect the interest
of the Trustee on behalf of the Certificateholders in its purchase of the
Receivables in accordance with the requirements of the Uniform Commercial Code
in effect in the State of Texas (the 'UCC'), and the Servicer will hold the
Receivables, either directly or through subcustodians (which may be affiliates
of the Servicer), as custodian for the Trustee following the sale and assignment
of the Receivables to the Trustee on behalf of the Certificateholders. The
Receivables will not be segregated, stamped or otherwise marked to indicate that
they have been sold to the Trustee on behalf of the Certificateholders. If,
through inadvertence or otherwise, another party purchases (or takes a security
interest in) the Receivables for new value in the ordinary course of business
and takes possession of the Receivables without actual knowledge of the Trust's
interest, the purchaser (or secured party) will acquire an interest in the
Receivables superior to the interest of the Trust.
RISK OF UNPERFECTED SECURITY INTEREST IN FINANCED VEHICLES IN CERTAIN STATES
The Seller will assign its security interests in the Financed Vehicles
along with the sale and assignment of the Receivables to the Trust, and the
Servicer will hold the certificates of title or other evidence of ownership
relating to the Financed Vehicles, either directly or through subcustodians, as
custodian for the Trustee following the sale and assignment of the Receivables
to the Trust. The certificates of title or other evidence of ownership will not
be endorsed or otherwise amended to identify the Trust as the new secured party.
In Ohio and most other states, in the absence of fraud or forgery by the vehicle
owner or of fraud, forgery, negligence or error by the Seller or the related
Affiliated Bank or administrative error by state or local agencies, the notation
of the related Affiliated Bank's lien on the certificates of title or ownership
and/or possession of such certificates with such notation will be sufficient to
protect the Trust against the rights of subsequent purchasers of a Financed
Vehicle or subsequent lenders who take a security interest in a Financed
Vehicle. There exists a risk, however, in not identifying the Trust or the
Trustee as the new secured party on the certificate of title that the security
interest of the Trust or the Trustee may not be enforceable. In the event the
Trust has failed to obtain or maintain a perfected security interest in a
Financed Vehicle, its security interest would be subordinate to, among others, a
bankruptcy trustee of the Obligor, a subsequent purchaser of the Financed
Vehicle or a holder of a perfected security interest in the Financed Vehicle.
INSOLVENCY RISK OF THE SELLER
The Seller intends that the transfer of the Receivables by it under the
Agreement constitute a sale. In the event that the Seller were to become
insolvent, the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ('FIRREA') sets forth certain powers that the Federal Deposit Insurance
Corporation (the 'FDIC') could exercise if it were appointed as receiver of the
Seller. Subject to clarification by FDIC regulations or interpretations, it
would appear from the positions taken by the FDIC before and after the passage
of FIRREA that the FDIC in its capacity as receiver for the Seller would not
interfere with the timely transfer to the Trust of payments collected on the
Receivables. If the transfer to the Trust were to be characterized as a secured
loan, to the extent that the Seller would be deemed to have granted a security
interest in the Receivables to the Trust, and that interest had been validly
perfected before the Seller's insolvency and had not been taken in contemplation
of insolvency, 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 the FDIC as receiver of the Seller. If, however, the FDIC were to
assert a contrary position, such as by requiring the Trustee to establish its
right to those payments by submitting to and completing the administrative
claims procedure established under FIRREA, delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur. See 'Certain Legal Aspects of the Receivables--Other Limitations.'
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REGIONAL ECONOMIC CONDITIONS
Economic conditions in the states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with respect to
the Receivables. As of the Cutoff Date, the billing addresses of the Obligors
with respect to approximately 33.92%, 24,13%, 19.90% and 10.01% by principal
balance of the Receivables were located in Ohio, Wisconsin, Texas and Indiana,
respectively. Ohio, Wisconsin, Texas and Indiana, have experienced economic
downturns from time to time, and no predictions can be made regarding future
economic conditions in these states or in any of the other states where the
Obligors are located. See 'The Receivables Pool.'
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time. For this purpose the term
'prepayments' includes prepayments by the Obligors in full or in part, certain
partial prepayments related to liquidations due to default, including rebates of
extended warranty contract costs and insurance premiums, as well as receipts of
proceeds from physical damage, credit life, theft and disability insurance
policies and certain other Receivables purchased or repurchased pursuant to the
terms of the Agreement. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors. In addition,
under certain circumstances, the Seller is obligated to repurchase, or to cause
the related Affiliated Bank to purchase, and the Servicer is obligated to
purchase the related Receivables pursuant to the Agreement as a result of
certain uncured breaches of representations and warranties in the case of the
Seller and certain uncured breaches of covenants in the case of the Servicer
made by them in the Agreement. See 'The Certificates--Sale and Assignment of the
Receivables' and '--Servicing Procedures.' See also 'The
Certificates--Termination' regarding the Seller's option to purchase the
Receivables. Accordingly, under certain circumstances, it is likely that the
Certificates will be repaid before the Final Scheduled Distribution Date. Any
reinvestment risk (which will vary from investor to investor, but which may
include the risk that principal payments will have to be reinvested at a lower
yield) resulting from the rate of prepayments of the Receivables and the
distribution of such prepayments to Certificateholders will be borne entirely by
the related Certificateholders. See 'Maturity and Prepayment Assumptions.'
FEDERAL INCOME TAXATION
It is expected that, for Federal income tax purposes, amounts otherwise
payable to the Class B Certificate Owners that are paid to the Class A
Certificate Owners pursuant to the subordination provisions described above
under 'Subordination of the Class B Certificates' will be deemed to have been
received by the Class B Certificate Owners and then paid by them to the Class A
Certificate Owners pursuant to a guaranty. See 'Federal Income Tax
Consequences--Class B Certificate Owners--Effect of Subordination.'
RATINGS OF THE CERTIFICATES; POSSIBILITY OF WITHDRAWAL OR DOWNGRADING
It is a condition to the issuance of the Certificates that the Class A
Certificates be rated in the highest rating category by at least two nationally
recognized rating agencies (each a 'Rating Agency'). It is a condition to the
issuance of the Class B Certificates that they be rated at least 'A' or its
equivalent by each such Rating Agency. A rating is not a recommendation to
purchase, hold or sell the Certificates, inasmuch as such rating does not
comment as to market price or suitability for a particular investor. The ratings
of the Certificates are based primarily on the quality of the Receivables and
the availability of the Reserve Fund and, in the case of the Class A
Certificates, on the subordination provided by the Class B Certificates. The
ratings of the Certificates address the likelihood of the receipt of
distributions due on the Certificates pursuant to their terms. There can be no
assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances so warrant. In the event that a rating is subsequently
lowered or withdrawn, no person or entity will be required to provide any
additional credit enhancement. There can be no assurance as to whether any
additional rating agency will rate the Certificates or, if one does, what rating
would be assigned to either class of Certificates by such rating agency.
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<PAGE>
LIMITED LIQUIDITY
There is currently no secondary market for the Certificates. The
Underwriters currently intend to make a market in the Certificates, but are
under no obligation to do so. There can be no assurance that a secondary market
will develop or, if a secondary market does develop, that it will provide the
Certificateholders with liquidity of investment or that it will continue for the
life of the Certificates. The Certificates will not be listed on any national
securities exchange.
FORMATION OF THE TRUST
The Seller will establish the Trust by selling and assigning the
Receivables and certain other Trust Property to the Trust in exchange for the
Certificates. All references herein to sales, assignments and transfers to the
Trust refer to sales, assignments and transfers to the Trustee on behalf of the
Trust for the benefit of the Certificateholders. Prior to such sale and
assignment, the Trust will have no assets or obligations or any operating
history. Upon formation, the Trust will not engage in any business activities
other than acquiring and holding the Receivables, issuing the Certificates and
distributing payments thereon.
The Servicer will service the Receivables, either directly or through
subservicers, and will be paid the Servicing Fee out of collections from the
Receivables, prior to distributions to Certificateholders. See 'The Seller's
Affiliated Bank Portfolio of Motor Vehicle Loans--Motor Vehicle Lending,' 'The
Certificates-- Servicing Procedures,' '--Servicing Compensation' and
'--Distributions on Certificates.'
The Servicer will, directly or through subcustodians, hold the Receivables
and the certificates of title relating to the Financed Vehicles as custodian for
the Trustee. Banc One Services Corporation will serve as subcustodian of the
Receivables. However, the Receivables will not be marked or stamped to indicate
that they have been sold to the Trust, and the certificates of title for the
Financed Vehicles will not be endorsed or otherwise amended to identify the
Trustee as the new secured party. Under such circumstances and in certain
jurisdictions, the Trust's interest in the Receivables and the Financed Vehicles
may be defeated. See 'Certain Legal Aspects of the Receivables.'
The Trust will not acquire any contracts or assets other than the Trust
Property, and it is not anticipated that the Trust will have any need for
additional capital resources. Because the Trust will have no operating history
upon its establishment and will not engage in any business activity other than
acquiring and holding the Trust Property, issuing the Certificates and
distributing payments thereon, no historical or pro forma financial statements
or ratios of earnings to fixed charges with respect to the Trust have been
included herein.
THE TRUST PROPERTY
Each Certificate represents a fractional undivided interest in the Trust.
The Trust Property will include the Receivables, which were originated
indirectly by Dealers, purchased by an Affiliated Bank in the ordinary course of
business pursuant to agreements with Dealers ('Dealer Agreements') and, in the
case of Receivables originated by an Affiliated Bank other than the Seller,
acquired by the Seller from the Affiliated Banks in the ordinary course of the
Seller's business. All of the Receivables evidence indirect financing made
available by the related Affiliated Bank to the Obligors. On the Closing Date,
the Seller will sell the Receivables to the Trustee for the benefit of the
Certificateholders. The Trust Property also includes (i) all monies received
under the Receivables on and after the Cutoff Date, (ii) such amounts as from
time to time may be held in one or more accounts established and maintained by
the Trustee pursuant to the Agreement as described below, (iii) security
interests in the Financed Vehicles, (iv) the Seller's rights (if any) to receive
proceeds from claims on credit life, disability, theft and physical damage
insurance policies covering the Financed Vehicles or the Obligors, (v) the
rights of the Trustee on behalf of the Certificateholders under the Agreement,
(vi) the rights to certain payments from the Reserve Fund and (vii) all proceeds
(within the meaning of the UCC) of the foregoing.
The Reserve Fund will be maintained for the benefit of the
Certificateholders, but will not be part of the Trust.
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THE SELLER'S AFFILIATED BANK PORTFOLIO OF MOTOR VEHICLE LOANS
MOTOR VEHICLE LENDING
The Receivables will consist of loans selected from the Seller's portfolio
of loans originated by the Seller or acquired by the Seller from the Affiliated
Banks in the ordinary course of the Seller's business (the 'Affiliated Bank
Portfolio'). The Affiliated Banks purchase from Dealers motor vehicle retail
installment sale contracts which are secured by a new or used automobile, van or
light-duty truck ('Motor Vehicle Loans'). The Affiliated Banks enter into Dealer
Agreements primarily with Dealers that are franchised to sell new motor vehicles
and with certain Dealers that sell used motor vehicles, based upon a limited
financial review of the Dealer or, in some cases, the reputation and prior
experience of the related Affiliated Bank with such Dealers and their key
management. In addition to purchasing Motor Vehicle Loans from such Dealers,
each of the Affiliated Banks also extends loans and lines of credit to certain
Dealers for, among other things, inventories and other commercial purposes. Such
loans and lines of credit are not included in the Receivables purchased by the
Trust. Each Affiliated Bank's motor vehicle lending operations are centrally
managed through Banc One Credit Company ('BOCC'), an unincorporated division of
Finance One Corporation, which is itself a wholly owned subsidiary of BANC ONE
CORPORATION.
Each Motor Vehicle Loan was purchased by the related Affiliated Bank after
a review by BOCC in accordance with its established underwriting procedures
described below. These procedures are intended to assess the ability of an
applicant for a proposed Motor Vehicle Loan to repay a proposed Motor Vehicle
Loan and the adequacy of the motor vehicle as collateral. BOCC's guidelines are
intended to provide a basis for lending decisions, but are not meant to
supersede the credit judgment of the lending officer. As a result, certain Motor
Vehicle Loans may not comply with all of BOCC's guidelines.
The Dealers require an applicant to complete an application which generally
includes such information as the applicant's income, liabilities, credit and
employment history and other personal information. The application is reviewed
for completeness and compliance with BOCC's guidelines. BOCC evaluates
applicants by considering, based on information provided in the application and
the credit bureau reports referred to below, the relation of the applicant's
income to expenses, including expenses relating to such Motor Vehicle Loan plus
transaction information (including requested loan amount, collateral description
and trade-in information).
All Motor Vehicle Loans are analyzed using a judgmental system supported by
generic (credit bureau score) and custom scorecards. Upon receipt of an
application, a credit bureau report on the applicant, which includes a credit
bureau score, is retrieved. The application, including transaction information,
and the credit bureau report are scored using a family of seven Fair Isaac
scorecards custom built for BOCC. Credit underwriters then review the data for
stability in employment and residence, creditworthiness based on historical
information, value of the related motor vehicle, and the applicant's ability to
support the new debt. The scorecards are used to highlight applicants that have
a higher probability of default. Underwriters are required to obtain concurrence
from a more senior lender prior to approval of loans with credit score policy or
other major policy exceptions. BOCC will give favorable consideration to an
applicant's down payment, loan to value ratio and, in some instances, will
accept weaker credit profiles in cases of applicant stability, ability to repay,
and/or lower loan to value ratios.
Under BOCC's normal underwriting standards, the amount advanced (including
sales tax, license fees and title fees) under a Motor Vehicle Loan generally
will not exceed (i) in the case of new motor vehicles, 100% to 125% of the
Dealer invoice for the motor vehicle which serves as collateral, plus service
and warranty contracts, plus any premium for credit life and credit accident and
health insurance obtained in connection with such Motor Vehicle Loan, or (ii) in
the case of used motor vehicles, 100% to 125% of the wholesale price reported in
the most recent edition of either the National Automotive Dealers Association
Used Car Guide or the Black Book guide, depending on the geographic market, plus
service and warranty contracts, plus any premium for credit life and credit
accident and health insurance obtained in connection with such Motor Vehicle
Loan. Maximum advance guidelines are differentiated by risk grade as measured by
credit score. Advances in excess of these standards are permitted only after
approval by a senior lender is obtained. BOCC reviews each of the Motor Vehicle
Loans to ensure compliance with its established policies and procedures.
Cancellation of extended warranty contracts or insurance may result in partial
prepayments of the Motor Vehicle Loans.
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NATIONAL SERVICING OPERATION
The collection function associated with the servicing of Motor Vehicle
Loans originated by the Affiliated Banks and other banks affiliated with the
Seller is centrally managed by BOCC at four collection sites located in Akron,
Ohio, Milwaukee, Wisconsin, Irving, Texas and Phoenix, Arizona. While the
collection sites are managed by BOCC, they are currently owned by each of Bank
One, N.A., Bank One, Wisconsin, Bank One, Texas, N.A. and Bank One, Arizona,
N.A., respectively. Certain functions associated with the servicing of these
Motor Vehicle Loans, including data processing, payment processing, statement
rendering, customer service, collateral file maintenance and certain
administrative functions are currently performed by Banc One Services
Corporation, an affiliate of the Seller. The Seller anticipates that during
calendar year 1998, for administrative purposes, BOCC and its four collection
sites will become legally owned by one affiliate of the Seller. Regardless of
such legal ownership change, BOCC will continue to manage the collection sites.
The Affiliated Bank Portfolio is currently serviced by Bank One, N.A., Bank One,
Wisconsin and the Seller and is centrally managed by BOCC as described above.
Bank One, N.A. currently services receivables originated by Bank One, N.A. and
its predecessor banks located in the state of Ohio. During the period from
mid-1995 through early 1997, the servicing of the receivables originated by
these Ohio banks was transferred to Bank One, N.A. Bank One, Wisconsin currently
services receivables originated by Bank One, Wisconsin and its predecessor banks
located in the state of Wisconsin, receivables originated by Bank One, Indiana,
N.A. and its predecessor banks located in the state of Indiana, receivables
originated by Bank One, Illinois, N.A. and its predecessor banks located in the
state of Illinois and receivables originated by Bank One, Kentucky, N.A. and its
predecessor banks located in the state of Kentucky. During the period from late
1995 through mid-1997, the servicing of the receivables originated by these
Wisconsin, Indiana, Illinois and Kentucky banks was transferred to Bank One,
Wisconsin. The Seller currently services receivables originated by the Seller,
receivables originated by Bank One, Oklahoma, N.A. and its predecessor banks
located in the State of Oklahoma and receivables originated by Bank One,
Louisiana, N.A., and its predecessor banks located in the State of Louisiana.
During mid-1997 the servicing of the receivables originated by these Oklahoma
and Louisiana banks was transferred to the Seller. Although these servicing
transfers are substantially complete and the Seller does not currently
contemplate any servicing interruptions developing as a result of these
transfers, there can be no assurance that such interruptions will not occur in
the future. In addition, the Seller and its affiliates may acquire from time to
time portfolios which they may service. Although the Seller does not contemplate
any servicing disruptions developing as a result of these acquisitions, there
can be no assurance that such interruptions will not occur.
DEALER AGREEMENTS
Each Dealer that originates Motor Vehicle Loans and assigns them to an
Affiliated Bank has made representations and warranties to the applicable
Affiliated Bank with respect to each Motor Vehicle Loan and the security
interest in the motor vehicle relating thereto, including that (a) the Motor
Vehicle Loan and underlying purchase transaction comply with all applicable laws
and regulations and that there are no defenses, counterclaims or set-offs which
the obligors could assert, (b) the contract is a bona fide sale that arose from
the sale of the vehicle described therein, the obligor's signature thereon is
genuine and the obligor is of full age and has the capacity to contract, (c) the
cash down payment made by the obligor has been received and/or that the trade-in
allowance given to the obligor was actually received and was in the amounts
specified in the documents delivered to the applicable Affiliated Bank, (d) all
statements of fact in the contract are true to the best of the Dealer's
knowledge, (e) there are no warranties, express or implied, that exist outside
the written contract and (f) the Dealer has no knowledge of any fact impairing
the validity or value of the contract. None of these representations and
warranties relate to the creditworthiness of the obligor or the collectability
of the Motor Vehicle Loans. Upon breach of any representation or warranty made
by such Dealer with respect to a Motor Vehicle Loan, the applicable Affiliated
Bank has a right to require the Dealer to repurchase such loan.
CONTRACT EXTENSIONS
The Servicer follows specific procedures with respect to contract
extensions and modifications. This policy is limited to circumstances where
there has been a temporary interruption in the customer's ability to make
payments, and provides that, (i) one extension is allowed after six payments are
made, (ii) one extension is allowed for each additional twelve payments made,
(iii) extensions will not be granted if the related loan is deemed to be
uncollectible, and (iv) extensions will not be granted if an obligor is more
than 90 days past due
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unless approval by the related Collections Center Manager is obtained.
Extensions exceeding the policy require the approval of the related Collections
Center Manager or his designee. The Servicer also engages in programs that
solicit qualified customers for a payment extension, referred to as a holiday
extension, typically twice each year. Any extension may extend the maturity of
the applicable Receivable beyond its original term to maturity and increase the
weighted average life of the Receivables. Any reinvestment risks resulting from
the extensions of payments on Receivables will be borne entirely by the
Certificateholders.
The Servicer may change a payment date once during the term of the contract
as an accommodation to the obligor if the new payment date is within 20 days of
the original scheduled payment date. Such change of payment date is not deemed
to be an extension and no extension fee is charged. The Servicer will not
voluntarily make modifications to the Receivables that reduce the original rates
of interest or the amount of the regularly scheduled payments on the Receivables
or that extend the final payments on such Receivables beyond the Collection
Period relating to the Final Scheduled Distribution Date.
COLLECTION AND CHARGE-OFF POLICIES
The Servicer considers an account to be past due when payments are not
received by the due date. Using behavior scoring, loan balance outstanding and
other key variables that distinguish risk level, the Servicer assesses Motor
Vehicle Loans in terms of the risk of becoming seriously delinquent (greater
than 60 days past due). More aggressive tactics are used to collect such higher
risk loans and the related obligors are contacted earlier in the delinquency
cycle. Depending on risk level, collection efforts can begin as early as five
days past due or as late as 28 days past due. Obligors on the first payment
default loans (high risk) are contacted at 5 days by a specialized collection
unit. Obligors on high risk non-first payment default loans are called at 5 days
past due using autodialer technology. Loans remain on the autodialer where
efforts are made to contact obligors and obtain payment arrangements until the
loan becomes 30 to 60 days past due. Higher risk loans are collected more
aggressively, and would exit the autodialer to a seasoned collection unit at 30
days, compared to a lower risk and/or lower balance loan which could remain in
the autodialer unit until 60 days past due.
Repossessions are carried out by contractors who have met the Servicer's
eligibility requirements. Collateral is liquidated at auctions, subject to
minimum bid requirements, no later than 45 days after repossession, unless the
Servicer is prevented from doing so by a bankruptcy filing.
The Servicer's policy is to charge off all delinquent Motor Vehicle Loans
as to which the related motor vehicle has not been repossessed during the month
the loan becomes 120 days delinquent. Motor Vehicle Loans as to which the
related motor vehicle has been repossessed are charged off within 45 days after
repossession or when the vehicle is sold, whichever comes earlier. Deficiency
balances are pursued, unless the deficiency is discharged in bankruptcy or the
Servicer determines it would not be useful based on the resources of the
obligor.
INSURANCE
Pursuant to BOCC's customary policies, each Motor Vehicle Loan requires the
obligor to obtain fire, theft and collision insurance or comprehensive and
collision insurance with respect to the related motor vehicle. While verified at
the funding of each Motor Vehicle Loan, insurance coverage on the related motor
vehicle will not be monitored by or on behalf of the Servicer on an ongoing
basis. The Servicer, on behalf of the Trust, is not obligated, and it does not
intend, to purchase required insurance on any related motor vehicle and charge
the obligor for the cost of such insurance if the obligor fails to do so.
<PAGE>
DELINQUENCIES AND NET LOSS
Set forth below is certain information concerning the historical
experience of the Affiliated Banks pertaining to retail (new or used) automobile
van or light duty truck receivables originated indirectly by the Affiliated
Banks through Dealers. Such data relates to the performance of the Affiliated
Banks' indirect automobile receivable portfolio, and is not historical data
regarding solely either the Affiliated Bank Portfolio or the portion of the
Affiliated Bank Portfolio constituting the Receivables. The information in the
table below reflects all of the indirect automobile receivables currently
serviced by the Servicer, Bank One, N.A. and Bank One, Wisconsin, except for
automobile receivables originated by Bank One, Kentucky, N.A., Bank One,
Oklahoma, N.A. and Bank One, Louisiana, N.A. In addition, as summarized above
under '--National Servicing Operation,' the servicing of a portion of the
Affiliated Bank Portfolio has been consolidated over the last two
16
<PAGE>
years. Accordingly, for significant periods indicated in the tables below, a
substantial amount of the related automobile receivables were not being serviced
by the Servicer, Bank One, N.A. or Bank One, Wisconsin. There can be no
assurance that the delinquency and net loss experience on the Receivables in the
future will be comparable to that set forth below.
DELINQUENCY EXPERIENCE
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31, AT OCTOBER 31,
------------------------------------------------------------------------ ----------------------
1996 1995 1994 1997
---------------------- ---------------------- ---------------------- ----------------------
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at Period End... 549,439 $4,708,384 594,079 $5,039,297 628,809 $5,506,119 480,290 $4,269,425
Delinquency:
30-59 days............. 10,221 $ 86,534 8,934 $ 70,722 6,773 $ 51,758 9,247 $ 77,662
60-89 days............. 2,750 $ 23,714 2,292 $ 18,243 1,629 $ 12,583 2,910 $ 23,888
90 days or more........ 1,640 $ 14,283 1,386 $ 10,859 718 $ 5,009 1,796 $ 14,806
Total Delinquencies as a
Percentage of the
Portfolio................ 2.66% 2.64% 2.12% 1.98% 1.45% 1.26% 2.91% 2.73%
<CAPTION>
1996
----------------------
NUMBER
OF
CONTRACTS AMOUNT
--------- ----------
<S> <C> <C>
Portfolio at Period End... 562,421 $4,850,964
Delinquency:
30-59 days............. 7,566 $ 63,804
60-89 days............. 2,309 $ 19,509
90 days or more........ 1,446 $ 11,573
Total Delinquencies as a
Percentage of the
Portfolio................ 2.01% 1.96%
</TABLE>
HISTORICAL NET LOSS EXPERIENCE
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR YEAR ENDED DECEMBER 31, FOR TEN MONTHS ENDED OCTOBER 31,
-------------------------------------- --------------------------------
1996 1995 1994 1997
---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Principal Amount Outstanding............. $4,708,384 $5,039,297 $5,506,119 $4,269,425
Average Principal Amount Outstanding..... $4,952,660 $5,160,855 $5,178,196 $4,445,343
Number of Loans Outstanding.............. 549,439 549,079 628,809 480,290
Average Number of Loans Outstanding...... 577,214 606,897 580,943 511,875
Net Losses............................... $ 59,966 $ 43,190 $ 30,241 $ 54,951
Net Losses as a Percent of Principal
Amount Outstanding..................... 1.27% 0.86% 0.55% 1.54%
Net Losses as a Percent of Average
Principal Amount Outstanding........... 1.21% 0.84% 0.58% 1.48%
<CAPTION>
1996
-----------------
<S> <C>
Principal Amount Outstanding............. $4,850,964
Average Principal Amount Outstanding..... $4,994,596
Number of Loans Outstanding.............. 562,421
Average Number of Loans Outstanding...... 582,152
Net Losses............................... $ 47,378
Net Losses as a Percent of Principal
Amount Outstanding..................... 1.17%
Net Losses as a Percent of Average
Principal Amount Outstanding........... 1.14%
</TABLE>
THE RECEIVABLES POOL
GENERAL
The Receivables were selected from the Affiliated Bank Portfolio by several
criteria, including, as of the Cutoff Date, the following: each Receivable has a
scheduled maturity of not later than the Final Scheduled Maturity Date; each
Receivable provides for level monthly payments which fully amortize the amount
financed (except for the last payment, which may be different from the level
payment); each Receivable is not more than 30 days contractually past due (a
scheduled payment has not been received by the first subsequent calendar month's
scheduled payment date) and is not more than six months paid ahead; each
Receivable has a principal balance between $250 and $50,000; and each Receivable
is a fixed rate, simple interest receivable (a 'Simple Interest Receivable'). As
of the Cutoff Date, no Obligor on any Receivable was noted in the records of the
Servicer or the related Affiliated Bank as being the subject of a bankruptcy
proceeding. No selection procedures believed by the Seller to be adverse to
Certificateholders were used in selecting the Receivables.
The composition, distribution by remaining principal, distribution by APR,
distribution by remaining term and geographic distribution of the Receivables as
of the Cutoff Date are set forth in the following tables.
17
<PAGE>
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED WEIGHTED
APR OF AGGREGATE PRINCIPAL NUMBER OF AVERAGE AVERAGE AVERAGE PRINCIPAL
RECEIVABLES BALANCE RECEIVABLES REMAINING TERM ORIGINAL TERM BALANCE
- --------------------------- ------------------- ----------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
10.19% $609,110,423.59 42,750 57.17 months 59.48 months $ 14,248.20
</TABLE>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES AS OF THE CUTOFF
DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
REMAINING PRINCIPAL NUMBER OF AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
BALANCE RANGE RECEIVABLES BALANCE(1) BALANCE(2)
- ------------------------------------------------------------- ----------- ------------------- -------------------
<S> <C> <C> <C>
$250 to $2,499............................................... 199 $ 401,757 0.07%
$2,500 to $4,999............................................. 1,840 7,333,095 1.20%
$5,000 to $7,499............................................. 3,684 23,410,190 3.84%
$7,500 to $9,999............................................. 5,611 49,564,493 8.14%
$10,000 to $12,499........................................... 7,193 81,071,105 13.31%
$12,500 to $14,999........................................... 6,927 95,044,761 15.60%
$15,000 to $17,499........................................... 5,707 92,448,163 15.18%
$17,500 to $19,999........................................... 4,172 77,934,437 12.79%
$20,000 to $22,499........................................... 2,868 60,657,702 9.96%
$22,500 to $24,999........................................... 1,906 45,032,166 7.39%
$25,000 to $27,499........................................... 1,211 31,635,065 5.19%
$27,500 to $29,999........................................... 681 19,510,606 3.20%
$30,000 to $39,999........................................... 716 23,561,939 3.87%
$40,000 to $50,000........................................... 35 1,504,944 0.25%
------ ------------- ------
Total................................................. 42,750 $ 609,110,424 100.00%
====== ============= ======
</TABLE>
- ------------------
(1) Dollar amounts may not add to $609,110,424 because of rounding.
(2) Percentages may not add to 100.00% because of rounding.
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
ANNUAL PERCENTAGE NUMBER OF AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
RATE RANGE RECEIVABLES BALANCE(1) BALANCE(2)
- ------------------------------------------------------------- ----------- ------------------- -------------------
<S> <C> <C> <C>
7.50% to 7.99%............................................... 3,932 $ 63,769,846 10.47%
8.00% to 8.99%............................................... 10,206 157,217,063 25.81%
9.00% to 9.99%............................................... 9,720 147,797,500 24.26%
10.00% to 10.99%............................................. 6,235 89,856,760 14.75%
11.00% to 11.99%............................................. 3,882 50,748,078 8.33%
12.00% to 12.99%............................................. 2,907 34,804,727 5.71%
13.00% to 13.99%............................................. 1,931 21,374,259 3.51%
14.00% to 14.99%............................................. 1,415 15,597,182 2.56%
15.00% to 20.00%............................................. 2,522 27,945,009 4.59%
------ ------------- ------
Total................................................. 42,750 $ 609,110,424 100.00%
====== ============= ======
</TABLE>
- ------------------
(1) Dollar amounts may not add to $609,110,424 because of rounding.
(2) Percentage may not add to 100.00% because of rounding.
18
<PAGE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
REMAINING TERM RANGE RECEIVABLES BALANCE(1) BALANCE(2)
- ------------------------------------------------------------- ----------- ------------------- -------------------
<S> <C> <C> <C>
12 to 17 months.............................................. 58 $ 255,764 0.04%
18 to 23 months.............................................. 693 3,839,008 0.63%
24 to 29 months.............................................. 877 4,756,054 0.78%
30 to 35 months.............................................. 2,749 21,413,558 3.52%
36 to 41 months.............................................. 1,469 12,702,920 2.09%
42 to 47 months.............................................. 4,876 54,029,108 8.87%
48 to 53 months.............................................. 3,322 38,578,636 6.33%
54 to 59 months.............................................. 15,224 228,108,312 37.45%
60 to 65 months.............................................. 9,346 156,013,779 25.61%
66 to 74 months.............................................. 4,136 89,413,285 14.68%
------ ------------- ------
Total................................................. 42,750 $ 609,110,424 100.00%
====== ============= ======
</TABLE>
- ------------------
(1) Dollar amounts may not add to $609,110,424 because of rounding.
(2) Percentages may not add to 100.00% because of rounding.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
STATE(1) RECEIVABLES BALANCE(3) BALANCE(4)
- ------------------------------------------------------------- ----------- ------------------- -------------------
<S> <C> <C> <C>
Ohio......................................................... 15,294 $ 206,616,698 33.92%
Wisconsin.................................................... 10,618 146,970,606 24.13%
Texas........................................................ 7,249 121,243,018 19.90%
Indiana...................................................... 4,573 60,966,286 10.01%
Illinois..................................................... 1,831 26,691,924 4.38%
Minnesota.................................................... 1,222 17,487,305 2.87%
Other(2)..................................................... 1,963 29,134,587 4.78%
------ ------------- ------
Total................................................. 42,750 $ 609,110,424 100.00%
====== ============= ======
</TABLE>
- ------------------
(1) Based on billing addresses of the Obligors.
(2) Includes 25 other states (none of which have a concentration of Receivables
in excess of 2.00% of the aggregate principal balance).
(3) Dollar amounts may not add to $609,110,424 because of rounding.
(4) Percentages may not add to 100.00% because of rounding.
Approximately 49.52% of the aggregate principal balance of the Receivables,
constituting 39.66% of the number of Receivables, as of the Cutoff Date,
represents financing of new vehicles; the remainder represents financing of used
vehicles. As of the Cutoff Date, no Receivable was more than 30 days
contractually past due. A Receivable is 30 days contractually past due if a
scheduled payment has not been received by the subsequent calendar month's
scheduled payment date.
All of the Receivables are Simple Interest Receivables. A Simple Interest
Receivable provides for the amortization of the amount financed under the
receivable over a series of fixed level monthly payments. Each monthly payment
includes an installment of interest which is calculated on the basis of the
outstanding principal balance of the receivable multiplied by the stated APR and
further multiplied by the period elapsed (as a fraction of a calendar year)
since the preceding payment of interest was made. As payments are received under
a Simple Interest Receivable, the amount received is applied first to interest
accrued to the date of payment and the balance is applied to reduce the unpaid
principal balance. Accordingly, if an Obligor pays a fixed monthly installment
before its scheduled due date, the portion of the payment allocable to interest
for the period since the preceding payment was made will be less than it would
have been had the payment been made as scheduled, and the portion
19
<PAGE>
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
The Servicer may accede to an Obligor's request to pay scheduled payments
in advance, in which event the Obligor will not be required to make another
regularly scheduled payment until the time a scheduled payment not paid in
advance is due. The amount of any payment made in advance will be treated as a
principal prepayment and will be distributed as part of the Principal
Collections in the month following the Collection Period in which the prepayment
was made. See 'Maturity and Prepayment Assumptions.'
20
<PAGE>
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time. For this purpose the term
'prepayments' includes prepayments by Obligors in full or in part, certain
partial prepayments related to liquidations due to default, including rebates of
extended warranty contract costs and insurance premiums, as well as receipts of
proceeds from physical damage, credit life, theft and disability insurance
policies and certain other Receivables, purchased or repurchased pursuant to the
terms of the Agreement. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors, including changes
in interest rates and the fact that an Obligor generally may not sell or
transfer the Financed Vehicle securing a Receivable without the consent of the
secured party, which generally results in the repayment of the remaining
principal balance of the Receivable. In addition, under certain circumstances,
the Seller is obligated to repurchase, or to cause the related Affiliated Bank
to repurchase, and the Servicer is obligated to purchase, Receivables pursuant
to the Agreement as a result of certain uncured breaches of representations and
warranties in the case of the Seller and certain uncured breaches of covenants
in the case of the Servicer. See 'The Certificates--Sale and Assignment of the
Receivables' and '--Servicing Procedures.' See also 'The
Certificates--Termination' regarding the Seller's option to purchase the
Receivables when the aggregate principal balance thereof is 5% or less of the
Original Pool Balance, at a purchase price equal to the sum of the Class A
Principal Balance and the Class B Principal Balance plus accrued and unpaid
interest thereon. Accordingly, under certain circumstances it is likely that the
Certificates will be repaid before the Final Scheduled Distribution Date. Any
reinvestment risk (which will vary from investor to investor, but which may
include the risk that principal payments will have to be reinvested at a lower
yield) resulting from the rate of prepayments in full of the Receivables and the
distribution of such prepayments to Certificateholders will be borne entirely by
the Certificateholders.
If an Obligor pays more than one scheduled payment at a time, the entire
amount of the additional payment will be treated as a principal prepayment and
distributed as part of the Principal Collections in the month following the
month of receipt and the Servicer will not generally require the Obligor to make
any scheduled payment in respect of such Receivable (a 'Paid-Ahead Receivable')
for the number of due dates corresponding to the number of such additional
scheduled payments (the 'Paid-Ahead Period'). Although the terms of the retail
installment contract require the Obligor to make its next scheduled payment, the
Obligor's Receivable is not considered delinquent for purposes of the Agreement
during the Paid-Ahead Period and, interest will continue to accrue on the
principal balance of the Receivable, as reduced by the application of the early
payment. When the Obligor pays the next required payment, although such payment
may be insufficient to cover the interest that has accrued since the last
payment by the Obligor, the Obligor's Receivable would be considered to be
current. This situation will continue until the installments are once again
sufficient to cover all accrued interest and to reduce the principal balance of
the Receivable. Depending on the principal balance and the APR of the related
Receivable and on the number of installments that were paid early, there may be
extended periods of time during which Receivables that are current are not
amortizing. During such periods, no distributions in respect of principal will
be made to the Certificateholders with respect to such Receivables.
Paid-Ahead Receivables will affect the weighted average life of the
Certificates. The distribution of the paid-ahead amount on the Distribution Date
following the Collection Period in which such amount was received will generally
shorten the weighted average life of the Certificates. However, depending on the
length of time during which a Paid-Ahead Receivable is not amortizing as
described above, the weighted average life of the Certificates may be extended.
The Seller's Affiliated Bank Portfolio of motor vehicle installment sale
contracts has historically included contracts which have been paid-ahead by one
or more scheduled monthly payments. There can be no assurance as to the number
of Receivables which may become Paid-Ahead Receivables or the number or the
principal amount of the scheduled payments which may be paid-ahead.
YIELD CONSIDERATIONS
Interest on the Certificates will accrue at the Class A Pass-Through Rate
and the Class B Pass-Through Rate with respect to each Collection Period on the
Class A Principal Balance and the Class B Principal Balance, respectively, as of
the Distribution Date occurring in such Collection Period (after giving effect
to any payments made on such Distribution Date) or, in the case of the first
Distribution Date, on the Original Class A Principal Balance and the Original
Class B Principal Balance, respectively. In the event of a principal prepayment
on a
21
<PAGE>
Receivable during a Collection Period, Class A Certificateholders and Class B
Certificateholders will receive their pro rata share of interest for the full
Collection Period with respect to the unpaid principal balance of such
Receivable as of the first day of such Collection Period to the extent that
amounts on deposit in the Collection Account and in the Reserve Fund are
available for such purpose. If the Reserve Fund is exhausted, the amount of
interest distributed to the Class B Certificateholders and, in certain limited
circumstances, the Class A Certificateholders may be less than that described
above. See 'The Certificates--Distributions on Certificates.'
Although the Receivables have different APRs, each Receivable's APR exceeds
the sum of (a) the weighted average of the Class A Pass-Through Rate and the
Class B Pass-Through Rate and (b) the Servicing Fee Rate. Therefore,
disproportionate rates of prepayments between Receivables with higher and lower
APRs will generally not affect the yield to Certificateholders. However, higher
rates of prepayments of Receivables with higher APRs will decrease the amount
available to cover delinquencies and defaults on the Receivables and may
decrease the amount available to the Reserve Fund. See 'The
Certificates--Distributions on Certificates' and '--Reserve Fund.'
POOL FACTORS AND TRADING INFORMATION
The 'Class A Pool Factor' and the 'Class B Pool Factor' will each be a
seven-digit decimal which the Servicer will compute each month indicating the
remaining Class A Principal Balance and Class B Principal Balance, respectively,
as of the close of business on the Distribution Date, as a fraction of the
respective initial outstanding principal balance of the Class A Certificates and
the Class B Certificates. The Class A Pool Factor and the Class B Pool Factor
will each be 1.0000000 as of the Closing Date, and thereafter will decline to
reflect reductions in the outstanding principal balance of the Class A
Certificates and the Class B Certificates, respectively.
A Class A Certificateholder's portion of the aggregate outstanding
principal balance of the Class A Certificates is the product of (i) the original
denomination of the holder's Class A Certificate and (ii) the Class A Pool
Factor. A Class B Certificateholder's portion of the aggregate outstanding
principal balance of the Class B Certificates is the product of (i) the original
denomination of the holder's Class B Certificate and (ii) the Class B Pool
Factor.
Pursuant to the Agreement, the Trustee will forward to Certificateholders a
copy of the Servicer's monthly reports concerning the payments received on the
Receivables, the Pool Balance, the Class A Pool Factor, the Class B Pool Factor
and various other items of information. Certificateholders during each calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law. See 'The Certificates--Statements to
Certificateholders.'
USE OF PROCEEDS
The Seller will use the net proceeds from the sale of the Certificates for
general corporate purposes and to make the initial Reserve Fund deposit in the
amount of $30,455,521.18.
THE SERVICER AND THE SELLER
Bank One, Texas, N.A., a national banking association, is an indirect
wholly owned subsidiary of BANC ONE CORPORATION, a multi-bank holding company
incorporated under the laws of the State of Ohio. The following unaudited
financial information regarding the Seller was calculated on the basis of
regulatory accounting principles and not on the basis of generally accepted
accounting principles, is based on the Seller's Consolidated Report of Condition
as of September 30, 1997 (the 'Call Report') and is qualified in its entirety by
detailed information included in such Call Report. As of September 30, 1997, the
Seller had total assets of approximately $22.11 billion, total deposits of
approximately $17.22 billion and total equity capital of approximately $1.87
billion.
The principal executive offices of Bank One, Texas, N.A. are located at
1717 Main Street, Dallas, Texas 75201, and its telephone number is (214)
290-2000.
22
<PAGE>
THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement, substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Copies of the Agreement may be obtained by the
Certificateholders upon written request to the Servicer. The following
information summarizes all material provisions of the Certificates and the
Agreement. The summary is subject to, and qualified in its entirety by reference
to, the Agreement.
GENERAL
The Certificates will evidence fractional undivided interests in the assets
of the Trust to be created pursuant to the Agreement. The Class A Certificates
will evidence in the aggregate an undivided ownership interest of 94% of the
Trust and the Class B Certificates will evidence in the aggregate an undivided
ownership interest of 6% of the Trust.
The Certificates will be offered for purchase in denominations of $1,000
and integral multiples of $1 in excess thereof in book-entry form. Each Class of
Certificates will initially be represented by a certificate registered in the
name of Cede, the nominee of DTC. No beneficial owner of a Certificate (a
'Certificate Owner') will be entitled to receive a definitive certificate
representing such person's interest in the Trust except as set forth below under
'--Definitive Certificates.' Unless and until Certificates of a Class are issued
in fully-registered certificated form ('Definitive Certificates') under certain
limited circumstances described below, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
its Direct Participants (as defined herein) and all references to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, notices, reports and statements to DTC or Cede, as the case may
be, for the benefit of the Certificate Owners in accordance with DTC procedures.
See '--Book-Entry Registration' and '--Definitive Certificates.'
BOOK-ENTRY REGISTRATION
Persons acquiring beneficial ownership interests in the Certificates will
hold their interests through DTC. Each Class of Certificates will be registered
in the name of Cede as nominee for DTC. 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 New York Uniform
Commercial Code, and a 'clearing agency' registered pursuant to Section 17A of
the Exchange Act. DTC was created to hold securities for its participating
members ('Participants') and to facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of certificates. 'Direct Participants' include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
the DTC system is also available to others such as banks, brokers, dealers, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ('Indirect Participants'). The
rules applicable to DTC and its Participants are on file with the Commission.
Certificate Owners that are not Direct Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Certificates may do so only through Direct Participants or
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through Direct
Participants. Under a book-entry format, Certificate Owners may experience some
delay in their receipt of payments, since such payments will be forwarded by the
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Direct Participants, which thereafter will forward them to Indirect Participants
or Certificate Owners. It is anticipated that the only 'Certificateholder' will
be Cede, as nominee for DTC. Certificate Owners will not be recognized by the
Trustee as Certificateholders, as such term is used in the Agreement, and
Certificate Owners will only be permitted to exercise the rights of
Certificateholders indirectly through DTC and its Participants. Transfers
between Participants will occur in accordance with DTC Rules.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the 'Rules'), DTC is required to make book-entry transfers of
Certificates among Direct Participants on whose behalf it acts with respect to
the Certificates and to receive and transmit distributions of principal of, and
interest on, the
23
<PAGE>
Certificates. Direct Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Certificates similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Certificate Owners. Accordingly, although Certificate
Owners will not possess Certificates, the Rules provide a mechanism by which
Certificate Owners will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Seller that it will take any action permitted to be
taken by a Certificateholder under the Agreement only at the direction of one or
more Direct Participants to whose accounts with DTC the applicable Certificates
are credited. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of Direct
Participants whose holdings include such undivided interests.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Certificates among Direct 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.
NEITHER THE TRUST, THE SELLER, THE SERVICER, ANY AFFILIATED BANK, THE
TRUSTEE NOR ANY OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION
TO ANY PARTICIPANTS, OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT
TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, (2) THE PAYMENT BY DTC OR
ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE
PRINCIPAL BALANCE OF, OR INTEREST ON, THE CERTIFICATES, (3) THE DELIVERY BY ANY
PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED
UNDER THE TERMS OF THE AGREEMENT TO BE GIVEN TO CERTIFICATEHOLDERS OR (4) ANY
OTHER ACTION TAKEN BY DTC OR ITS NOMINEE, AS THE CERTIFICATEHOLDER.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered, certificated form
('Definitive Certificates') to Certificate Owners, rather than to DTC or its
nominee, only if (i) the Seller advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to the Certificates and the Servicer is unable to locate a
qualified successor, (ii) the Seller, at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Servicing Termination, holders of Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single Class,
advise the Trustee and DTC through Direct Participants in writing, and DTC shall
so notify the Trustee, that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the Certificate Owners' best interests.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Certificate Owners, through DTC
and its Participants, of the availability of Definitive Certificates. Upon
surrender by DTC of the definitive certificates representing the Certificates
and receipt by the Trustee of instructions for re-registration, the Trustee will
reissue the Certificates as Definitive Certificates, and thereafter the Trustee
will recognize the holders of such Definitive Certificates as Certificateholders
under the Agreement ('Holders').
Distributions of principal of, and interest on, the Definitive Certificates
will be made by the Trustee directly to Holders in accordance with the
procedures set forth herein and in the Agreement. Distributions of principal and
interest on each Distribution Date will be made to Holders in whose names the
Definitive Certificates were registered at the close of business on the
applicable Record Date specified for such Certificates. Such distributions will
be made by check mailed to the address of such Holder as it appears on the
register maintained by the Trustee. The final payment on any Definitive
Certificate, however, will be made only upon presentation and surrender of such
Definitive Certificate at the office or agency specified in the notice of final
distribution mailed to Certificateholders.
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Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or of a registrar named in a notice delivered to Holders.
No service charge will be imposed for any registration of transfer or exchange,
but the Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith.
SALE AND ASSIGNMENT OF THE RECEIVABLES
On the Closing Date, the Seller will sell and assign to the Trust, without
recourse, its entire interest in the Receivables, including its security
interests in the related Financed Vehicles, pursuant to the Agreement. Each
Receivable will be identified in a schedule appearing as an exhibit to the
Agreement. The Trustee will, concurrently with such sale and assignment and at
the written direction of the Seller, execute, authenticate and deliver the
Certificates.
In the Agreement, the Seller will represent and warrant to the Trustee,
among other things, that (i) the information provided in a schedule to the
Agreement is correct in all material respects and the computer tape supplied by
the Seller describing certain characteristics of the Receivables is correct in
all material respects as of the Cutoff Date; (ii) the Obligor on each Receivable
is required to maintain physical damage insurance covering the Financed Vehicle;
(iii) at the Cutoff Date neither the Seller nor the related Affiliated Bank has
received notice that any right of rescission, setoff, counterclaim or defense
has been asserted or threatened with respect to any Receivable; (iv) at the
Closing Date each of the Receivables is secured by a validly perfected first
priority security interest in the Financed Vehicle in favor of the related
Affiliated Bank and such security interest has been assigned to the Seller or
appropriate action has been taken to obtain the same; (v) each Receivable, at
the time it was originated, complied and, at the Closing Date, complies in all
material respects with applicable Federal and state laws, including, without
limitation, consumer credit, truth in lending, equal credit opportunity and
disclosure laws; and (vi) neither the Seller nor the related Affiliated Bank
have received notice of any liens or claims, including liens for work, labor,
materials or unpaid state or federal taxes relating to any Financed Vehicle
securing the related Receivable that are or may be prior to or equal to the lien
granted by such Receivable. Pursuant to the Agreement, the Seller, the Servicer
or the Trustee must promptly advise the others in writing upon a discovery of a
breach of any of the Seller's representations and warranties with respect to the
Receivables. Unless any such breach shall have been cured within 60 days
following the discovery of such breach by the Trustee or receipt by the Trustee
of written notice from the Seller or the Servicer of such breach, the Seller
will repurchase any Receivable from the Trust in which the interests of the
Certificateholders are materially and adversely affected by such breach as of
the first day succeeding the end of such 60 day period that is the last day of a
Collection Period (or, at the Seller's option, the last day of the first
Collection Period following the discovery) at a price equal to the unpaid
principal balance owed by the Obligor plus interest thereon at the respective
APR to the last day of the month of repurchase (the 'Purchase Amount'). The
repurchase obligation will constitute the sole remedy available to the Trustee
or the Certificateholders for any such uncured breach.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Trustee will appoint the Servicer as custodian of the
Receivables.
The Servicer, in its capacity as custodian, will hold the Receivables and
all electronic entries, documents, instruments and writings relating thereto
(each, a 'Receivable File'), either directly or through subcustodians, on behalf
of the Trustee for the benefit of Certificateholders. The Receivables will not
be stamped or otherwise marked to reflect the sale and assignment of the
Receivables to the Trust and will not be segregated from other receivables held
by the Servicer or the subcustodians. The Seller will designate Banc One
Services Corporation to serve as subcustodian. The Seller will cause the
accounting records and computer systems used by the Seller, the Servicer and the
related Affiliated Bank, to be marked to reflect the sale and assignment of the
Receivables to the Trust, and will file UCC financing statements reflecting such
sale and assignment with appropriate governmental authorities. The Obligors
under the Receivables will not be notified of the sale and assignment of the
Receivables to the Trust. See 'Formation of the Trust' and 'Certain Legal
Aspects of the Receivables.'
ACCOUNTS
The Trustee will establish one or more segregated accounts (the 'Collection
Account'), in the name of the Trustee on behalf of the Trust and the
Certificateholders, into which all payments made on or with respect to the
Receivables will be deposited. The Trustee will also establish a segregated
account (the 'Class A Distribution
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Account'), in the name of the Trustee on behalf of the Trust and the Class A
Certificateholders, and a segregated account (the 'Class B Distribution
Account'), in the name of the Trustee on behalf of the Trust and the Class B
Certificateholders, from which all distributions with respect to the Class A
Certificates and the Class B Certificates, respectively, will be made. The
Servicer will establish the Reserve Fund as a segregated account with Bankers
Trust Company, as collateral agent on behalf of the Certificateholders (the
'Collateral Agent'). The Collection Account, the Class A Distribution Account,
the Class B Distribution Account and the Reserve Fund are collectively referred
to as the 'Accounts.' The Reserve Fund will be maintained for the benefit of the
Certificateholders, but will not be an asset of the Trust.
The Accounts will be maintained as Eligible Deposit Accounts. 'Eligible
Deposit Account' means either (a) a segregated account with an Eligible
Institution or (b) a segregated trust account with the corporate trust
department of a depository institution (other than the Seller or any affiliate
of the Seller) organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic branch of
a foreign bank), having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of such depository
institution have a credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade (an 'Eligible Trust
Company'). 'Eligible Institution' means a depository institution (other than the
Seller or any affiliate of the Seller) organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank) (i) which has either (A) a long-term
senior unsecured debt rating acceptable to the Rating Agencies or (B) a
short-term senior unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by the
FDIC. The Accounts will be established initially with the trust department of
the Trustee or, in the case of the Reserve Fund, with the Collateral Agent. In
the event that the Trustee ceases to be an Eligible Institution, the Trustee or,
in the case of the Reserve Fund, the Collateral Agent shall transfer the
Accounts to an Eligible Institution or Eligible Trust Company. None of the
Accounts may be maintained in the State of Ohio.
Funds in the Accounts will be invested as provided in the Agreement in
Eligible Investments at the direction of the Servicer. 'Eligible Investments'
are generally limited to investments acceptable to the Rating Agencies as being
consistent with the ratings of the Certificates. Eligible Investments may
include securities or other obligations issued by the Seller or its affiliates
or trusts originated by the Seller or its affiliates. Eligible Investments are
limited to obligations or securities that mature not later than the Business Day
before the date on which the funds invested in such Eligible Investments are
required to be withdrawn from the Accounts. Any earnings (net of losses and
investment expenses) on amounts on deposit in the Accounts (other than the
Reserve Fund) will be paid to the Servicer and will not be available to
Certificateholders.
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 Agreement, will
continue such collection procedures as it follows with respect to motor vehicle
retail installment sale contracts they service. Consistent with its normal
procedures, the Servicer may, in its discretion, arrange with the Obligor on a
Receivable to extend or modify the payment schedule, subject to certain
limitations contained in the Agreement. Pursuant to the Agreement, the Servicer
or the Trustee shall inform the other party in writing promptly upon the
discovery of the breach by the Servicer of certain covenants made by it. If the
Servicer fails to cure the breaches with respect to a Receivable within 60 days
following the discovery of the breach or the receipt by the Trustee of notice of
such breach, the Servicer is required to purchase for the Purchase Amount any
Receivable in which the interests of the Certificateholders are materially and
adversely affected by the breach as of the first day succeeding the end of such
60 day period that is the last day of a Collection Period (or, at the Servicer's
option, the last day of the first Collection Period following the discovery).
Certain functions associated with the servicing of the Receivables,
including data processing, payment processing, statement rendering, customer
service, collateral file maintenance and certain administrative functions are
currently performed on behalf of the Seller, and will be performed on behalf of
the Servicer, by Banc One Services Corporation, an affiliate of the Seller. No
such delegation will relieve Bank One, Texas, N.A. of any of its obligations as
Servicer under the Agreement and the Servicer shall be responsible for such
functions as if it alone were performing such functions with respect to the
Receivables.
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PAYMENTS ON RECEIVABLES
The Agreement requires the Servicer to deposit all payments, other than any
nonsufficient funds charges and other administrative fees and similar charges
retained by the Servicer as part of its compensation, on Receivables (from
whatever source) and all proceeds of Receivables collected during each
Collection Period into the Collection Account within two Business Days of
receipt thereof. However, in the event that Bank One, Texas, N.A. satisfies
certain requirements for monthly remittances and neither of the Rating Agencies,
after 10 days prior notice, shall have notified the Seller, the Servicer or the
Trustee in writing that monthly deposits by the Servicer in and of itself will
result in a reduction or withdrawal of the then-current ratings of the
Certificates, then so long as Bank One, Texas, N.A. is the Servicer and provided
that (i) there exists no Event of Servicing Termination (as described below) and
(ii) each other condition to making monthly deposits as may be specified by the
Rating Agencies is satisfied, the Servicer will not be required to deposit such
amounts into the Collection Account until on or before the Business Day
preceding the Distribution Date. It is anticipated that Bank One, Texas, N.A.
will satisfy such requirements on the Closing Date. In such event, the Servicer
will also deposit the aggregate Purchase Amount of Receivables repurchased by
the Seller or purchased by the Servicer into the Collection Account on or before
the Business Day preceding the Distribution Date. Pending deposit into the
Collection Account, Collections may be invested by the Servicer at its own risk
and for its own benefit, and will not be segregated from funds of the Servicer.
SERVICING COMPENSATION
The Servicer will be entitled to receive on each Distribution Date, out of
interest collected on or in respect of the Receivables, the Servicing Fee for
the related Collection Period equal to one-twelfth of the product of 1.00% (the
'Servicing Fee Rate') and the Pool Balance as of the first day of such
Collection Period. The Servicing Fee will be calculated and paid based upon a
360-day year consisting of twelve 30-day months. The Servicing Fee will be paid
out of Interest Collections from the Receivables, prior to distributions to
Certificateholders.
The Servicer will also collect and retain any nonsufficient funds charges
and other administrative fees or similar charges allowed by applicable law with
respect to the Receivables, and will be entitled to reimbursement from the Trust
for certain expenses. Payments by or on behalf of Obligors will be allocated to
scheduled payments and late fees and other charges in accordance with the
Servicer's normal practices and procedures. In addition, the Servicer will be
entitled to any earnings (net of losses and investment expenses) on amounts on
deposit in the Accounts (other than the Reserve Fund).
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of automotive receivables as an agent for their
beneficial owner, including collecting and posting all payments, responding to
inquiries of Obligors on the Receivables, investigating delinquencies, sending
payment coupons to Obligors, paying costs of disposition of defaults and
policing the collateral. The Servicing Fee also will compensate the Servicer for
administering the Receivables, accounting for Collections and furnishing monthly
and annual statements to the Trustee with respect to distributions and
generating Federal income tax information. The Servicing Fee also will reimburse
the Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables. Any fees to be paid to a subservicer will be paid by the Servicer
out of the Servicing Fee.
DISTRIBUTIONS ON CERTIFICATES
Deposits to Collection Account. On the later of the tenth Business Day and
the sixteenth calendar day of each month in which a Distribution Date occurs
(the 'Determination Date'), the Servicer will provide the Trustee with certain
information with respect to the preceding Collection Period, including the
amount of aggregate Collections on the Receivables, the aggregate amount of
Liquidated Receivables and the aggregate Purchase Amount of Receivables to be
repurchased by the Seller or to be purchased by the Servicer.
No later than the Business Day preceding each Distribution Date, the
Servicer will cause Collections to be deposited into the Collection Account. See
'--Payments on Receivables.' 'Collections' for any Distribution Date will equal
the sum of Interest Collections and Principal Collections for the related
Distribution Date.
'Interest Collections' for any Distribution Date will equal the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on the Receivables allocable to interest in respect
of such Collection Period; (ii) all proceeds (other than any proceeds from any
Dealer reserve) of the
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liquidation of defaulted Receivables ('Liquidated Receivables'), net of expenses
incurred by the Servicer or the related Subservicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivables ('Liquidation Proceeds'), to the extent attributable
to interest due thereon, which became Liquidated Receivables during such
Collection Period in accordance with the Subservicer's customary servicing
procedures, to the extent not included in clause (i) above; (iii) the Purchase
Amount of each Receivable that was repurchased by the Seller or purchased by the
Servicer during such Collection Period, to the extent attributable to accrued
interest thereon; and (iv) all monies collected, from whatever source (other
than any proceeds from any Dealer reserve), in respect of Liquidated Receivables
during any Collection Period following the Collection Period in which such
Receivable was written off, net of the sum of any amounts expended by the
Servicer or the related Subservicer for the account of the Obligor and any
amounts required by law to be remitted to the Obligor ('Recoveries'), to the
extent received during such Collection Period.
'Principal Collections' for any Distribution Date will equal the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on the Receivables allocable to principal in respect
of such Collection Period; (ii) all Liquidation Proceeds attributable to the
principal amount of Receivables which became Liquidated Receivables during such
Collection Period in accordance with the related Subservicer's customary
servicing procedures, to the extent not included in clause (i) above; (iii) the
Purchase Amount of each Receivable repurchased by the Seller or purchased by the
Servicer during such Collection Period to the extent attributable to principal;
and (iv) partial prepayments on Receivables in respect of such Collection Period
relating to refunds of extended warranty contract costs or of credit life or
disability insurance policy premiums, but only if such costs or premiums were
financed by the respective Obligor and only to the extent not included in clause
(i) above.
Interest Collections and Principal Collections on any Distribution Date
shall exclude all payments and proceeds (including Liquidation Proceeds) of any
Receivables the Purchase Amount of which has been included in Collections in a
prior Collection Period.
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall instruct the Trustee to make the following deposits and
distributions, to the extent of Interest Collections (and, in the case of
shortfalls occurring under clause (ii) below in the Class A Interest
Distribution, the Class B Percentage of Principal Collections to the extent of
such shortfalls):
(i) to the Servicer, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods (to the extent not retained by the Servicer
as described under '--Net Deposits' below);
(ii) to the Class A Distribution Account, after the application of
clause (i), the Class A Interest Distribution; and
(iii) to the Class B Distribution Account, after the application of
clauses (i) and (ii), the Class B Interest Distribution.
On each Distribution Date, the Servicer shall instruct the Trustee to make
the following deposits and distributions, to the extent of Principal Collections
and Interest Collections remaining after the application of clauses (i), (ii)
and (iii) above:
(iv) to the Class A Distribution Account, the Class A Principal
Distribution;
(v) to the Class B Distribution Account, after the application of
clause (iv), the Class B Principal Distribution; and
(vi) to the Reserve Fund, any amounts remaining after the application
of clauses (i) through (v).
To the extent necessary to satisfy the distributions described above, the
Servicer shall instruct the Trustee to withdraw from the Reserve Fund and
deposit in the Class A Distribution Account or the Class B Distribution Account
as described below in the following order of priority on each Distribution Date:
(i) an amount equal to the excess of the Class A Interest Distribution
over the sum of Interest Collections and the Class B Percentage of
Principal Collections will be deposited into the Class A Distribution
Account;
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(ii) an amount equal to the excess of the Class B Interest
Distribution over the portion of Interest Collections remaining after the
distribution of the Class A Interest Distribution will be deposited into
the Class B Distribution Account;
(iii) an amount equal to the excess of the Class A Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution and
the Class B Interest Distribution will be deposited into the Class A
Distribution Account; and
(iv) an amount equal to the excess of the Class B Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution, the Class B Interest Distribution and the Class A Principal
Distribution will be deposited into the Class B Distribution Account.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders and
all amounts on deposit in the Class B Distribution Account will be distributed
to the Class B Certificateholders.
'Class A Interest Carryover Shortfall' means, with respect to any
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
'Class A Interest Distribution' means, with respect to any Distribution
Date, the sum of Class A Monthly Interest for such Distribution Date and the
Class A Interest Carryover Shortfall for such Distribution Date.
'Class A Monthly Interest' means, with respect to any Distribution Date,
one-twelfth (or, in the case of the first Distribution Date a fraction, the
numerator of which is equal to and the denominator of which is 360) of the
product of the Class A Pass-Through Rate and the Class A Principal Balance as of
the Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, the Original Class A Principal Balance.
'Class A Monthly Principal' means, with respect to any Distribution Date,
the Class A Percentage of Principal Collections for such Distribution Date plus
the Class A Percentage of Realized Losses with respect to Receivables which
became Liquidated Receivables during the related Collection Period.
'Class A Principal Balance' equals the Original Class A Principal Balance,
as reduced by all amounts allocable to principal on the Class A Certificates
previously distributed to Class A Certificateholders.
'Class A Principal Carryover Shortfall' means, with respect to any
Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
'Class A Principal Distribution' means, with respect to any Distribution
Date, the sum of Class A Monthly Principal for such Distribution Date and the
Class A Principal Carryover Shortfall for such Distribution Date; provided,
however, that the Class A Principal Distribution shall not exceed the Class A
Principal Balance immediately prior to such Distribution Date. In addition, on
the Final Scheduled Distribution Date, the principal required to be deposited in
the Class A Distribution Account will include the lesser of (a) any principal
due and remaining unpaid on each Receivable in the Trust as of the Final
Scheduled Maturity Date or (b) the portion of the amount required to be
deposited under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Class A Distribution Account on such
Distribution Date and allocable to principal) to reduce the Class A Principal
Balance to zero.
'Class B Interest Carryover Shortfall' means, with respect to any
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
'Class B Interest Distribution' means, with respect to any Distribution
Date, the sum of Class B Monthly Interest for such Distribution Date and the
Class B Interest Carryover Shortfall for such Distribution Date.
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'Class B Monthly Interest' means, with respect to any Distribution Date,
one-twelfth (or, in the case of the first Distribution Date a fraction, the
numerator of which is equal to and the denominator of which is 360) of the
product of the Class B Pass-Through Rate and the Class B Principal Balance as of
the Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, the Original Class B Principal Balance.
'Class B Monthly Principal' means, with respect to any Distribution Date,
the Class B Percentage of Principal Collections for such Distribution Date plus
the Class B Percentage of Realized Losses with respect to Receivables which
became Liquidated Receivables during the related Collection Period.
'Class B Principal Balance' equals the Original Class B Principal Balance,
as reduced by all amounts allocable to principal on the Class B Certificates
previously distributed to Class B Certificateholders.
'Class B Principal Carryover Shortfall' means, with respect to any
Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
'Class B Principal Distribution' means, with respect to any Distribution
Date, the sum of Class B Monthly Principal for such Distribution Date and the
Class B Principal Carryover Shortfall for such Distribution Date; provided,
however, that the Class B Principal Distribution shall not exceed the Class B
Principal Balance immediately prior to such Distribution Date. In addition, on
the Final Scheduled Distribution Date, the principal required to be distributed
to Class B Certificateholders will include the lesser of (a) any principal due
and remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class B Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class B Principal Balance to zero, and, in
the case of clauses (a) and (b), remaining after any required distribution of
the amount described in clause (a) to the Class A Distribution Account.
'Realized Losses' means, for any period, the excess of the principal
balance of any Liquidated Receivable over Liquidation Proceeds to the extent
allocable to principal.
SUBORDINATION OF THE CLASS B CERTIFICATES
The rights of the Class B Certificateholders to receive distributions with
respect to the Receivables will be subordinated to the rights of the Class A
Certificateholders to the extent described below. This subordination is intended
to enhance the likelihood of timely receipt by Class A Certificateholders of the
full amount of interest and principal required to be paid to them, and to afford
such Class A Certificateholders limited protection against losses in respect of
the Receivables.
No interest distribution will be made to the Class B Certificateholders on
any Distribution Date in respect of interest until the full amount of interest
on the Class A Certificates payable on such Distribution Date has been
distributed to the Class A Certificateholders. No principal distribution will be
made to the Class B Certificateholders on any Distribution Date in respect of
principal until the full amount of interest on and principal of the Class A
Certificates and interest on the Class B Certificates payable on such
Distribution Date has been distributed to the Class A Certificateholders and the
Class B Certificateholders, respectively. Distributions of interest on the Class
B Certificates, however, to the extent of collections on or in respect of the
Receivables allocable to interest and certain available amounts on deposit in
the Reserve Fund, will not be subordinated to the payment of principal of the
Class A Certificates.
RESERVE FUND
In the event of delinquencies or losses on the Receivables, the protection
afforded to the Class A Certificateholders will be effected both by the
preferential right of the Class A Certificateholders to receive current
distributions with respect to the Receivables, to the extent described above
under '--Subordination of the Class B Certificates,' prior to any distribution
being made on a Distribution Date to the Class B Certificateholders, and to
receive amounts on deposit in the Reserve Fund. Amounts on deposit in the
Reserve Fund will also be generally available to cover shortfalls in required
distributions to the Class B Certificateholders, in respect of interest, after
payment of interest on the Class A Certificates and, in respect of principal,
after
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payment of interest on and principal of the Class A Certificates and interest on
the Class B Certificates. The Reserve Fund will not be a part of or otherwise
includible in the Trust and will be a segregated trust account held by the
Collateral Agent for the benefit of the Certificateholders.
The Reserve Fund will be created with an initial deposit by the Seller on
the Closing Date of an amount equal to 5.00% of the Original Pool Balance, and
will be augmented on each Distribution Date by deposit therein of Collections
remaining after distribution of the Servicing Fee and amounts to be paid to
Class A Certificateholders and Class B Certificateholders as described above
under '--Distributions on Certificates.' Amounts on deposit in the Reserve Fund
will be released to the Seller on each Distribution Date to the extent that the
amount on deposit in the Reserve Fund exceeds the Specified Reserve Balance.
Upon any such release to the Seller of amounts from the Reserve Fund, neither
the Class A Certificateholders nor the Class B Certificateholders will have any
further rights in, or claims to, such amounts.
'Specified Reserve Balance' with respect to any Distribution Date means the
greater of (a) 5.00% of the sum of the Class A Principal Balance and Class B
Principal Balance on such Distribution Date (after giving effect to all
distributions with respect to the Certificates to be made on such Distribution
Date) except that, if on any Distribution Date (x) the average of the Charge-off
Rates for the three preceding Collection Periods exceeds 2.00% with respect to
the first through the seventh Distribution Dates, 3.00% with respect to the
eighth through the sixteenth Distribution Dates and 2.50% with respect to the
Distribution Dates thereafter, or (y) the average of the Delinquency Percentages
for the three preceding Collection Periods exceeds 1.75%, then the Specified
Reserve Balance shall be an amount equal to 8.00% of the sum of the Class A
Principal Balance and the Class B Principal Balance on such Distribution Date
(after giving effect to all distributions with respect to the Certificates to be
made on such Distribution Date); provided that, the percentage specified in this
clause (a) will revert back to 5.00% if, for any three consecutive Collection
Periods, clauses (x) and (y) above are not triggered, or (b) 1.50% of the sum of
the Original Class A Principal Balance and Original Class B Principal Balance;
provided that the Specified Reserve Balance shall never be greater than the sum
of the Class A Principal Balance and the Class B Principal Balance. In no
circumstances will the Seller be required to deposit any amounts in the Reserve
Fund other than the initial Reserve Fund deposit to be made on the Closing Date.
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 (x) the Pool Balance on the last day of
the immediately preceding Collection Period and (y) the Pool Balance on the last
day in such Collection Period. The 'Aggregate Net Losses' with respect to a
Collection Period will equal the aggregate principal balance of all Receivables
newly designated during such Collection Period as Liquidated Receivables minus
Liquidation Proceeds collected during such Collection Period with respect to all
Liquidated Receivables and any Recoveries collected during such Collection
Period. The 'Delinquency Percentage' with respect to a Collection Period will
equal the ratio of (a) the outstanding principal balance of the Receivables 60
days or more delinquent as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
Amounts held from time to time in the Reserve Fund will continue to be held
for the benefit of the Certificateholders and may be invested in Eligible
Investments. Any loss on such investment will be charged to the Reserve Fund.
Any investment earnings (net of losses) will be paid to the Seller.
The time necessary for the Reserve Fund to reach and maintain the Specified
Reserve Balance at any time after the date of issuance of the Certificates will
be affected by the delinquency, credit loss and repossession and prepayment
experience of the Receivables and, therefore, cannot be accurately predicted.
If on any Distribution Date the protection afforded the Class A
Certificates by the Class B Certificates and by the Reserve Fund is exhausted,
the Class A Certificateholders will directly bear the risks associated with
ownership of the Receivables. If on any Distribution Date amounts on deposit in
the Reserve Fund have been depleted, the protection afforded the Class B
Certificates by the Reserve Fund will be exhausted and the Class B
Certificateholders will directly bear the risks associated with ownership of the
Receivables.
None of the Class B Certificateholders, the Trustee, the Servicer 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 Class A Certificateholders.
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NET DEPOSITS
As an administrative convenience, unless the Servicer is required to remit
Collections within two Business Days of receipt thereof, the Servicer will be
permitted to make the deposit of Collections and Purchase Amounts for or with
respect to the Collection Period net of distributions to be made to the Servicer
with respect to the Collection Period. The Servicer, however, will account to
the Trustee and the Certificateholders as if all deposits, distributions and
transfers were made individually.
STATEMENTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution
to each Class A Certificateholder and Class B Certificateholder as of the close
of business on the related Record Date (which shall be Cede as the nominee for
DTC unless Definitive Certificates are issued under the limited circumstances
described herein) a statement prepared by the Servicer (the 'Distribution Date
Statement'), setting forth with respect to the related Collection Period, among
other things, the following information:
(i) the amount of the distribution allocable to principal of the Class
A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on the Class
A Certificates and the Class B Certificates;
(iii) the Pool Balance as of the close of business on the last day of
such Collection Period;
(iv) the amount of the Servicing Fee paid to the Servicer with respect
to such Collection Period and the Class A Percentage and Class B Percentage
of the Servicing Fee paid to the Servicer with respect to such Collection
Period;
(v) the amount of any Class A Interest Carryover Shortfall, Class A
Principal Carryover Shortfall, Class B Interest Carryover Shortfall and
Class B Principal Carryover Shortfall on the Distribution Date immediately
following such Collection Period and the change in such amounts from those
with respect to the immediately preceding Distribution Date;
(vi) the Class A Pool Factor and the Class B Pool Factor as of such
Distribution Date, after giving effect to payments allocated to principal
reported under clause (i) above;
(vii) the amount of the aggregate Realized Losses, if any, for such
Collection Period;
(viii) the aggregate principal balance of all Receivables which were
more than 30, 60 and 90 days delinquent as of the close of business on the
last day of such Collection Period;
(ix) the amount on deposit in the Reserve Fund on such Distribution
Date, after giving effect to distributions made on such Distribution Date;
(x) the Class A Principal Balance and the Class B Principal Balance as
of such Distribution Date, after giving effect to payments allocated to
principal reported under clause (i) above;
(xi) the amount otherwise distributable to the Class B
Certificateholders that is being distributed to the Class A
Certificateholders on such Distribution Date;
(xii) the aggregate Purchase Amount of Receivables repurchased by the
Seller or purchased by the Servicer with respect to such Collection Period;
and
(xiii) the aggregate Principal Balance of all Receivables (excluding
the Principal Balance of Receivables which have become Liquidated
Receivables) which have been repossessed by the Servicer.
Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above
shall be expressed in the aggregate and as a dollar amount per $1,000 of
original denomination of a Certificate. Copies of such statements may be
obtained by Certificate Owners by a request in writing addressed to the Trustee.
In addition, within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Agreement, the
Trustee will mail to each person who at any time during such calendar year shall
have been a Certificateholder a statement containing the sum of the amounts
described in clauses (i), (ii), (iv) and (v) above for the purposes of such
Certificateholder's preparation of federal income tax returns. See 'Federal
Income Tax Consequences--Information Reporting and Backup Withholding.'
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EVIDENCE AS TO COMPLIANCE
The Agreement will provide that a firm of independent public accountants
will furnish to the Trustee a report expressing an opinion as to whether
management's assertion that the Servicer maintained effective internal control
over the servicing of the Receivables for the Trust is fairly stated in all
material respects as of the preceding calendar year (or, in the case of the
first such report, as of December 31, 1998).
The Agreement will also provide for delivery to the Trustee concurrently
with the delivery of the reports referred to above of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its obligations
under the Agreement throughout the preceding twelve months ended December 31 (or
in the case of the first such certificate, the period from the Closing Date to
December 31, 1998) or, if there has been a default in the fulfillment of any
such obligation, describing each such default. The Servicer has agreed to give
the Trustee notice of certain Events of Servicing Termination under the
Agreement.
Copies of such statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the Trustee. See 'The
Certificates--The Trustee.'
CERTAIN MATTERS REGARDING THE SERVICER
The Agreement will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon a determination that
the Servicer's performance of such duties is no longer permissible under
applicable law or if such resignation is required by regulatory authorities.
Such resignation will become effective on the earlier of the date the Servicer
is required by regulatory authorities to resign or the date on which the Trustee
or a successor servicer has assumed the Servicer's servicing obligations and
duties under the Agreement.
The Agreement will further provide that neither the Servicer nor any of its
directors, officers, employees, and agents shall be under any liability to the
Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the 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 its duties or
by reason of reckless disregard of its obligations and duties thereunder. In
addition, the Agreement will provide that the Servicer is under no obligation to
appear in, prosecute or defend any legal action that is incidental to its
servicing responsibilities under the Agreement and that, in its opinion, may
cause it to incur any expense or liability.
Under the circumstances specified in the Agreement, any entity into which
the Servicer may be merged or consolidated, or any entity resulting from any
merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer, which corporation or other entity in
each of the foregoing cases assumes the obligations of the Servicer, will be the
successor to the Servicer under the Agreement.
The Servicer may appoint a subservicer or subcustodian to perform all or
any portion of its obligations under the Agreement; however, the Servicer shall
remain obligated and be liable to the Trust, the Trustee and the
Certificateholders for the servicing and administering of the Receivables as if
the Servicer alone were servicing and administering the Receivables. It is
currently anticipated that the Receivables will be serviced as part of BOCC's
national servicing operation and, accordingly, one or more affiliates of the
Servicer may be appointed as a subservicer or subcustodian of the Receivables.
See 'The Seller's Affiliated Bank Portfolio of Motor Vehicle Loans--National
Servicing Operation.'
EVENTS OF SERVICING TERMINATION
'Events of Servicing Termination' under the Agreement will consist of (i)
any failure by the Servicer to deliver to the Trustee for deposit in any of the
Accounts any required payment or to direct the Trustee or the Collateral Agent,
as applicable, to make any required distributions therefrom, that shall continue
unremedied for five Business Days after written notice of such failure is
received by the Servicer from the Trustee or the Collateral Agent, as
applicable, or after discovery of such failure by the Servicer; (ii) any failure
by the Servicer duly to observe or perform in any material respect any other
covenant or agreement in the Agreement which failure materially and adversely
affects the rights of Certificateholders and which continues unremedied for 60
days after the giving of written notice of such failure (1) to the Servicer by
the Trustee or (2) to the Servicer and to the Trustee by holders of
Certificates, evidencing not less than 25% aggregate outstanding principal
balance of
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the Class A Certificates and Class B Certificates taken together as a single
Class (or such longer period, not in excess of 120 days, as may be reasonably
necessary to remedy such default; provided that such default is capable of
remedy within 120 days and the Servicer delivers an officer's certificate to the
Trustee to such effect and to the effect that the Servicer has commenced, or
will promptly commence, and diligently pursue all reasonable efforts to remedy
such default); and (iii) certain events of insolvency, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings with respect to the Servicer and certain actions by the Servicer
indicating its insolvency, reorganization pursuant to bankruptcy, receivership
or similar proceedings, or inability to pay its obligations.
If an Event of Servicing Termination occurs, the Trustee will have no
obligation to notify Certificateholders of such event prior to the end of any
cure period described above.
RIGHTS UPON AN EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination remains unremedied, the
Trustee or the holders of Certificates evidencing not less than a majority of
the aggregate outstanding principal balance of the Class A Certificates and the
Class B Certificates taken together as a single Class may terminate
substantially all of the Servicer's rights and obligations under the Agreement,
whereupon the Trustee or a successor Servicer appointed by the Trustee will
succeed to all the responsibilities, duties and liabilities of the Servicer
under the Agreement. Thereafter, the successor Servicer will be entitled to the
compensation otherwise payable to the Servicer. If, however, a conservator or
receiver has been appointed for the Servicer, and no Event of Servicing
Termination other than such appointment has occurred, such conservator or
receiver may have the power to prevent the Trustee or the Certificateholders
from terminating substantially all of the Servicer's rights and obligations
under the Agreement. In the event that the Trustee is unwilling or legally
unable so to act, the Trustee may appoint, or petition a court of competent
jurisdiction for the appointment of a successor with a net worth of at least
$50,000,000 and whose regular business includes the servicing of automobile
receivables. In no event may the servicing compensation to be paid to such
successor be greater than the servicing compensation payable to the Servicer
under the Agreement.
WAIVER OF PAST DEFAULTS
The holders of Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates and Class B
Certificates taken together as a single Class, in the case of any default which
does not adversely affect the Trustee may, on behalf of all Certificateholders,
waive any default by the Servicer in the performance of its obligations under
the Agreement and its consequences, except a default in making any required
deposits to or payments from any of the Accounts in accordance with the
Agreement. No such waiver shall impair the Certificateholders' rights with
respect to subsequent defaults.
AMENDMENT
The Agreement may be amended by the Seller, the Servicer and the Trustee,
without the consent of any of the Certificateholders, to cure any ambiguity or
defect, to correct or supplement any provision therein or for the purpose of
adding any provision to or changing in any manner or eliminating any of the
provisions of the Agreement, or of modifying in any manner the rights of
Certificateholders; provided, that such action will not, in the opinion of
counsel reasonably satisfactory to the Trustee, materially and adversely affect
the interest of any Certificateholder.
The Agreement also may be amended by the Seller, the Servicer and the
Trustee, with the consent of the holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single Class, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement or of modifying in any manner the rights
of the Certificateholders; provided, however, that no such amendment may (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that are
required to be made on any Certificate, without the consent of all adversely
affected Certificateholders or (ii) reduce the percentage of the aggregate
outstanding principal balance of the Certificates, the holders of which are
required to consent to any such amendment, without the consent of all
Certificateholders affected thereby.
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LIST OF CERTIFICATEHOLDERS
Upon written request of the Servicer, the Trustee will provide to the
Servicer within 15 days after receipt of such request a list of names and
addresses of all Certificateholders of record as of the most recent Record Date.
Upon written request by holders of Certificates of either Class evidencing not
less that 25% of the voting interests thereof, and upon compliance by such
Certificateholders with certain provisions of the Agreement, the Trustee will
afford such Certificateholders access during business hours to the most current
list of Certificateholders for purposes of communicating with other
Certificateholders with respect to their rights under the Agreement.
The Agreement will not provide for holding any annual or other meetings of
Certificateholders.
TERMINATION
The obligations of the Seller, the Servicer and the Trustee under the
Agreement will, except with respect to certain reporting requirements, terminate
upon the earliest of (i) the Distribution Date next succeeding the Seller's
purchase of the Receivables, as described below, (ii) payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and (iii) the Distribution Date next succeeding the month which is six
months after the maturity or other liquidation of the last Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust (including any Liquidated Receivables) in accordance with the terms
and priorities set forth in the Agreement.
The Seller will be permitted, at its option, in the event that the Pool
Balance as of the first day of a Collection Period has declined to 5% or less of
the Original Pool Balance, to purchase from the Trust, on any Distribution Date
occurring in a subsequent Collection Period, all remaining Receivables in the
Trust at a purchase price equal to the sum of the Class A Principal Balance and
the Class B Principal Balance plus accrued and unpaid interest thereon. The
exercise of this right will effect an early retirement of the Certificates.
The Trustee will give written notice of termination of the Trust to each
Certificateholder of record. The final distribution to any Certificateholder
will be made only upon surrender and cancellation of such Certificateholder's
Certificate (whether a Definitive Certificate or the physical certificate
representing the Certificates) at the office or agency of the Trustee specified
in the notice of termination. Any funds remaining in the Trust, after the
Trustee has taken certain measures to locate a Certificateholder and such
measures have failed, will be distributed to the Seller or as otherwise provided
in the Agreement.
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or sufficiency
of the Agreement, the Certificates (other than the execution and authentication
of the Certificates), the Receivables or any related documents, and will not be
accountable for the use or application by the Seller or the Servicer of any
funds paid to the Seller or the Servicer in respect of the Certificates or the
Receivables, or the investment of any monies by the Servicer before such monies
are deposited into the Collection Account. The Trustee will not independently
verify the Receivables. If no Event of Servicing Termination has occurred and is
continuing, the Trustee will be required to perform only those duties
specifically required of it under the Agreement. Generally, those duties are
limited to the receipt of the various certificates, reports or other instruments
required to be furnished to the Trustee under the Agreement, in which case it
will only be required to examine them to determine whether they conform to the
requirements of the Agreement. The Trustee will not be charged with knowledge of
a failure by the Servicer to perform its duties under the Agreement which
failure constitutes an Event of Servicing Termination unless a responsible
officer of the Trustee obtains actual knowledge of such failure as specified in
the Agreement.
The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. No Class A
Certificateholder or Class B Certificateholder will have any right under the
Agreement to institute any proceeding with respect to the Agreement, unless such
holder has given the Trustee written notice of default and unless, with respect
to the Class A Certificates, the holders of Class A Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates or, with respect to the Class B Certificates, the holders of
Class B Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the
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Class B Certificates, have made a written request to the Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity, and the Trustee for 30 days has neglected or
refused to institute any such proceedings.
THE TRUSTEE
Bankers Trust Company, a New York banking corporation, will act as Trustee
under the Agreement. The Trustee, in its individual capacity or otherwise, and
any of its affiliates, may hold Certificates in their own names or as pledgee.
In addition, for the purpose of meeting the legal requirements of certain
jurisdictions, the Servicer and the Trustee, acting jointly (or in some
instances, the Trustee, acting alone), will have the power to appoint co-
trustees or separate trustees of all or any part of the Trust. In the event of
such appointment, all rights, powers, duties and obligations conferred or
imposed upon the Trustee by the Agreement will be conferred or imposed upon the
Trustee and such co-trustee or separate trustee jointly, or, in any jurisdiction
where the Trustee is incompetent or unqualified to perform certain acts, singly
upon such co-trustee or separate trustee who shall exercise and perform such
rights, powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to serve, becomes legally unable to
act, is adjudged insolvent or is placed in receivership or similar proceedings.
In such circumstances, the Servicer will be obligated to appoint a successor
trustee. However, any such resignation or removal of the Trustee and appointment
of a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
The Agreement will provide that the Servicer will pay the Trustee's fees.
The Agreement will also provide that the Trustee will be entitled to
indemnification by the Seller for, and will be held harmless against, any loss,
liability or expense incurred by the Trustee not resulting from the Trustee's
own willful misfeasance, bad faith or negligence. Indemnification will be
unavailable to the Trustee to the extent that any such loss, liability or
expense results from a breach of any of the Trustee's representations or
warranties set forth in the Agreement, and for any tax, other than those for
which the Seller or the Servicer is required to indemnify the Trustee.
The Trustee's Corporate Trust Office is located at 4 Albany Street, New
York, New York 10006. The Seller, the Servicer and their respective affiliates
may have other banking relationships with the Trustee and its affiliates in the
ordinary course of their business.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are 'chattel paper' as defined in the UCC. Pursuant to the
UCC, for most purposes, a sale of chattel paper is treated in a manner similar
to a transaction creating a security interest in chattel paper. The Seller will
cause appropriate financing statements to be filed with the appropriate
governmental authorities in the State of Texas to perfect the interest of the
Trust in its purchase of the Receivables from the Seller.
Pursuant to the Agreement, the Servicer will hold the Receivables, either
directly or through subcustodians, as custodian for the Trustee following the
sale and assignment of the Receivables to the Trust. The Servicer will appoint
Banc One Services Corporation to act as subcustodian with respect to the
Receivables. The Seller will take such action as is required to perfect the
rights of the Trustee in the Receivables. The Receivables will not be
segregated, stamped or otherwise marked to indicate that they have been sold to
the Trust. If, through inadvertence or otherwise, another party purchases (or
takes a security interest in) the Receivables for new value in the ordinary
course of business and takes possession of the Receivables without actual
knowledge of the Trust's interest, the purchaser (or secured party) will acquire
an interest in the Receivables superior to the interest of the Trust.
Under the Agreement, the Servicer will be obligated from time to time to
take such actions as are necessary to protect and perfect the Trust's interest
in the Receivables and their proceeds.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Generally, retail motor vehicle loans such as the Receivables evidence
loans to obligors to finance the purchase of such motor vehicles. The loans also
constitute personal property security agreements and include grants of security
interests in the vehicles under the UCC. Perfection of security interests in
motor vehicles is generally governed by the motor vehicle registration laws of
the state in which the vehicle is located. In Ohio and most other states, a
security interest in the vehicle is perfected by notation of the secured party's
lien on the vehicle's certificate of title.
Each Affiliated Bank's practice is to take such action as is required in
order to perfect its security interest in a Financed Vehicle under the laws of
the jurisdiction in which the Financed Vehicle is registered. If the related
Affiliated Bank, because of clerical error or otherwise, has failed to take such
action with respect to a Financed Vehicle, it will not have a perfected security
interest in the Financed Vehicle and its security interest may be subordinate to
the interests of, among others, subsequent purchasers of the Financed Vehicle
that give value without notice of the related Affiliated Bank's security
interest and to whom a certificate of ownership is issued in such purchaser's
name, holders of perfected security interests in the Financed Vehicle, and the
trustee in bankruptcy of the Obligor. The Affiliated Bank's security interest
may also be subordinate to such third parties in the event of fraud or forgery
by the Obligor or administrative error by state recording officials or in the
circumstances noted below. As described more fully below, the Seller will
warrant in the Agreement that it has an enforceable first priority perfected
security interest with respect to each Financed Vehicle on the Closing Date and
will be required to repurchase the related Receivable in the event of an uncured
breach of such warranty.
In connection with the acquisition by the Seller of the related Receivables
from the Affiliated Banks, the Affiliated Banks have assigned their respective
security interests in the Financed Vehicles to the Seller. Pursuant to the
Agreement, the Seller will assign its security interests in the Financed
Vehicles, along with the sale and assignment of the Receivables, to the Trust,
and the Servicer will hold the certificates of title relating to the Financed
Vehicles, or such other documents sufficient to evidence the security interest
of the related Affiliated Bank in the applicable Financed Vehicles, either
directly or through subcustodians, as custodian for the Trustee following such
sale and assignment. The certificates of title will not be endorsed or otherwise
amended to identify the Trust or Trustee as the new secured party, however,
because of the administrative burden and expense involved.
In Ohio and most other states, an assignment of a security interest in a
Financed Vehicle along with the applicable Receivable is effective without
amendment of any lien noted on a vehicle's certificate of title or ownership,
and the assignee succeeds thereby to the assignor's rights as secured party. In
Ohio and most other
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states, in the absence of fraud or forgery by the vehicle owner or of fraud,
forgery, negligence or error by the related Affiliated Bank or the Seller or
administrative error by state or local agencies, the notation of the related
Affiliated Bank's lien on the certificates of title or ownership and/or
possession of such certificates with such notation will be sufficient to protect
the Trust against the rights of subsequent purchasers of a Financed Vehicle or
subsequent lenders who take a security interest in a Financed Vehicle. There
exists a risk, however, in not identifying the Trust or Trustee as the new
secured party on the certificate of title that the security interest of the
Trust or the Trustee may not be enforceable. In the event the Trust has failed
to obtain or maintain a perfected security interest in a Financed Vehicle, its
security interest would be subordinate to, among others, a bankruptcy trustee of
the Obligor, a subsequent purchaser of the Financed Vehicle or a holder of a
perfected security interest.
The Seller will warrant in the Agreement as to each Receivable conveyed by
it to the Trust that, on the Closing Date, it has a valid, subsisting and
enforceable first priority perfected security interest in the Financed Vehicle
securing the Receivable (subject to administrative delays and clerical errors on
the part of the applicable government agency and to any statutory or other lien
arising by operation of law after the Closing Date which is prior to such
security interest) and such security interest will be assigned by the Seller to
the Trustee for the benefit of the Certificateholders. In the event of an
uncured breach of such warranty, the Seller will be required to repurchase such
Receivable for its Purchase Amount. This repurchase obligation will constitute
the sole remedy available to the Trust, the Trustee and the Certificateholders
for such breach. The Seller's warranties with respect to perfection and
enforceability of a security interest in a Financed Vehicle will not cover
statutory or other liens arising after the Closing Date by operation of law
which have priority over such security interest. Accordingly, any such lien
would not by itself give rise to a repurchase obligation on the part of the
Seller.
In the event that an Obligor moves to a state other than the state in which
the Financed Vehicle is registered, under the laws of Ohio and most states, a
perfected security interest in a motor vehicle continues for four months after
such relocation and thereafter, in most instances, until the Obligor
re-registers the motor vehicle in the new state, but in any event not beyond the
surrender of the certificate. A majority of states require surrender of a
certificate of title to re-register a motor vehicle and require that notice of
such surrender be given to each secured party noted on the certificate of title.
In those states that require a secured party take possession of a certificate of
title to perfect a security interest, the secured party would learn of the
re-registration through the request from the Obligor to surrender possession of
the certificate of title. In those states that require a secured party to note
its lien on a certificate of title to perfect a security interest but do not
require possession of the certificate of title, the secured party would learn of
the re-registration through the notice from the state department of motor
vehicles that the certificate of title had been surrendered. The requirements
that a certificate of title be surrendered and that notices of such surrender be
given to each secured party also apply to re-registrations effected following a
sale of a motor vehicle. The related Affiliated Bank would therefore have the
opportunity to re-perfect its security interest in a Financed Vehicle in the
state of re-registration following relocation of the Obligor and would be able
to require satisfaction of the related Receivable following a sale of the
Financed Vehicle. In states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection. In the
ordinary course of servicing motor vehicle loans, the related Affiliated Bank
takes steps to effect re-perfection upon receipt of notice of re-registration or
information from the Obligor as to relocation. However, there is a risk that an
Obligor could relocate without notification to the related Affiliated Bank, then
file a false affidavit with the new state to cause a new certificate of title to
be issued without notation of the related Affiliated Bank's lien.
Under the laws of Ohio and many other states, certain possessory liens for
repairs performed on a motor vehicle and liens for unpaid taxes as well as
certain rights arising from the use of a motor vehicle in connection with
illegal activities, may take priority over a perfected security interest in the
motor vehicle. The Seller will warrant in the Agreement that, as of the Closing
Date, neither the Seller nor any of the Affiliated Banks have received notice
that any such liens are pending. In the event of a breach of such warranty which
has a material and adverse effect on the interests of the Trust, the Trustee and
the Certificateholders, the Seller will be required to repurchase, or cause the
related Affiliated Bank to repurchase the Receivables secured by the Financed
Vehicle involved. This repurchase obligation will constitute the sole remedy
available to the Trust, the Trustee and the Certificateholders for such breach.
Any liens for repairs or taxes arising at any time after the Closing Date during
the term of a Receivable would not give rise to a repurchase obligation on the
part of the Seller.
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REPOSSESSION
In the event of a default by an Obligor, the holder of a Receivable has all
the remedies of a secured party under the UCC, except where specifically limited
by other state laws or by contract. The remedies of a secured party under the
UCC include the right to repossession by means of self-help, unless such means
would constitute a breach of the peace. Self-help repossession is the method
employed by the Servicer in most cases, and is accomplished simply by taking
possession of the motor vehicle. Generally, where the obligor objects or raises
a defense to repossession, a court order must be obtained from the appropriate
state court and the motor vehicle must then be repossessed in accordance with
that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor generally has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus, in
most cases, reasonable expenses for repossessing, holding and preparing the
collateral for disposition and arranging for its sale plus, in some
jurisdictions, reasonable attorneys' fees. In some states, the obligor has the
right, prior to actual sale, to reinstatement of the original loan terms and to
return of the collateral by payment of delinquent installments of the unpaid
balance and certain additional amounts.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. While some states impose prohibitions or
limitations on deficiency judgments, if the net proceeds from resale do not
cover the full amount of the indebtedness, a deficiency judgment can be sought
in Ohio and those states that do not prohibit or limit such judgments. Any such
deficiency judgment would be a personal judgment against the Obligor for the
shortfall, however, a defaulting Obligor may have very little capital or sources
of income available following repossession. Other statutory provisions,
including state and federal bankruptcy laws, may interfere with a lender's
ability to enforce a deficiency judgment or to collect a debt owed or realize
upon collateral. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or not paid at all.
Occasionally, after resale of a repossessed motor vehicle and payment of
all expenses and indebtedness, there is a surplus of funds. In that case, the
UCC requires the secured party to remit the surplus to any other holder of a
lien with respect to the motor vehicle or, if no such lienholder exists or funds
remain after paying such other lienholder, to the Obligor.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth In Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B, Z and AA, and other similar acts and regulations,
state adoptions of the Uniform Consumer Credit Code and other similar laws,
including the Ohio Retail Installment Sales Act and state usury laws. Also,
state laws impose other restrictions on consumer transactions, may require
contract disclosures in addition to those required under Federal law and may
limit the remedies available in the event of default by an Obligor. These
requirements impose specific statutory liabilities upon creditors who fail to
comply with their provisions where applicable. In most cases, this liability
could affect the ability of an assignee, such as the Trust, to enforce secured
loans such as the Receivables.
The FTC's holder-in-due-course rule (the 'FTC Rule') has the effect of
subjecting a seller of motor vehicles (and certain related lenders and their
assignees) in a consumer credit transaction and any assignee of the seller to
all claims and defenses which the purchaser could assert against the seller.
Liability under the FTC Rule is limited to the amounts paid by the purchaser
under the contract, and the holder of the contract may also be
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unable to collect any balance remaining due thereunder from the purchaser. The
FTC Rule may be duplicated by state statutes or the common law in certain
states. Although the related Affiliated Banks are not sellers of motor vehicles
and are not subject to the jurisdiction of the FTC, the loan agreements
evidencing the Receivables contain provisions which contractually apply the FTC
Rule. Accordingly, the related Affiliated Bank and the Trustee as holder of the
Receivables, may be subject to claims or defenses, if any, that the purchaser of
a Financed Vehicle may assert against the seller of such vehicle.
Under the motor vehicle dealer licensing laws of most states, sellers of
motor vehicles are required to be licensed to sell such vehicles at retail sale.
In addition, with respect to used motor vehicles, the FTC's Rule on Sale of Used
Vehicles requires that all sellers of used motor vehicles prepare, complete and
display a 'Buyer's Guide' which explains the warranty coverage for such
vehicles. Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of used motor vehicles
furnish a written statement signed by the seller certifying the accuracy of the
odometer reading. If a seller is not properly licensed or if either a Buyer's
Guide or Odometer Disclosure Statement was not properly provided to the
purchaser of a Financed Vehicle, such purchaser may be able to assert a claim
against the seller of such vehicle. Although the related Affiliated Bank is not
a seller of motor vehicles and is not subject to these laws, a violation thereof
may form the basis for a claim or defense against the related Affiliated Bank or
the Trustee as holder of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
The Seller will warrant in the Agreement as to each Receivable conveyed by
it to the Trust that such Receivable complied at the time it was originated and
as of the Closing Date in all material respects with all requirements of
applicable law. If, as of the Cutoff Date, an Obligor had a claim against the
Trust for violation of any law and such claim materially and adversely affected
the Trust's interest in a Receivable, such violation would create an obligation
of the Seller to repurchase the Receivable unless the breach were cured. This
repurchase obligation will constitute the sole remedy of the Trust, the Trustee
and the Certificateholders against the Seller in respect of any such uncured
breach. See 'The Certificates--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 lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the Bankruptcy Code, a court may prevent a lender
from repossessing a motor vehicle and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of such
vehicle at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness.
The Seller intends that the transfer of the Receivables by it under the
Agreement constitutes a sale. If the Seller were to become insolvent, FIRREA
sets forth certain powers that the FDIC could exercise if it were appointed as
receiver for the Seller. Subject to clarification by FDIC regulations or
interpretations, it would appear from the positions taken by the FDIC before and
after the passage of FIRREA that the FDIC in its capacity as receiver for the
Seller would not interfere with the timely transfer to the Trust of payments
collected on the Receivables. If the transfer to the Trust were to be
characterized as a secured loan, to the extent that the Seller would be deemed
to have granted a security interest in the Receivables to the Trust, and that
interest had been validly perfected before the Seller's insolvency and had not
been taken in contemplation of insolvency, 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 the FDIC as receiver of the Seller. If,
however, the FDIC were to assert a contrary position, such as by requiring the
Trustee to establish its right to those payments by submitting to and completing
the administrative claims procedure established under FIRREA, delays in payments
on the Certificates and possible reductions in the amount of those payments
could occur.
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As an insured depository institution, the Seller and its subsidiaries and
persons owned or controlled by the Seller or its subsidiaries are subject to the
examination, regulation and supervision of the Office of the Comptroller of the
Currency (the 'OCC'). The OCC has broad regulatory powers to prevent or remedy
unsafe or unsound practices or other violations of applicable regulations,
agreements or policies. The OCC may issue a cease-and-desist order or require
affirmative action to correct any conditions resulting from any violation or
practice with respect to which such order is issued including requiring such
entity, among other things, to make restitution or provide reimbursement, to
dispose of any loan or asset involved, to rescind agreements or contracts and to
take such other action as the OCC determines to be appropriate. The Seller
believes that the transactions contemplated by the Prospectus do not constitute
unsafe or unsound practices and do not violate any applicable OCC regulations,
agreements or policies.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated Federal income tax
consequences of the purchase, ownership and disposition of Certificates. 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 Certificates as 'capital assets'
(generally, property held for investment) within the meaning of Section 1221 of
the Code. Consequences to individual investors of investment in the Certificates
will vary according to circumstances; accordingly, investors should consult
their own tax advisors to determine the Federal, state, local, and other tax
consequences of the purchase, ownership and disposition of the Certificates.
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.
TAX STATUS OF THE TRUST
In the opinion of Squire, Sanders & Dempsey L.L.P., special tax counsel,
the Trust will be classified as a grantor trust and not as an association
taxable as a corporation for Federal income tax purposes. Accordingly, each
Certificate Owner will be subject to Federal income taxation as if it owned
directly its interest in each asset owned by the Trust and paid directly its
share of reasonable expenses paid by the Trust. If the IRS determined that the
Trust were not properly characterized as a grantor trust, then, in the opinion
of special tax counsel, the Trust would be classified as a partnership and not
as an association taxable as a corporation for Federal income tax purposes.
There would be no or only minor Federal income tax consequences to the
Certificate Owners if the Trust were characterized as a partnership rather than
a grantor trust. The discussion that follows assumes that the Trust will be
treated as a grantor trust.
In General. For purposes of Federal income tax, the Seller will be deemed
to have retained a fixed portion of the interest due on each Receivable (the
'Retained Yield') equal to the difference between (x) the APR of such Receivable
and (y)(i) with respect to the Class A Percentage of such Receivable, the sum of
the Class A Pass-Through Rate and the Servicing Fee Rate, and (ii) with respect
to the Class B Percentage of such Receivable, the sum of the Class B
Pass-Through Rate and the Servicing Fee Rate. The Retained Yield will be treated
as 'stripped coupons' within the meaning of Section 1286 of the Code. In
addition, if the Class B Pass-Through Rate exceeds the Class A Pass-Through
Rate, a portion of the interest accrued on each Receivable could be treated as a
'stripped coupon' purchased by the Class B Certificate Owners or as an amount
received as consideration for a guaranty. Accordingly, each Class A Certificate
Owner will be treated as owning its pro rata percentage interest in the
principal of, and interest payable on, each Receivable (minus the portion of the
interest payable on such Receivable that is treated as Retained Yield and less
any amount treated as a stripped coupon purchased by the Class B Certificate
Owners or received as consideration for a guaranty), and such interest in each
Receivable will be treated as a 'stripped bond' within the meaning of Section
1286 of the Code. Similarly, each Class B Certificate Owner will be treated as
owning its pro rata percentage interest in the principal of each Receivable,
plus a disproportionate share of the interest payable on each Receivable or any
amount treated as consideration for a guaranty.
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CLASS A CERTIFICATE OWNERS
Because Class A Certificates represent stripped bonds, they will be subject
to the original issue discount ('OID') rules of the Code. Accordingly, the tax
treatment of a Class A Certificate Owner will depend upon whether the amount of
OID on a Class A Certificate is less than a statutorily defined de minimis
amount.
In general, under regulations issued under Section 1286 of the Code, the
amount of OID on a Receivable treated as a 'stripped bond' will be de minimis if
it is less than 1/4 of one percent of the stated redemption price at maturity,
as defined in Section 1273(a)(2) of the Code, for each full year remaining after
the purchase date until the maturity of the Receivable. The maturity date is
based on the weighted average maturity date (and a reasonable prepayment
assumption may have to be taken into account in determining weighted average
maturity). Under the regulations, it appears that the portion of the interest on
each Receivable payable to the Class A Certificate Owners will be treated as
'qualified stated interest.' As a result, the amount of OID on a Receivable will
equal the amount by which the price at which a Certificate Owner is deemed to
have acquired an interest in a Receivable (the 'Purchase Price') is less than
the portion of the remaining principal balance of the Receivable allocable to
the interest acquired. Although the matter is not free from doubt, the Trust
intends to take the positions (i) that the amount of OID on the Receivables will
be determined by aggregating all payments on the Receivables allocable to the
Class A Certificate Owners (not including the Retained Yield), and treating the
portion of all payments on the Receivables allocable to the Class A Certificate
Owners as a single obligation on an aggregate basis, rather than being
determined separately with respect to each Receivable, and (ii) that no separate
allocation of consideration must be made to accrued interest or to amounts held
in the Collection Account.
Based on these positions, it is anticipated that the Certificates will not
be issued initially with OID (or that any OID present will be de minimis). The
IRS could require, instead, that the computation be performed on a
Receivable-by-Receivable basis. In the preamble to the regulations under Section
1286 of the Code, the IRS requests comment on appropriate aggregation rules. Any
such recalculation could adversely affect the timing and character of a Class A
Certificate Owner's income. The IRS might also require that a portion of the
purchase price of a Certificate be allocated to accrued interest on each
Receivable and to amounts held in the Collection Account pending distribution to
Certificate Owners at the time of purchase as though such accrued interest and
collections on the Receivables were separate assets purchased by the Certificate
Owner. Any such allocation would reduce the Purchase Price and thus increase the
discount (or decrease the premium) on the Receivables.
If the amount of OID is de minimis under the rule set forth above, the
Class A Certificates would not be treated as having OID. Each Class A
Certificate Owner would be required to report on its Federal income tax return
its share of the gross income of the Trust, including interest and certain other
charges accrued on the Receivables and any gain upon collection or disposition
of the Receivables (but not including any portion of the Retained Yield). Such
gross income attributable to interest on the Receivables would exceed the Class
A Certificate Rate by an amount equal to the Class A Certificate Owner's share
of the expenses of the Trust for the period during which it owns a Class A
Certificate. The Class A Certificate Owner would be entitled to deduct its share
of expenses of the Trust to the extent described below. Any amounts received by
a Class A Certificate Owner from the Reserve Fund or from the subordination of
the Class B Certificates will be treated for Federal income tax purposes as
having the same characteristics as the payments they replace.
A Class A Certificate Owner would report its share of the income of the
Trust under its usual method of accounting. Accordingly, interest would be
includible in a Certificate Owner's gross income when it accrues on the
Receivables, or, in the case of Certificate Owners who are cash basis taxpayers,
when received by the Servicer or a Subservicer on behalf of Certificate Owners.
Because (i) interest accrues on the Receivables over differing monthly periods
and is paid in arrears and (ii) interest collected on a Receivable generally is
paid to Certificateholders in the following month, the amount of interest
accruing to a Certificate Owner during any calendar month will not equal the
interest distributed in that month. The actual amount of discount on a
Receivable would be includible in income as principal payments are received on
the Receivables.
If the OID on a Receivable is not treated as being de minimis, in addition
to the amounts described above, a Class A Certificate Owner will be required to
include in income any OID as it accrues on a daily basis, regardless of when
cash payments are received, using a method reflecting a constant yield on the
Receivables. It is possible that the IRS could require use of a prepayment
assumption in computing the yield of a Receivable. If a
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Receivable is deemed to be acquired by a Certificate Owner at a significant
discount, such treatment could accelerate the accrual of income by a Certificate
Owner.
The Servicer intends to account for OID, if any, reportable by holders of
Class A Certificates by reference to the price paid for a Class A Certificate by
an initial purchaser, although the amount of OID will differ for subsequent
purchasers. Such subsequent purchasers should consult their tax advisors
regarding the proper calculation of OID on the interest in Receivables
represented by a Class A Certificate.
In the event that a Receivable is treated as purchased at a premium (i.e.,
its Purchase Price exceeds the portion of the remaining principal balance of
such Receivable allocable to the Certificate Owner), such premium will be
amortizable by the Certificate Owner as an offset to interest income (with a
corresponding reduction in the Certificate Owner's basis) under a constant yield
method over the term of the Receivable if an election under Section 171 of the
Code is made with respect to the interests in the Receivables represented by the
Certificates or was previously in effect. Any such election will also apply to
all debt instruments held by the Certificate Owner during the year in which the
election is made and all debt instruments acquired thereafter.
A Certificate Owner will be entitled to deduct, consistent with its method
of accounting, its pro rata share of reasonable servicing fees and other fees
paid or incurred by the Trust as provided in Section 162 or 212 of the Code. If
a Certificate Owner is an individual, estate or trust, the deduction for such
holder's share of such fees will be allowed only to the extent that all of such
holder's miscellaneous itemized deductions, including such holder's share of
such fees, exceed 2% of such holder's adjusted gross income. In addition, in the
case of Certificate Owners who are individuals, certain otherwise allowable
itemized deductions will be reduced, but not by more than 80%, by an amount
equal to 3% of such Certificate Owner's adjusted gross income in excess of a
statutorily defined threshold.
CLASS B CERTIFICATE OWNERS
In General. Except as described below, it is believed that the Class B
Certificate Owners will be subject to tax in the same manner as Class A
Certificate Owners. However, no Federal income tax authorities address the
precise method of taxation of an instrument such as the Class B Certificates. In
the absence of applicable authorities, the Servicer intends to report income to
Class B Certificate Owners in the manner described below.
Each Class B Certificate Owner will be treated as owning (i) the Class B
Percentage of the principal on each Receivable plus (ii) a disproportionate
portion of the interest on each Receivable (not including the Retained Yield).
Income will be reported to a Class B Certificate Owner based on the assumption
that all amounts payable to the Class B Certificate Owners are taxable under the
coupon stripping provisions of the Code and treated as a single obligation. In
applying those provisions, the Servicer will take the position that a Class B
Certificate Owner's entire share of the interest on a Receivable will qualify as
'qualified stated interest'. Thus, except to the extent modified by the effects
of subordination of the Class B Certificates, as described below, income will be
reported to Class B Certificate Owners in the manner described above for holders
of the Class A Certificates.
Effect of Subordination. If the Class B Certificate Owners receive
distributions of less than their share of the Trust's receipts of principal or
interest (the 'Shortfall Amount') because of the subordination of the Class B
Certificates, holders of Class B Certificates would probably be treated for
Federal income tax purposes as if they had (1) received as distributions their
full share of such receipts, (2) paid over to the Class A Certificate Owners an
amount equal to such Shortfall Amount, and (3) retained the right to
reimbursement of such amounts to the extent of future collections otherwise
available for deposit in the Reserve Fund.
Under this analysis, (1) Class B Certificate Owners would be required to
accrue as current income any interest or OID income of the Trust that was a
component of the Shortfall Amount, even though such amount was in fact paid to
the Class A Certificate Owners, (2) a loss would only be allowed to the Class B
Certificate Owners when their right to receive reimbursement of such Shortfall
Amount became worthless (i.e., when it becomes clear that the amount will not be
available from any source to reimburse such loss), and (3) reimbursement of such
Shortfall Amount prior to such a claim of worthlessness would not be taxable
income to Class B Certificate Owners because such amount was previously included
in income. Those results should not significantly affect the inclusion of income
for Class B Certificate Owners on the accrual method of accounting, but could
accelerate
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inclusion of income to Class B Certificate Owners on the cash method of
accounting by, in effect, placing them on the accrual method. Moreover, the
character and timing of loss deductions is unclear.
SALES OF CERTIFICATES
A Certificate Owner that sells a Certificate will recognize gain or loss
equal to the difference between the amount realized on the sale and its adjusted
basis in the Certificate. In general, such adjusted basis will equal the
Certificate Owner's cost for the Certificate, increased by the amount of any
income previously reported with respect to the Certificate, and decreased by the
amount of any losses previously reported with respect to the Certificate and the
amount of any distributions received thereon. Any such gain or loss generally
will be capital gain or loss if the assets underlying the Certificate were held
as capital assets, except that, in the case of a Certificate that was acquired
with more than a de minimis amount of market discount, such gain will be treated
as ordinary interest income to the extent of the portion of such discount that
accrued during the period in which the seller held the Certificate and that was
not previously included in income.
FOREIGN CERTIFICATE OWNERS
Interest attributable to Receivables which is payable to a foreign
Certificate Owner will generally not be subject to the normal 30% withholding
tax imposed with respect to such payments, provided that such Certificate Owner
is not engaged in a trade or business in the United States and that such
Certificate Owner fulfills certain certification requirements. Under such
certification requirements, the Certificate Owner must certify, under penalties
of perjury, that it is not a 'United States person' and it is the beneficial
owner of the Certificates, and must provide its name and address. For this
purpose, 'United States person' means a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust the income of which is includible in gross income for United
States Federal income tax purposes, regardless of its source.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Trustee will furnish or make available, within the prescribed period of
time for tax reporting purposes after the end of each calendar year, to each
Certificate Owner or each person holding a Certificate on behalf of a
Certificate Owner at any time during such year, such information as the Trustee
deems necessary or desirable to assist Certificate Owners in preparing their
federal income tax returns. Payments made on the Certificates and proceeds from
the sale of Certificates will not be subject to a 'backup' withholding tax of
31% unless, in general, the Certificate Owner fails to comply with certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
STATE AND LOCAL TAX CONSEQUENCES
Set forth below is a summary of the Ohio income and franchise tax
consequences to the Trust and the Certificateholders. Except as specifically
noted below, this summary is based upon existing provisions of the Ohio Revised
Code pertaining to income and franchise taxation, the rules promulgated
thereunder, and relevant judicial rulings and administrative decisions and
pronouncements, all of which are subject to change, which change may be
retroactive. There are no Ohio authorities addressing similar transactions or
involving a trust that issues interests with terms similar to those of the
Certificates and no ruling addressing the matters discussed below will be sought
from Ohio tax officials. There can be no assurance that such officials will
agree with this summary.
In the opinion of Squire, Sanders & Dempsey L.L.P., Ohio tax counsel, the
Trust will be treated as a trust under current Ohio tax law. Under current Ohio
law, a trust is not subject to either the Ohio franchise tax or the Ohio income
tax, and accordingly, the Trust will not be subject to Ohio franchise or income
taxation. Furthermore, Certificateholders not otherwise subject to Ohio
franchise or income taxation will not be subject to Ohio franchise or income
taxation solely as a result of holding interests in the Trust.
Effective generally for tax years beginning on or after January 1, 1998, an
Ohio tax is levied on the Ohio apportioned income of a 'qualifying pass-through
entity' and 'qualifying trust' attributable to each
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'qualifying investor' in the pass-through entity or qualifying trust. Qualifying
investors, in general, are individuals or entities not otherwise subject to Ohio
franchise or income taxes. The amount of tax paid by the pass-through entity or
qualifying trust attributable to each qualifying investor may be claimed as a
credit against that investor's Ohio franchise or income tax liability. However,
trusts are not treated as qualifying pass-through entities and trusts whose
activities are limited to the acquisition, holding, managment or disposition of
intangible property (as is the case with the Trust) are not treated as
qualifying trusts. Therefore, following the effective date of the new law, the
Trust will not be subject to Ohio franchise or income taxation.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement or other employee
benefit plan subject to Title I of ERISA, should consider the fiduciary
standards under ERISA in the context of the plan's particular circumstances
before authorizing an investment of a portion of such plan's assets in the
Certificates. Accordingly, pursuant to Section 404 of ERISA, such fiduciary
should consider among other factors: (i) whether the investment is for the
exclusive benefit of plan participants and their beneficiaries; (ii) whether the
investment satisfies the applicable diversification requirements; (iii) whether
the investment is in accordance with the documents and instruments governing the
plan; and (iv) whether the investment is prudent, considering the nature of the
investment. Fiduciaries of plans also should consider ERISA's prohibition on
improper delegation of control over, or responsibility for, plan assets.
In addition, benefit plans subject to ERISA, as well as individual
retirement accounts or certain types of Keogh plans not subject to ERISA but
subject to Section 4975 of the Code and any entity whose source of funds for the
purchase of Certificates includes plan assets by reason of a plan or account
investing in such entity (each, a 'Plan'), are prohibited from engaging in a
broad range of transactions involving Plan assets and persons having certain
specified relationships to a Plan ('parties in interest' and 'disqualified
persons'). Such transactions are treated as 'prohibited transactions' under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code.
An investment in Certificates by a Plan might result in the assets of the
Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code
defines the term 'plan assets.' Under Section 2510.3- 101 of the United States
Department of Labor ('DOL') regulations (the 'Regulation'), a Plan's assets may
include an interest in the underlying assets of an entity (such as a trust) for
certain purposes, including the prohibited transaction provisions of ERISA and
the Code, if the Plan acquires an 'equity interest' in such entity, unless
certain exceptions apply. The Seller believes that the Certificates will give
Certificateholders an equity interest in the Trust for purposes of the
Regulation and can give no assurance that the Certificates will qualify for any
of the exceptions under the Regulation. As a result, the assets of the Trust may
be considered the assets of any Plan which acquires a Certificate.
The DOL has issued individual exemptions, Prohibited Transaction Exemption
('PTE') 95-89, Exemption Application No. D-10046, 60 Fed. Reg. 49011 (1995), to
Banc One Capital Corporation, and PTE 89-89, Exemption Application No. D-6446,
54 Fed. Reg. 42589 (1989) to Salomon Brothers Inc (collectively, the
'Exemption'). The Exemption generally exempts from the application of the
prohibited transaction provisions of Section 406 of ERISA and the excise taxes
imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of
the Code and Section 502(i) of ERISA certain transactions relating to the
initial purchase, holding and subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements set forth in the
Exemption. The receivables covered by the Exemption include motor vehicle
installment obligations such as the Receivables. The Seller believes that the
Exemption will apply to the acquisition, holding and resale of the Class A
Certificates by a Plan and that all conditions of the Exemption other than those
within the control of the investors have been or will be met.
45
<PAGE>
The Exemption sets forth six general conditions that must be satisfied for
a transaction involving the acquisition of the Class A Certificates by a Plan to
be eligible for the exemptive relief thereunder:
(1) the acquisition of the Class A Certificates by a Plan is on terms
(including the price for the Class A Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length transaction with
an unrelated party;
(2) the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interest
evidenced by other certificates of the Trust;
(3) the Class A Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from any one of four rating entities;
(4) the Trustee is not an affiliate of any other member of the
'Restricted Group', which consists of the Underwriters, the Seller, the
Trustee, the Servicer, the Affiliated Banks, each subservicer, each insurer
and any Obligor with respect to the Receivables included in the Trust
constituting more than 5% of the aggregate unamortized principal balance of
the assets of the Trust as of the date of initial issuance of the Class A
Certificates, and any affiliate of such parties.
(5) the sum of all payments made to and retained by the Underwriters
in connection with the offering of the Class A Certificates represents not
more than reasonable compensation for placing the Class A Certificates. The
sum of all payments made to and retained by the Servicer represents not
more than the reasonable compensation for the Servicer's services under the
Agreement and reimbursement of the Servicer's reasonable expenses in
connection therewith; and
(6) the Plan investing in the Class A Certificates must be an
'accredited investor' as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act.
Because the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interests evidenced by
other certificates of the Trust, the second general condition set forth above is
satisfied. It is a condition of the issuance of the Class A Certificates that
they be rated in the highest rating category by a nationally recognized rating
agency and thus the third general condition should be satisfied. The Seller and
the Servicer expect that the fourth general condition set forth above will be
satisfied with respect to the Class A Certificates. A fiduciary of a Plan
contemplating purchasing a Class A certificate must make its own determination
that the first, fifth and sixth general conditions set forth above will be
satisfied with respect to the Class A Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide relief from the restrictions imposed by Sections 406(a) and 407(a) of
ERISA as well as the excise taxes imposed by Section 4975(a) and (b) of the Code
by reason of Section 4975(c)(1)(A) through (D) of the Code, in connection with
the direct or indirect sale, exchange, transfer or holding of the Class A
Certificates by a Plan. However, no exemption is provided from the restrictions
of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or
holding of a Class A Certificate on behalf of an 'Excluded Plan' by any person
who has discretionary authority or renders investment advice with respect to the
assets of such Excluded Plan. For purposes of the Class A Certificates an
Excluded Plan is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide relief from the restrictions imposed by Sections 406(b)(1)
and (b)(2) and 407(a) of ERISA and the taxes imposed by Section 4975(a) and (b)
of the Code by reason of Section 4975(c)(1)(E) of the Code in connection with
the direct or indirect sale, exchange, transfer or holding of Class A
Certificates in the initial issuance of Class A Certificates between the Seller
or the Underwriters and a Plan other than an Excluded Plan when the person who
has discretionary authority or renders investment advice with respect to the
investment of Plan assets in the Class A Certificates is (a) an Obligor with
respect to 5% or less of the fair market value of the Receivables or (b) an
affiliate of such person.
The Exemption also may provide relief from the restriction imposed by
Sections 406(a) and 407(a) of ERISA and the taxes imposed by Section
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to
otherwise apply merely because a person is deemed to be a party in interest or a
disqualified person with
46
<PAGE>
respect to an investing Plan by virtue of providing services to a Plan (or by
virtue of having certain specified relationships to such a person) solely as a
result of such Plan's ownership of Class A Certificates.
Before purchasing a Class A Certificate, a fiduciary of a Plan should
itself confirm (a) that the Class A Certificates constitute 'certificates' for
purposes of the Exemption and (b) that the specific conditions set forth in
Section II of the Exemption and the other requirements set forth in the
Exemption will be satisfied.
Any Plan fiduciary considering whether to purchase a Class A Certificate on
behalf of a Plan should consult with its counsel regarding the applicability of
the fiduciary responsibility and prohibited transaction provisions of ERISA and
the Code to such investment.
Because the Class B Certificates are subordinate interests, the Exemption
will not be available for Class B Certificates. Accordingly, no Class B
Certificate may be purchased by or otherwise transferred to a Plan other than an
'insurance company general account' as defined in, and which complies with the
provisions of, PTE 95-60 which may be deemed to be holding Plan assets.
Furthermore, each purchaser of Class B Certificates will be deemed to have
represented that it is not acquiring Class B Certificates, directly or
indirectly, for or on behalf of a Plan other than an 'insurance company general
account' as defined in, and which complies with the provisions of, PTE 95-60. If
Definitive Certificates are issued, each transferee of a Class B Certificate
will be required to deliver to the Trustee a certificate to such effect. Any
purchaser whose source of funds for the purchase of Class B Certificates
includes such assets of an insurance company general account should itself
confirm that all applicable requirements set forth in PTE 95-60 will be
satisfied, particularly the requirement (set forth in Section IV(c) of PTE
95-60) that neither the insurance company nor an affiliate thereof will be a
party in interest or disqualified person in connection with the purchase and
holding of Class B Certificates or the servicing, management and operation of
the Trust.
47
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the Certificates (the 'Underwriting Agreement'), the Seller has
agreed to sell to each of the Underwriters named below (collectively, the
'Underwriters'), and each of the Underwriters has severally agreed to purchase,
the principal balance of each Class of Certificates set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL BALANCE PRINCIPAL BALANCE
OF CLASS A OF CLASS B
UNDERWRITERS CERTIFICATES CERTIFICATES
- --------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Banc One Capital Corporation....................... $271,281,500.00 $18,273,711.80
--------------- --------------
Salomon Brothers Inc............................... $271,281,500.00 $18,273,711.79
--------------- --------------
UBS Securities LLC................................. $ 30,000,000.00 $ 0.00
=============== ==============
Total......................................... $572,563,000.00 $36,547,423.59
=============== ==============
</TABLE>
The Seller has been advised by the Underwriters that they propose to offer
the Certificates to the public initially at the public offering prices set forth
on the cover page of this Prospectus, and to certain dealers at such prices less
a concession of % per Class A Certificate and % per Class B
Certificate; that the Underwriters and such dealers may allow a discount of
% per Class A Certificate and % per Class B Certificate on the sale to
certain other dealers; and that after the initial public offering of the
Certificates, the public offering prices and the concessions and discounts to
dealers may be changed by the Underwriters.
The Seller has agreed to indemnify the several Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriters may be required to make in respect thereof.
In the ordinary course of their respective businesses, the Underwriters and
their respective affiliates have engaged and may engage in commercial banking
and investment banking transactions with affiliates of the Seller, including the
Seller's parent BANC ONE CORPORATION.
The Trustee or the Collateral Agent, as applicable, may, from time to time,
invest the funds in the Accounts in Eligible Investments acquired from the
Underwriters.
After the initial distribution of the Certificates by the Underwriters,
this Prospectus may be used by Banc One Capital Corporation, an affiliate of the
Seller and the Servicer, in connection with offers and sales relating to market
making transactions in the Certificates. Banc One Capital Corporation may act as
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale.
In connection with the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Certificates. Specifically, the Underwriters may overallot the offering,
creating a short position in the Certificates for their own account. The
Underwriters may bid for and purchase Certificates in the open market to cover
such short positions. In addition, the Underwriters may bid for and purchase
Certificates in the open market to stabilize the price of the Certificates.
These activities may stabilize or maintain the market price of the Certificates
above independent market levels. The Underwriters are not required to engage in
these activities, and may end these activities at any time.
LEGAL MATTERS
The validity of the Certificates will be passed upon for the Seller by
Squire, Sanders & Dempsey L.L.P., Columbus, Ohio, and for the Underwriters by
Stroock & Stroock & Lavan LLP, New York, New York. Certain Federal income tax
matters and Ohio franchise tax matters will be passed upon for the Seller by
Squire, Sanders & Dempsey L.L.P.
48
<PAGE>
INDEX OF PRINCIPAL TERMS
PAGE
----
Accounts............................................................... 26
Affiliated Bank........................................................ 1
Affiliated Bank Portfolio.............................................. 4
Affiliated Banks....................................................... 1
Aggregate Net Losses................................................... 31
Agreement.............................................................. 3
APR.................................................................... 4
BOCC................................................................... 14
Business Day........................................................... 5
Call Report............................................................ 22
Cede................................................................... 2
Certificate Owner...................................................... 23
Certificateholders..................................................... 5
Certificates........................................................... 1
Charge-off Rate........................................................ 31
Class.................................................................. 3
Class A Certificateholders............................................. 5
Class A Certificates................................................... 1
Class A Distribution Account........................................... 25
Class A Interest Carryover Shortfall................................... 29
Class A Interest Distribution.......................................... 29
Class A Monthly Interest............................................... 5
Class A Monthly Principal.............................................. 6
Class A Pass-Through Rate.............................................. 4
Class A Percentage..................................................... 3
Class A Pool Factor.................................................... 22
Class A Principal Balance.............................................. 5
Class A Principal Carryover Shortfall.................................. 29
Class A Principal Distribution......................................... 29
Class B Certificateholders............................................. 5
Class B Certificates................................................... 1
Class B Distribution Account........................................... 26
Class B Interest Carryover Shortfall................................... 29
Class B Interest Distribution.......................................... 29
Class B Monthly Interest............................................... 5
Class B Monthly Principal.............................................. 6
Class B Pass-Through Rate.............................................. 5
Class B Percentage..................................................... 3
Class B Pool Factor.................................................... 22
Class B Principal Balance.............................................. 5
Class B Principal Carryover Shortfall.................................. 30
Class B Principal Distribution......................................... 30
Closing Date........................................................... 4
Code................................................................... 9
49
<PAGE>
PAGE
----
Collateral Agent....................................................... 3
Collection Account..................................................... 25
Collection Period...................................................... 6
Collections............................................................ 27
Commission............................................................. 2
Cutoff Date............................................................ 1
Dealer Agreements...................................................... 13
Dealers................................................................ 4
Definitive Certificates................................................ 23
Delinquency Percentage................................................. 31
Determination Date..................................................... 28
Direct Participants.................................................... 23
Distribution Date...................................................... 5
Distribution Date Statement............................................ 32
DOL.................................................................... 45
DTC.................................................................... 2
Eligible Deposit Account............................................... 26
Eligible Institution................................................... 26
Eligible Investments................................................... 26
Eligible Trust Company................................................. 26
ERISA.................................................................. 9
Events of Servicing Termination........................................ 33
Exchange Act........................................................... 2
Excluded Plan.......................................................... 46
Exemption.............................................................. 45
FDIC................................................................... 11
Final Scheduled Distribution Date...................................... 1
Final Scheduled Maturity Date.......................................... 4
Financed Vehicles...................................................... 4
FIRREA................................................................. 11
FTC Rule............................................................... 39
Holders................................................................ 24
Indirect Participants.................................................. 23
Interest Collections................................................... 27
IRS.................................................................... 41
Issuer................................................................. 3
Liquidated Receivables................................................. 28
Liquidation Proceeds................................................... 28
Motor Vehicle Loans.................................................... 14
Obligors............................................................... 4
OCC.................................................................... 41
Ohio Tax Counsel....................................................... 8
OID.................................................................... 42
Original Class A Principal Balance..................................... 3
Original Class B Principal Balance..................................... 3
50
<PAGE>
PAGE
----
Original Pool Balance.................................................. 7
Paid-Ahead Period...................................................... 21
Paid-Ahead Receivable.................................................. 21
Participants........................................................... 23
Plan................................................................... 9
Pool Balance........................................................... 7
Principal Collections.................................................. 6
PTE.................................................................... 45
Purchase Amount........................................................ 25
Purchase Price......................................................... 42
Rating Agency.......................................................... 9
Realized Losses........................................................ 30
Receivable File........................................................ 25
Receivables............................................................ 1
Record Date............................................................ 5
Recoveries............................................................. 28
Registration Statement................................................. 2
Regulation............................................................. 45
Reserve Fund........................................................... 6
Restricted Group....................................................... 46
Retained Yield......................................................... 41
Rules.................................................................. 23
Securities Act......................................................... 2
Seller................................................................. 3
Servicer............................................................... 3
Servicing Fee.......................................................... 8
Servicing Fee Rate..................................................... 8
Shortfall Amount....................................................... 43
Simple Interest Receivable............................................. 17
Specified Reserve Balance.............................................. 7
Trust.................................................................. 1
Trust Property......................................................... 4
Trustee................................................................ 3
UCC.................................................................... 11
Underwriters........................................................... 48
Underwriting Agreement................................................. 48
51
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR
THE UNDERWRITERS. 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>
Reports to Certificateholders....................... 2
Available Information............................... 2
Incorporation of Certain Documents by
Reference......................................... 2
Summary of Terms.................................... 3
Risk Factors........................................ 10
Formation of the Trust.............................. 13
The Trust Property.................................. 13
The Seller's Affiliated Bank Portfolio of Motor
Vehicle Loans..................................... 14
The Receivables Pool................................ 17
Maturity and Prepayment Assumptions................. 21
Yield Considerations................................ 21
Pool Factors and Trading Information................ 22
Use of Proceeds..................................... 22
The Servicer and the Seller......................... 22
The Certificates.................................... 23
Certain Legal Aspects of the Receivables............ 37
Federal Income Tax Consequences..................... 41
State and Local Tax Consequences.................... 44
ERISA Considerations................................ 45
Underwriting........................................ 48
Legal Matters....................................... 48
Index of Principal Terms............................ 49
</TABLE>
------------------------
UNTIL MARCH , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS 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.
$609,110,423.59
BANC ONE AUTO
GRANTOR TRUST 1997-B
$572,563,000.00
CLASS A %
ASSET BACKED CERTIFICATES
$36,547,423.59
CLASS B %
ASSET BACKED CERTIFICATES
BANK ONE, TEXAS, N.A.
SELLER AND SERVICER
-------------------------
PROSPECTUS
DECEMBER , 1997
-------------------------
BANC ONE CAPITAL CORPORATION
SALOMON SMITH BARNEY
UBS SECURITIES
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $179,688
Printing and Engraving........................................ $ 25,000
Trustee's Fees................................................ $ 4,000
Legal Fees and Expenses....................................... $ 85,000
Blue Sky Fees and Expenses.................................... $ 5,000
Accountant's Fees and Expenses................................ $ 43,000
Rating Agency Fees............................................ $275,000
Miscellaneous Fees and Expenses............................... $ 8,312
--------
Total Expenses...................................... $625,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Registrant's Articles of Association (filed as Exhibit
3.1 hereto) provides that, in certain circumstances and subject to certain
conditions, the Registrant shall indemnify each person who was or is a director,
officer, employee or agent of either the Registrant or of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Registrant who was or is a party in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, against all expense,
liability, loss, judgments, fines or penalties, including amounts paid in
settlement.
The Registrant's parent, BANC ONE CORPORATION, has entered into
indemnification agreements with certain directors and executive officers of the
Registrant that provide for indemnification unless the indemnitee's conduct is
finally adjudged by a court to be knowingly fraudulent, deliberately dishonest
or willful misconduct. The Underwriting Agreement filed as Exhibit 1.1 hereto
provides for indemnification by the Underwriters of the Registrant and its
directors, officers and controlling persons for certain liabilities arising
under the Securities Act of 1933 or otherwise.
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
1.1. -- Form of Underwriting Agreement
3.1. -- Amended and Restated Articles of Association of Bank One, Texas, N.A.*
3.2. -- Amended and Restated Bylaws of Bank One Texas, N.A.**
4.1. -- Form of Pooling and Servicing Agreement
4.2. -- Form of Certificate (included as part of Exhibit 4.1)
5.1. -- Opinion of Squire, Sanders & Dempsey L.L.P. with respect to legality
8.1. -- Opinion of Squire, Sanders & Dempsey L.L.P. with respect to federal income tax matters and Ohio
franchise tax matters
23.1. -- Consent of Squire, Sanders & Dempsey L.L.P. (contained in Exhibit 5.1 and Exhibit 8.1)
24.1. -- Powers of Attorney (included as part of signature page)***
</TABLE>
- ------------------
* Previously filed in connection with registration statement number 333-1092
and incorporated herein by reference.
** Previously filed in connection with registration statement number 333-25951
and incorporated herein by reference.
*** Previously filed.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended (the 'Securities Act'), the information omitted from
the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(4) For purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act') that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(6) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(7) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(8) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Bank One,
Texas, N.A. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the State of Texas, on December 4,
1997.
BANK ONE, TEXAS, N.A.
By: /s/ TERRY KELLEY
--------------------------
Terry Kelley
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------- -------------------------------------- ------------------
<S> <C> <C>
* Chairman, Chief Executive Officer and December 4, 1997
Terry Kelley Director
* Executive Vice President and Chief December 4, 1997
Mark Gresenz Financial Officer (principal
financial officer)
* Vice President, Divisional Controller December 4, 1997
Jeffrey W. Stewart (principal accounting officer)
* Director December 4, 1997
Rita C. Clements
* Director December 4, 1997
William L. Schilling
* Director December 4, 1997
Ronald G. Steinhart
* Director December 4, 1997
Vernell Sturns
*By: TERRY KELLEY
Terry Kelley
Attorney-in-Fact
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------------------------------------------------------------------------------------------
<S> <C> <C>
1.1. Form of Underwriting Agreement
3.1. Amended and Restated Articles of Association of Bank One, Texas, N.A.*
3.2. Amended and Restated Bylaws of Bank One, Texas, N.A.**
4.1. Form of Pooling and Servicing Agreement
4.2. Form of Certificate (included as part of Exhibit 4.1)
5.1. Opinion of Squire, Sanders & Dempsey L.L.P. with respect to legality
8.1. Opinion of Squire, Sanders & Dempsey L.L.P. with respect to federal income tax matters and
Ohio franchise tax matters
23.1. Consent of Squire, Sanders & Dempsey L.L.P. (contained in Exhibit 5.1 and Exhibit 8.1)
24.1. Powers of Attorney (included as part of signature page)***
</TABLE>
- ------------------
* Previously filed in connection with registration statement number 333-1092
and incorporated herein by reference.
** Previously filed in connection with registration statement number 333-25951
and incorporated herein by reference.
*** Previously filed.
Exhibit 1.1
BANC ONE AUTO GRANTOR TRUST 1997-B
$572,563,000.00 CLASS A __% ASSET BACKED CERTIFICATES
$36,547,423.59 CLASS B __% ASSET BACKED CERTIFICATES
BANK ONE, TEXAS, N.A.
(SELLER)
UNDERWRITING AGREEMENT
December __, 1997
BANC ONE CAPITAL CORPORATION
150 East Gay Street, 24th Floor
Columbus, OH 43271-0340
SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
Ladies and Gentlemen:
Introductory. Bank One, Texas, N.A. (the "Seller"), proposes to
cause BANC ONE AUTO GRANTOR TRUST 1997-B (the "Trust") to issue $572,563,000
principal amount of its Class A __% Asset Backed Certificates (the "Class A
Certificates") and $36,547,423.00 principal amount of its Class B __% Asset
Backed Certificates (the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates") and the Seller proposes to sell the
Certificates to the several underwriters named in Schedule I attached hereto
(the "Underwriters"). The assets of the Trust include, among other things, a
pool of retail receivables generated from time to time pursuant to motor vehicle
retail installment sale contracts (the "Receivables") secured by new or used
automobiles, vans or light-duty trucks financed thereby (the "Financed
Vehicles"), and certain monies received thereunder on or after December 1, 1997
(the "Cutoff Date"), and the other property and the proceeds thereof to be
conveyed to the Trustee pursuant to the Pooling and Servicing Agreement to be
dated as of December 1, 1997 (the "Pooling and Servicing Agreement") among the
Seller, as seller and the Seller, as servicer (in such capacity, the "Servicer")
and Bankers Trust Company, a New York banking corporation, as trustee (the
"Trustee"). Pursuant to the Pooling and Servicing Agreement, the Seller in its
capacity as Seller will sell the Receivables to the Trustee, acting on behalf of
Trust, and in its capacity as Servicer will service the Receivables on behalf of
the Trust. In addition, pursuant to the Pooling and Servicing Agreement, the
Servicer will agree to perform certain administrative tasks. The Certificates
will be issued pursuant to the Pooling and Servicing Agreement. Each of the
Affiliated Banks sold Receivables originated by such Affiliated Bank to the
Seller.
<PAGE>
Capitalized terms used and not otherwise defined herein shall
have the meanings given them in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Seller. (a) The Seller
represents and warrants to and agrees with the Underwriters that:
(i) A registration statement (No. 333-38681), including a form
of prospectus, on Form S-3 relating to the Certificates has been filed
with the Securities and Exchange Commission (the "Commission") and
either (A) has been declared effective under the Securities Act of 1933,
as amended (the "Act"), and is not proposed to be amended or (B) is
proposed to be amended by amendment or post-effective amendment. If the
Seller does not propose to amend such registration statement and if any
post-effective amendment to such registration statement has been filed
with the Commission prior to the execution and delivery of the
Underwriting Agreement, the most recent such amendment has been declared
effective by the Commission. For purposes of the Underwriting Agreement,
"Effective Time" means (x) if the Seller has advised the Underwriters
that it does not propose to amend such registration statement, the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of the Underwriting Agreement, was declared effective by
the Commission, or (y) if the Seller has advised the Underwriters that
it proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as
the case may be, is declared effective by the Commission. "Effective
Date" means the date of the Effective Time. Such registration statement,
as amended at the Effective Time, including all information (if any)
deemed to be a part of such registration statement as of the Effective
Time pursuant to Rule 430A(b) under the Act, and including the exhibits
thereto and any material incorporated by reference therein, is
hereinafter referred to as the "Registration Statement," and the form of
prospectus relating to the Certificates, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Act or, if no such filing is required, as included in
the Registration Statement at the Effective Date, is hereinafter
referred to as the "Prospectus."
(ii) If the Effective Time is prior to the execution and
delivery of the Underwriting Agreement: (A) on the Effective Date, the
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
under the Act (the "Rules and Regulations"), (B) on the date of the
Underwriting Agreement, the Registration Statement conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b), the
Registration Statement and the Prospectus will conform, in all material
respects to the requirements of the Act and the Rules and Regulations,
(C) on the Effective Date, the Registration Statement did not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading and (D) on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did
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not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date the Prospectus will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading. If the Effective Time is subsequent
to the execution and delivery of the Underwriting Agreement: (1) on the
Effective Date, the Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Act and the
Rules and Regulations, (2) on the Effective Date, the Registration
Statement will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading and (3)
on the Effective Date, at the time of filing of the Prospectus pursuant
to Rule 424(b) and at the Closing Date, the Prospectus will not include
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The two preceding sentences do not apply to
statements in or omissions from the Registration Statement or Prospectus
based upon written information furnished to the Seller by any
Underwriter through the Underwriters specifically for use therein and
the Seller acknowledges that the only such information is the
Underwriters' Information as defined in Section 2(b) hereof.
(iii) The Underwriting Agreement has been duly authorized,
executed and delivered by the Seller. The execution, delivery and
performance of the Underwriting Agreement and the issuance and sale of
the Certificates and compliance with the terms and provisions hereof
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any agreement or
instrument to which the Seller is a party or by which the Seller is
bound or to which any of the properties of the Seller is subject which
could reasonably be expected to have a material adverse effect on the
transactions contemplated herein. The Seller has full corporate power
and authority to (i) authorize the Trustee to execute and deliver the
Certificates to the Seller and (ii) sell the Certificates to the
Underwriters, all as contemplated by the Underwriting Agreement.
(iv) Other than as contemplated by the Underwriting Agreement
or as disclosed in the Prospectus, there is no broker, finder or other
party that is entitled to receive from the Seller any brokerage or
finder's fee or other fee or commission as a result of any of the
transactions contemplated by the Underwriting Agreement.
(v) All legal or governmental proceedings, contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required.
(vi) As of the Closing Date (as defined below), the
representations and warranties of (i) the Seller and the Servicer under
the Pooling and Servicing Agreement will be true and correct in all
material respects and each such representation and warranty is so
incorporated herein by this reference; and (ii) the representations and
warranties of the Seller herein shall be true and correct in all
material respects.
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(vii) The Seller's assignment and delivery of the Receivables
to the Trustee, on behalf of the Trust, on the Closing Date will vest in
the Trustee, on behalf of the Trust, all the Seller's right, title and
interest therein, or will result in a first priority perfected security
interest therein, in either case subject to no prior Lien.
(viii) The Certificates, when duly and validly executed and
authenticated by the Trustee, in accordance with the Pooling and
Servicing Agreement, and delivered and paid for pursuant hereto will be
validly issued and outstanding and entitled to the benefits of the
Pooling and Servicing Agreement.
(ix) Neither the transfer from the Seller to the Trustee,
acting on behalf of the Trust, of the Receivables and other Trust
Property conveyed by it to the Trust pursuant to the Pooling and
Servicing Agreement, nor the assignment of the security interest of the
Seller in the Financed Vehicles or the other Trust Property to the
Trustee, acting on behalf of the Trust, pursuant to the Pooling and
Servicing Agreement, nor the issuance, sale and delivery of the
Certificates, nor the fulfillment of the terms of the Certificates, will
conflict with, or result in a breach, violation or acceleration of, or
constitute a default under, any term or provision of the organizational
documents of the Seller or any material indenture or other material
agreement or instrument to which the Seller is a party or by which it or
its properties is bound or result in a violation of or contravene the
terms of any statute, order or regulation applicable to the Seller of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Seller or will result in the
creation of any Lien upon any material property or assets of the Seller.
(x) The Seller has delivered to the Underwriters or to counsel
for the Underwriters complete and correct copies of publicly available
portions of the Consolidated Report of Condition of the Seller for the
nine months ended September 30, 1997, as submitted to the Governors of
the Federal Reserve System; except as set forth in or contemplated in
the Registration Statement and the Prospectus, there has been no
material adverse change in the financial condition or results of
operations of the Seller since September 30, 1997.
(xi) Any taxes, fees and other governmental charges in
connection with the execution, delivery and performance by the Seller of
the Underwriting Agreement, the Pooling and Servicing Agreement and the
Certificates shall have been paid or will be paid by or on behalf of the
Seller at or prior to the Closing Date to the extent then due.
(b) The Seller hereby agrees with the Underwriters that, for all
purposes of the Underwriting Agreement, the only information furnished to the
Seller by the Underwriters specifically for use in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, are the statements with respect to stabilization on the
second page of, and the statements under the caption "Underwriting" in, the
preliminary prospectus and the Prospectus (collectively, the "Underwriters'
Information").
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(3) Purchase, Sale and Delivery of the Certificates. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Seller agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Seller, the principal amount of the Class A Certificates set forth
opposite the name of such Underwriter in Schedule I hereto at a purchase price
of _________% of the principal amount thereof and the principal amount of the
Class B Certificates set forth opposite the name of such Underwriter in Schedule
I hereto at a purchase price of ________% of the principal amount thereof.
The Seller will deliver the Certificates to the Underwriters, for
the account of the Underwriters, against payment of the purchase price to or
upon the order of the Seller by wire transfer or check in Federal (same day)
Funds, at the office of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York 10038, at 10:00 a.m., New York time on December __, 1997, or at
such other time not later than seven full business days thereafter as the
Underwriters and the Seller determine, such time being herein referred to as the
"Closing Date." The Certificates to be so delivered will be initially
represented by one or more Class A Certificates and one or more Class B
Certificates registered in the name of Cede & Co., the nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Certificates
will be represented by book entries on the records of DTC and participating
members thereof. Definitive Certificates will be available only under the
limited circumstances specified in the Pooling and Servicing Agreement.
4. Offering. It is understood that, after the Registration
Statement becomes effective, the Underwriters propose to offer the Certificates
for sale to the public (which may include selected dealers), on the terms set
forth in the Prospectus.
5. Covenants of the Seller. The Seller covenants and agrees with
the several Underwriters that:
(a) If the Effective Time is prior to the execution and delivery
of the Underwriting Agreement, the Seller will file the Prospectus, properly
completed, with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by the Underwriters, subparagraph
(4)) of Rule 424(b) not later than the earlier of (i) the second business day
following the execution and delivery of the Underwriting Agreement and (ii) the
fifteenth business day after the Effective Date. The Seller will advise the
Underwriters promptly of any such filing pursuant to Rule 424(b).
(b) The Seller will advise the Underwriters promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus or the Registration Statement or the Prospectus and will not
effect such amendment or supplementation without the consent of the
Underwriters, which consent shall not be unreasonably withheld or delayed; the
Seller will also advise the Underwriters promptly of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for any additional information; and the Seller will also
advise the Underwriters promptly of the effectiveness of the Registration
Statement (if the Effective Time is subsequent to the execution of the
Underwriting Agreement) and of any amendment or supplement to the Registration
Statement or the Prospectus and of the issuance by the Commission of any stop
order suspending
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<PAGE>
the effectiveness of the Registration Statement or the institution or threat of
any proceeding for that purpose and the Seller will use its reasonable best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the Certificates
is required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act, the Seller promptly will prepare and file
with the Commission an amendment or supplement which will correct such statement
or omission, or an amendment or supplement which will effect such compliance.
Neither the consent of the Underwriters to, nor the delivery by the Underwriters
of, any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) The Seller will timely prepare and file all periodic reports,
on behalf of the Trust, with the Commission referred to in its No-Action Letter
to the Commission dated August 11, 1995 until no longer required to do so as
permitted by Section 15(d) of the Exchange Act.
(c) The Seller will furnish to each of the Underwriters copies of
the Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Underwriters reasonably request.
(f) The Seller will take all actions which are reasonably
necessary to arrange for the qualification of the Certificates for sale under
the laws of such jurisdictions as the Underwriters designate and will continue
such qualifications in effect so long as required for the distribution;
provided, however, that in no event shall the Seller be obligated to qualify as
a foreign corporation or to execute a general or unlimited consent to service of
process in any such jurisdiction.
(g) For a period from the date of the Underwriting Agreement until
the retirement of the Certificates, or until such time as the Underwriters shall
cease to maintain a secondary market in the Certificates, whichever occurs
first, the Seller will deliver to the Underwriters the annual statements of
compliance and the annual independent certified public accountants' reports
furnished to the Trustee pursuant to the Pooling and Servicing Agreement, as
soon as such statements and reports are furnished to the Trustee.
(h) So long as any of the Certificates are outstanding, the Seller
will furnish to the Underwriters (i) as soon as practicable after the end of the
fiscal year all documents required to be distributed to Certificateholders or
filed with the Commission on behalf of the Trust pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any order of the
Commission thereunder and (ii) from time to time, any other information
concerning the Seller as the Underwriters may reasonably request only insofar as
such information reasonably relates to the Registration Statement or the
transactions contemplated by the Pooling and Servicing Agreement.
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<PAGE>
(i) On or before the Closing Date, the Seller shall mark its
accounting and computer records relating to the Receivables to show the absolute
ownership by the Trustee on behalf of the Trust of the Receivables, and from and
after the Closing Date the Seller shall not take any action inconsistent with
the ownership by the Trustee on behalf of the Trust of such Receivables, other
than as permitted by the Pooling and Servicing Agreement.
(j) To the extent, if any, that any of the ratings provided with
respect to the Certificates by the rating agency or agencies that initially rate
any of the Certificates are conditional upon the furnishing of documents or the
taking of any other actions by the Seller on or prior to the Closing Date, the
Seller shall furnish such documents and take any such other actions. A copy of
any such document shall be provided to the Underwriters at the time it is
delivered to the rating agencies.
(k) For the period beginning on the date of the Underwriting
Agreement and ending on the Closing Date, neither the Seller nor any Affiliate
or trust originated, directly or indirectly, by the Seller or any Affiliate (or
any trust, partnership or other entity sponsored by the Seller or any Affiliate
or in which the Seller or any Affiliate is a partner or a stockholder) will,
without the prior written consent of the Underwriters, offer to issue or issue
notes collateralized by, or certificates (other than the Certificates)
evidencing an ownership interest in, motor vehicle installment sale contracts,
provided, however, that except as otherwise provided by the Pooling and
Servicing Agreement, this shall not be construed to prevent (i) the sale of
Receivables by any Affiliate of the Seller to any person or (ii) any sales or
grants of participations in and to Receivables by one or more Affiliates of the
Seller to one or more other Affiliates of the Seller.
(l) The Seller will apply the net proceeds of the sale of the
Certificates that it receives in the manner set forth in the Prospectus under
the caption "Use of Proceeds."
(m) The Seller will pay all expenses incident to the performance
of its obligations under the Underwriting Agreement, including, but not limited
to (i) the printing and filing of the documents (including the Registration
Statement and Prospectus), (ii) the preparation, issuance and delivery of the
Certificates to the Underwriters, (iii) the fees and disbursements of the
Seller's counsel and accountants, (iv) the qualification of the Certificates
under securities laws in accordance with the provisions of Section 6(f),
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
any blue sky or legal investment survey, if any is requested, (v) the printing
and delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, (vi) the printing and delivery
to the Underwriters of copies of any blue sky or legal investment survey
prepared in connection with the Certificates, (vii) any fees charged by rating
agencies for the rating of the Certificates and (viii) the fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc.
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Certificates
will be subject to the accuracy, as of the date hereof and as of the Closing
Date, of the representations and warranties on the part of the Seller herein, to
the accuracy of the written statements of officers of the Seller made pursuant
to the provisions of this Section, to the performance by the Seller of its
obligations hereunder and to the following additional conditions precedent:
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<PAGE>
(a) If the Effective Time is not prior to the execution and
delivery of the Underwriting Agreement, the Effective Time shall have occurred
not later than 6:00 p.m. New York City time on the date of the Underwriting
Agreement or such later time or date as shall have been consented to by the
Underwriters.
(b) If the Effective Time is prior to the execution and delivery
of the Underwriting Agreement, the Prospectus and any supplements thereto shall
have been filed with the Commission in accordance with the Rules and Regulations
and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Seller or the Underwriters, shall be contemplated by the Commission.
(c) The Underwriters shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time is prior to the execution and
delivery of the Underwriting Agreement, shall be on or prior to the date of the
Underwriting Agreement or, if the Effective Time is subsequent to the execution
and delivery of the Underwriting Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the Registration Statement to be filed
shortly prior to the Effective Time), of Deloitte & Touche L.L.P. with respect
to certain agreed-upon procedures, confirming that such accountants are
independent public accountants within the meaning of the Act and the Rules and
Regulations, and substantially in the form of the draft to which the
Underwriters has previously agreed and otherwise in form and substance
reasonably satisfactory to the Underwriters and counsel for the Underwriters.
(d) Subsequent to the execution and delivery of the Underwriting
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change materially and adversely affecting (A) the Trust
Property taken as a whole or (B) the business or properties of the Seller, each
Subservicer or BANC ONE CORPORATION which, in the reasonable judgment of the
Underwriters in the case of either (A) or (B) makes it impractical or
inadvisable to market the Certificates on the terms and in the manner
contemplated in the Prospectus; (ii) any downgrading in the rating of any debt
securities of BANC ONE CORPORATION or any of its Affiliates by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any such debt securities (other than
an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange; (iv) any suspension
of trading of any securities of BANC ONE CORPORATION on any exchange or in the
over-the-counter market; (v) any banking moratorium declared by Federal or New
York authorities; or (vi) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress, or any
other substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the
Certificates.
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(e) The Underwriters shall have received an opinion of Squire,
Sanders & Dempsey L.L.P., special counsel to the Seller, dated the Closing Date,
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, to the effect that:
(i) The Seller has been duly organized and is validly existing
as a national banking association under the laws of the United States of
America, with corporate power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is currently conducted, and to enter into and perform its
obligations under the Underwriting Agreement and the Pooling and
Servicing Agreement.
(ii) The Seller has duly authorized, executed and delivered
the written order to the Trustee to execute and deliver the
Certificates. When the Certificates have been duly executed, delivered
and authenticated in accordance with the Pooling and Servicing Agreement
and delivered and paid for pursuant to the Underwriting Agreement, the
Certificates will be validly issued, outstanding and entitled to the
benefits of the Pooling and Servicing Agreement, subject as to
enforceability to the effects of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws now
or hereafter in effect relating to creditors' rights generally and
subject to general principles of equity (whether in a proceeding at law
or in equity).
(iii) The Seller has duly authorized, executed and delivered
the Underwriting Agreement and the Pooling and Servicing Agreement and
the Pooling and Servicing Agreement is the legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance
with its terms, subject as to enforceability to the effects of
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws now or hereafter in effect
relating to creditors' rights generally or the rights of creditors of
institutions the deposits of which are insured by the Federal Deposit
Insurance Corporation ("FDIC") and subject to general principles of
equity (whether applied in a proceeding at law or in equity).
(iv) Neither the transfer of the Trust Property by the Seller
to the Trustee on behalf of the Trust, nor the execution and delivery by
the Seller of the Underwriting Agreement and the Pooling and Servicing
Agreement, nor the consummation by the Seller of the transactions
contemplated by the Underwriting Agreement or the Pooling and Servicing
Agreement nor the performance by the Seller of its obligations
thereunder will (i) violate the articles of association or by-laws, each
as amended, of the Seller or (ii) violate or contravene the terms of
applicable provisions of statutory law or regulation.
(v) To such counsel's knowledge, there are no actions,
proceedings or investigations pending against the Seller or threatened
against the Seller before any court, administrative agency or tribunal
(i) asserting the invalidity of the Trust, the Underwriting Agreement or
the Pooling and Servicing Agreement, (ii) seeking to prevent the
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consummation of any of the transactions contemplated by the Underwriting
Agreement or the Pooling and Servicing Agreement or the execution and
delivery thereof or (iii) that could reasonably be expected to
materially and adversely affect the enforceability of the Underwriting
Agreement or the Pooling and Servicing Agreement against the Seller or
the ability of the Seller to perform its obligations thereunder.
(vi) No consent, license, approval, authorization or order of,
or filing with, any court or governmental agency or body is required of
the Seller for the consummation by the Seller of the transactions
contemplated in the Underwriting Agreement or the Pooling and Servicing
Agreement, except such consents, licenses, approvals, authorizations or
orders as have been obtained or such filings as have been made and
except where the failure to obtain the same would not have a material
adverse effect upon the rights of the Certificateholders.
(vii) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Seller that
are required to be disclosed in the Registration Statement, other than
those disclosed therein.
(viii) The Seller is not, and will not as a result of the
offer and sale of the Certificates as contemplated in the Prospectus and
the Underwriting Agreement become, an "investment company" as defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), or a company "controlled by" an "investment company" within the
meaning of the Investment Company Act.
(ix) All actions required, if any, to be taken and all filings
required to be made by the Seller or the Trust under the Act and the
Exchange Act prior to the sale of the Certificates have been duly taken
or made.
(x) The Pooling and Servicing Agreement need not be qualified
under the Trust Indenture Act and the Trust is not required to register
under the Investment Company Act.
(xi) Such counsel has been advised by the Commission's staff
that the Registration Statement has become effective under the Act; any
required filing of the Prospectus pursuant to Rule 424(b) promulgated
under the Act has been made in the manner and within the time period
required under such rule; and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose are pending
or threatened by the Commission.
(xii) The statements in the Prospectus under the headings
"Summary of Terms--Federal Tax Status and State Franchise Tax
Consequences," "Federal Income Tax Consequences," "State and Local Tax
Consequences," "Summary of Terms--ERISA Considerations," and "ERISA
Considerations," to the extent that they constitute statements of
matters of law or legal conclusions with respect thereto, have been
reviewed by such counsel and accurately describe the material
consequences to holders of the Certificates under the Code and ERISA.
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(xiii) Such counsel shall state that they have participated in
the preparation of the Registration Statement and no facts have come to
their attention which may cause them to believe that the Registration
Statement, as of the Effective Time, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus, as of its date or the Closing Date,
contains any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that such counsel need not express any view with respect to the
financial, statistical or computational material included in the
Registration Statement or the Prospectus.
(xiv) The Pooling and Servicing Agreement meets each of the
requirements of Section 13(e) of the Federal Deposit Insurance Act, as
amended (the "FDIA"), and neither Section 11(d)(9) nor Section
11(n)(4)(I) of the FDIA would prevent the Pooling and Servicing
Agreement from forming the basis of a claim against the FDIC as
conservator or receiver or in its corporate capacity, or against any
bridge bank chartered pursuant to Section 11(n) of the FDIA. For
purposes of this paragraph (xiv), such counsel may assume that from the
time of its execution the Pooling and Servicing Agreement has been and
will be an official record (as such term is used in Sections
11(n)(4)(I)(iv) and 13(e)(i)(D) of the FDIA) of the Seller.
(xv) To such counsel's knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments to which the Seller is a party that are required to be filed
as exhibits to the Registration Statement other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto.
(xvi) The Trust will not be classified as an association
taxable as a corporation for federal income tax purposes and, instead,
the Trust will be treated either as a grantor trust under subpart E,
part I of subchapter J of the Internal Revenue Code of 1986, as amended
(the "Code") or as a partnership under subchapter K of the Code and,
except with respect to amounts received with respect to the Receivables
which are payable by the Trust to the Seller or to the Collateral Agent
for deposit in the Reserve Fund and certain amounts payable by the Trust
to the Servicer, each Certificateholder will be treated as the owner of
an undivided pro rata interest in the income and corpus attributable to
the Trust.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the States of Ohio, New York and Texas.
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(f) The Underwriters shall have received the opinion of Squire,
Sanders & Dempsey L.L.P., special counsel to the Seller, dated the Closing Date,
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, regarding the creation, attachment and perfection of a first
priority security interest in the Receivables, the Financed Vehicles in the
State of Ohio and the property held in the Reserve Fund in favor of the Trustee
on behalf of the Certificateholders. Such opinion may contain such assumptions,
qualifications and limitations as are customary in opinions of this type and are
reasonably acceptable to counsel to the Underwriters. In rendering such opinion,
such counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York, Texas and Ohio.
(g) The Underwriters shall have received the opinion of in-house
counsel to the Seller, or such other counsel acceptable to the Underwriters and
counsel for the Underwriters, dated the Closing Date, satisfactory in form and
substance to the Underwriters and counsel for the Underwriters to the effect
that: neither the execution and delivery by the Seller of the Pooling and
Servicing Agreement nor the consummation by the Seller of the transactions
contemplated therein nor the fulfillment of the terms thereof by the Seller will
(a) violate the articles of association or by-laws of the Seller, (b) result in
a breach, violation or acceleration of, or constitute a default under, any term
or provision of any material indenture or other material agreement or instrument
of which such counsel has knowledge after due inquiry to which the Seller is a
party or by which it is bound or (c) result in a violation of or contravene the
terms of any Federal or Texas statute or, to such counsel's knowledge, any order
or regulation applicable to the Seller of any Federal or Texas court, regulatory
body, administrative agency or governmental body having jurisdiction over the
Seller.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Texas.
(h) The Underwriters shall have received the opinion of Squire,
Sanders & Dempsey L.L.P. counsel to the Seller, or such other counsel acceptable
to the Underwriters and counsel for the Underwriters, dated the Closing Date,
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters to the effect that:
(i) The Receivables are chattel paper as defined in the UCC as
in effect in the State of Texas.
(ii) To the extent that Article 9 of the Uniform Commercial
Code as in effect in the State of Texas (the "Texas UCC") is applicable
(without regard to conflicts of laws principles), if a court concludes
that the transfer of the Receivables from the Seller to the Trustee for
the benefit of the Certificateholders is a sale, the interest of the
Trustee in the Receivables, the interest of the Trustee in the Seller's
security interests in the Financed Vehicles securing the Receivables and
the proceeds of each of the foregoing will be perfected upon the filing
of the UCC-1 financing statements with such filing
-12-
<PAGE>
offices as such counsel deems necessary or appropriate (the "Filing
Offices") and will constitute a first priority perfected interest
therein. If a court concludes that such transfer is not a sale, assuming
the Pooling and Servicing Agreement constitutes a grant by the Seller to
the Trustee of a valid security interest in the Receivables, the
security interest of the Trustee in the Receivables and the interest of
the Trustee in the Seller's security interests in the Financed Vehicles
securing the Receivables and the proceeds of each of the foregoing will
be perfected upon the filing of the UCC-1 financing statements with the
Filing Offices and will constitute a first priority perfected security
interest therein and in the proceeds thereof, and such security
interests will be prior to any other security interest that is perfected
solely by the filing of financing statements under the Texas UCC,
excluding purchase money security interests under ss. 9-312(4) of the
UCC and temporarily perfected security interests in proceeds under ss.
9-306(3) of the Texas UCC. Except for the subsequent filing of
continuation statements within the prescribed time period, no filing or
other action, other than the filing of the UCC-1 financing statements
with the Filing Offices, is necessary to perfect and maintain the
interest or the security interest of the Trustee on behalf of the Trust
in the Receivables, the security interests in the Financed Vehicles
securing the Receivables and the proceeds of each of the foregoing
against third parties; provided, however, that such Receivables could be
subject to such claims of other persons who take or who have taken
possession of the Receivables for new value in the ordinary course of
such person's business and without knowledge of the transfer to the
Trustee.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Texas.
(i) The Underwriters shall have received an opinion addressed to
it of Stroock & Stroock & Lavan LLP, in its capacity as counsel to the
Underwriters, dated the Closing Date, with respect to the validity of the
Certificates and such other related matters as the Underwriters shall reasonably
require and the Seller shall have furnished or caused to be furnished to such
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(j) The Underwriters shall have received an opinion of counsel to
the Trustee, dated the Closing Date and satisfactory in form and substance to
the Underwriters and counsel for the Underwriters, to the effect that:
(i) The Trustee is a banking corporation validly existing and
in good standing under the laws of the State of New York.
(ii) The Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Pooling and
Servicing Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of the Pooling and Servicing
Agreement.
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<PAGE>
(iii) The Pooling and Servicing Agreement has been duly
executed and delivered by the Trustee and constitutes a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee in
accordance with its respective terms, except that such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium,
liquidation, or other similar laws applicable to banking corporations
affecting the enforcement of creditors' rights generally, and by general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(iv) The Certificates have been duly authenticated by the
Trustee in accordance with the terms of the Pooling and Servicing
Agreement.
(k) The Underwriters shall have received copies of each opinion
of counsel delivered to either rating agency, together with a letter addressed
to the Underwriters, dated the Closing Date, to the effect that each Underwriter
may rely on each such opinion to the same extent as though such opinion was
addressed to each as of its date.
(l) The Underwriters shall have received a certificate dated the
Closing Date of Bank One, Texas, N.A., executed by any two of the Chairman of
the Board, the President, any Executive Vice President, Senior Vice President or
Vice President, the Treasurer, any Assistant Treasurer, the Secretary, the
principal financial officer or the principal accounting officer of Bank One,
Texas, N.A., in which such officer shall state that, to the best of its
knowledge after reasonable investigation, (i) the representations and warranties
of Bank One, Texas, N.A., contained in the Underwriting Agreement and the
Pooling and Servicing Agreement are true and correct in all material respects,
(ii) that Bank One, Texas, N.A., has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied under such agreements at
or prior to the Closing Date, (iii) that no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are contemplated by the Commission, and
(iv) since December 31, 1996, except as may be disclosed in the Prospectus or in
such certificate, no material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the business
or properties of Bank One, Texas, N.A., has occurred.
(m) The Underwriters shall have received evidence satisfactory to
it that, on or before the Closing Date, UCC-1 financing statements have been or
are being filed in the appropriate filing offices reflecting the transfer of the
interest in the Receivables and the proceeds thereof to the Trustee on behalf of
the Trust.
(n) The Class A Certificates shall be rated "AAA" or its
equivalent, and the Class B Certificates shall be rated at least "A" or its
equivalent, in each case by Moody's, S&P and Fitch and none shall have placed
either the Class A Certificates or the Class B Certificates under surveillance
or review with possible negative implications.
(o) The issuance of the Certificates shall not have resulted in a
reduction or withdrawal by any Rating Agency of the current rating of any
outstanding securities issued or originated by the Seller.
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<PAGE>
The Seller will provide or cause to be provided to the
Underwriters such conformed copies of such of the foregoing opinions,
certificates, letters and documents as the Underwriters shall reasonably
request.
7. Indemnification and Contribution. (a) The Seller will
indemnify and hold each Underwriter harmless against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto or any related preliminary prospectus, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Seller will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with the
Underwriters' Information provided, further, that the Seller shall not be liable
to any Underwriter to the extent that any such loss, claim, damage or liability
of such Underwriter arises as a result of a misstatement or omission or alleged
misstatement or omission in any related preliminary prospectus that was
corrected in the Prospectus (and copies of which Prospectus were furnished to
the Underwriters) and such Underwriter, if required by law, failed to give or
send to the purchaser, at or prior to the written confirmation of sale, a copy
of the Prospectus.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Seller against any losses, claims, damages or
liabilities to which the Seller may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus or any amendment or supplement thereto or any related preliminary
prospectus, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Seller by such Underwriter
through the Underwriters specifically for use therein, and will reimburse the
Seller for any legal or other expenses reasonably incurred by the Seller in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred.
-15-
<PAGE>
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by the indemnified party of the
counsel appointed by the indemnifying party, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that (i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties, except that in no event shall the
indemnifying party be liable for the expenses of more than one separate counsel
representing the indemnified parties who are parties to such action, suit,
investigation, inquiry or proceeding and (ii) in any event, the indemnified
party or parties shall be entitled, at its or their own expense to have counsel
chosen by such indemnified party or parties participate in, but not conduct, the
defense. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability from any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnifying party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Seller on the one hand and the Underwriters on the other from the offering
of the Certificates or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Seller on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Seller on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Seller bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault
-16-
<PAGE>
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Seller or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by the related Underwriter exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Seller under this Section shall be in
addition to any liability which the Seller may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Seller, to each officer of the Seller
who has signed the Registration Statement and to each person, if any, who
controls the Seller within the meaning of the Act.
8. Survival of Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller or its officers and of the Underwriters set forth in or made pursuant to
the Underwriting Agreement or contained in certificates of officers of the
Seller submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, the Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If for any reason the
purchase of the Certificates by the Underwriters is not consummated, the Seller
shall remain responsible for the expenses to be paid or reimbursed by the Seller
pursuant to Section 5(m) and the respective obligations of the Seller and the
Underwriters pursuant to Section 7 shall remain in effect. If for any reason the
purchase of the Certificates by the Underwriters is not consummated (other than
because of a failure to satisfy the conditions set forth in items (iii), (v) and
(vi) of Section 6(d)), the Seller will reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Certificates.
9. Failure to Purchase the Certificates. If any Underwriter or
Underwriters default in its obligations to purchase its portion of Class A
and/or Class B Certificates hereunder, and the aggregate principal amount that
such defaulting Underwriter or Underwriters agreed but failed to purchase does
not exceed 10% of the total principal amount of the Certificates, the
Underwriters may make arrangements satisfactory to the Seller for the purchase
-17-
<PAGE>
of such Certificates by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date, the nondefaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Certificates that such defaulting
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
so default and the aggregate principal amount of the Certificates with respect
to such default or defaults exceeds 10% of the total principal amount of the
Certificates, and arrangements satisfactory to the Underwriters are not made by
the Seller for the purchase of such Certificates by other persons within 48
hours after such default, the Underwriting Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Seller, except as
provided in Section 8. As used in the Underwriting Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter or Underwriters
from liability for its default.
10. Notices. Any written request, demand, authorization,
direction, notice, consent or waiver shall be personally delivered or mailed
certified mail, return receipt requested (or in the form of telex or facsimile
notice, followed by written notice as aforesaid) and shall be deemed to have
been duly given upon receipt, if sent to the Underwriters, when delivered to
Banc One Capital Corporation, 150 East Gay Street, 24th Floor, Columbus, OH
43271-0340, Attention: Asset Backed Securities Department (fax # (614)
221-2441), and Salomon Brothers Inc, Seven World Trade Center, New York, New
York 10048, (fax # (212) 783-3848), and if sent to the Seller, when delivered to
Bank One, Texas, N.A., 1717 Main Street, Dallas, Texas 75201, Attention: Chief
Financial Officer (fax # (214) 290-3749).
11. Successors. The Underwriting Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligations hereunder.
12. Counterparts. The Underwriting Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
13. Applicable Law. The Underwriting Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York without
regard to the choice of law provisions thereof.
-18-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Seller and the
Underwriters in accordance with its terms.
Very truly yours,
BANK ONE, TEXAS, N.A.
By: ______________________________
Name:
Title
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first written above.
BANC ONE CAPITAL CORPORATION
By: ________________________________
Name:
Title:
SALOMON BROTHERS INC
By: ________________________________
Name:
Title:
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<PAGE>
SCHEDULE I
INITIAL PRINCIPAL
AMOUNT OF
UNDERWRITER CLASS CERTIFICATES
- ----------- ----- ------------
Banc One Capital A $__________
Corporation
Salomon Brothers Inc A $__________
Banc One Capital B $__________
Corporation
Salomon Brothers Inc B $__________
Exhibit 4.1
[Draft 12/3/97]
POOLING AND SERVICING
AGREEMENT
between
BANK ONE, TEXAS, N.A.,
as
Seller and Servicer
and
BANKERS TRUST COMPANY,
as Trustee,
On behalf of the Certificateholders,
and as Collateral Agent
Dated as of December 1, 1997
Banc One Auto Grantor Trust 1997-B
$572,563,000.00 Class A ___% Asset Backed Certificates
$36,547,423.59 Class B ___% Asset Backed Certificates
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
Definitions
<S> <C> <C>
SECTION 1.1. Definitions...................................................................1
SECTION 1.2. Usage of Terms...............................................................17
SECTION 1.3. Calculations.................................................................17
SECTION 1.4. References...................................................................18
SECTION 1.5. References to the Trust......................................................18
SECTION 1.6. Action by or Consent of Certificateholders...................................18
ARTICLE II.
The Trust Property
SECTION 2.1. Conveyance of Trust Property.................................................18
SECTION 2.2. Representations and Warranties as to Each Receivable.........................18
SECTION 2.3. Repurchase upon Breach.......................................................22
SECTION 2.4. Custody of Receivable Files..................................................22
SECTION 2.5. Duties of Servicer as Custodian..............................................23
SECTION 2.6. Instructions; Authority To Act...............................................24
SECTION 2.7. Custodian's Indemnification..................................................24
SECTION 2.8. Effective Period and Termination.............................................24
ARTICLE III.
Administration and Servicing of the Trust Property
SECTION 3.1. Duties of Servicer...........................................................24
SECTION 3.2. Collection and Allocation of Receivable Payments.............................25
SECTION 3.3. Realization upon Receivables.................................................26
SECTION 3.4. Physical Damage Insurance....................................................26
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.......................26
SECTION 3.6. Covenants of Servicer........................................................26
SECTION 3.7. Purchase of Receivables upon Breach..........................................27
SECTION 3.8. Servicing Fee................................................................27
SECTION 3.9. Servicer's Certificate.......................................................27
SECTION 3.10. Annual Statement as to Compliance; Notice of Default.........................27
i
<PAGE>
SECTION 3.11. Annual Independent Certified Public Accountants' Report......................28
SECTION 3.12. Access to Certain Documentation and Information Regarding Receivables........28
SECTION 3.13. Servicer Expenses............................................................28
SECTION 3.14. Appointment of Subservicer...................................................29
ARTICLE IV.
Distributions; Reserve Fund; Statements to Certificateholders
SECTION 4.1. Establishment of Accounts....................................................29
SECTION 4.2. Collections..................................................................31
SECTION 4.3. Additional Deposits..........................................................32
SECTION 4.4. Net Deposits.................................................................32
SECTION 4.5. Distributions................................................................32
SECTION 4.6. Reserve Fund.................................................................34
SECTION 4.7. Statements to Certificateholders.............................................35
ARTICLE V.
[Intentionally Omitted]
ARTICLE VI.
The Certificates
SECTION 6.1. The Certificates.............................................................37
SECTION 6.2. Authentication and Delivery of Certificates..................................37
SECTION 6.3. Registration of Transfer and Exchange of Certificates........................38
SECTION 6.4. Reserved.....................................................................39
SECTION 6.5. Reserved.....................................................................39
SECTION 6.6. Mutilated, Destroyed, Lost or Stolen Certificates............................39
SECTION 6.7. Persons Deemed Owners........................................................39
SECTION 6.8. Access to List of Certificateholders' Names and Addresses....................39
SECTION 6.9. Maintenance of Office or Agency..............................................40
SECTION 6.10. Book-Entry Certificates......................................................40
SECTION 6.11. Notices to Clearing Agency...................................................41
SECTION 6.12. Definitive Certificates......................................................41
ARTICLE VII.
The Seller
SECTION 7.1. Representations of Seller....................................................42
ii
<PAGE>
SECTION 7.2. Continued Existence..........................................................43
SECTION 7.3. Liability of Seller; Indemnities.............................................43
SECTION 7.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller......44
SECTION 7.5. Limitation on Liability of Seller and Others.................................45
SECTION 7.6. Seller May Own Certificates..................................................45
ARTICLE VIII.
The Servicer
SECTION 8.1. Representations of Servicer..................................................45
SECTION 8.2. Indemnities of Servicer......................................................47
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer....48
SECTION 8.4. Limitation on Liability of Servicer and Others...............................48
SECTION 8.5. Bank One, Texas, N.A. Not To Resign as Servicer..............................49
SECTION 8.6. Existence....................................................................49
SECTION 8.7. Tax Accounting...............................................................49
SECTION 8.8. Covenants....................................................................49
ARTICLE IX.
Servicing Termination
SECTION 9.1. Events of Servicing Termination..............................................50
SECTION 9.2. Appointment of Successor.....................................................51
SECTION 9.3. Payment of Servicing Fee.....................................................52
SECTION 9.4. Notification to Certificateholders...........................................52
SECTION 9.5. Waiver of Past Events of Servicing Termination...............................52
ARTICLE X.
The Trustee
SECTION 10.1. Acceptance by Trustee........................................................52
SECTION 10.2. Duties of Trustee............................................................52
SECTION 10.3. Trustee's Certificate........................................................54
SECTION 10.4. Trustee's Assignment of Purchased Receivables................................54
SECTION 10.5. Certain Matters Affecting the Trustee........................................54
SECTION 10.6. Trustee Not Liable for Certificates or Receivables...........................56
SECTION 10.7. Trustee May Own Certificates.................................................57
SECTION 10.8. Trustee's Fees and Expenses..................................................57
SECTION 10.9. Eligibility Requirements for Trustee.........................................57
SECTION 10.10. Resignation or Removal of Trustee............................................58
iii
<PAGE>
SECTION 10.11. Successor Trustee...............................................................58
SECTION 10.12. Merger or Consolidation of Trustee..............................................59
SECTION 10.13. Appointment of Co-Trustee or Separate Trustee...................................59
SECTION 10.14. Representations and Warranties of Trustee.......................................60
SECTION 10.15. Reports by Trustee..............................................................61
SECTION 10.16. Tax Accounting..................................................................61
SECTION 10.17. Trustee May Enforce Claims Without Possession of Certificates...................61
ARTICLE XI.
Termination
SECTION 11.1. Termination of the Trust.....................................................61
SECTION 11.2. Optional Purchase of All Receivables.........................................62
ARTICLE XII.
Miscellaneous Provisions
SECTION 12.1. Amendment....................................................................63
SECTION 12.2. Protection of Title to Trust.................................................64
SECTION 12.3. Limitation on Rights of Certificateholders...................................65
SECTION 12.4. Governing Law................................................................66
SECTION 12.5. Notices......................................................................66
SECTION 12.6. Severability of Provisions...................................................67
SECTION 12.7. Assignment...................................................................67
SECTION 12.8. Certificates Nonassessable and Fully Paid....................................67
SECTION 12.9. Intention of Parties.........................................................67
SECTION 12.10. Counterparts.................................................................67
SECTION 12.11. Collateral Agent Protection..................................................67
SECTION 12.12. Limitation of Liability of Trustee and Collateral Agent......................68
</TABLE>
iv
<PAGE>
Page
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SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivable
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Servicer's Certificate
Exhibit D - Form of Monthly Statement to Certificateholders
Exhibit E - Form of Benefit Plan Affidavit
Exhibit F - Form of Trustee's Certificate
v
<PAGE>
POOLING AND SERVICING AGREEMENT dated as
of December 1, 1997 (the "Agreement"), between Bank One,
Texas, N.A., a national banking association (in its
capacity as Seller, the "Seller" or in its capacity as
Servicer, the "Servicer"), and Bankers Trust Company, a
New York banking corporation, as trustee hereunder (the
"Trustee") and as collateral agent with respect to the
Reserve Fund (the "Collateral Agent").
In consideration of the premises and of the mutual agreements
herein contained, and other good and valuable consideration, the receipt of
which is acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I.
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"Accounts" has the meaning specified in Section 4.1(a)(ii).
"Account Property" means all amounts and investments held from
time to time in any Account or the Reserve Fund, as the case may be (whether in
the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Affiliated Bank" means each of Bank One, N.A., Bank One,
Wisconsin, Bank One, Texas, N.A. and Bank One, Indiana, N.A.
"Aggregate Net Losses" means, with respect to a Collection
Period, the aggregate principal balance of all Receivables newly designated
during such Collection Period as Liquidated Receivables minus Liquidation
Proceeds collected during such Collection Period with respect to all Liquidated
Receivables and any Recoveries collected during such Collection Period.
"Agreement" means, this Pooling and Servicing Agreement, as the
same may be amended and supplemented from time to time.
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"Amount Financed" means, with respect to any Receivable, the
amount advanced under such Receivable toward the purchase price of the related
Financed Vehicle, the payment of any physical damage or theft insurance premiums
and any related costs and shown as such in the Contract evidencing such
Receivable.
"APR" or "Annual Percentage Rate" of a Receivable means the
annual rate of finance charges stated in the related Contract expressed as a
percentage.
"Authorized Officer" means (i) with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, managing director, secretary, assistant
secretary, assistant treasurer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject and (ii) with respect to the Servicer,
any officer of the Servicer who is authorized to act for the Servicer in matters
relating to the Trust and who is identified on the list of Authorized Officers
delivered by the Servicer to the Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Banc One Credit Company" means an unincorporated division of
Finance One Corporation, a wholly-owned subsidiary of BANC ONE CORPORATION. Banc
One Credit Company manages the motor vehicle lending operations of BANC ONE
CORPORATION.
"Book-Entry Certificates" mean beneficial interests in the
definitive Certificates described in Section 6.10, the ownership of which shall
be evidenced, and transfers of which shall be made, through book entries by a
Clearing Agency as described in Section 6.10.
"Business Day" means a day other than a Saturday, a Sunday or a
day on which banking institutions or trust companies in New York, New York or
Dallas, Texas or the city in which the Corporate Trust Office is located are
authorized by law, regulation, executive order or governmental decree to be
closed.
"Certificate" means any Class A Certificate or Class B
Certificate.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules, regulations and procedures of such
Clearing Agency).
"Certificate Register" means the register maintained by the
Trustee for the registration of Certificates and of transfers and exchanges of
Certificates as provided in Section 6.3.
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"Certificateholder" or "Holder" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that, solely
for the purpose of giving any consent, request or waiver pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
the Seller, the Servicer or any Person actually known to an Authorized Officer
of the Trustee to be an Affiliate of the Seller or the Servicer, shall not be
taken into account in determining whether the requisite percentage necessary to
effect any such consent, request or waiver shall have been obtained.
"Charge-off Rate" means, with respect to a Collection Period the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of (x) the Pool Balance on the last day of
the immediately preceding Collection Period and (y) the Pool Balance on the last
day in such Collection Period.
"Class A Certificate" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit A hereto.
"Class A Certificateholder" or "Class A Holder" means the Person
in whose name a Class A Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer, shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"Class A Distribution Account" means the account established and
maintained as such pursuant to Section 4.1.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any
Distribution Date, one-twelfth (or, in the case of the first Distribution Date,
a fraction, the numerator of which is __ and the denominator of which is 360) of
the product of the Class A Pass-Through Rate and the Class A Principal Balance
as of the Distribution Date occurring in the preceding Collection Period (after
giving effect to any payments made on such Distribution Date) or, in the case of
the first Distribution Date, the Original Class A Principal Balance.
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"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of Principal Collections for such
Distribution Date plus the Class A Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"Class A Pass-Through Rate" means ___% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months.
"Class A Percentage" means 94%.
"Class A Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Class A
Principal Balance (after giving effect to any distributions made on such
Distribution Date) divided by the Original Class A Principal Balance.
"Class A Principal Balance" equals the Original Class A Principal
Balance, as reduced by all amounts allocable to principal on the Class A
Certificates previously distributed to Class A Certificateholders.
"Class A Principal Carryover Shortfall" means, with respect to
any Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"Class A Principal Distribution" means, with respect to any
Distribution Date (including the Final Scheduled Distribution Date), the sum of
Class A Monthly Principal for such Distribution Date and the Class A Principal
Carryover Shortfall for such Distribution Date; provided, however, that the
Class A Principal Distribution shall not exceed the Class A Principal Balance
immediately prior to such Distribution Date. In addition, on the Final Scheduled
Distribution Date, the principal required to be deposited in the Class A
Distribution Account will include the lesser of (a) any principal due and
remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class A Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class A Principal Balance to zero.
"Class B Certificate" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit B hereto.
"Class B Certificateholder" or "Class B Holder" means the Person
in whose name a Class B Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class B
Certificate registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer, shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
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"Class B Distribution Account" means the account established and
maintained as such pursuant to Section 4.1.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any
Distribution Date, one-twelfth (or, in the case of the first Distribution Date,
a fraction, the numerator of which is __ and the denominator of which is 360) of
the product of the Class B Pass-Through Rate and the Class B Principal Balance
as of the Distribution Date occurring in the preceding Collection Period (after
giving effect to any payments made on such Distribution Date) or, in the case of
the first Distribution Date, the Original Class B Principal Balance.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of Principal Collections for such
Distribution Date plus the Class B Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"Class B Pass-Through Rate" means ___% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months.
"Class B Percentage" means 6%.
"Class B Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Class B
Principal Balance (after giving effect to any distributions made on such
Distribution Date) divided by the Original Class B Principal Balance.
"Class B Principal Balance" equals the Original Class B Principal
Balance, as reduced by all amounts allocable to principal on the Class B
Certificates previously distributed to Class B Certificateholders.
"Class B Principal Carryover Shortfall" means, with respect to
any Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
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"Class B Principal Distribution" means, with respect to any
Distribution Date (including the Final Scheduled Distribution Date), the sum of
Class B Monthly Principal for such Distribution Date and the Class B Principal
Carryover Shortfall for such Distribution Date; provided, however, that the
Class B Principal Distribution shall not exceed the Class B Principal Balance
immediately prior to such Distribution Date. In addition, on the Final Scheduled
Distribution Date, the principal required to be distributed to Class B
Certificateholders will include the lesser of (a) any principal due and
remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class B Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class B Principal Balance to zero, and, in
the case of clauses (a) and (b), remaining after any required distribution of
the amount described in clause (a) to the Class A Distribution Account.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be DTC.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means December __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means Bankers Trust Company, a New York
banking corporation, in its capacity as collateral agent with respect to the
Reserve Fund for the Certificateholders.
"Collection Account" means the account or accounts established
and maintained as such pursuant to Section 4.1.
"Collection Period" means, with respect to any Distribution Date,
the calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
"Collections" mean, for a Distribution Date, the sum of the
Interest Collections and Principal Collections for such Distribution Date.
"Computer Tape" means the computer tape furnished by the Seller
describing certain characteristics of the Receivables as of the Cutoff Date.
"Contract" means a motor vehicle retail installment sale
contract.
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"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Agreement is located
at Four Albany Street, New York, New York 10006, or at such other address as the
Trustee may designate from time to time by notice to the Certificateholders, the
Seller and the Servicer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Certificateholders, the Seller and the Servicer).
"Customary Practices and Procedures" means, with respect to the
servicing of any Receivable, the customary standards, practices and procedures
of the Servicer with respect to the servicing of comparable automotive
receivables that such Person services for itself or others and with respect to
the functions performed as custodian of a Receivable File, the customary
standards, practices and procedures of the Servicer with respect to the
functions performed as custodian of comparable automobile receivable files for
which such Person serves as custodian for itself or others.
"Cutoff Date" means December 1, 1997.
"Cutoff Date Principal Balance" means, with respect to a
Receivable, the Amount Financed minus the sum of (i) that portion of all
payments (including prepayments) made by or on behalf of the related Obligor
prior to the Cutoff Date and allocable to principal using the Simple Interest
Method, (ii) any portion of extended warranty contract costs or of physical
damage, theft, credit life or disability insurance premiums included in the
Amount Financed that was refunded prior to the Cutoff Date and (iii) any
prepayment in full or any partial prepayments applied to reduce the principal
balance of the Receivable, but only to the extent not included in clause (i).
"Dealer" means a dealer who sold a Financed Vehicle and who
originated and assigned the Receivable for such Financed Vehicle to the related
Affiliated Bank under a Dealer Agreement.
"Dealer Agreement" means any agreement between the related
Affiliated Bank and a Dealer relating to the acquisition of Receivables.
"Deemed Cured" means, as of any Distribution Date, with respect
to a Trigger Event that has occurred, that no Trigger Event shall have occurred
as of such Distribution Date and that on the two consecutively preceding
Distribution Dates, no Trigger Event shall have occurred.
"Definitive Certificates" shall have the meaning specified in
Section 6.10.
"Delinquency Percentage" means, with respect to a Collection
Period the ratio of (a) the outstanding principal balance of the Receivables 60
days or more delinquent (which amount shall include Receivables in respect of
Financed Vehicles that have been repossessed but not yet sold or otherwise
liquidated), as of the last day of such Collection Period, determined in
accordance with the Customary Practices and Procedures, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
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"Delivery" when used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery, transfer thereof to the Trustee or
Collateral Agent (all references to the Collateral Agent in this
definition relate to the Reserve Fund), as applicable, or their
respective nominee, agent or custodian by physical delivery to the
Trustee or Collateral Agent, as applicable, or its nominee, agent or
custodian endorsed to, or registered in the name of, the Trustee or
Collateral Agent, as applicable, or their respective nominee, agent or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, the Trustee or Collateral Agent, as applicable, or their
respective nominee, agent or custodian or endorsed in blank to a
financial intermediary (as defined in Section 8-313 of the UCC) and the
making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the
Trustee or Collateral Agent, as applicable, or their respective nominee,
agent or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Trustee or Collateral Agent, as applicable, or their respective nominee,
agent or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the making
by such clearing corporation of appropriate entries on its books
reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or Collateral
Agent, as applicable, or their respective nominee, agent or custodian of
such securities and the making by such financial intermediary of entries
on its books and records identifying such certificated securities as
belonging to the Trustee or Collateral Agent, as applicable, or their
respective nominee, agent or custodian (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in registered
form shall be in the name of the Trustee or Collateral Agent, as
applicable, or their respective nominee, agent or custodian; and such
additional or alternative procedures as may hereafter become appropriate
to effect the complete transfer of ownership of any such Account
Property to the Trustee or Collateral Agent, as applicable, or their
respective nominee, agent or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law,
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including applicable Federal regulations and Articles 8 and 9 of the
UCC: book-entry registration of such Account Property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a financial
intermediary which is also a "depository" pursuant to applicable Federal
regulations and issuance by such financial intermediary of a deposit
advice or other written confirmation of such book-entry registration to
the Trustee or Collateral Agent, as applicable, or its nominee, agent or
custodian of the purchase by the Trustee or Collateral Agent, as
applicable, or its nominee, agent or custodian of such book-entry
securities; the making by such financial intermediary of entries in its
books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee or Collateral Agent, as applicable, or its
nominee, agent or custodian and indicating that such custodian holds
such Account Property solely as agent for the Trustee or Collateral
Agent, as applicable, or its nominee, agent or custodian; and such
additional or alternative procedures as may hereafter become appropriate
to effect complete transfer of ownership of any such Account Property to
the Trustee or Collateral Agent, as applicable, or its nominee, agent or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof; and
(c) with respect to any item of Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by the Trustee or Collateral Agent, as applicable, or its nominee, agent
or custodian of such uncertificated security and the making by such
financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Trustee or
Collateral Agent, as applicable, or its nominee, agent or custodian.
"Depository Agreement" means the agreement among the Seller, the
Trustee and DTC, dated December __, 1997.
"Determination Date" with respect to any Distribution Date, means
the later of the tenth Business Day and the sixteenth calendar day of the
calendar month in which such Distribution Date occurs.
"Distribution Date" means, with respect to each Collection
Period, the 20th day of the following month (or, if such 20th day is not a
Business Day, the next following Business Day), the first such Distribution Date
being January 20 1998.
"Distribution Date Statement" means, the statement described in
Section 4.7
"DTC" means The Depository Trust Company.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution (other than the Seller or
any affiliate of the Seller) organized under the laws of the United States of
America or any one of the States thereof or the District of Columbia (or any
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domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution shall have a credit rating from each Rating Agency
in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means any depository institution (other
than the Seller or any affiliate of the Seller) organized under the laws of the
United States of America or any one of the States thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) has (A) either a
long-term senior unsecured debt rating of AAA or a short-term senior unsecured
debt or certificate of deposit rating of A-1+ or better by Standard & Poor's and
(B)(1) a long-term senior unsecured debt rating of A-1 or better and (2) a
short-term senior unsecured debt rating of P-1 or better by Moody's, or any
other long-term, short-term or certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the FDIC. If so
qualified, the Trustee and Collateral Agent may be considered an Eligible
Institution.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution (including the Seller or any Affiliate of the
Seller) or trust company incorporated under the laws of the United
States of America or any State thereof or the District of Columbia (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities (including depository receipts issued by any such
institution or trust company as custodian with respect to any obligation
referred to in clause (a) above or portion of such obligation for the
benefit of the holders of such depository receipts); provided, however,
that at the time of the investment or contractual commitment to invest
therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or
other short-term senior unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) of such depository
institution or trust company shall have a credit rating from S&P of A-1+
and from Moody's of P-1;
(c) commercial paper (including commercial paper of the Seller or
any Affiliate of the Seller) having, at the time of the investment or
contractual commitment to invest therein, a rating from S&P of A-1+ and
from Moody's of P-1;
(d) investments in money market mutual funds (including funds for
which the Seller or the Trustee or any of their respective Affiliates is
investment manager or advisor) having a rating from S&P of AAA-m or
AAAm-G and from Moody's of Aaa;
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(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) referred to in clause (b) above; and
(g) any other investment which would not cause either Rating
Agency to downgrade or withdraw its then current rating of either the
Class A Certificates or the Class B Certificates, as directed in writing
by either Rating Agency to the Trustee.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Entity" means (i) an employee benefit plan, retirement
arrangement, individual retirement account or Keogh subject to either Title I of
ERISA or Section 4975 of the Code, or (ii) an entity whose source of funds to be
used for the purchase of a Class B Certificate includes the assets of any such
plan, arrangement or account.
"Event of Servicing Termination" means an event specified in
Section 9.1.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means the July 2004
Distribution Date.
"Final Scheduled Maturity Date" means January 31, 2004.
"Financed Vehicle" means a new or used automobile, van or light
duty truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Fitch" means Fitch IBCA, Inc., or its successors in interest.
"Independent Counsel" means, when used with respect to any
specified Person, that the Person (a) is in fact independent of the Servicer,
the Trust, the Seller and any Affiliate of any of the foregoing Persons and (b)
is not an officer or employee of the Servicer, the Trust, the Seller or any
Affiliate of any of the foregoing Persons.
"Insolvency Event" means, with respect to a specified Person, (a)
the filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or State bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or
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similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or State bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance" has the meaning specified in Section 3.4.
"Interest Collections" for a Distribution Date shall be the sum
of the following amounts with respect to the preceding Collection Period: (i)
that portion of all collections on the Receivables allocable to interest in
respect of such Collection Period; (ii) Liquidation Proceeds attributable to
interest on the Receivables which became Liquidated Receivables during such
Collection Period in accordance with the Servicer's customary servicing
procedures, to the extent not included in clause (i) above; (iii) the Purchase
Amount of each Receivable that became a Purchased Receivable during such
Collection Period to the extent attributable to accrued interest on such
Receivable; and (iv) Recoveries received during such Collection Period. Interest
Collections for any Distribution Date shall exclude all payments and proceeds
(including Liquidation Proceeds) of any Receivable, the Purchase Amount of which
has been included in Collections in a prior Collection Period.
"Lien" means a security interest, lien, charge, pledge, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that may attach to a Financed Vehicle or Receivable by operation of law as a
result of any act or omission by the related Obligor.
"Liquidated Receivable" means any defaulted Receivable liquidated
by the Servicer through the sale of a Financed Vehicle or otherwise or which the
Servicer has, after using all reasonable efforts to realize upon such
Receivable, charged-off.
"Liquidation Proceeds" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source (other
than any proceeds from any Dealer reserve) on a Liquidated Receivable during the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the sum of any amounts expended by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivable.
"Moody's" means Moody's Investors Service, Inc., or its
successors in interest.
"Obligor" on a Receivable means the purchaser or the
co-purchasers of the Financed Vehicle and any other Person who is obligated for
the indebtedness arising from such Receivable.
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"Officer's Certificate" means a certificate signed by the
chairman of the board, the president, the vice chairman of the board, any
executive vice president, any senior vice president or any vice president.
"Opinion of Counsel" means one or more written opinions of
counsel who may, except as otherwise expressly provided in this Agreement, be
employees of or counsel to the Seller or the Servicer and who shall be
reasonably satisfactory to the Trustee, and which opinion or opinions shall be
addressed to the Trustee as Trustee, and shall be in form and substance
satisfactory to the Trustee; provided, however, that any opinion regarding the
status of the Trust as a grantor trust for federal income tax purposes shall be
delivered by Independent Counsel.
"Original Class A Principal Balance" means $572,563,000.00.
"Original Class B Principal Balance" means $36,547,423.59.
"Original Pool Balance" means the aggregate Cutoff Date Principal
Balance of the Receivables, which is $609,110,423.59.
"Original Principal Balance" means the sum of the Original Class
A Principal Balance and the Original Class B Principal Balance.
"Person" means any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Plan" has the meaning specified in Section 6.3.
"Pool Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"Principal Balance" of a Receivable, as of the close of business
on the last day of a Collection Period, means the Amount Financed minus the sum
of (i) that portion of all payments made by or on behalf of the related Obligor
on or prior to such day and allocable to principal using the Simple Interest
Method, (ii) any refunded portion of extended warranty contract costs or of
physical damage, theft, credit life or disability insurance premiums included in
the Amount Financed, (iii) any payment of the Purchase Amount with respect to
the Receivable allocable to principal and (iv) any prepayment in full or any
partial prepayments applied to reduce the principal balance of the Receivable,
but only to the extent not included in clause (i).
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"Principal Collections" for a Distribution Date shall be the sum
of the following amounts with respect to the preceding Collection Period: (i)
that portion of all collections on the Receivables allocable to principal in
respect of such Collection Period; (ii) all Liquidation Proceeds attributable to
the principal amount of Receivables which became Liquidated Receivables during
such Collection Period in accordance with the Customary Practices and Procedures
only to the extent not included in clause (i) above; (iii) the Purchase Amount
of each Receivable repurchased by the Seller or purchased by the Servicer during
such Collection Period, to the extent attributable to principal; and (iv)
partial prepayments on Receivables in respect of such Collection Period relating
to refunds of extended warranty contract costs or of credit life or disability
insurance policy premiums, but only if such costs or premiums were financed by
the respective Obligor and only to the extent not included in clause (i) above.
Principal Collections on any Distribution Date shall exclude all payments and
proceeds (including Liquidation Proceeds) of any Receivable, the Purchase Amount
of which has been included in Collections in a prior Collection Period.
"Purchase Amount" means the amount, as of the close of business
on the last day of a Collection Period, required to prepay in full a Receivable
under the terms thereof including interest at the APR to the end of the month of
purchase.
"Purchased Receivable" means, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller or the Servicer pursuant to this Agreement.
"Rating Agency" means either S&P, Moody's or Fitch. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by the Seller, notice of which designation shall be given to the
Trustee, the Collateral Agent and the Servicer.
"Rating Agency Condition" means, with respect to any action, that
each Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Seller, the Servicer or the
Trustee in writing prior to the expiration of such 10-day period that such
action will, in and of itself, result in a reduction or withdrawal of the then
current rating of either class of Certificates. With respect to Section 4.2, the
Rating Agency Condition shall be deemed to be satisfied on the Closing Date
after receipt of a letter from each Rating Agency dated such date stating that
the Class A Certificates are rated in the highest investment rating category and
the Class B Certificates are rated at least "A" or its equivalent.
"Realized Losses" means, for any period, the excess of the
Principal Balance of any Liquidated Receivable over Liquidation Proceeds to the
extent allocable to principal.
"Receivable" means any Contract listed on Schedule A (which
Schedule may be in the form of microfiche), but excluding Liquidated Receivables
and Purchased Receivables.
"Receivable File" means, with respect to a Receivable, the
documents, specified in Section 2.4.
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"Record Date" means, in respect of each Collection Period and the
related Distribution Date, the last day of the calendar month immediately
preceding such Distribution Date.
"Recoveries" with respect to any Collection Period, means all
monies received by the Servicer with respect to any Liquidated Receivable during
any Collection Period following the Collection Period in which such Receivable
became a Liquidated Receivable, net of the sum of (i) any expenses incurred by
the Servicer in connection with the collection of such Receivable and the
disposition of the Financed Vehicle (to the extent not previously reimbursed)
and (ii) any payments required by law to be remitted to the Obligor, but, in any
event, not less than zero.
"Reserve Fund" means the fund established and maintained as such
pursuant to Section 4.1(b).
"Reserve Fund Deposit" means, with respect to the Closing Date,
$30,455,521.18.
"Sale and Servicing Agreements" means, the sale and servicing
agreements dated as of July 1, 1996, as amended as of _________, 1997 among the
Seller and (i) Bank One, N.A., as originator, administrator and servicer, (ii)
Bank One, N.A., as administrator, Bank One, Wisconsin, as originator and
servicer and (iii) Bank One, N.A., as administrator, Bank One, Wisconsin, as
servicer and Bank One, Indiana, N.A., as originator.
"S&P" or "Standard & Poor's" means Standard & Poor's Ratings
Services, a Division of The McGraw-Hill Companies, Inc., or its successors in
interest.
"Schedule of Receivables" means each list attached hereto as
Schedule A identifying the Receivables conveyed by the Seller, which list may be
in the form of microfiche, or computer readable tape or diskette.
"Seller" means Bank One, Texas, N.A., as the seller of the
Receivables, and each successor to Bank One, Texas, N.A., (in the same capacity)
pursuant to Section 7.4.
"Servicer" means Bank One, Texas, N.A., the servicer of the
Receivables, and each successor to Bank One, Texas, N.A. (in the same capacity)
pursuant to Section 8.3, and each successor Servicer appointed and acting
pursuant to Section 9.2.
"Servicer's Certificate" has the meaning specified in Section
3.9.
"Servicing Fee" means, with respect to any Distribution Date, the
fee payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 3.8.
"Servicing Fee Rate" shall be 1.0% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
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"Simple Interest Method" means the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and the remainder of
such payment is allocable to principal.
"Specified Reserve Balance" means, with respect to any
Distribution Date, the greater of (a) 5.00% of the sum of the Class A Principal
Balance and the Class B Principal Balance on such Distribution Date (after
giving effect to all distributions with respect to the Certificates to be made
on such Distribution Date) except that, if on any Distribution Date a Trigger
Event has occurred and is not Deemed Cured, then the Specified Reserve Balance
shall be an amount equal to the greater of 7.00% of the sum of the Class A
Principal Balance and the Class B Principal Balance on such Distribution Date
(after giving effect to all distributions with respect to the Certificates to be
made on such Distribution Date) and the amount specified in clause (b) below;
provided however, at such time as a Trigger Event is Deemed Cured, the
percentage in this clause (a) shall revert back to 5.00%, or (b) 1.50% of the
sum of the Original Class A Principal Balance and the Original Class B Principal
Balance; provided, that, the Specified Reserve Balance shall never be greater
than the sum of the Class A Principal Balance and the Class B Principal Balance.
In no circumstances will the Seller be required to deposit any amounts in the
Reserve Fund other than the Reserve Fund Deposit.
"STAMP" has the meaning specified in Section 6.3.
"State" means any state in the United States of America.
"Subcustodian" has the meaning specified in Section 2.4(b).
"Transfer Date" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"Trigger Event" means, with respect to any Distribution Date, the
occurrence of either (x) the average of the Charge-off Rates for the three
preceding Collection Periods exceeds 2.00% with respect to the first through the
seventh Distribution Dates, 3.00% with respect to the eigth through the
sixteenth Distribution Dates or 2.50% with respect to any Distribution Dates
thereafter or (y) the average of the Delinquency Percentages for the three
preceding Collection Periods exceeds 1.75%.
"Trust" means the Banc One Auto Grantor Trust 1997-B created by
this Agreement.
"Trustee" means Bankers Trust Company, a New York banking
corporation, as Trustee under this Agreement, or any successor, and any
successor Trustee appointed and acting pursuant to Sections 10.10 and 10.11.
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"Trust Property" means the (i) Receivables; (ii) all monies
received under the Receivables on and after the Cutoff Date; (iii) such amounts
as from time to time may be held in the Collection Account, the Class A
Distribution Account and the Class B Distribution Account (including the Account
Property related thereto); (iv) security interests in the Financed Vehicles; (v)
the Seller's rights, if any, to receive proceeds from claims on physical damage,
credit life, theft and disability insurance policies covering the Financed
Vehicles or the Obligors; (vi) the rights of the Trustee for the benefit of the
Certificateholders under this Agreement; (vii) the rights to receive payments
under the circumstances specified herein from the Reserve Fund; and (viii) all
proceeds (within the meaning of Section 9-306 of the UCC) of the foregoing.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction.
SECTION 1.2. Usage of Terms.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(b) As used in this Agreement, in any instrument governed
hereby and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation."
(d) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
SECTION 1.3. Calculations. Except as otherwise specifically
provided herein, all calculations of the amount of interest accrued on the
Certificates during any Collection Period and all calculations of the amount of
the Servicing Fee payable with respect to a Collection Period shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
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SECTION 1.4. References. All references to the first day of a
Collection Period shall refer to the opening of business on such day. All
references to the last day of a Collection Period shall refer to the close of
business on such day.
SECTION 1.5. References to the Trust. Whenever any provision of
this Agreement refers to actions to be taken by the Trust, matters to be
consented to by the Trust or deliveries or notices to the Trust, such provision
shall be deemed to refer to actions to be taken by the Trustee, matters to be
consented to by the Trustee or deliveries or notices to the Trustee.
SECTION 1.6. Action by or Consent of Certificateholders. Whenever
any provision of this Agreement refers to action to be taken or consented to by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken or consented to by Certificateholders.
ARTICLE II.
The Trust Property
SECTION 2.1. Conveyance of Trust Property. In consideration of
the Trustee's delivery to, or upon the written order of, the Seller of
authenticated Certificates, in authorized denominations, in an aggregate amount
equal to the Original Principal Balance, the Seller does hereby sell, transfer,
assign and convey to the Trustee, upon the terms and conditions hereof, the
Trust Property to the Trustee on behalf of the Trust, without recourse.
SECTION 2.2. Representations and Warranties as to Each
Receivable. The Seller makes the following representations and warranties as to
each Receivable conveyed by the Seller to the Trustee hereunder on which the
Trustee shall conclusively rely in accepting the Trust Property on behalf of the
Trust and authenticating the Certificates. Unless otherwise indicated, such
representations and warranties are being made as of the execution and delivery
of this Agreement, but shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trustee on behalf of the Trust.
(a) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the Receivables
from the Seller to the Trustee on behalf of the Trust and that the beneficial
interest in and title to such Receivables not be part of the receivership in the
event of the filing of a petition for receivership by or against the Seller. No
Receivable has been sold, transferred, assigned or pledged by the Seller to any
Person other than the Trustee on behalf of the Trust. Immediately prior to the
transfer and assignment herein contemplated, the Seller had good and marketable
title to each Receivable, free and clear of all Liens and, immediately upon the
transfer thereof, the Trustee on behalf of the Trust shall have good and
marketable title to each such Receivable, free and clear of all Liens; and the
transfer of the Receivables to the Trustee on behalf of the Trust has been
perfected under the UCC.
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(b) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Trustee a first priority perfected
ownership interest in the Receivables, and to give the Trustee a first priority
perfected security interest therein, shall have been made.
(c) Characteristics of Receivables. Each Receivable (A)
has been originated by a Dealer in the regular course of such Dealer's business,
purchased from such Dealer by an Affiliated Bank in the ordinary course of such
Affiliated Bank's business and purchased by the Seller from such Affiliated Bank
(in the case of Affiliated Banks other than the Seller) in the ordinary course
of the Seller's business, and each Obligor was approved in accordance with Banc
One Credit Company's standard underwriting procedures in effect at the time such
Receivable was originated or purchased, (B) has created or shall create a valid,
subsisting and enforceable first priority security interest in favor of the
related Affiliated Bank in the Financed Vehicle, which security interest has
been assigned by such Affiliated Bank to the Seller and is assignable by the
Seller to the Trustee; (C) contains customary and enforceable provisions under
the laws of the State governing such Receivables such that the rights and
remedies of the holder thereof are adequate for realization against the
collateral of the benefits of the security; and (D) provides for equal monthly
payments at a fixed rate of interest calculated based on the Simple Interest
Method that fully amortizes the Amount Financed by maturity and yields interest
at the Annual Percentage Rate assuming payments are made on the due date
thereof.
(d) Schedule of Receivables. The information set forth in
Schedule A is true and correct in all material respects as of the opening of
business on the Cutoff Date and no selection procedures believed by the Seller
to be adverse to the Certificateholders were utilized in selecting the
Receivables. The Computer Tape regarding the Receivables is true and correct in
all material respects as of the Cutoff Date.
(e) Compliance With Law. Each Receivable complied at the
time it was originated or made and at the Closing Date complies in all material
respects with all requirements of applicable Federal, State and local laws and
regulations thereunder, including usury laws, the Federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations B, Z and AA, State adaptations of the
Uniform Consumer Code and other consumer credit laws and equal credit
opportunity and disclosure laws.
(f) Binding Obligation. As of the Cutoff Date, each
Receivable represents the legal, valid and binding payment obligation in writing
of the Obligor thereunder, enforceable by the holder thereof in accordance with
its terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
now or hereafter in effect related to or affecting creditors' rights generally
and subject to general principles of equity (whether applied in a proceeding at
law or in equity).
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(g) No Government Obligor. As of the Cutoff Date, none of
the Receivables is due from the United States of America or any State or from
any agency, department or instrumentality of the United States of America or any
State.
(h) Security Interest in Financed Vehicle. Immediately
prior to the sale, assignment and transfer thereof, each Receivable shall be
secured by a validly perfected first priority security interest in the Financed
Vehicle in favor of the related Affiliated Bank as secured party or all
necessary and appropriate actions have been commenced that would result in the
valid perfection of a first security interest in the Financed Vehicle in favor
of the related Affiliated Bank as secured party.
(i) Receivables in Force. As of the Cutoff Date, no
Receivable has been satisfied, subordinated or rescinded, nor has any Financed
Vehicle been released from the Lien granted by the related Receivable in whole
or in part unless another vehicle has been substituted as collateral securing
the Receivable without any other modification to such Receivable.
(j) No Waiver. As of the Cutoff Date, no provision of a
Receivable has been waived except as reflected in the computer records relating
to such Receivable.
(k) No Defenses. As of the Cutoff Date, neither the
Seller nor the related Affiliated Bank has received notice that any right of
rescission, setoff, counterclaim or defense has been asserted or threatened with
respect to any Receivable.
(l) No Liens. Neither the Seller nor the related
Affiliated Bank has received notice of any Liens or claims, including Liens for
work, labor, materials or unpaid State or Federal taxes relating to any Financed
Vehicle securing the related Receivable, that are or may be prior to or equal to
the Lien granted by such Receivable.
(m) No Default. No Receivable has a payment that is more
than 30 days overdue as of the Cutoff Date and, except as permitted in this
paragraph, no default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has occurred; and no continuing
condition that with notice or the lapse of time would constitute a default,
breach, violation or event (in any such case) permitting acceleration under the
terms of any Receivable has arisen as of the Cutoff Date; and the Seller has not
waived and shall not waive any of the foregoing.
(n) Maturity of Receivables. The weighted average
original maturity of the Receivables is 59.48 months as of the Cutoff Date; the
weighted average remaining term of the Receivables is 57.17 months as of the
Cutoff Date; and the latest scheduled maturity of any Receivable shall be no
later than the Final Scheduled Maturity Date.
(o) No Bankruptcies. No Obligor on any Receivable was
noted in the related Receivable File as having filed for bankruptcy in a
proceeding which remained undischarged as of the Cutoff Date.
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(p) No Repossessions. As of the Cutoff Date, no Financed
Vehicle securing any Receivable has been repossessed and is in the possession of
the Servicer or any agent thereof.
(q) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(r) APR. The weighted average APR of the Receivables as
of the Cutoff Date is approximately 10.19%.
(s) Paid Ahead. As of the Cutoff Date, no Receivable is
more than six months paid ahead.
(t) Principal Balance. The average principal balance of
the Receivables as of the Cutoff Date is $14,248.20. The aggregate Cutoff Date
Principal Balance of the Receivables is $609,110,423.59. As of the Cutoff Date,
each Receivable has a principal balance between $250 and $50,000.
(u) Financing. Approximately 49.52% of the aggregate
Cutoff Date Principal Balance of the Receivables, constituting approximately
39.66% of the number of Receivables as of the Cutoff Date, represents financing
of new vehicles; the remainder of the Receivables represents financing of used
vehicles.
(v) Insurance. The Affiliated Bank, in accordance with
its customary procedures, has determined that the Obligor, at the time the
Receivable was originated, obtained, applied for or made arrangements to obtain
physical damage insurance covering the Financed Vehicle and under the terms of
the Receivable the Obligor is required to maintain such insurance.
(w) Lawful Assignment. No Receivable has been originated
in, or as of the Cutoff Date is subject to the laws of, any jurisdiction under
which the sale, transfer and assignment of such Receivable or this Agreement is
unlawful, void or voidable.
(x) Insurance Premiums. As of the Cutoff Date, less than
1.00% of the aggregate Cutoff Date Principal Balance of the Receivables,
constituting less than 1.00% of the number of Receivables included amounts
attributable to the payment of any physical damage or theft insurance premium.
(y) One Original. There is only one original executed
copy of each Receivable.
(z) Location of Receivable Files. The Receivable Files
are kept at one or more of the locations listed in Schedule B.
(aa) Computer Records. As of the Closing Date, the
accounting and computer records relating to the Receivables of the Seller have
been marked to show the absolute ownership by the Trustee on behalf of the Trust
of the Receivables.
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SECTION 2.3. Repurchase upon Breach. The Seller, the Servicer or
the Trustee, as the case may be, shall inform the other parties to this
Agreement promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties made pursuant to Section 2.2. With respect to
this Agreement in the case of the Trustee, "discovery" shall mean actual
knowledge by an Authorized Officer of the Trustee. Unless any such breach shall
have been cured within 60 days following the discovery thereof by the Trustee or
receipt by the Trustee of written notice from the Seller or the Servicer of such
breach, the Seller shall be obligated to repurchase any Receivable in which the
interests of the Certificateholders are materially and adversely affected by any
such breach as of the first day succeeding the end of such 60 day period that is
the last day of a Collection Period (or, at the Seller's option, the last day of
the first Collection Period following the discovery). In consideration of and
simultaneously with the repurchase of the Receivable, the Seller shall remit to
the Collection Account the Purchase Amount in the manner specified in Section
4.3 and the Trustee shall execute such assignments and other documents
reasonably requested by the Seller in order to effect such repurchase. The sole
remedy of the Trust, the Trustee or the Certificateholders with respect to a
breach of representations and warranties pursuant to Section 2.2 and the
agreement contained in this Section shall be to require the Seller to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein. The Trustee shall not have any duty to conduct any affirmative
investigation as to the occurrence of any conditions requiring the repurchase of
any Receivable pursuant to this Section.
SECTION 2.4. Custody of Receivables Files. (a) To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trustee hereby revocably appoints the Servicer, and the Servicer hereby accepts
such appointment, to act as the agent of the Trustee as custodian of the
following documents or instruments (the "Receivable File") with respect to each
Receivable:
(i) the original executed copy of the Receivable;
(ii) a record of the information supplied by the Obligor
in the original credit application;
(iii) the original certificate of title (it being
understood that the original certificates of title generally are not
delivered to the related Affiliated Bank for 90 days but that promptly
upon delivery they shall be delivered to the Servicer as custodian
hereunder) or, if the laws of the state in which the Obligor is located
do not provide for possession of the certificate of title by the
Servicer, such other documents that the Servicer shall keep on file, in
accordance with Customary Practices and Procedures, sufficient in such
state to evidence the security interest of the related Affiliated Bank
in the Financed Vehicle; and
(iv) any and all other documents that the Servicer or a
Subcustodian shall keep on file, in accordance with Customary Practices
and Procedures, relating to a Receivable, an Obligor or a Financed
Vehicle.
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(b) To assure uniform quality in servicing the
Receivables and to reduce administrative costs, the Trustee hereby acknowledges
that the Servicer may appoint one or more Subcustodians (each, a "Subcustodian")
of the Receivable Files; provided, however, that if a Subcustodian is a Person
other than Banc One Services Corporation or an Affiliated Bank, the Rating
Agency Condition shall have been satisfied in connection therewith. Such
appointment shall not relieve the Servicer from its obligations as custodian of
all the Receivable Files hereunder. If the Servicer appoints any Person other
than Banc One Services Corporation as Subcustodian, the Servicer shall provide
written notice thereof to the Trustee.
SECTION 2.5. Duties of Servicer as Custodian. (a) Safekeeping.
The Servicer shall hold, or shall cause a Subcustodian to hold, the Receivable
Files on behalf of the Trustee for the benefit of all present and future
Certificateholders and maintain or cause a Subcustodian to maintain such
accurate and complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Servicer and the Trustee to comply with this
Agreement. In performing its duties as custodian the Servicer shall act, and
shall cause a Subcustodian to act, with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the receivable
files relating to all comparable automotive receivables that the Servicer
services for itself or others, except that the Servicer shall not be obligated,
and does not intend, to (i) pay any premium for force-placed insurance
concerning any Financed Vehicle or (ii) monitor any Obligor's maintenance of
Insurance. The Servicer shall conduct, or cause to be conducted, periodic audits
of the Receivable Files held by it under this Agreement and of the related
accounts, records and computer systems, in such a manner as shall enable the
Trustee to verify the accuracy of the Servicer's record-keeping in the event the
Trustee is required to do so pursuant to the terms of this Agreement. The
Servicer shall promptly report to the Trustee any failure on its part to hold
the Receivable Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer
shall maintain or cause a Subcustodian to maintain each Receivable File at one
of the offices specified in Schedule B or at such other office as shall be
specified to the Trustee by written notice not later than 90 days after any
change in location. Upon reasonable prior notice, the Servicer shall make
available to the Trustee or its duly authorized representatives, attorneys or
auditors a list of locations of the Receivable Files and records and computer
systems maintained by the Servicer and permit access to such Receivable Files at
such times during normal business hours as the Trustee shall require at the sole
expense of the Servicer.
(c) Release of Documents. Upon written instruction from
the Trustee, the Servicer shall release or cause to be released any Receivable
File to the Trustee, the Trustee's agent or the Trustee's designee, as the case
may be, at such place or places as the Trustee may designate, as soon as
practicable and upon the release and delivery of any such document in accordance
with the instructions of the Trustee, the Servicer shall be released from any
further liability and responsibilities under this Section 2.5 with respect to
such documents unless and until such time as any such document may be returned
to the Servicer.
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SECTION 2.6. Instructions; Authority To Act. The Servicer shall
be deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by an Authorized Officer
of the Trustee.
SECTION 2.7. Custodian's Indemnification. The Servicer as
custodian shall indemnify and hold harmless the Trustee and its officers,
directors, employees and agents for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses (including reasonable
attorneys' fees and expenses) that may be imposed on, incurred by or asserted
against the Trustee or any of its officers, directors, employees and agents as
the result of any improper act or omission in any way relating to the
maintenance and custody by the Servicer or a Subcustodian of the Receivable
Files where the final determination that any such improper act or omission by
the Servicer or a Subcustodian which resulted in such liability, obligation,
loss, damage, payment, cost or expense is established by a court of law, by an
arbitrator or by way of settlement agreed to by the Servicer; provided, however,
that the Servicer shall not be liable for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Trustee.
This provision shall not be considered to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.
SECTION 2.8. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section. If
Bank One, Texas, N.A. shall resign as Servicer in accordance with the provisions
of this Agreement or if all of the rights and obligations of any Servicer shall
have been terminated under Section 9.1, the appointment of such Servicer as
custodian shall be terminated by the Trustee or by Holders of Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates taken together
as a single class, in the same manner as the Trustee or such Holders may
terminate the rights and obligations of the Servicer under Section 9.1. The
Trustee may terminate the Servicer's appointment as custodian, with cause, at
any time upon written notification to the Servicer, and without cause upon 30
days' prior written notification to the Servicer and the Rating Agencies. As
soon as practicable after any termination of such appointment, the Servicer
shall deliver at its expense the Receivable Files to the Trustee or the
Trustee's agent at such place or places as the Trustee may reasonably designate
in writing. If the Servicer shall be terminated as custodian hereunder for any
reason but shall continue to serve as Servicer, the Trustee shall, or shall
cause its agent to, make the Receivable Files available to the Servicer during
normal business hours upon reasonable notice so as to permit the Servicer to
perform its obligations as Servicer hereunder at the sole expense of the
Servicer.
ARTICLE III.
Administration and Servicing of the Trust Property
SECTION 3.1. Duties of Servicer. The Servicer, on behalf of the
Trust (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using Customary Practices
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and Procedures, except that the Servicer shall not be obligated, and does not
intend, to (i) pay any premium for force-placed insurance concerning any
Financed Vehicle or (ii) monitor any Obligor's maintenance of Insurance. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions. Subject to the
provisions of Section 3.2, the Servicer shall follow Customary Practices and
Procedures in performing its duties as Servicer. Without limiting the generality
of the foregoing, the Servicer is authorized and empowered to execute and
deliver, on behalf of itself, the Trust, the Trustee and the Certificateholders
or any of them, any and all instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments, with
respect to such Receivables or to the Financed Vehicles securing such
Receivables provided that such action is consistent with this Agreement. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Trustee
(in the case of a Receivable other than a Purchased Receivable) shall thereupon
be deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or legal proceeding
it shall be held that the Servicer may not enforce a Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
such Receivable the Trustee shall, at the Servicer's expense and written
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Trustee or the Certificateholders. The Trustee shall
upon the written request of the Servicer execute any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments.
(a) The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Receivables as and when the same shall
become due and shall follow Customary Practices and Procedures. The Servicer
shall allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others.
(b) The Servicer may not grant extensions or modify the
original due dates of a Receivable; provided, however, that (i) in those
circumstances where the Servicer determines that there has been a temporary
interruption in the Obligor's ability to make payments and (ii) following a
solicitation of the related Obligor in accordance with Customary Practices and
Procedures, the Servicer may (x) after six payments have been made, grant one
one-month extension with respect to a Receivable, (y) after each additional
twelve payments have been made, grant a one-month extension with respect to a
Receivable and (z) change the original due date once during the term of a
Receivable to a new due date within 20 days of the original scheduled due date
of such Receivable, provided that the Servicer may not extend the date for final
payment by the Obligor of any Receivable beyond the Collection Period preceeding
the Final Scheduled Distribution Date. The Servicer may in its discretion waive
any late payment charge or any other fees that may be collected in the ordinary
course of servicing a Receivable. The Servicer shall not voluntarily agree to
any reduction of (i) the original interest rate, (ii) the amount of the original
regular scheduled payment or (iii) the Principal Balance, of any Receivable. The
Servicer shall not advance any funds to any Person as a result of actions taken
by it pursuant to this Section 3.2(b).
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SECTION 3.3 Realization upon Receivables. On behalf of the Trust,
the Servicer shall use its best efforts, consistent with Customary Practices and
Procedures, to repossess or otherwise convert the ownership of the Financed
Vehicle securing any Receivable as to which the Servicer shall have determined
eventual payment in full is unlikely. From time to time, as appropriate for
servicing or foreclosing upon any Receivable, the Trustee shall, upon written
request of the Servicer, execute such documents as shall be necessary to
prosecute any such proceedings. The Servicer shall follow Customary Practices
and Procedures as it shall deem necessary or advisable in its servicing of
automotive receivables, which may include reasonable efforts to realize proceeds
from Receivables repurchased by a Dealer, pursuant to a Dealer Agreement, as a
result of a breach of a representation or warranty in the related Dealer
Agreement or a default by an Obligor resulting in the repossession of the
Financed Vehicle under such Dealer Agreement. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its reasonable discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 3.4. Physical Damage Insurance. The Servicer shall, in
accordance with Customary Practices and Procedures, require that each Obligor
shall have obtained and shall maintain fire, theft and collision insurance or
comprehensive and collision insurance covering the Financed Vehicle
("Insurance") as of the execution of the Receivable. The Servicer shall enforce
its rights under the Receivables to require the Obligors to maintain Insurance,
in accordance with Customary Practices and Procedures, except that the Servicer
shall not be obligated, and does not intend, to (i) pay any premium for
force-placed insurance concerning any Financed Vehicle or (ii) monitor any
Obligor's maintenance of Insurance.
SECTION 3.5. Maintenance of Security Interests in Financed
Vehicles. The Servicer shall, in accordance with Customary Practices and
Procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle in
favor of the applicable Affiliated Bank. The Servicer is hereby authorized to
take such steps as are necessary to re-perfect such security interest on behalf
of the Trustee in the event of the relocation of a Financed Vehicle or for any
other reason.
SECTION 3.6. Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing any Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession or except as may be required by
an insurer in order to receive proceeds from insurance covering such Financed
Vehicle, nor shall the Servicer impair the rights of the Trustee or the
Certificateholders in such Receivables (it being understood that no action of
the Servicer taken in compliance with the terms of this Agreement shall be
deemed to impair such rights), nor shall the Servicer increase the number of
scheduled payments due under a Receivable.
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SECTION 3.7. Purchase of Receivables upon Breach. The Servicer or
the Trustee shall inform the other party and the Seller promptly, in writing,
upon the discovery of any breach pursuant to Section 3.2(b), 3.5 or 3.6. Unless
the breach shall have been cured within 60 days following such discovery thereof
by the Trustee or the receipt by the Trustee of written notice of such breach,
the Servicer shall be obligated to purchase any Receivable in which the
interests of the Certificateholders are materially and adversely affected by
such breach as of the first day succeeding the end of such 60 day period that is
the last day of a Collection Period (or, at the Servicer's option, the last day
of the first Collection Period following the discovery). In consideration of the
purchase of any such Receivable pursuant to the preceding sentence, the Servicer
shall remit the Purchase Amount in the manner specified in Section 4.3. The sole
remedy of the Trustee or the Certificateholders with respect to a breach
pursuant to Section 3.2(b), 3.5 or 3.6 shall be to require the Servicer to
purchase Receivables pursuant to this Section. The Trustee shall have no duty to
conduct any affirmative investigation as to the occurrence of any condition
requiring the purchase of any Receivable pursuant to this Section.
SECTION 3.8. Servicing Fee. The servicing fee for each
Distribution Date shall equal the product of (i) one-twelfth, (ii) the Servicing
Fee Rate and (iii) the Pool Balance as of the first day of the related
Collection Period (the "Servicing Fee"). As additional servicing compensation,
the Servicer shall also be entitled to retain certain non-sufficient funds
charges and other administrative fees or similar charges allowed by applicable
law with respect to the Receivables as well as investment earnings (net of
losses) on the Accounts.
SECTION 3.9. Servicer's Certificate. On each Determination Date,
the Servicer shall deliver to the Trustee and the Seller, with a copy to the
Rating Agencies, an Officer's Certificate of the Servicer (the "Servicer's
Certificate") containing all information necessary to make the distributions
pursuant to Sections 4.5 and 4.6 for the Collection Period preceding the date of
such Servicer's Certificate. Receivables to be purchased by the Servicer or to
be repurchased by the Seller shall be identified by the Servicer by account
number with respect to such Receivable (as specified in Schedule A).
SECTION 3.10. Annual Statement as to Compliance; Notice of
Default. (a) The Servicer shall deliver to the Trustee, on or before April 30 of
each year beginning April 30, 1999, an Officer's Certificate, dated as of
December 31 of the preceding year, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period (or, in the case of the
first such report, during the period from the Closing Date to December 31, 1998)
and of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year 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. The Trustee shall send a copy of such certificate and
the report referred to in Section 3.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 3.11 may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
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(b) The Servicer shall deliver to the Trustee and the
Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five (5) Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, would become an Event of Servicing Termination under Section
9.1(a) or (b).
SECTION 3.11. Annual Independent Certified Public Accountants'
Report. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer or the Seller,
to deliver to the Seller and the Trustee on or before April 30 of each year
beginning April 30, 1999 a report addressed to the Servicer, the Seller, the
Trustee and each Rating Agency to the effect that (i) such accountants have
examined the assertions by the Servicer's management about the Servicer's
compliance with this Agreement during the preceding calendar year (or, in the
case of the first such report, during the period from the Closing Date to
December 31, 1998) and (ii) in such accountants' opinion, such assertions are
fairly stated in all material respects, except for such exceptions as such firm
shall believe to be immaterial and such other exceptions as shall be set forth
in such report. In the event such firm requires the Trustee to agree to the
procedures performed by such firm, the Servicer shall direct the Trustee in
writing to so agree; it being understood and agreed that the Trustee will
deliver such letter of agreement in conclusive reliance upon the direction of
the Servicer, and the Trustee makes no independent inquiry or investigation as
to, and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
Such report will also indicate that the firm is independent of
the Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide and shall cause the related
Subcustodian to provide to the Certificateholders access to the Receivable Files
in such cases where the Certificateholders shall be required by applicable
statutes or regulations to review such documentation as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the locations where the Receivable Files are held and
described in Section 2.5(b). Nothing in this Section shall affect the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access to information as a result of such obligation shall not constitute a
breach of this Section.
SECTION 3.13. Servicer Expenses. The Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of the Trustee or its agent and independent
accountants, taxes imposed on the Servicer and expenses incurred in connection
with distributions and reports to Certificateholders.
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SECTION 3.14. Appointment of Subscriber. The Servicer may appoint
any affiliate of the Servicer which is in the business of performing such
responsibilities to act as a subservicer and to perform all or a portion of its
obligations as Servicer and/or custodian hereunder. Notwithstanding the
foregoing, the Servicer shall remain obligated and be liable to the Trust, the
Trustee and the Certificateholders for the servicing and administering of the
Receivables in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subservicer and to
the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Receivables. The fees and expenses of any
subservicer shall be as agreed between the Servicer and any subservicer from
time to time and none of the Trust, the Trustee or the Certificateholders shall
have any responsibility therefor. All amounts received by a subservicer shall be
deemed to be received by the Servicer.
ARTICLE IV.
Distributions; Reserve Fund; Statements to Certificateholders
SECTION 4.1. Establishment of Accounts. (a) (i) The Trustee shall
establish and maintain in the name of the Trustee one or more Eligible Deposit
Accounts (the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders. The Trustee shall establish and maintain in the name of the
Trustee an Eligible Deposit Account (the "Class A Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Class A Certificateholders. The Trustee shall
establish and maintain in the name of the Trustee an Eligible Deposit Account
(the "Class B Distribution Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Class B
Certificateholders. The Collection Account, the Class A Distribution Account and
the Class B Distribution Account shall not be held in the State of Texas or
Ohio.
(ii) Funds on deposit in the Collection Account, the
Class A Distribution Account and the Class B Distribution Account
(collectively, the "Accounts") shall be invested by the Trustee in
Eligible Investments selected in writing by the Servicer; provided,
however, it is understood and agreed that the Trustee shall not be
liable for any loss arising from such investment in Eligible
Investments. All such Eligible Investments shall be held by the Trustee
for the benefit of the beneficiaries of the applicable Account;
provided, that on each Distribution Date all interest and other
investment income (net of losses and investment expenses) on funds on
deposit therein shall be withdrawn from the Accounts at the written
direction of the Servicer and shall be paid to the Servicer. Funds on
deposit in the Accounts shall be invested in Eligible Investments that
will mature so that such funds will be available at the close of
business on the Transfer Date preceding the following Distribution Date.
Funds deposited in an Account on a Transfer Date which immediately
precedes a Distribution Date or upon the maturity of any Eligible
Investments are not required to be (but may be) invested overnight.
Neither the Servicer nor the Trustee shall be liable for any investment
losses.
(iii) The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accounts and
in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust
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Property. Except as expressly provided herein, the Accounts shall be
under the sole dominion and control of the Trustee. If, at any time, any
of the Accounts ceases to be an Eligible Deposit Account, the Trustee
shall within 10 Business Days (or such longer period, as to which each
Rating Agency may consent) establish a new Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to
such new Account. In connection with the foregoing, the Servicer agrees
that, in the event that any of the Accounts are not accounts with the
Trustee, the Servicer shall notify the Trustee in writing promptly upon
any of such Accounts ceasing to be an Eligible Deposit Account.
(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee in writing to make withdrawals and
payments from the Accounts for the purpose of permitting the Servicer to
carry out its duties hereunder or permitting the Trustee to carry out
its duties.
(b) (i) The Servicer, for the benefit of the Trust and
the Certificateholders, shall establish and maintain in the name of Bankers
Trust Company as Collateral Agent an Eligible Deposit Account (the "Reserve
Fund"). The Reserve Fund shall not be property of the Trust. The Reserve Fund
shall not be held in the State of Texas or Ohio.
(ii) Funds on deposit in the Reserve Fund shall be
invested by the Collateral Agent in Eligible Investments selected in
writing by the Servicer; provided, however, it is understood and agreed
that the Collateral Agent shall not be liable for any loss arising from
such investment in Eligible Investments. All such Eligible Investments
shall be held by the Collateral Agent for the benefit of the
beneficiaries of the Reserve Fund; provided, that on each Distribution
Date all interest and other investment income (net of losses and
investment expenses) on funds on deposit therein shall be withdrawn from
the Reserve Fund at the written direction of the Servicer and shall be
paid to the Servicer for distribution to the Seller. Funds on deposit in
the Reserve Fund shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on
the Transfer Date preceding the following Distribution Date. Funds
deposited in the Reserve Fund on a Transfer Date which immediately
precedes a Distribution Date or upon the maturity of any Eligible
Investments are not required to be (but may be) invested overnight.
Neither the Servicer nor the Trustee shall be liable for any investment
losses. The Seller will treat these funds, Eligible Investments and
other assets in the Reserve Fund as its own for Federal, State and local
income tax and franchise tax purposes and will report on its tax returns
all income, gain and loss from the Reserve Fund.
(iii) The Reserve Fund shall be under the sole dominion
and control of the Collateral Agent. If, at any time, the Reserve Fund
ceases to be an Eligible Deposit Account, the Servicer shall within 10
Business Days (or such longer period, as to which each Rating Agency may
consent) establish a new Reserve Fund as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Reserve Fund.
In connection with the foregoing, the Servicer agrees that, in the event
that the Reserve Fund is not an account with the Trustee, the Servicer
shall notify the Trustee in writing promptly upon the Reserve Fund
ceasing to be an Eligible Deposit Account.
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(iv) With respect to the Account Property in respect of
the Reserve Fund, the Collateral Agent agrees that:
(A) any Account Property that is held in deposit accounts
shall be held solely in an Eligible Deposit Account subject to
the penultimate sentence of Section 4.1(b)(iii); and, except as
otherwise provided herein, each such Eligible Deposit Account
shall be subject to the exclusive custody and control of the
Collateral Agent, and the Collateral Agent shall have sole
signature authority with respect thereto;
(B) any Account Property that constitutes Physical
Property shall be delivered to the Collateral Agent in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Collateral
Agent or a financial intermediary (as such term is defined in
Section 8-313(4) of the UCC) acting solely for the Collateral
Agent;
(C) any Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Collateral Agent, pending maturity or
disposition, through continued book-entry registration of such
Account Property as described in such paragraph; and
(D) any Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Collateral Agent in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Collateral Agent, pending maturity or
disposition, through continued registration of the Collateral
Agent's (or its nominee's) ownership of such security.
(v) The Servicer shall have the power, revocable by the
Trustee, to instruct the Collateral Agent in writing to make withdrawals
and payments from the Reserve Fund for the purpose of permitting the
Servicer to carry out its duties hereunder or permitting the Collateral
Agent to carry out its duties.
SECTION 4.2. Collections. (a) The Servicer shall remit within two
Business Days of receipt thereof to the Collection Account all payments by or on
behalf of the Obligors with respect to the Receivables (other than certain
nonsufficient funds charges and other administrative fees or similar charges
that may be retained by the Servicer as part of its servicing compensation in
accordance with Section 3.8), and all Liquidation Proceeds and Recoveries, both
as collected during the Collection Period. Notwithstanding the foregoing, for so
long as (i) no Event of Servicing Termination shall have occurred and be
continuing and (ii) the Rating Agency Condition shall have been satisfied (and
any conditions or limitations imposed by the Rating Agencies in connection
therewith are complied with), the Servicer shall remit such collections to the
Collection Account on the related Transfer Date. For purposes of this Article IV
the phrase "payments by or on behalf of Obligors" shall mean payments made with
respect to the Receivables by Persons other than the Servicer or the Seller.
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(b) All collections for the Collection Period shall be
applied by the Servicer as follows: with respect to each Receivable (other than
a Purchased Receivable), payments by or on behalf of the Obligor shall be
applied to interest and principal in accordance with the Simple Interest Method,
as applied by the Servicer. Any excess shall be applied to prepay the
Receivable.
(c) All Liquidation Proceeds shall be applied by the
Servicer to the related Receivable in accordance with Customary Practices and
Procedures.
SECTION 4.3. Additional Deposits. The Servicer and the Seller
shall deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables and the Seller shall
deposit or cause to be deposited therein all amounts to be paid under Section
11.2. The Servicer will deposit or cause to be deposited the aggregate Purchase
Amount with respect to Purchased Receivables within two Business Days after such
obligations become due, unless the Servicer shall not be required to make
deposits within two Business Days of receipt pursuant to Section 4.2(a) (in
which case such deposit will be made by the related Transfer Date). All such
other deposits shall be made on the Transfer Date following the end of the
related Collection Period.
SECTION 4.4. Net Deposits. As an administrative convenience,
unless the Servicer is required to remit collections within two Business Days of
receipt thereof, the Servicer will be permitted to make the deposit of
collections on the Receivables and Purchase Amounts for or with respect to the
Collection Period net of distributions to be made to the Servicer with respect
to the Collection Period. The Servicer, however, will account to the Trustee and
the Certificateholders as if all deposits, distributions and transfers were made
individually.
SECTION 4.5. Distributions. (a) On each Determination Date, the
Servicer shall calculate all amounts required to determine the amounts to be
deposited in the Class A Distribution Account and the Class B Distribution
Account.
(b) Subject to the last paragraph of this Section 4.5(b),
on each Distribution Date, the Servicer shall instruct the Trustee in writing
(based on the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 3.9) to make the following
deposits and distributions for receipt by the Servicer or deposit in the
applicable Account by 12:00 P.M. (New York City time):
(i) to the extent of Interest Collections for such
Distribution Date (and, in the case of shortfalls occurring under clause
(B) below in the Class A Interest Distribution, the Class B Percentage
of Principal Collections for such Distribution Date to the extent of
such shortfalls):
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(A) to the Servicer, the Servicing Fee for such
Distribution Date and all unpaid Servicing Fees from prior
Collection Periods (to the extent such amounts have not been
retained pursuant to Section 4.4);
(B) to the Class A Distribution Account, after the
application of clause (A), the Class A Interest Distribution for
such Distribution Date; and
(C) to the Class B Distribution Account, after the
application of clauses (A) and (B), the Class B Interest
Distribution for such Distribution Date; and
(ii) to the extent of the portion of Principal
Collections and Interest Collections for such Distribution Date
remaining after the application of clauses (i)(A), (B) and (C) above:
(A) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(B) to the Class B Distribution Account, after the
application of clause (A), the Class B Principal Distribution for
such Distribution Date; and
(C) to the Reserve Fund, any amounts remaining after the
application of clauses (i)(A) through (C) and (ii) (A) and (B).
In the event that the Collection Account is maintained with an institution other
than the Trustee, the Servicer shall instruct and cause such institution to make
all deposits and distributions pursuant to this Section 4.5(b) on the related
Transfer Date. The Trustee shall be entitled to conclusively rely on the
Servicer's instructions and any Servicer's Certificate without investigation.
(c) On each Distribution Date, in accordance with the
written direction of the Servicer, all amounts on deposit in the Class A
Distribution Account, after application of Section 4.6 below, will be
distributed to the Class A Certificateholders by the Trustee and all amounts on
deposit in the Class B Distribution Account, after application of Section 4.6
below, will be distributed to the Class B Certificateholders by the Trustee.
Payments under this Section 4.5(c) shall be made to the Certificateholders
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least seven Business Days prior to such Distribution
Date and such Holder's Certificates in the aggregate evidence a denomination of
not less than $1,000,000 or by check mailed by the Trustee to each Holder's
respective address of record (or, in the case of Certificates registered in the
name of a Clearing Agency, or its nominee, by wire transfer of immediately
available funds). To the extent that the Trustee is required to wire funds to
the Certificateholders or the Servicer from the Class A Distribution Account or
the Class B Distribution Account, as applicable, the Servicer shall request the
institution maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, to make a wire transfer of the amount to be
distributed and the institution maintaining the Class A Distribution
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Account or the Class B Distribution Account, as applicable, shall promptly
deliver to the Trustee a confirmation of such wire transfer. To the extent that
the Trustee is required to make payments to Certificateholders by check
hereunder, it shall request the institution maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable, to provide it with a
supply of checks to make such payments. The institution shall, if a request is
made by the Servicer for a wire transfer in accordance with this Section 4.5(c),
wire such funds, in accordance with such instructions by 12:00 P.M. (New York
City time) on such Distribution Date, and it will otherwise act in compliance
with the provisions of this paragraph and the other provisions of this Agreement
applicable to it as the institution maintaining the Class A Distribution Account
or the Class B Distribution Account, as applicable. The Servicer shall take all
necessary action (including requiring an agreement to such effect) to ensure
that any institution maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, agrees to comply, and complies, with the
provisions of this paragraph and the other provisions of this Agreement
applicable to it as the institution maintaining the Class A Distribution Account
or the Class B Distribution Account, as applicable. Initially the institution
shall be the Trustee.
SECTION 4.6. Reserve Fund. (a) On the Closing Date, the Reserve
Fund Deposit shall be deposited into the Reserve Fund from the net proceeds from
the sale of the Certificates. The Seller hereby grants to the Collateral Agent a
security interest in and to the Reserve Fund and any and all property credited
thereto from time to time, including but not limited to Eligible Investments, to
secure payment of the Certificates according to their terms. Amounts held from
time to time in the Reserve Fund will continue to be held by the Collateral
Agent for the benefit of Class A Certificateholders and the Class B
Certificateholders but the Reserve Fund shall not be an asset of the Trust. By
acceptance of their Certificates, Certificateholders shall be deemed to have
appointed Bankers Trust Company as Collateral Agent. Bankers Trust Company
hereby accepts such appointment as Collateral Agent.
(b) On each Distribution Date, the Servicer shall
instruct the Collateral Agent in writing (based on the information contained in
the Servicer's Certificate delivered on the related Determination Date pursuant
to Section 3.9) to withdraw from the Reserve Fund on such Distribution Date, to
the extent of funds available therein, the amounts specified below, in the order
of priority specified below, and deposit such amounts in the Class A
Distribution Account or the Class B Distribution Account, as specified below, on
such Distribution Date:
(i) an amount equal to the excess, if any, of the Class A
Interest Distribution for such Distribution Date over the sum of
Interest Collections for such Distribution Date and the Class B
Percentage of Principal Collections for such Distribution Date will be
deposited into the Class A Distribution Account;
(ii) an amount equal to the excess, if any, of the Class
B Interest Distribution for such Distribution Date over the portion of
Interest Collections for such Distribution Date remaining after the
distribution of the Class A Interest Distribution for such Distribution
Date will be deposited into the Class B Distribution Account;
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(iii) an amount equal to the excess, if any, of the Class
A Principal Distribution for such Distribution Date over the portion of
Principal Collections and Interest Collections for such Distribution
Date remaining after the distribution of the Class A Interest
Distribution and the Class B Interest Distribution for such Distribution
Date will be deposited into the Class A Distribution Account; and
(iv) an amount equal to the excess, if any, of the Class
B Principal Distribution for such Distribution Date over the portion of
Principal Collections and Interest Collections for such Distribution
Date remaining after the distribution of the Class A Interest
Distribution, the Class B Interest Distribution and the Class A
Principal Distribution for such Distribution Date will be deposited into
the Class B Distribution Account.
The Collateral Agent shall be entitled to conclusively rely on the Servicer's
instruction and the Servicer's Certificate without investigation.
(c) If the amount on deposit in the Reserve Fund on any
Distribution Date (after giving effect to all other deposits thereto and
withdrawals therefrom to be made on such Distribution Date) is greater than the
Specified Reserve Balance for such Distribution Date, the Servicer shall
instruct the Collateral Agent in writing to distribute the amount of the excess
to the Seller on such Distribution Date. On the date on which the Trust
terminates, any funds remaining in the Reserve Fund (after all other
distributions to be made from the Reserve Fund pursuant to this Section 4.6 have
been made) shall be distributed to the Seller. Amounts properly distributed to
the Servicer for distribution to the Seller pursuant to Section 4.1(b)(ii) or
this Section 4.6(c) shall not be available under any circumstances to the Trust,
the Trustee or the Certificateholders and the Seller shall in no event
thereafter be required to refund any such distributed amounts.
SECTION 4.7. Statements to Certificateholders. (a) On each
Determination Date, the Servicer shall provide to the Trustee (with a copy to
the Rating Agencies) for the Trustee to forward to each Certificateholder of
record a statement (each a "Distribution Date Statement") setting forth with
respect to the related Collection Period at least the following information as
to the Certificates to the extent applicable:
(i) the amount of the distribution allocable to principal
of the Class A Certificates and the Class B Certificates; the amount of
the distribution allocable to interest on the Class A Certificates and
the Class B Certificates;
(ii) the Pool Balance as of the close of business on the
last day of such Collection Period;
(iii) the amount of the Servicing Fee paid to the
Servicer with respect to such Collection Period and the Class A
Percentage and Class B Percentage of the Servicing Fee paid to the
Servicer with respect to such Collection Period;
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(iv) the amount of any Class A Interest Carryover
Shortfall, Class A Principal Carryover Shortfall, Class B Interest
Carryover Shortfall and Class B Principal Carryover Shortfall on the
Distribution Date immediately following such Collection Period and the
change in such amounts from those with respect to the immediately
preceding Distribution Date;
(v) the Class A Pool Factor and the Class B Pool Factor
as of such Distribution Date, after giving effect to payments allocated
to principal reported under clause (i) above;
(vi) the amount of the aggregate Realized Losses, if any,
for such Collection Period;
(vii) the aggregate Principal Balance of all Receivables
which were more than 30, 60 and 90 days delinquent as of the close of
business on the last day of such Collection Period;
(viii) the amount on deposit in the Reserve Fund on such
Distribution Date, after giving effect to distributions made on such
Distribution Date;
(ix) the Class A Principal Balance and the Class B
Principal Balance as of such Distribution Date, after giving effect to
payments allocated to principal reported under clause (i) above;
(x) the amount otherwise distributable to the Class B
Certificateholders that is being distributed to the Class A
Certificateholders on such Distribution Date;
(xi) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer with respect to
such Collection Period; and
(xii) the aggregate Principal Balance of all Receivables
(excluding the Principal Balance of Receivables which have become
Liquidated Receivables) which have been repossessed by the Servicer.
Each amount set forth pursuant to clauses (i), (ii),(iii) and (iv) above shall
be expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of a Certificate. Copies of such statements may be obtained by
Certificate Owners by a request in writing addressed to the Trustee.
(b) Within a reasonable period of time after the end of
each calendar year, but not later than the latest date permitted by law, the
Trustee shall mail, to each Person who at any time during such calendar year
shall have been a Certificateholder, a statement provided by the Servicer
containing the sum of the amounts described in clauses (i), (ii), (iii) and (iv)
above for such calendar year or, in the event such Person shall have been a
Certificateholder during a portion of such calendar year, for the applicable
portion of such year, for the purposes of such Certificateholder's preparation
of Federal income tax returns. In addition, the Servicer shall furnish to the
Trustee for distribution to such Person at such time any other information
necessary under applicable law for the preparation of such income tax returns.
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(c) The Servicer, at its own expense, shall cause a firm
of nationally recognized accountants to prepare any state or local tax returns
required to be filed by the Trust, and the Trustee shall execute and file such
returns if requested to do so by the Servicer. The Trustee, upon written
request, will promptly furnish the Servicer with all such information known to
the Trustee as may be reasonably required in connection with the preparation of
all Texas tax returns of the Trust.
ARTICLE V.
[Intentionally Omitted]
ARTICLE VI.
The Certificates
SECTION 6.1. The Certificates. The Certificates shall be issued
as Class A Certificates and Class B Certificates, substantially in the form of
Exhibits A and B hereto, respectively. The Certificates shall be issued in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof; provided, however, that one Class A Certificate and one Class B
Certificate may be issued in a denomination that represents any remaining
portion of the Original Class A Principal Balance and the Original Class B
Principal Balance, as the case may be. The Certificates shall be executed by the
Trustee on behalf of the Trust by manual or facsimile signature of an Authorized
Officer of the Trustee. Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trustee, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates.
SECTION 6.2. Authentication and Delivery of Certificates. The
Trustee shall cause to be authenticated and delivered to or upon the written
order of the Seller, in exchange for the Receivables and other Trust Property,
simultaneously with the sale, assignment and transfer to the Trustee on behalf
of the Trust of the Receivables, and the constructive delivery to the Trustee of
the Receivables Files and the other components of the Trust existing as of the
Closing Date, Certificates duly authenticated by the Trustee in authorized
denominations equaling in the aggregate the sum of the Original Class A
Principal Balance and the Original Class B Principal Balance, and evidencing the
entire ownership of the Trust. No Certificate shall entitle the Holder thereof
to any benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Certificate a certificate of authentication,
substantially in the form set forth in the form of Certificates attached hereto
as Exhibit A and Exhibit B respectively, executed by the Trustee by manual
signature. Such authentication shall constitute conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates issued on the Closing Date shall be dated the
Closing Date. Any Certificates issued thereafter shall be dated the date of
their authentication.
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SECTION 6.3. Registration of Transfer and Exchange of
Certificates. The Trustee shall maintain, or cause to be maintained, at the
office or agency to be maintained by it in accordance with Section 6.9, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. Upon surrender for
registration of transfer of any Class A Certificate or Class B Certificate at
such office or agency, the Trustee shall execute, authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Class A
Certificates or Class B Certificates, as the case may be, in authorized
denominations of a like aggregate amount. At the option of a Certificateholder,
Class A Certificates or Class B Certificates may be exchanged for other Class A
Certificates or Class B Certificates, as the case may be, of authorized
denominations of a like aggregate amount at the office or agency maintained by
the Trustee in accordance with Section 6.9. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer duly executed by the Holder and in a form
satisfactory to the Trustee. No service charge shall be made for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for registration of transfer or exchange shall be
canceled and disposed of in a commercially reasonable manner approved by the
Trustee.
A Class B Certificate may not be directly or indirectly sold or
transferred to, or purchased or acquired by, or on behalf of (1) any employee
benefit plan, retirement arrangement, individual retirement account or keogh
plan which is subject to either Title I of ERISA, or Section 4975 of the Code
(each, a "Plan"), or (2) any entity whose source of funds to be used for the
purchase of such Class B Certificate includes the assets of any such Plan, other
than an "Insurance Company General Account" as defined in, and which complies
with the provisions of, Prohibited Transaction Exemption 95-60 issued by the
United States Department of Labor. Every transferee of a Class B Certificate
represented by a Book-Entry Certificate shall be deemed to have represented and
warranted to the Seller and the Trustee that it is not an entity described in
either clause (1) or (2) above. Each transferee of a Definitive Certificate
shall deliver a Benefit Plan Affidavit to the Seller and the Trustee in the form
of Exhibit E. Neither the Servicer nor the Trustee will incur any liability for
any transfers made in accordance with this Section 6.3.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee duly executed by the Certificateholder or his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Trustee, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Trustee in addition to, or in substitution for,
STAMP, all in accordance with the Exchange Act.
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SECTION 6.4. Reserved
SECTION 6.5. Reserved
SECTION 6.6. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Class A Certificate or Class B Certificate shall be
surrendered to the Trustee, or if the Trustee shall receive evidence to its
satisfaction of the destruction, loss or theft of any Class A Certificate or
Class B Certificate and (b) there shall be delivered to the Trustee such
security or indemnity as may be required to save the Trustee harmless, then in
the absence of notice that such Class A Certificate or Class B Certificate shall
have been acquired by a bona fide purchaser, the Trustee shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Class A Certificate or Class B Certificate, a new
Class A Certificate or Class B Certificate of like tenor and denomination. In
connection with the issuance of any new Certificate under this Section 6.6, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any replacement
Certificate issued pursuant to this Section 6.6 shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.7. Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Trustee may treat the Person in
whose name any Certificate shall be registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 4.5 and for all
other purposes, and the Trustee shall not be bound by any notice to the
contrary.
SECTION 6.8. Access to List of Certificates' Names and Addresses.
The Trustee shall furnish or cause to be furnished to the Servicer, within 15
days after receipt by the Trustee of a request therefor from the Servicer in
writing, a list of the names and addresses of the Certificateholders as of the
most recent Record Date. If Definitive Certificates have been issued, the
Trustee, upon written request by holders of Class A Certificates or Class B
Certificates evidencing not less than 25% of the aggregate outstanding principal
balance of either the Class A Certificates or the Class B Certificates, as the
case may be, will, within fifteen days after the receipt of such request, afford
such Class A Certificateholders or Class B Certificateholders access during
normal business hours to the most current list of Certificateholders for
purposes of communicating with other Certificateholders with respect to their
rights under the Agreement. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed that none of the Seller, the
Servicer or the Trustee is accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
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SECTION 6.9. Maintenance of Office or Agency. The Trustee shall
maintain, or cause to be maintained, at its expense, in the Borough of
Manhattan, The City of New York, an office or agency where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and this Agreement
may be served. The Trustee initially designates Four Albany Street, New York, NY
10006 or by mail to the Corporate Trust Office as its office for such purposes.
The Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of any such office or agency.
SECTION 6.10. Book-Entry Certificates. Upon original issuance,
the Class A Certificates and the Class B Certificates shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to DTC or its custodian, by, or on behalf of, the
Seller. Such Certificates shall initially be registered on the Certificate
Register in the name of Cede & Co., the nominee of DTC, and no Certificate Owner
will receive a definitive certificate representing such Certificate Owner's
interest in the Class A Certificates or the Class B Certificates, as the case
may be, except as provided in Section 6.12. Unless and until definitive,
fully-registered Certificates ("Definitive Certificates") have been issued to
Class A Certificateholders or Class B Certificateholders, as the case may be,
pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full
force and effect, the Seller, the Servicer and the Trustee may deal with
the Clearing Agency for all purposes (including the making of
distributions on the Certificates and the taking of actions by the
Certificateholders) as the authorized representative of the Certificate
Owners;
(ii) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law, the rules, regulations and procedures of the
Clearing Agency and agreements between such Certificate Owners and the
Clearing Agency and all references in this Agreement to actions by
Certificateholders shall refer to actions taken by the Clearing Agency
upon instructions from the Clearing Agency Participants, and all
references in this Agreement to distributions, notices, reports and
statements to Certificateholders shall refer to distributions, notices,
reports and statements to the Clearing Agency or its nominee, as
registered holder of the Certificates, as the case may be, for
distribution to Certificate Owners in accordance with the rules,
regulations and procedures of the Clearing Agency;
(iii) to the extent that the provisions of this Section
6.10 conflict with any other provisions of this Agreement, the
provisions of this Section 6.10 shall control;
(iv) pursuant to the Depository Agreement, DTC will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit distributions of principal and interest on the Certificates
to the Clearing Agency Participants, for distribution by such Clearing
Agency Participants to the Certificate Owners or their nominees; and
(v) Certificate Owners may own beneficial interest in
Certificates representing original denominations of $1,000 and integral
multiples of $1,000 in excess thereof except for any residual amount of
Original Class A Principal Balance or Original Class B Principal
Balance.
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For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing specified percentages of the aggregate outstanding
principal balance of such Certificates, such direction or consent may be given
by Certificate Owners having interests in the requisite percentage, acting
through the Clearing Agency.
SECTION 6.11. Notices to Clearing Agency. Whenever notice or
other communication to the Certificateholders is required under this Agreement
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency.
SECTION 6.12. Definitive Certificates. If (i) (A) the Seller
advises the Trustee in writing that the Clearing Agency is no longer willing or
able properly to discharge its responsibilities under the Depository Agreement
and (B) the Trustee or the Servicer is unable to locate a qualified successor,
(ii) the Seller, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Servicing Termination, Holders of Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates, taken together
as a single Class, advise the Trustee and the Clearing Agency through the
Clearing Agency Participants in writing, and the Clearing Agency shall so notify
the Trustee, that the continuation of a book-entry system through the Clearing
Agency is no longer in their best interests, the Trustee shall notify the
Clearing Agency which shall be responsible to notify the Certificate Owners of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners, requesting the same. Upon surrender to the
Trustee by the Clearing Agency of the Certificates registered in the name of the
nominee of the Clearing Agency, accompanied by re-registration instructions from
the Clearing Agency for registration, the Trustee shall execute, on behalf of
the Trust, authenticate and deliver Definitive Certificates in accordance with
such instructions. The Servicer shall arrange for, and will bear all costs of,
the printing and issuance of such Definitive Certificates. Neither the Seller,
the Servicer nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder. Definitive Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Trustee, as evidenced by its execution thereof. Neither the
Trust, the Seller, the Servicer nor the Trustee will have any responsibility or
obligation to any Clearing Agency Participants or the Persons for whom they act
as nominees with respect to (1) the accuracy of any records maintained by DTC or
any Clearing Agency Participants, (2) the payment by DTC or any Clearing Agency
Participant of any amount due to any beneficial owner in respect of the
Principal Balance of, or interest on, the Certificates, (3) the delivery by any
Clearing Agency Participant of any notice to any Certificate Owner which is
required or permitted hereunder to be given to Certificateholders or (4) any
other action taken by DTC or its nominee as the Certificateholder.
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ARTICLE VII.
The Seller
SECTION 7.1. Representations of Seller. The Seller makes the
following representations on which the Trustee is deemed to have relied in
accepting the Receivables and other Trust Property in trust and in executing and
authenticating the Certificates. The representations are being made as of the
execution and delivery of this Agreement and shall survive the sale and
assignment of the Receivables and other Trust Property to the Trustee.
(a) Organization and Good Standing. The Seller is duly
organized and validly existing as a national banking association with the
corporate power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is presently conducted,
and had at all relevant times, and has, the power, authority and legal right to
acquire and own the Receivables.
(b) Power and Authority of the Seller. The Seller has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the Seller has full corporate power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Trustee and the Seller has duly authorized such sale and
assignment to the Trustee by all necessary corporate action; and the execution,
delivery and performance of this Agreement been duly authorized by the Seller by
all necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Seller, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect relating to creditors' rights generally or the rights of creditors of
banks, the deposit accounts of which are insured by the FDIC, and subject to
general principles of equity (whether applied in a proceeding at law or in
equity).
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Seller, or any material indenture, agreement or
other instrument to which the Seller is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to this Agreement); nor violate any law or, to the best of
its knowledge, any order, rule or regulation applicable to the Seller of any
court or of any Federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
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(e) No Proceedings. There are no proceedings or
investigations pending against the Seller or, to its best knowledge, threatened
against the Seller, before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement or the Certificates,
(ii) seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Seller of its obligations under, or the
validity or enforceability of this Agreement or the Certificates or (iv) seeking
to affect adversely the Federal or State income tax or ERISA attributes of the
Trust or the Certificates.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Seller in connection with the execution and
delivery by the Seller of this Agreement and the performance by the Seller of
the transactions contemplated by this Agreement have been duly obtained,
effected or given and are in full force and effect, except where failure to
obtain the same would not have a material adverse effect upon the rights of the
Trust or the Certificateholders.
SECTION 7.2. Continued Existence. During the term of this
Agreement, subject to Sections 7.4 and 8.3, the Seller will keep in full force
and effect its existence, rights and franchises as a national banking
association under the laws of the United States and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby.
SECTION 7.3. Liability of Seller; Indemnities. The Seller shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless
the Trust and the Trustee and the Trustee's officers, directors, employees and
agents from and against any taxes that may at any time be asserted against any
such Person with respect to the transactions contemplated in this Agreement
(except any income taxes arising out of fees paid to the Trustee and except any
taxes to which the Trustee may otherwise be subject to not related to this
Agreement), including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, in the case of the Trust,
not including any taxes asserted with respect to, and as of the date of, the
issuance and original sale of the Certificates or asserted with respect to
ownership of the Receivables or Federal or other income taxes arising out of
distributions on the Certificates) and costs and expenses in defending against
the same or in connection with any application relating to the Certificates
under any State securities laws.
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(b) The Seller shall indemnify, defend and hold harmless
the Trust, the Trustee and the Certificateholders and the officers, directors,
employees and agents of the Trustee from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent arising out of,
or imposed upon such Person through (i) the Seller'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 Seller's or the Trust's violation of Federal or State securities
laws in connection with the offering and sale of the Certificates or in
connection with any application relating to the Certificates under any State
securities laws.
(c) The Seller shall be liable as primary obligor for,
and shall indemnify, defend and hold harmless the Trustee and its officers,
directors, employees and agents from and against any and all costs, expenses,
losses, claims, damages and liabilities (including reasonable attorneys' fees
and expenses) arising out of, or incurred in connection with, this Agreement,
the Trust Property, the acceptance or performance of the trusts and duties set
forth herein or the action or the inaction of the Trustee hereunder (including
the Trustee's execution of any state or local tax return pursuant to Section
4.7(c)) except to the extent that such cost, expense, loss, claim, damage or
liability: (i) shall be due to the willful misfeasance, bad faith or negligence
of the Trustee or (ii) shall arise from any breach by the Trustee of its
covenants, representations or warranties under this Agreement. Such liability
shall survive the termination of the Trust.
(d) The Seller shall pay any and all taxes levied or
assessed upon all or any part of the Trust Property (other than those taxes
expressly excluded from the Seller's responsibilities pursuant to the
parentheticals in paragraph (a) above).
Indemnification under this Section shall survive the resignation
or removal of the Trustee and the termination of this Agreement and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 7.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, shall be the successor to the Seller
without the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that the Seller hereby covenants
that it will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Seller if other than Bank One,
Texas, N.A., either (a) executes an agreement of assumption to perform every
obligation of the Seller under this Agreement or (b) delivers to the Trustee an
Opinion of Counsel stating that the surviving Seller is obligated to perform
every obligation of the Seller under this Agreement without the execution of an
agreement of assumption or any other action not previously taken by the
surviving Seller, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 2.2 or 7.1 shall have been
breached, (iii) the Seller shall have delivered to the Trustee an Officer's
Certificate and an
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Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption, if any, comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, and that the Rating Agency Condition shall
have been satisfied with respect to such transaction, (iv) such transaction will
not result in a material adverse Federal or State tax consequence to the Trust
or the Certificateholders and (v) unless Bank One, Texas, N.A., is the surviving
entity, the Seller shall have delivered to the Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables and reciting the details of such filings, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interests.
SECTION 7.5. Limitation on Liability of Seller and Others. The
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement (provided that such reliance shall not limit in any
way the Seller's obligations under Section 2.2). The Seller 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 except this shall not relieve the
Seller from its obligations to indemnify pursuant to Section 7.3.
SECTION 7.6. Seller May Own Certificates. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as expressly provided herein.
ARTICLE VIII.
The Servicer
SECTION 8.1. Representations of Servicer. The Servicer makes the
following representations on which the Trustee is deemed to have relied in
accepting the Receivables and other Trust Property in trust and in
authenticating the Certificates. The representations are being made as of the
execution and delivery of this Agreement and shall survive the sale and
assignment of the Receivables and other Trust Property to the Trustee.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a national banking association with the
corporate power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is presently conducted,
and had at all relevant times, and has, the power, authority and legal right to
service the Receivables.
(b) Due Qualification. The Servicer is duly qualified to
do business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or leasing of property or the conduct of
its business (including the servicing of the Receivables as required by this
Agreement) shall require such qualifications.
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(c) Power and Authority of the Servicer. The Servicer has
the corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement have been duly authorized by the Servicer by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other governmental instrumentality required to be obtained, effected
or given by the Servicer in connection with the execution and delivery by the
Servicer of this Agreement and the performance by the Servicer of the
transactions contemplated by this Agreement have been duly obtained, effected or
given and are in full force and effect, except where failure to obtain the same
would not have a material adverse effect upon the rights of the Trust or the
Certificateholders.
(d) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect relating to creditors' rights generally or the rights of creditors of
banks the deposit accounts of which are insured by the FDIC, and subject to
general principles of equity (whether applied in a proceeding at law or in
equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under the articles of
association or by-laws of the Servicer, or any material 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 pursuant to this Agreement); nor violate any law or, to the best of
its 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.
(f) No Proceedings. There are no proceedings or
investigations pending against the Servicer, or, to its best knowledge,
threatened against the Servicer, 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 the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that could reasonably be
expected to have a material and adverse effect on the performance by the
Servicer of its obligations under, or the validity or enforceability of this
Agreement or the Certificates or (iv) seeking to affect adversely the Federal or
State income tax or ERISA attributes of the Trust or the Certificates.
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(g) No Amendment or Waiver. No provision of any
Receivable has been waived, altered or modified in any respect, except pursuant
to a document, instrument or writing included in the relevant Receivable File,
and no such amendment, waiver, alteration or modification causes such Receivable
not to conform to the other warranties contained in this Section or those of the
Seller contained in Section 2.2.
(h) Location of Receivable Files. The Receivable Files
are kept in one of the offices of the Servicer or the Subcustodian specified in
Schedule B, or at such other office specified in accordance with Section 2.5.
SECTION 8.2. Indemnities of Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
The Servicer shall indemnify, defend and hold harmless the Trust,
the Trustee, the Seller and the Certificateholders and any of the officers,
directors, employees and agents of the Trustee or the Seller from any and all
costs, expenses, losses, claims, damages and liabilities (including reasonable
attorneys' fees and expenses) to the extent arising out of, or imposed upon any
such Person through, the negligence, willful misfeasance or bad faith of the
Servicer in the performance of its obligations and duties under this Agreement
or in the performance of the obligations and duties of any subservicer under any
subservicing agreement or by reason of the reckless disregard of its obligations
and duties under this Agreement or by reason of the reckless disregard of the
obligations of any subservicer under any subservicing agreement, where the final
determination that any such cost, expense, loss, claim, damage or liability
arose out of, or was imposed upon any such Person through, any such negligence,
willful misfeasance, bad faith or recklessness on the part of the Servicer or
any subservicer, is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Servicer. Notwithstanding the foregoing, if the
Servicer is rendered unable, in whole or in part, by virtue of an act of God,
act of war, fires, earthquake or other natural disasters, to satisfy its
obligations under this Agreement, the Servicer shall not be deemed to have
breached any such obligation upon the sending of written notice of such event to
the other parties hereto, for so long as the Servicer remains unable to perform
such obligation as a result of such event. This provision shall not be construed
to limit the Servicer's or any other party's rights, obligations, liabilities,
claims or defenses which arise as a matter of law or pursuant to any other
provision of this Agreement.
The Servicer shall indemnify, defend and hold harmless the Trust,
the Trustee, the Seller, the Certificateholders or any of the officers,
directors, employees and agents of the Trustee or the Seller from any and all
costs, expenses, losses, claims, damages and liabilities (including reasonable
attorneys' fees and expenses) to the extent arising out of or imposed upon any
such Person as a result of any compensation payable to any Subcustodian or
subservicer (including any fees payable in connection with the release of any
Receivable File from the custody of such Subcustodian or in connection with the
termination of the servicing activities of such subservicer with respect to any
Receivable) whether pursuant to the terms of any subservicing agreement or
otherwise.
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SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer, substantially as a whole, shall be the successor to the
Servicer without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that the Servicer
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Servicer if other
than Bank One, Texas, N.A., either (a) executes an agreement of assumption to
perform every obligation of the Servicer under this Agreement or (b) delivers to
the Trustee an Opinion of Counsel stating that the surviving Servicer is
obligated to perform every obligation of the Servicer under this Agreement
without the execution of an agreement of assumption or other action not
previously taken by the surviving Servicer, (ii) immediately after giving effect
to such transaction, no representation or warranty made pursuant to Section 8.1
shall have been breached and no Event of Servicing Termination, and no event
that, after notice or lapse of time, or both, would become an Event of Servicing
Termination shall have occurred and be continuing, (iii) the Servicer shall have
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption, if any, comply with this Section and that all conditions precedent,
if any, provided for in this Agreement relating to such transaction have been
complied with, and that the Rating Agency Condition shall have been satisfied
with respect to such transaction, and (iv) such transaction will not result in a
material adverse Federal or State tax consequence to the Trust or the
Certificateholders.
SECTION 8.4. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of its directors, officers, employees or agents
shall be under any liability to the Trust or the Certificateholders, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action in good faith by the Servicer or any subservicer 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 or any
subservicer and any of their respective directors, officers, employees or agents
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising under this Agreement.
Except as otherwise provided in this Agreement the Servicer shall
not be under any obligation to appear in, prosecute or defend any legal action
that shall be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer, may (but shall not be required
to) undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement to protect the interests of the Certificateholders
under this Agreement.
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SECTION 8.5. Bank One, Texas, N.A. Not to Resign as Servicer.
Subject to the provisions of Section 8.3, Bank One, Texas, N.A., hereby agrees
not to resign from the obligations and duties hereby imposed on it as Servicer
under this Agreement except upon determination that the performance of its
duties hereunder shall no longer be permissible under applicable law or if such
resignation is required by regulatory authorities. Notice of any such
determination permitting the resignation of Bank One, Texas, N.A., as Servicer
shall be communicated to the Trustee at the earliest practicable time (and, if
such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until the
earlier of the Trustee or a successor Servicer having assumed the
responsibilities and obligations of the resigning Servicer in accordance with
Section 9.2 or the date upon which any regulatory authority requires such
resignation.
SECTION 8.6. Existence. Subject to the provisions of Sections 7.4
and 8.3, during the term of this Agreement, Bank One, Texas, N.A., will keep in
full force and effect its existence, rights and franchises as a national banking
association under the laws of the jurisdiction of its organization.
SECTION 8.7. Tax Accounting. The Servicer shall prepare any
Federal tax returns of the Trust in accordance with the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder. To the extent not inconsistent with any such regulations, such
returns shall be prepared in a manner consistent with the following rules:
(a) The Class A Certificateholders shall be treated as
owning the Class A Percentage of Interest Collections (but limited to the Class
A Certificate Rate plus the Servicing Fee Rate) and Principal Collections and
the Class B Certificateholders shall be treated as owning the Class B Percentage
of Interest Collections (but limited to the Class B Certificate Rate plus the
Servicing Fee Rate) and Principal Collections. The Seller shall be treated as
having retained the stripped coupons on the Class A Percentage and the Class B
Percentage of each Receivable equal to the difference between the APR of such
Receivable and the portion owned by the Class A and Class B Certificateholders,
respectively, pursuant to this paragraph.
(b) To the extent that as a result of the subordination
provisions of this Agreement, actual cash distributions to the Class B
Certificateholders are less than the amount set forth in subsection (a), the
Class B Certificateholders shall be deemed to have (i) received the amount set
forth in subsection (a), (ii) paid such difference to the Class A
Certificateholders pursuant to a guaranty of the Class A Certificates, and (iii)
become subrogated to the rights of the Class A Certificateholders to recovery of
the amounts so paid.
SECTION 8.8. Covenants. The Servicer agrees that it will not
permit any of the Sale and Servicing Agreements to be terminated or amended in
any manner inconsistent with the provisions of this Agreement.
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ARTICLE IX.
Servicing Termination
SECTION 9.1. Events of Servicing Termination. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(a) any failure by the Servicer to deliver to the Trustee
for deposit in any of the Accounts or the Reserve Fund any required payment or
to direct the Trustee or the Collateral Agent, as applicable, to make any
required distributions therefrom that shall continue unremedied for a period of
five Business Days after written notice of such failure is received by the
Servicer from the Trustee or the Collateral Agent, as applicable, or after
discovery of such failure by an Authorized Officer of the Servicer; or
(b) any failure by the Servicer duly to observe or to
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement, which failure shall (i) materially and
adversely affect the rights of either the Class A Certificateholders or the
Class B Certificateholders and (ii) continue unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Trustee or (B) to the
Servicer and to the Trustee by Holders of Certificates evidencing not less than
25% of the aggregate outstanding principal balance of the Class A Certificates
and Class B Certificates taken together as a single class (or for such longer
period, not in excess of 120 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 120 days and the
Servicer delivers an Officer's Certificate to the Trustee to such effect and to
the effect that the Servicer has commenced or will promptly commence, and will
diligently pursue, all reasonable efforts to remedy such default); or
(c) an Insolvency Event occurs with respect to the
Servicer or any successor; then, and in each and every case, so long as the
Event of Servicing Termination shall not have been remedied within any
applicable cure period, either the Trustee, or the Holders of Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates taken together
as a single class, by notice then given in writing to the Servicer and the
Trustee may terminate all the rights and obligations (other than the obligations
set forth in Section 8.2) of the Servicer under this Agreement. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Certificates or the
Receivables or otherwise, shall, without further action, pass to and be vested
in the Trustee or such successor Servicer as may be appointed under Section 9.2;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under
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this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received by it with
respect to a Receivable. All reasonable costs and expenses (including attorneys'
fees and expenses) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of an Event of Servicing Termination, the
Trustee shall give notice thereof to the Rating Agencies.
SECTION 9.2. Appointment of Successor. (a) Upon the Servicer's
receipt of notice of termination, pursuant to Section 9.1 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the earlier
of (x) the date 45 days from the delivery to the Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
termination hereunder, the Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, the Trustee without further action
shall automatically be appointed the successor Servicer and the Trustee shall be
entitled to the Servicing Fee. Notwithstanding the above, the Trustee shall, if
it shall be unwilling or unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution, having a net
worth of not less than $50,000,000 and whose regular business shall include the
servicing of automotive receivables, as the successor to the Servicer under this
Agreement.
(b) Upon appointment, the successor Servicer (including
the Trustee acting as successor servicer) shall be the successor in all respects
to the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities of the Servicer arising thereafter and shall be entitled
to the Servicing Fee and all the rights granted to the Servicer by the terms and
provisions of this Agreement. No successor Servicer shall be liable for any acts
or omissions of any predecessor Servicer.
(c) The Servicer may not resign unless it is prohibited
from serving as such by law or by requirement of any regulatory authority.
(d) Notwithstanding anything herein to the contrary, in
the event the Trustee becomes the successor to the Servicer hereunder, it shall
service the Receivables in accordance with its customary practices and
procedures in effect at such time with respect to receivables similar to the
Receivables.
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SECTION 9.3. Payment of Servicing Fee. If the Servicer shall
change, the predecessor Servicer shall be entitled to receive any accrued and
unpaid Servicing Fees through the date of the successor Servicer's acceptance
hereunder in accordance with Section 3.8.
SECTION 9.4. Notification to Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article IX, the Trustee shall give prompt written notice thereof to
Certificateholders and the Rating Agencies.
SECTION 9.5. Waiver of Past Events of Servicing Termination. The
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, may, on behalf of all
Certificateholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from any of the Accounts or the
Reserve Fund in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Events of Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE X.
The Trustee
SECTION 10.1. Acceptance by Trustee. The Trustee, by its
execution of this Agreement, accepts all consideration conveyed by the Seller
pursuant to Section 2.1 and the Trust created hereunder and declares that it
shall hold such consideration in trust upon the terms hereof set forth for the
benefit of the Certificateholders.
SECTION 10.2. Duties of Trustee. (a) The Trustee, both prior to
and after the curing of an Event of Servicing Termination, undertakes to perform
only such duties as are specifically set forth in this Agreement and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
If an Event of Servicing Termination shall have occurred and shall not have been
cured (the appointment of a successor Servicer (including the Trustee) to
constitute a cure for the purposes of this Article) of which an Authorized
Officer of the Trustee has actual knowledge, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs; provided,
however, that if the Trustee assumes the duties of the Servicer pursuant to
Section 9.2, the Trustee in performing such duties shall use the degree of skill
and attention required by Section 3.1.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee that are required specifically to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they reasonably conform to the requirements of this Agreement.
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(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, its own bad faith or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Servicing
Termination, and after the curing of all such Events of Servicing
Termination that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee, the permissible right of the Trustee
(solely in its capacity as such) to do things enumerated in this
Agreement shall not be construed as a duty and, in the absence of bad
faith on the part of the Trustee, or manifest error, the Trustee (solely
in its capacity as such) may conclusively rely on the truth of the
statements and the correctness of the opinions expressed upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of
judgment made in good faith by an officer of the Trustee, unless it
shall be proved that the Trustee shall have been negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with the direction of the Holders of Certificates evidencing
not less than a majority of the aggregate outstanding principal balance
of the Class A Certificates and the Class B Certificates taken together
as a single class, as set forth in Section 9.1, relating to the time,
method and place of conducting any proceeding or any remedy available to
the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement.
(d) The Trustee (solely in its capacity as such) shall
not be required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that the repayment of such funds or indemnity satisfactory to it
against such risk or liability shall not be assured to it, and none of the
provisions contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to impair the
security interests created or existing under any Receivable or Financed Vehicle
or to impair the value of any Receivable or Financed Vehicle.
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(f) The Trustee shall have no power to vary the corpus of
the Trust including (i) accepting any substitute obligation for a Receivable
initially assigned to the Trustee under this Agreement, (ii) adding any other
investment, obligation or security except for investments of moneys in the
Accounts as permitted in this Agreement, or (iii) withdrawing any Receivable,
except for a withdrawal permitted under this Agreement.
SECTION 10.3. Trustee's Certificate. As soon as practicable after
each Transfer Date on which Receivables shall be assigned to the Seller pursuant
to Section 2.3 or 11.2, as applicable, or to the Servicer pursuant to Section
3.7, the Trustee shall execute a certificate, prepared by the Servicer,
substantially in the form of Exhibit F hereto, including its date and the date
of the Agreement, and accompanied by a copy of the Servicer's Certificate for
the related Collection Period. The Trustee's certificate shall operate, as of
such Transfer Date, as an assignment pursuant to Section 10.4.
SECTION 10.4. Trustee's Assignment of Purchased Receivables. With
respect to all Receivables repurchased by the Seller pursuant to Section 2.3 or
11.2, or purchased by the Servicer pursuant to Section 3.7, the Trustee shall
assign, without recourse, representation or warranty, to the Seller or to the
Servicer, as the case may be, all the Trustee's right, title and interest in and
to such Receivables, and all security and documents and all other Trust Property
conveyed pursuant to Section 2.1 with respect to such Receivables. Such
assignment shall be a sale and assignment outright, and not for security. If, in
any enforcement suit or legal proceeding, it is held that the Seller or the
Servicer, as the case may be, may not enforce any such Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
the Receivable, the Trustee shall, at the expense of the Seller or the Servicer,
as the case may be, take such steps as the Seller or the Servicer, as the case
may be, deems necessary to enforce the Receivable, including bringing suit in
the Trustee's name or the names of the Certificateholders.
SECTION 10.5. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 10.2:ustee
(i) The Trustee may conclusively rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate of auditors or accountants or any other certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, appraisal, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties.
(ii) The Trustee may consult with counsel and any Opinion
of Counsel or any advice of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it under this Agreement in good faith and in accordance
with such Opinion of Counsel or any advice of such counsel.
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(iii) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or
to institute, conduct or defend any litigation under this Agreement or
in relation to this Agreement, at the request, order or direction of any
of the Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred therein or thereby.
(iv) The Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon it
by this Agreement; provided, however, that the Trustee's conduct does
not constitute willful misfeasance, negligence or bad faith.
(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing of all Events of Servicing Termination
that may have occurred, the Trustee shall not be bound to make any
investigation into the facts of any matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, direction, order, approval, bond, note or other paper or
document, unless requested in writing so to do by Holders of
Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class
B Certificates taken together as a single class; provided, however, that
if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of an
investigation requested by the Certificateholders is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
indemnity satisfactory to it against such cost, expense or liability as
a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer, or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand. Nothing in this clause
(v) shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Obligors; provided, further, that the Trustee shall be entitled to make
such further inquiry or investigation into such facts or matter as it
may reasonably see fit, and if the Trustee shall determine to make such
further inquiry or investigation it shall be entitled to examine the
books and records of the Servicer or the Seller, personally or by agent
or attorney, at the sole cost and expense of the Servicer or Seller, as
the case may be.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or
by or through agents, attorneys, nominees or a custodian, and shall not
be liable for the acts of such agents, attorneys, nominees or custodians
provided that they have been appointed with due care.
(vii) The Trustee shall not be required to make any
initial or periodic examination of any documents or records related to
the Receivables or Financed Vehicles for the purpose of establishing the
presence or absence of defects, the compliance by the Seller with their
representations and warranties or for any other purpose.
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SECTION 10.6. Trustee Not Liable for Certificates or Receivables.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the Trustee's execution of,
and the certificate of authentication on, the Certificates). Except as expressly
provided herein, the Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (other than the Trustee's
execution of, and the certificate of authentication on, the Certificates), or of
any Receivable or related document, or for the validity of the execution by the
Seller and the Servicer of this Agreement or of any supplements hereto or
instruments of further assurance, or for the sufficiency of the Trust Property
hereunder, and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the part
of the Seller or the Servicer under this Agreement except as herein set forth;
but the Trustee may require the Seller or the Servicer to provide full
information and advice as to the performance of the aforesaid covenants,
conditions and agreements. The Trustee (solely in its capacity as such) shall
have no obligation to perform any of the duties of the Seller or the Servicer,
except as explicitly set forth in this Agreement. The Trustee shall have no
liability in connection with compliance of the Servicer or the Seller with
statutory or regulatory requirements related to the Receivables. The Trustee
shall not make or be deemed to have made any representations or warranties with
respect to the Receivables or the validity or sufficiency of any assignment of
the Receivables to the Trust or the Trustee. The Trustee (solely in its capacity
as such) shall at no time have any responsibility or liability for, or with
respect to, the legality, validity or enforceability of any security interest in
any Financed Vehicle or (prior to the time, if any, that the Servicer is
terminated as custodian hereunder) any Receivable, or the perfection and
priority of such a security interest or the maintenance of any such perfection
and priority, the efficacy of the Trust or its ability to generate funds
sufficient to provide for the payments to be distributed to Certificateholders
under this Agreement, the existence, condition, location and ownership of any
Financed Vehicle, the existence and contents of any Receivable or any computer
or other record thereof, the validity of the assignment of any Receivable to the
Trust or of any intervening assignment, the completeness of any Receivable, the
performance or enforcement of any Receivable, the compliance by the Seller with
any warranty or representation made under this Agreement or in any related
document and the accuracy of any such warranty or representation, prior to the
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof, any investment of monies by the Servicer or any loss
resulting therefrom (it being understood that the Trustee, on behalf of the
Trust, shall remain responsible for any Trust Property that it may hold), the
acts or omissions of the Seller, the Servicer or any Obligor, any action of the
Servicer taken in the name of the Trustee or any action by the Trustee taken at
the instruction of the Servicer (provided that such instruction is not in
express violation of the terms and provisions of this Agreement); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a claim based on
the failure of the Trustee to perform its duties under this Agreement (whether
in its capacity as Trustee or as successor Servicer) or based on the Trustee's
willful misfeasance, negligence or bad faith, or based on the Trustee's breach
of a representation and warranty contained in Section 10.14, no recourse shall
be had to the Trustee (whether in its individual capacity or as Trustee) for any
claim based on any provision of this Agreement, the Certificates or any
Receivable or assignment thereof against the Trustee in its individual capacity;
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the Trustee shall not have any personal obligation, liability or duty whatsoever
to any Certificateholder or any other Person with respect to any such claim. The
Trustee shall not be accountable for the use or application by the Seller of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Servicer in respect of the Receivables prior to the time such amounts are
deposited in the Collection Account (whether or not the Collection Account is
maintained with the Trustee). The Trustee shall have no liability for any losses
from the investment or reinvestment in Eligible Investments made in accordance
with Section 4.1.
SECTION 10.7. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 10.8. Trustee's Fees and Expenses. The Servicer agrees to
pay to the Trustee, and the Trustee shall be entitled to, reasonable
compensation as is agreed upon in writing between the Trustee and the Servicer
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by this Agreement and in the exercise and
performance of any of the powers and duties under this Agreement as Trustee, and
the Servicer shall pay or reimburse the Trustee upon its request for all
reasonable expenses (including, without limitation, expenses incurred in
connection with notices or other communications to Certificateholders),
disbursements and advances (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all persons not
regularly in its employ) incurred or made by the Trustee in accordance with any
of the provisions of this Agreement (including the reasonable fees and expenses
of its agents, any co-trustee and counsel) or in defense of any action brought
against it in connection with this Agreement except any such expense,
disbursement, or advance as may arise from its negligence, willful misfeasance
or bad faith. The Servicer shall indemnify the Trustee, its officers, directors,
agents and employees for, and hold it, and its officers, directors, agents and
employees harmless against, any loss, liability, cost or expense, arising out of
or in connection with the transactions contemplated by this Agreement provided
that such loss, liability, cost, or expense is not caused by the Trustee's
negligence, willful misconduct or bad faith. The Servicer's covenant to pay the
expenses, disbursements and advances provided for in the preceding sentence and
the Servicer's indemnity pursuant to Section 8.2 shall survive the termination
of this Agreement.
SECTION 10.9. Eligibility Requirements for Trustee. The Trustee
shall be organized and doing business under the banking laws of a state or of
the United States, shall be authorized under such laws to exercise corporate
trust powers, shall have a combined capital and surplus of at least $50,000,000,
shall have a credit rating of at least Baa3 from Moody's and BBB from S&P, shall
be an entity which is not an Affiliate of the Seller or the Servicer and shall
be subject to supervision or examination by Federal or State banking
authorities. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section 10.9, the consolidated
net worth of such corporation shall be deemed to be its consolidated capital and
surplus as set forth in its most recent consolidated report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 10.9, the Trustee shall resign
immediately in the manner and with the effect specified in Section 10.10.
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SECTION 10.10. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged
from the trusts hereby created by giving 30 days' prior written notice thereof
to the Servicer. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Trustee, by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 10.9 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver, conservator or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Trustee. If the Trustee is removed
under the authority of the immediately preceding sentence, the Servicer shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed, the
successor Trustee, the Certificateholders at their respective addresses of
record and the Rating Agencies.
(c) Any resignation or removal of the Trustee and
appointment of a successor Trustee pursuant to any of the provisions of this
Section 10.10 shall not become effective until acceptance of appointment by the
successor Trustee pursuant to Section 10.11.
(d) The respective obligations of the Seller and the
Servicer described in this Agreement shall survive the removal or resignation of
the Trustee as provided in this Agreement.
(e) The Trustee shall be paid all amounts outstanding
upon its resignation or removal.
SECTION 10.11. Successor Trustee. Any successor Trustee appointed
pursuant to Section 10.10 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all rights,
powers, duties and obligations of its predecessor under this Agreement, with
like effect as if originally named as Trustee. The predecessor Trustee shall
deliver to the successor Trustee all documents and statements held by it under
this Agreement, and the Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
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(a) No successor Trustee shall accept appointment as
provided in this Section 10.11 unless at the time of such acceptance such
successor Trustee shall be eligible pursuant to Section 10.9.
(b) Upon acceptance of appointment by a successor Trustee
pursuant to this Section 10.11, the Servicer shall mail notice of such
acceptance by the successor Trustee under this Agreement to all
Certificateholders at their respective addresses of record and to the Rating
Agencies. If the Servicer shall fail to mail such notice within ten days after
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Servicer.
SECTION 10.12. Merger or Consolidation of Trustee. Any
corporation or banking association which is eligible to be a successor Trustee
under Section 10.9 (i) into which the Trustee may be merged or consolidated,
(ii) that may result from any merger, conversion or consolidation to which the
Trustee shall be a party, or (iii) that may succeed by purchase and assumption
to the business of the Trustee, where the Trustee is not the surviving entity,
which corporation or banking association executes an agreement of assumption to
perform every obligation of the Trustee under this Agreement, shall be the
successor of the Trustee hereunder, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Trustee shall promptly notify the
Servicer and the Rating Agencies of any such merger, conversion, consolidation
or purchase and assumption where the Trustee is not the surviving entity.
SECTION 10.13. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Property or any Financed Vehicle may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person,
in such capacity and for the benefit of the Certificateholders, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 10.13, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Servicing Termination shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.9 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.11.
Notwithstanding the appointment of a co-trustee or separate trustee hereunder,
the Trustee shall not be relieved of any of its obligations under this
Agreement.
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(b) Each separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee, is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee under
this Agreement or as successor to the Servicer under this Agreement),
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Property or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee.
(ii) No trustee under this Agreement shall be liable by
reason of any act or omission of any other trustee under this Agreement.
(iii) The Servicer and the Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
in particular to the provisions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Each such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may, at any time,
appoint the Trustee its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. The Trustee shall promptly notify the
Servicer and the Rating Agencies of any appointment made pursuant to this
Section 10.13.
SECTION 10.14. Representations and Warranties of Trustee. The
Trustee makes the following representations and warranties on which the Seller,
the Servicer and Certificateholders may rely:
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(i) Organization and Good Standing. The Trustee is a
banking corporation duly organized, validly existing, and in good
standing under the laws of the State of New York; and
(ii) Power and Authority. The Trustee has full power,
authority and legal right to execute, deliver and perform this Agreement
and has taken all necessary action to authorize the execution, delivery
and performance by it of this Agreement.
SECTION 10.15. Reports by Trustee. The Trustee shall provide to
any Certificateholder or Certificate Owner who so requests in writing (addressed
to the Corporate Trust Office) a copy of any Servicer's Certificate, the annual
statement described in Section 3.10, and the annual accountant's examination
described in Section 3.11. The Trustee may require any Certificateholder or
Certificate Owner requesting such report to pay a reasonable sum to cover the
cost of the Trustee's complying with such request.
SECTION 10.16. Tax Accounting. The Servicer shall prepare any
Federal tax returns of the Trust in accordance with the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder. In no event shall the Trustee in its individual capacity be liable
for any liabilities, costs or expenses of the Trust, the Certificateholders, the
Seller or the Servicer arising under any tax law or regulation, including,
without limitation, Federal, State or local income or excise taxes or any tax
imposed on or measured by income (or any interest or penalty with respect
thereto or arising from any failure to comply therewith). Notwithstanding the
foregoing, in no event shall the Trustee be liable hereunder for any
liabilities, costs or expenses incurred from any information furnished to it by
the Servicer or failure to furnish information by the Servicer in a timely
manner.
SECTION 10.17. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
ARTICLE XI.
Termination
SECTION 11.1. Termination of the Trust. (a) The Trust, and the
respective obligations and responsibilities of the Seller, the Servicer and the
Trustee hereunder shall terminate (except as otherwise expressly provided
herein) upon the earliest of: (i) the Distribution Date next succeeding the
purchase by the Seller at its option, pursuant to Section 11.2, of the
Receivables remaining in the Trust, (ii) the payment to Certificateholders of
all amounts required to be paid to them pursuant to this Agreement or (iii) the
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Distribution Date next succeeding the month which is six months after the
maturity or the liquidation of the last Receivable held in the Trust and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust; provided, however, in no event shall the Trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of St. James's, living on the date of this Agreement. The
Servicer shall promptly notify the Trustee of any prospective termination
pursuant to this Section 11.1.
(b) Notice of any termination, specifying the
Distribution Date upon which the Certificateholders may surrender the
Certificates to the Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders and the Rating Agencies mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating the amount of any such final payment and that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified. Upon presentation and surrender of
the Certificates, the Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 4.5. Amounts remaining after distribution, or providing for
distribution, to the Certificateholders shall be distributed to the Seller.
(c) In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six months after the
date specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. The Trustee shall after giving such notice deliver or cause to be
delivered to the Servicer the Certificate Register. If within one year after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Servicer may take appropriate steps, or may appoint an agent
to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets that shall remain subject to this Agreement.
Any such funds held pending such distribution shall be held uninvested. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Trustee to the Seller upon written request.
SECTION 11.2. Optional Purchase of All Receivables. In the event
that the Pool Balance is 5% or less of the Original Pool Balance as of the first
day of any Collection Period, the Seller shall have the option to purchase the
corpus of the Trust on any Distribution Date occurring in a subsequent
Collection Period. To exercise such option, the Seller shall deposit pursuant to
Section 4.3 the sum of the Class A Principal Balance and the Class B Principal
Balance plus accrued and unpaid interest thereon into the Collection Account for
the Distribution Date occurring in the month in which such repurchase is to be
effected. The payment shall be made in the manner specified in Section 4.3, and
shall be distributed pursuant to Section 4.5. Upon such payment the Seller shall
succeed to and own all interests in and to the Trust and the Trust Property.
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ARTICLE XII.
Miscellaneous Provisions
SECTION 12.1. Amendment. (a) This Agreement may be amended by the
Seller, the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity or defect, to correct or supplement
any provision in this Agreement or for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Certificateholders; provided,
that such action shall not, as evidenced by an Opinion of Counsel delivered to
the Trustee, materially and adversely affect the interests of any
Certificateholder and receipt of an opinion pursuant to Section 12.2(i);
provided further, that any amendment within the scope of Section 12.1(b)(i) or
(ii) shall be deemed to materially and adversely affect the interests of the
Certificateholders, as evidenced by an Officer's Certificate of the Servicer
delivered to the Trustee.
(b) This Agreement may also be amended from time to time
by the Seller, the Servicer and the Trustee, with the consent of the Holders of
Certificates evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A Certificates and the Class B Certificates taken
together as a single class, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, or change the allocation or
priority of, collections of payments on Receivables or distributions that are
required to be made on any Certificate, without the consent of all adversely
affected Certificateholders or (ii) reduce the percentage of the aggregate
outstanding principal balance of the Certificates, the holders of which are
required to consent to any such amendment, without the consent of all
Certificateholders. Promptly after the execution of any such amendment or
consent, the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder.
(c) It shall not be necessary for the consent of
Certificateholders pursuant to Section 12.1(b) to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
(d) Notice of any amendment of this Agreement shall be
sent by the Servicer to the Rating Agencies, at such address as the Rating
Agencies may from time to time specify in writing.
(e) The Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
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(f) In connection with any amendment pursuant to this
Section 12.1 the Trustee shall be entitled to receive an Opinion of Counsel to
the effect that such amendment is authorized or permitted by the Agreement.
SECTION 12.2. Protection of Title to Trust. (a) The Servicer
shall cause to be executed and filed such financing statements and cause to be
executed and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
interest of the Certificateholders and the Trustee under this Agreement in the
Trust Property and in the proceeds thereof. The Servicer shall deliver (or cause
to be delivered) to the Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing. In the event that the Servicer fails to perform its obligations under
this subsection, the Trustee may (but shall not be obligated to) do so, at the
expense of the Servicer.
(b) Neither the Seller nor the Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed by the Servicer in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trustee at least
five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) Each of the Seller and the Servicer shall have an
obligation to give the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment. The Servicer
shall at all times maintain each office from which it shall service Receivables,
and its principal executive office, within the United States of America.
(d) The Servicer shall maintain or cause to be maintained
accounts and records as to each Receivable accurately and in sufficient detail
to permit (i) the reader thereof to know at any time the status of such
Receivable, including payments and Recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments or Recoveries on (or
with respect to) each Receivable and the amounts from time to time deposited in
the Collection Account in respect of such Receivable.
(e) The Servicer shall maintain and shall cause any
subservicer to maintain its computer systems so that, from and after the time of
sale under this Agreement of the Receivables to the Trustee, the Servicer's and
any subservicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly that such Receivable is owned by
the Trust. Indication of the Trust's ownership of a Receivable shall be deleted
from or modified on the Seller's, the Servicer's and any subservicer's computer
systems when, and only when, the Receivable shall be paid or shall become a
Purchased Receivable.
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(f) If at any time the Seller or the Servicer shall
propose to sell, grant a security interest in or otherwise transfer any interest
in automobile 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 Trust.
(g) The Servicer shall permit the Trustee and its agents
at any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request at any time the Trustee shall have
reasonable grounds to believe that such request is necessary in connection with
the performance of its duties under this Agreement, the Servicer shall furnish
to the Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to the Schedule of Receivables and to each of
the Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee promptly
after the execution and delivery of this Agreement and of each amendment
thereto, an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest.
(j) The Seller shall, to the extent required by
applicable law, cause the Certificates 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 12.3. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust, or entitle the Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
or otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
(b) No Certificateholder shall have any right to vote
(except as expressly provided herein) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement, nor shall anything set forth in this Agreement, or contained in the
terms of the Certificates, be construed so as to constitute the Holders as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken pursuant to any
provision of this Agreement.
65
<PAGE>
(c) No Certificateholder shall have any right by virtue
or by availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless the Holders of the Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under the Agreement and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 30 days after its receipt of such notice, request, and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right, under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Class A Certificateholders or Class B
Certificateholders, as the case may be. For the protection and enforcement of
the provisions of this Section 12.3, each Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 12.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.5. Notices. All demands, notices and communications
upon or to the Seller, the Servicer, the Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered, sent by overnight
courier or mailed by certified mail, return receipt requested, (or in the form
of telex or facsimile notice, followed by written notice delivered as aforesaid)
and shall be deemed to have been duly given upon receipt (a) in the case of the
Seller or Servicer, to Bank One, Texas, N.A., 1717 Main Street, Dallas, Texas
75201, Attention: Chief Financial Officer, facsimile 214-290-7667, (b) in the
case of the Trustee, at the Corporate Trust Office, facsimile (212) 250-6439,
(c) in the case of Fitch, to Fitch IBCA, Inc., to One State Street Plaza, New
York, New York 10004, Attention of Asset Backed Securities Group, facsimile
212-514-9879, (d) in the case of Moody's, to Moody's Investors Service, Inc., to
99 Church Street, New York, New York 10004, Attention of Asset Backed Securities
Group, facsimile 212-514-9879 and (e) in the case of Standard & Poor's, to
Standard & Poor's Corporation, 26 Broadway (15th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department, facsimile
212-208-8208; or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties. All demands, notices and
communications upon or to the Certificateholders under this Agreement shall be
in writing, sent by first class mail.
66
<PAGE>
SECTION 12.6. Severability of Provisions. If any one or more of
the covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
Holders thereof.
SECTION 12.7. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 7.4, 8.3 and 8.5, this
Agreement may not be assigned by the Seller or the Servicer. This Agreement may
not be assigned by the Trustee except as provided by Sections 10.10 through
10.13 hereof.
SECTION 12.8. Certificates Nonassessable and Fully Paid. The
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 6.1, each Certificate shall be deemed
fully paid.
SECTION 12.9. Intention of Parties. (a) The execution and
delivery of this Agreement shall constitute an acknowledgment by the Seller and
the Trustee, on behalf of the Certificateholders, that it is intended that the
assignment and transfer herein contemplated constitute a sale and assignment
outright, and not for security, of the Receivables and the other Trust Property,
conveying good title thereto free and clear of any liens, from the Seller to the
Trustee, and that the Receivables and the other Trust Property shall not be a
part of the estate of the Seller in the event of the insolvency, receivership,
conservatorship or the occurrence of another similar event, of, or with respect
to, the Seller. In the event that such conveyance is determined to be made as
security for a loan made by the Trustee or the Certificateholders to the Seller,
the parties intend that the Seller shall have granted to the Trustee a security
interest in all of the Seller's right, title and interest in and to the Trust
Property conveyed to the Trustee pursuant to Section 2.1 in order to secure the
obligations under the Certificates, and that this Agreement shall constitute a
security agreement under applicable law.
(b) The execution and delivery of this Agreement shall
constitute an acknowledgment by the Seller on behalf of the Certificateholders
that they intend that the Trust be classified (for Federal tax purposes) as a
grantor trust under Subpart E, Part I of Subchapter J of the Code of which the
Certificateholders are owners, rather than as an association taxable as a
corporation. The powers granted and obligations undertaken in this Agreement
shall be construed so as to further such intent.
SECTION 12.10. Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 12.11. Collateral Agent Protection. Notwithstanding
anything contained herein to the contrary, the Collateral Agent shall have the
same rights and protection afforded to the Trustee hereunder.
67
<PAGE>
SECTION 12.12. Limitation of Liability of Trustee and Collateral
Agent. Notwithstanding anything contained herein to the contrary (i) this
Agreement has been accepted by Bankers Trust Company not in its individual
capacity but solely as Trustee and as Collateral Agent with respect to the
Reserve Fund and in no event shall Bankers Trust Company have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Seller hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Seller and (ii) under no circumstances shall Bankers Trust
Company be liable for the payment of any indebtedness or expenses of the Trust;
provided, however, nothing contained herein shall relieve Bankers Trust Company
of its obligations contained herein in its capacity as Trustee and as Collateral
Agent.
68
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
BANK ONE, TEXAS, N.A.
as Seller and Servicer
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:_______________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as Collateral
Agent
By:_______________________________
Name:
Title:
69
<PAGE>
SCHEDULE A
Schedule of Receivables
(delivered to the Trustee at Closing)
<PAGE>
SCHEDULE B
Location of Receivables
Banc One Services Corporation
500 Taylor Street
Fort Worth, Texas 76102
Banc One Services Corporation
201 East Main Street
Lexington, Kentucky 40507
Banc One Services Corporation
One Riverfront Plaza
Louisville, Kentucky 40202
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE
WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT
BALANCE ON THE FACE HEREOF.
NUMBER A- $______________ (of
CUSIP NO.____________ $572,563,000.00 issued)
BANC ONE AUTO GRANTOR TRUST 1997-B
CLASS A ___% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of motor vehicle retail installment sale
contracts secured by new or used automobiles, vans or light duty trucks.
(This Certificate does not represent an interest in or obligation of Bank One,
Texas, N.A., the Trustee or any of their respective affiliates, except to the
extent described below.)
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
$__________________ nonassessable, fully-paid, fractional undivided interest in
Banc One Auto Grantor Trust 1997-B (the "Trust") formed pursuant to the Pooling
and Servicing Agreement (the "Agreement") dated as of December 1, 1997 among
Bank One, Texas, N.A., as seller (the "Seller") and servicer (the "Servicer")
and Bankers Trust Company, a New York banking corporation, as Trustee and
Collateral Agent, a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
<PAGE>
This Certificate is one of the duly authorized Certificates, designated
as the Class A ___% Asset Backed Certificates (herein called the "Class A
Certificates"), issued under the Agreement. Also issued under the Agreement are
Certificates designated as the Class B ___% Asset Backed Certificates (the
"Class B Certificates"). The Class A Certificates and the Class B Certificates
are hereinafter collectively called the "Certificates." The aggregate beneficial
ownership interests in the Trust evidenced by all Class A Certificates is 94%.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement to which Agreement reference is hereby made for
a statement of the respective rights and obligations thereunder of the Seller,
the Servicer, the Trustee and Holders of the Class A Certificates.
The property of the Trust includes a pool of simple interest motor
vehicle retail installment sale contracts for new or used automobiles, vans or
light duty trucks (collectively, the "Receivables"), all monies received under
the Receivables on or after the related Cutoff Date, security interests in the
vehicles financed thereby, certain bank accounts, the rights to proceeds from
certain insurance proceeds, the rights of the Trust under the Agreement, the
right to receive certain payments from funds deposited in the Reserve Fund and
all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 20th day of each
month or, if such 20th day is not a Business Day, the next Business Day (each, a
"Distribution Date"), commencing on January 20, 1998, to the Person in whose
name this Certificate is registered at the close of business on the last day of
the calendar month preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
It is the intent of the Seller, the Trustee and the Certificateholders
that the Trust be classified (for Federal tax purposes) as a grantor trust under
Subpart E, Part I of Subchapter J of the Code of which the Class A
Certificateholders are owners, rather than as an association taxable as a
corporation. The Seller, the Servicer, the Trustee and the Certificateholders,
by acceptance of a Class A Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Certificates for such tax purposes as
interests in a grantor trust.
Distributions on this Certificate will be made as provided in the
Agreement by the Trustee by check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect to
Certificates registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the Borough of Manhattan, the City
of New York.
2
<PAGE>
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Certificate
shall not entitle the Holder hereof to any benefit under the Agreement or be
valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date:
BANC ONE AUTO GRANTOR TRUST 1997-B
By:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
Date:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
4
<PAGE>
(REVERSE OF CLASS A CERTIFICATE)
The Class A Certificates do not represent an obligation of, or an
interest in, any of the Seller, the Servicer, the Trustee or any affiliates of
any of them, and no recourse may be had against such parties or their assets
except as expressly set forth or contemplated herein or in the Agreement. In
addition, this Certificate is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other amounts), all
as more specifically set forth herein and in the Agreement. A copy of the
Agreement may be examined by any Certificateholder upon written request during
normal business hours at the principal office of the Seller and at such other
places, if any, designated by the Seller.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer and the Trustee and the rights of the Certificateholders at
any time by the Seller, the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in the Borough of Manhattan, The
City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Class A Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
Except as provided in the Agreement, the Class A Certificates are
issuable only as registered certificates without coupons in minimum
denominations of $1,000 and integral multiples thereof; provided, however, that
one Class A Certificate may be issued in a denomination that represents any
remaining portion of the Original Class A Principal Balance. As provided in the
Agreement and subject to certain limitations therein set forth, Class A
Certificates are exchangeable for new Class A Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Trustee or any such agent shall be affected by any notice to the
contrary.
5
<PAGE>
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held by the Trust. The Seller of the Receivables may
at its option purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable only on a Distribution Date during a Collection Period
subsequent to a Collection Period in which the Pool Balance is 5% or less of the
Original Pool Balance as of the first day of such Collection Period.
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
_______________________________________________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ____________________________ to transfer said Class
A Certificate on the books of the Trustee, with full power of substitution in
the premises.
Dated:
___________________________________________*/
Medallion:
____________________________*/
- -----------------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears upon the face of the within Class A Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS CERTIFICATE MAY NOT BE DIRECTLY OR INDIRECTLY SOLD OR TRANSFERRED
TO, OR PURCHASED OR ACQUIRED BY, OR ON BEHALF OF (1) ANY EMPLOYEE BENEFIT PLAN,
RETIREMENT ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN WHICH IS
SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (EACH, A "PLAN"), OR (2) ANY ENTITY WHOSE SOURCE OF FUNDS TO BE USED FOR
THE PURCHASE OF THIS CLASS B CERTIFICATE INCLUDES THE ASSETS OF ANY SUCH PLAN,
OTHER THAN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN, AND WHICH
COMPLIES WITH THE PROVISIONS OF, PROHIBITED TRANSACTION EXEMPTION 95-60.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE
WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT
BALANCE ON THE FACE HEREOF.
NUMBER B- $_________ (of
CUSIP NO.________ $36,547,423.00 issued)
BANC ONE AUTO GRANTOR TRUST 1997-B
CLASS B ___% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of motor vehicle retail installment sale
contracts secured by new or used automobiles, vans or light duty trucks.
1
<PAGE>
(This Certificate does not represent an interest in or obligation of Bank One,
Texas, N.A., the Trustee or any of their respective affiliates, except to the
extent described below.)
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a $_______
nonassessable, fully-paid, fractional undivided interest in Banc One Auto
Grantor Trust 1997-B (the "Trust") formed pursuant to the Pooling and Servicing
Agreement (the "Agreement") dated as of December 1, 1997 among Bank One, Texas,
N.A., as seller (the "Seller") and servicer (the "Servicer") and Bankers Trust
Company, a New York banking corporation, as Trustee and Collateral Agent, a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates, designated
as the Class B ___% Asset Backed Certificates (herein called the "Class B
Certificates"), issued under the Agreement. Also issued under the Agreement are
Certificates designated as the Class A ___% Asset Backed Certificates (the
"Class A Certificates"). The Class A Certificates and the Class B Certificates
are hereinafter collectively called the "Certificates." The aggregate beneficial
ownership interests in the Trust evidenced by all Class B Certificates is 6%.
This Class B Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement to which Agreement reference is hereby made for
a statement of the respective rights and obligations thereunder of the Seller,
the Servicer, the Trustee and Holders of the Class B Certificates.
The property of the Trust includes a pool of simple interest motor
vehicle retail installment sale contracts for new or used automobiles, vans or
light duty trucks (collectively, the "Receivables"), all monies received under
the Receivables on or after the Cutoff Date, security interests in the vehicles
financed thereby, certain bank accounts, the rights to proceeds from certain
insurance proceeds, the rights of the Trust under the Agreement, the right to
receive certain payments from funds deposited in the Reserve Fund and all
proceeds of the foregoing.
Under the Agreement, there will be distributed on the 20th day of each
month or, if such 20th day is not a Business Day, the next Business Day (each, a
"Distribution Date"), commencing on January 20, 1998, to the Person in whose
name this Certificate is registered at the close of business on the last day of
the calendar month preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
It is the intent of the Seller, the Trustee and the Certificateholders
that the Trust be classified (for Federal tax purposes) as a grantor trust under
Subpart E, Part I of Subchapter J of the Code of which the Class B
Certificateholders are owners, rather than as an association taxable as a
corporation. The Seller, the Servicer, the Trustee and the Certificateholders,
by acceptance of a Class B Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Certificates for such tax purposes as
interests in a grantor trust.
Distributions on this Certificate will be made as provided in the
Agreement by the Trustee by check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect to
2
<PAGE>
Certificates registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the Borough of Manhattan, the City
of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Certificate
shall not entitle the Holder hereof to any benefit under the Agreement or be
valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date:
BANC ONE AUTO GRANTOR TRUST 1997-B
By:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Agreement.
Date:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
4
<PAGE>
(REVERSE OF CLASS B CERTIFICATE)
The Class B Certificates do not represent an obligation of, or an
interest in, any of the Seller, the Servicer, the Trustee or any affiliates of
any of them, and no recourse may be had against such parties or their assets
except as expressly set forth or contemplated herein or in the Agreement. In
addition, this Certificate is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other amounts), all
as more specifically set forth herein and in the Agreement. A copy of the
Agreement may be examined by any Certificateholder upon written request during
normal business hours at the principal office of the Seller and at such other
places, if any, designated by the Seller.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer and the Trustee and the rights of the Certificateholders at
any time by the Seller, the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in the Borough of Manhattan, The
City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Class B Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
Except as provided in the Agreement, the Class B Certificates are
issuable only as registered certificates without coupons in minimum
denominations of $1,000 and integral multiples thereof; provided, however, that
one Class B Certificate may be issued in a denomination that represents any
remaining portion of the Original Class B Principal Balance. As provided in the
Agreement and subject to certain limitations therein set forth, Class B
Certificates are exchangeable for new Class B Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Trustee or any such agent shall be affected by any notice to the
contrary.
5
<PAGE>
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held by the Trust. The Seller of the Receivables may
at its option purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable only on a Distribution Date during a Collection Period
subsequent to a Collection Period in which the Pool Balance is 5% or less of the
Original Pool Balance as of the first day of such Collection Period.
[By accepting and holding this Class B Certificate, the Holder hereof
shall be deemed to have represented and warranted that it is it is not acquiring
Class B Certificates, directly or indirectly, for or on behalf of an ERISA
Entity other than an "insurance company general account" as defined in, and
which complies with the provisions of, Prohibited Transaction Exemption 95-60.]
[The transferee hereof of this Class B Definitive Certificate will
represent that it is not either (1) an employee benefit plan, retirement
arrangement, individual retirement account or keogh plan which is subject to
either Title I of ERISA, or Section 4975 of the Code, or (2) any entity whose
source of funds to be used for the purchase of the Class B Certificate includes
the assets of any such Plan, other than an "Insurance Company General Account"
as defined in, and which complies with the provisions of, Prohibited Transaction
Exemption 95-60 issued by the United States Department of Labor.]
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
_______________________________________________________________________________
the within Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ____________________________ to transfer said Class
B Certificate on the books of the Trustee, with full power of substitution in
the premises.
Dated:
___________________________________________*/
Medallion:
____________________________*/
- -----------------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears upon the face of the within Class B Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
7
<PAGE>
EXHIBIT F-1
FORM OF TRUSTEE'S CERTIFICATE - ASSIGNMENT TO SELLER
Trustee's Certificate pursuant to Section 10.3 of the Pooling and
Servicing Agreement.
Bankers Trust Company, a New York banking corporation, as trustee
(the "Trustee") of Banc One Auto Grantor Trust 1997-B, created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1997 (the "Pooling and
Servicing Agreement") between Bank One, Texas, N.A. as Seller (the "Seller") and
as Servicer (the "Servicer"), and the Trustee does hereby sell, transfer, assign
and otherwise convey to the Seller, without recourse, representation or
warranty, all of the Trustee's right, title and interest in and to all of the
Receivables (as defined in the Pooling and Servicing Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to be
retransferred to the Seller pursuant to Section [2.3] [11.2] of the Pooling and
Servicing Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
____________________, 199__.
__________________________________
<PAGE>
EXHIBIT F-2
FORM OF TRUSTEE'S CERTIFICATE - ASSIGNMENT TO SERVICER
Trustee's Certificate pursuant to Section 10.3 of the Pooling and
Servicing Agreement.
Bankers Trust Company, a New York banking corporation, as trustee
(the "Trustee") of Banc One Auto Grantor Trust 1997-B, created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1997 (the "Pooling and
Servicing Agreement") between Bank One, Texas, N.A. as Seller (the "Seller") and
as Servicer (the "Servicer"), and the Trustee does hereby sell, transfer, assign
and otherwise convey to the Servicer, without recourse, representation or
warranty, all of the Trustee's right, title and interest in and to all of the
Receivables (as defined in the Pooling and Servicing Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to be
transferred by the Trustee to the Servicer pursuant to Section 3.7 of the
Pooling and Servicing Agreement, and all security and documents relating
thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
____________________, 199__.
Exhibit 5.1
SQUIRE, SANDERS & DEMPSEY L.L.P.
December 4, 1997
Bank One, Texas, N.A.
Subject: Banc One Auto Grantor Trust 1997-B
Ladies and Gentlemen:
We have acted as counsel to Bank One, Texas, N.A., a national banking
association (the "Seller"), in connection with the negotiation, execution and
delivery of (a) the Pooling and Servicing Agreement dated as of December 1, 1997
(the "Pooling and Servicing Agreement") by and between the Seller and Bankers
Trust Company (the "Trustee"), (b) the Underwriting Agreement described in the
Registration Statement and (c) the Registration Statement dated October 24, 1997
(Registration No. 333-38681), as amended (the "Registration Statement").
Pursuant to the Pooling and Servicing Agreement, the Seller is selling
all of its right, title and interest in a pool of retail receivables generated
from time to time pursuant to motor vehicle retail installment sale contracts
(the "Receivables") to the Trustee for the benefit of the holders of the
Certificates. Pursuant to the Underwriting Agreement, the Class A Certificates
and Class B Certificates (collectively, the "Certificates") described in the
Registration Statement are being sold in a public offering registered under the
Securities Act of 1933, as amended (the "1933 Act").
We are familiar with the corporate proceedings taken by the Seller in
connection with the foregoing agreement and the transactions contemplated
thereby. In addition, we have examined such corporate records, certificates of
corporate officers and governmental officials and other documents and such
questions of law as we have considered necessary or appropriate for the purpose
of this opinion.
<PAGE>
Bank One, Texas, N.A.
December 4, 1997
Page 2
On the basis of such examination and subject to the foregoing we are of
the opinion that assuming the due execution of the Pooling and Servicing
Agreement in substantially the form presented to us, upon the issuance,
authentication and delivery of the Certificates in accordance with the
provisions of the Pooling and Servicing Agreement against payment therefor, the
Certificates will be legally issued, fully paid and non-assessable and entitled
to the benefits of the Pooling and Servicing Agreement, subject, as to
enforceability to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and the reference to our firm
whenever it appears in such Registration Statement, including the Prospectus
constituting a part thereof, as originally filed or as subsequently amended.
Respectfully submitted,
SQUIRE, SANDERS & DEMPSEY L.L.P.
Exhibit 8.1
SQUIRE, SANDERS & DEMPSEY L.L.P.
December 4, 1997
Bank One, Texas, N.A.
Banc One Capital Corporation
Salomon Brothers Inc
UBS Securities LLC
Re: Banc One Auto Grantor Trust 1997-B
----------------------------------
Ladies and Gentlemen:
We have acted as special federal income tax counsel for Bank One,
Texas, N.A., a national banking association (the "Seller"), in connection with
the preparation and filing of a Registration Statement on Form S-3 (Registration
No. 333-38681) (the "Registration Statement"), originally filed with the
Securities and Exchange Commission (the "Commission") on October 24, 1997, as
amended by Amendment No. 1 to the Registration Statement to be filed with the
Commission ("Amendment No. 1"). The Registration Statement relates to the
offering of Class A Asset Backed Certificates and Class B Asset Backed
Certificates (the "Certificates"). The Certificates will be issued pursuant to
the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
between the Seller and Bankers Trust Company, as trustee.
In that connection, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for the
purposes of this opinion, including (a) a prospectus included in Amendment No. 1
relating to the Certificates (the "Prospectus"), (b) the form of the Pooling and
Servicing Agreement filed as an exhibit to Amendment No. 1 and, (c) the form of
the Certificates (included as exhibits to the Pooling and Servicing Agreement).
Based upon the foregoing, we hereby confirm that the statements in the
Prospectus under the headings "FEDERAL INCOME TAX CONSEQUENCES," and "STATE AND
LOCAL TAX CONSEQUENCES" to the extent they constitute matters of law or legal
conclusions with respect thereto, are correct.
<PAGE>
Bank One, Texas, N.A.
Banc One Capital Corporation
Salomon Brothers Inc
UBS Securities LLC
December 4, 1997
Page 2
This opinion is solely for the benefit of the addressees and may not be
relied upon in any manner by any other person or entity other than Moody's
Investors Service, Inc., Fitch Investors Service, L.P., and Standard & Poor's
Corporation which may rely on this opinion solely for the purposes of issuing
their respective ratings of the Certificates.
We hereby consent to the use of our name in the Prospectus under the
headings "FEDERAL INCOME TAX CONSEQUENCES", "STATE AND LOCAL TAX CONSEQUENCES"
and "LEGAL MATTERS" and to the filing of this opinion as an exhibit to the
Registration Statement.
Respectfully submitted,
SQUIRE, SANDERS & DEMPSEY L.L.P.
