As filed with the Securities and Exchange Commission on April 28, 1997
Registration Statement No. 333-____
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANC ONE AUTO GRANTOR TRUST 1997-A
(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:
Kim L. Swanson, Esq. Kenneth L. Wagner, Esq. Reed D. Auerbach, Esq.
Squire, Sanders & Dempsey BANC ONE CORPORATION Stroock & Stroock & Lavan
L.L.P 100 East Broad Street LLP
1300 Huntington Center Columbus, Ohio 43271-0158 180 Maiden Lane
41 South High Street New York, New York 10038
Columbus, Ohio 43215
--------------------------------------------------
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./ /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================
PROPOSED PROPOSED
AMOUNT TO MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF BE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER OFFERING FEE
(1) UNIT (1) PRICE (1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Asset Backed $ 500,000 100% $ 500,000 $151.52
Certificates....................... (2)
- --------------------------------------------------------------------------------------------------
Class B Asset Backed $ 500,000 100% $ 500,000 $151.52
Certificates....................... (2)
- --------------------------------------------------------------------------------------------------
TOTAL.............................. $1,000,000 100% $1,000,000 $303.04
(2)
==================================================================================================
<FN>
(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.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
- ------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to a public
offering by Banc One Auto Grantor Trust 1997-A of $____________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 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED ________________, 1997
PROSPECTUS
$------------
BANC ONE AUTO GRANTOR TRUST 1997-A
$___________Class A ___% Asset Backed Certificates
$___________Class B ___% Asset Backed Certificates
BANK ONE, TEXAS, N.A.
SELLER AND MASTER SERVICER
Bank One, N.A. Bank One, Wisconsin
Servicer Servicer
------------------------------
Banc One Auto Grantor Trust 1997-A (the "Trust") will be formed pursuant to
a Pooling and Servicing Agreement dated as of June __, 1997, between Bank One,
Texas, N.A., a national banking association, as seller and master servicer, and
__________, as trustee, and will issue $___________aggregate principal balance
of ___% Class A Asset Backed Certificates (the "Class A Certificates") and
$___________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 June __, 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 acquired by the Seller from Bank One, N.A., Bank One Wisconsin, and Bank
One, Indiana, N.A. (each an "Affiliated Bank" and together the "Affiliated
Banks") in the ordinary course of the Seller's business. None of the Receivables
were originated by the Seller. The Receivables originated by Bank One, N.A. or
its predecessors will be serviced by Bank One, N.A. and the remaining
Receivables will be serviced by Bank One, Wisconsin.
The Class A Certificates will evidence in the aggregate an undivided
ownership interest in approximately ___% of the Trust. The Class B Certificates
will evidence in the aggregate an undivided ownership interest in approximately
___% 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
fifteenth day of each month, commencing July 15, 1997. 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 __________ 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
__.
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.
------------------------------
==============================================================================
Price to Underwriting Proceeds to
Public Discounts the Seller(1)
- ------------------------------------------------------------------------------
Per Class
A Certificate...... ____________ ________% _______________%
- ------------------------------------------------------------------------------
Per Class
B Certificate...... _________% ________% _______________%
- ------------------------------------------------------------------------------
Total.............. $_____________ $_____________ $________________
==============================================================================
(1) Before deducting expenses, estimated to be $_______.
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
June __, 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."
------------------------------
- ------------------------------ ------------------------
June __, 1997.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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 Master 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 Citicorp 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 Master 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 Master 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, 24th Floor, Columbus, Ohio 43271-0138,
Attention: Structured Finance. Telephone requests for such copies should be
directed to BANC ONE CORPORATION at (614) 248-5800.
<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.
Issuer............................... Banc One Auto Grantor Trust 1997-A (the
"Trust" or the "Issuer").
Seller and Master Servicer .......... Bank One, Texas, N.A. (in its
capacity as seller, the "Seller" or,
in its capacity as master servicer,
the "Master Servicer "). See "The
Master Servicer and the Seller."
Affiliated Banks .................... All of the Receivables were originated
by Bank One, N.A., Bank One, Wisconsin
or Bank One, Indiana, N.A. (each an
"Affiliated Bank" and together, the
"Affiliated Banks").
Servicers............................ Bank One, N.A. with respect to the
Receivables originated by Bank One,
N.A. and Bank One, Wisconsin with
respect to the remaining Receivables
(each a "Servicer" and together the
"Servicers").
Trustee and Collateral Agent......... _____________, a _______________, 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-A 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
June __, 1997 (the "Agreement ") among
the Seller, the Master 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 $___________(the
"Original Class A Principal Balance ")
and will evidence in the aggregate an
undivided ownership interest in
approximately ___% of the Trust (the
"Class A Percentage ").
The Class B Certificates will be issued
in an initial aggregate principal amount
of $___________(the "Original Class B
Principal Balance") and will evidence
in the aggregate an undivided ownership
interest in approximately ___% 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."
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
June __, 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
$____________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 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
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. None of the Receivables
were originated by the Seller. As of
the Cutoff Date, the weighted average
annual percentage rate (the "APR") of
the Receivables was approximately ____%,
the weighted average remaining
maturity of the Receivables was
approximately ____ months and
the weighted average original
maturity of the Receivables was
approximately ____ months. As of the
Cutoff Date, no Receivable has a
scheduled maturity later than
___________ (the "Final Scheduled
Maturity Date"). Approximately ___% 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 ___%
, ____% and ___% of the aggregate
principal balance of the Receivables
have Obligors with billing addresses
in the States of Ohio, Wisconsin 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 ").
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 15th day of each
month (or, if such 15th day is not a
Business Day, the next succeeding
Business Day) (each, a "Distribution
Date "), commencing in July 1997. The
final scheduled Distribution Date is
the ______ 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.
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 Servicers 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 Certificate-
holders, but will not be part of
the Trust.
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 $________, or ___% 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) ___% 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) __% 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 Master 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.
Servicing Fee........................ The Master 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 Master 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 Master
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."
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."
<PAGE>
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 Master 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 MASTER SERVICER
Neither the Seller, the Master 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
Master Servicer, or if Bank One, N.A. or Bank One, Wisconsin, were to cease
acting as Servicers, 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, or to cause the
related Affiliated Bank to repurchase the related Receivables, with respect to
which such representations and warranties have been breached. If the Master
Servicer fails to cure certain breaches of the covenants made by it in the
Agreement with respect to a Receivable, the Master Servicer may be required to
purchase the affected Receivable, or to cause the related Servicer to purchase
the related Receivable. Because the Seller and the Master Servicer are the same
entity, certain conflicts of interest may arise with respect to such
obligations. For example, the Master 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 Master Servicer are obligated to give
notices of any breaches of representations to the Trustee, failure by the Master
Servicer to give such notice could give rise to an Event of Servicing
Termination. Neither the Seller nor the Master 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."
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 Master Servicer will hold
the Receivables, either directly or through subcustodians (which may be
affiliates of the Master 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
Master 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."
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 ___%, __% and __% by principal balance of the
Receivables were located in Ohio, Wisconsin and Indiana, respectively. Ohio,
Wisconsin and Indiana have experienced economic downturns from time to time, and
no predictions can be made regarding future economic conditions in Ohio,
Wisconsin, Indiana 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 Master Servicer is obligated to
purchase, or to cause the related Servicer 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 Master 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.
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 Master 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. The Master
Servicer will designate Bank One, N.A. to service the Receivables originated by
Bank One, N.A. or its predecessors and Bank One, Wisconsin to service the
remaining Receivables. 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 Master 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.
<PAGE>
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 acquired
by the Seller from the Affiliated Banks in the ordinary course of the Seller's
business. The Receivables are presently serviced by and will continue to be
serviced by Bank One, N.A. and Bank One, Wisconsin, as the case may be, as
servicers for the Master Servicer and 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.
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 acquired by the Seller from the Affiliated Banks in the ordinary course
of the Seller's business (the "Affiliated Bank Portfolio"). None of the
Receivables were originated by the Seller. 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. Each Affiliated Bank's motor vehicle
lending operations are centrally managed through Banc One Credit Company, an
unincorporated division of Bank One, N.A. 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.
The Seller's Affiliated Bank Portfolio is currently serviced by Bank One,
N.A., with respect to loans originated by Bank One, N.A. or its predecessors and
by Bank One, Wisconsin, with respect to loans originated by the other Affiliated
Banks. Bank One, N.A. and Bank One, Wisconsin, are referred to as the
"Servicers." Certain functions associated with the servicing of the Motor
Vehicle Loans, including data processing, payment processing, statement
rendering, customer service, collateral file maintenance and certain
administrative functions are currently performed on behalf of the Master
Servicer by Banc One Services Corporation, an affiliate of the Seller.
Each Motor Vehicle Loan was purchased by the related Affiliated Bank after
a review by the related Affiliated Bank 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.
Each Affiliated Bank'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 the
related Affiliated Bank'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 the related Affiliated Bank's guidelines.
The related Affiliated Bank 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.
All Motor Vehicle Loans are analyzed using a judgmental system supported by
generic (custom 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 six Fair Isaac
scorecards custom built for the Affiliated Banks. 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. The Affiliated
Banks 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 each of the Affiliated Bank'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,
110% to 130% 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. The applicable
Affiliated Bank 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.
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.
<PAGE>
CONTRACT MODIFICATIONS
The Seller's Affiliated Bank Portfolio is currently serviced by Bank One,
N.A. and Bank One, Wisconsin. Each Servicer follows specific procedures with
respect to contract extensions and modifications. Each Servicer's extension
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 unless approval by the
related Collections Center Manager is obtained. Extensions exceeding a
Servicer's policy require the approval of the related Collections Center Manager
or his designee. [The Servicers engage in programs that solicit qualified
customers for an extension in exchange for a fee payment.]
The related 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 related 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 Servicers consider 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 Servicers assess 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 25 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 related
Servicer's eligibility requirements. Collateral is liquidated at auctions,
subject to minimum bid requirements, no later than 45 days after repossession,
unless the related Servicer is prevented from doing so by a bankruptcy filing.
Each Servicer's policy is to charge off all delinquent Motor Vehicle Loans
as to which the related motor vehicle has not been repossessed prior to the loan
becoming 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 related
Servicer determines it would not be useful based on the resources of the
obligor.
INSURANCE
Pursuant to the related Affiliated Bank'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 Master Servicer or the related Servicer on an ongoing basis. [None of the
Master Servicer or the Servicers, on behalf of the Trust, is obligated, and they
do 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.]
DELINQUENCIES AND NET LOSS
Set forth below is certain information concerning the historical experience
of that portion of the portfolio owned or serviced by Bank One, Texas, N.A.
pertaining to retail (new or used) automobile, van or light duty truck
receivables originated indirectly by the Seller through Dealers. There can be no
assurance that the delinquency and net loss experience on the Receivables will
be comparable to that set forth below.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
At December 31, At March 31,
---------------------------------------------------------- -------------------------------------------
1994 1995 1996 1996 1997
------------------- ------------------ -------------------- -------------------- ------------------
Number Number Number Number Number
of of of of of
Contracts Amount Contract Amount Contracts Amount Contracts Amount Contracts Amount
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at
Period End
Delinquency:
30-59 days...
60-89 days...
90 days or more...
Total Delinquencies as a
Percentage of
the Portfolio......
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL NET LOSS EXPERIENCE
(DOLLAR AMOUNTS IN THOUSANDS)
For Three Months
For Year Ended December 31, Ended March 31,
----------------------------------- -----------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding.........................
Average Principal Amount Outstanding
Number of Loans Outstanding..........................
Average Number of Loans Outstanding
Net Losses...........................................
Net Losses as a Percent of Principal
Amount Outstanding..................................
Net Losses as a Percent of Average Principal Amount
Outstanding ........................................
</TABLE>
THE RECEIVABLES POOL
GENERAL
The Receivables were selected from the Seller's 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 related records of the Master Servicer, the related
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.
<TABLE>
<CAPTION>
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
WEIGHTED
AVERAGE AGGREGATE WEIGHTED WEIGHTED AVERAGE
APR OF PRINCIPAL NUMBER OF AVERAGE AVERAGE PRINCIPAL
RECEIVABLES BALANCE RECEIVABLES REMAINING TERM ORIGINAL TERM BALANCE
- ------------ --------- ----------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
% $ months months $
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING PRINCIPAL OF THE RECEIVABLES AS OF THE CUTOFF DATE
PERCENTAGE
NUMBER OF AGGREGATE PRINCIPAL OF AGGREGATE
REMAINING PRINCIPAL RECEIVABLES BALANCE PRINCIPAL BALANCE (1)
- -------------------- ----------- ------------------- ---------------------
(Dollars in Thousands)
<S> <C> <C> <C>
$250 to $2,499................................
$2,500 to $4,999..............................
$5,000 to $7,499..............................
$7,500 to $9,999..............................
$10,000 to $12,499............................
$12,500 to $14,999............................
$15,000 to $17,499............................
$17,500 to $19,999............................
$20,000 to $22,499............................
$22,500 to $24,999............................
$25,000 to $27,499............................
$27,500 to $29,999............................
$30,000 to $39,999............................
$40,000 to $49,999............................
Total...................................
- --------------
(1) Percentages may not add to 100.00% because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE
RECEIVABLES AS OF THE CUTOFF DATE
Percentage
ANNUAL PERCENTAGE Number of Aggregate Principal of Aggregate
RATE RANGE RECEIVABLES BALANCE PRINCIPAL BALANCE(1)
------------------ ----------- ------------------ -------------------
<S> <C> <C> <C>
(Dollars in Thousands)
2.00% to 2.99%................................
3.00% to 3.99%................................
4.00% to 4.99%................................
5.00% to 5.99%................................
6.00% to 6.99%................................
7.00% to 7.99%................................
8.00% to 8.99%................................
9.00% to 9.99%................................
10.00% to 10.99%..............................
11.00% to 11.99%..............................
12.00% to 12.99%..............................
13.00% to 13.99%..............................
14.00% to 14.99%..............................
15.00% and above..............................
Total....................................
- --------------
(1) Percentages may not add to 100.00% because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING TERM OF THE
RECEIVABLES AS OF THE CUTOFF DATE
NUMBER OF AGGREGATE PRINCIPAL PERCENTAGE OF AGGREGATE
RANGE OF REMAINING TERMS RECEIVABLES BALANCE PRINCIPAL BALANCE
------------------------ ----------- ------------------- -----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
12 to 17 months................................
18 to 23 months................................
24 to 29 months................................
30 to 35 months................................
36 to 41 months................................
42 to 47 months................................
48 to 53 months................................
54 to 59 months................................
60 to 65 months................................
66 to 72 months................................
Total.....................................
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
Percentage
NUMBER OF AGGREGATE PRINCIPAL OF AGGREGATE
STATE(1) RECEIVABLES BALANCE PRINCIPAL BALANCE
-------- ----------- ------------------- ------------------
<S> <C> <C> <C>
(Dollars in Thousands)
Ohio...................................
Wisconsin..............................
Indiana................................
Other..................................
Total.............................
<FN>
- --------------
(1) Based on billing addresses of the Obligors.
</FN>
</TABLE>
Approximately __________% of the aggregate principal balance of the
Receivables, constituting __________% 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 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 Servicers 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."
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 Master Servicer is obligated to purchase, or to cause the
related Servicer 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 Master
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 Servicers 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 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 Master 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 Master 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 $_________.
THE MASTER 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 December 31, 1996 (the "Call Report") and is qualified in its entirety by
detailed information included in such Call Report. As of December 31, 1996, the
Seller had total assets of approximately $__ billion, total deposits of
approximately $___ billion and total equity capital of approximately $__
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.
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 Master 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 ___% of the
Trust and the Class B Certificates will evidence in the aggregate an undivided
ownership interest of ___% 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 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 MASTER SERVICER, THE SERVICERS, 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 Master 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.
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 Master
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 Master 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 Master Servicer as custodian
of the Receivables.
The Master 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 Master 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
Master Servicer, the related 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 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 Master Servicer will establish the Reserve Fund as a
segregated account with ___________________, 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 Master 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 Master Servicer and will not be
available to Certificateholders.
SERVICING PROCEDURES
The Master Servicer will make, or cause the Servicers to 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
or cause the Servicers to continue such collection procedures as they follow
with respect to motor vehicle retail installment sale contracts they service.
Consistent with its normal procedures, the Master Servicer or a 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 Master Servicer or the Trustee shall inform the
other party in writing promptly upon the discovery of the breach by the Master
Servicer of certain covenants made by it. If the Master 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 Master
Servicer is required to purchase, or to cause the related Servicer 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 Master 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 Master Servicer, by Banc One Services Corporation, an affiliate of the
Seller. The Master Servicer intends to delegate the servicing of the Receivables
originated by Bank One, N.A. and its predecessors to Bank One, N.A. and the
remaining Receivables to Bank One, Wisconsin. No such delegations will relieve
Bank One, Texas, N.A. of any of its obligations as Master Servicer under the
Agreement and the Master Servicer shall be responsible for such functions as if
it alone were performing such functions with respect to the Receivables.
PAYMENTS ON RECEIVABLES
The Agreement requires the Master Servicer to deposit, or cause the
Servicers to deposit, all payments, other than any nonsufficient funds charges
and other administrative fees and similar charges retained by the Master
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 Master Servicer or the Trustee in writing
that monthly deposits by the Master 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 Master 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 Master Servicer will not be required to deposit, or
to cause the Servicers 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 Master Servicer will also deposit the aggregate
Purchase Amount of Receivables repurchased by the Seller or purchased by the
Master 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 Master Servicer at its own risk and for its
own benefit, and will not be segregated from funds of the Master Servicer.
SERVICING COMPENSATION
The Master 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 Master 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 Master Servicer's normal practices and procedures. In addition, the
Master 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 Master 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 Master 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 Master 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 Servicer will be paid by the Master Servicer out of the Servicing Fee.
DISTRIBUTIONS ON CERTIFICATES
Deposits to Collection Account. On the later of the eighth Business Day and
the eleventh calendar day of each month in which a Distribution Date occurs (the
"Determination Date"), the Master 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 Master Servicer.
No later than the Business Day preceding each Distribution Date, the Master
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 liquidation of defaulted Receivables ("Liquidated
Receivables"), net of expenses incurred by the Master Servicer or the related
Servicer in connection with such liquidation and any amounts required by law to
be remitted to the Obligor on such Liquidated Receivables ("Liquidation
Proceeds"), to the extent attributable to interest due thereon, which became
Liquidated Receivables during such Collection Period in accordance with the
Servicer's customary servicing procedures, 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 Master 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 Master Servicer or the related Servicer
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 Servicer'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 Master
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
Master 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 Master Servicer, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods (to the extent not retained by the Master 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 Master 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
Master Servicer shall instruct the Trustee to withdraw from the Reserve Fund and
deposit in the Class A Distribution Account or the Class B Distribution Account
as described below in the following order of priority on each Distribution Date:
(i) an amount equal to the excess of the Class A Interest Distribution over
the sum of Interest Collections and the Class B Percentage of Principal
Collections will be deposited into the Class A Distribution Account;
(ii) an amount equal to the excess of the Class B Interest Distribution
over the portion of Interest Collections remaining after the distribution of the
Class A Interest Distribution will be deposited into the Class B Distribution
Account;
(iii) an amount equal to the excess of the Class A Principal Distribution
over the portion of Principal Collections and Interest Collections remaining
after the distribution of the Class A Interest Distribution and the Class B
Interest Distribution will be deposited into the Class A Distribution Account;
and
(iv) an amount equal to the excess of the Class B Principal Distribution
over the portion of Principal Collections and Interest Collections remaining
after the distribution of the Class A Interest Distribution, the Class B
Interest Distribution and the Class A Principal Distribution will be
deposited into the Class B Distribution Account.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders and
all amounts on deposit in the Class B Distribution Account will be distributed
to the Class B Certificateholders.
"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.
"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 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 ___ 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) __% of the sum of the Class A Principal Balance and Class B
Principal Balance on such Distribution Date (after giving effect to all
distributions with respect to the Certificates to be made on such Distribution
Date) or (b) __% of the sum of the Original Class A Principal Balance and
Original Class B Principal Balance except that, if on any Distribution Date (x)
the average of the Charge-off Rates for the three preceding Collection Periods
exceeds ___% or (y) the average of the Delinquency Percentages for the three
preceding Collection Periods exceeds ___%, then the Specified Reserve Balance
shall be an amount equal to __% 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). 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 Master Servicer,
the Servicers 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.
NET DEPOSITS
As an administrative convenience, unless the Master Servicer is required to
remit Collections within two Business Days of receipt thereof, the Master
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 Master Servicer with respect to the Collection Period. The Master
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 Master 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 Master Servicer with
respect to such Collection Period and the Class A Percentage and Class B
Percentage of the Servicing Fee paid to the Master 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; and
(xii) the aggregate Purchase Amount of Receivables repurchased by the
Seller or purchased by the Master Servicer with respect to such Collection
Period.
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."
EVIDENCE AS TO COMPLIANCE
The Agreement will provide that a firm of independent public accountants
will furnish to the Trustee a report expressing a summary of findings regarding
the Master Servicer's compliance with the Agreement during the preceding
calendar year (or, in the case of the first such report, the period from the
Closing Date to December 31, 1997).
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 Master Servicer stating that the Master 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, 1997) or, if there has been a default in the
fulfillment of any such obligation, describing each such default. The Master
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 MASTER SERVICER
The Agreement will provide that the Master Servicer may not resign from its
obligations and duties as Master Servicer thereunder, except upon a
determination that the Master 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 Master Servicer is required by regulatory authorities to resign or
the date on which the Trustee or a successor servicer has assumed the Master
Servicer's servicing obligations and duties under the Agreement.
The Agreement will further provide that neither the Master 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 Master 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 Master 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 Master Servicer may be merged or consolidated, or any entity resulting from
any merger or consolidation to which the Master Servicer is a party, or any
entity succeeding to the business of the Master Servicer, which corporation or
other entity in each of the foregoing cases assumes the obligations of the
Master Servicer, will be the successor to the Master Servicer under the
Agreement.
The Master Servicer may appoint a subservicer or subcustodian to perform
all or any portion of its obligations under the Agreement; however, the Master
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 Master Servicer alone were servicing and administering the Receivables. The
Master Servicer will appoint Bank One, N.A. to service Receivables originated by
Bank One, N.A. or its predecessors and Bank One, Wisconsin to service the
remaining Receivables.
EVENTS OF SERVICING TERMINATION
"Events of Servicing Termination" under the Agreement will consist of (i)
any failure by the Master 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 Master Servicer from the Trustee or the Collateral Agent, as
applicable, or after discovery of such failure by the Master Servicer; (ii) any
failure by the Master 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 Master Servicer by the Trustee or (2) to the Master Servicer
and to the Trustee by holders of Certificates, evidencing not less than 25%
aggregate outstanding principal balance of 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 Master
Servicer delivers an officer's certificate to the Trustee to such effect and to
the effect that the Master 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 Master
Servicer and certain actions by the Master 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 Master Servicer's rights and obligations under the
Agreement, whereupon the Trustee or a successor Master Servicer appointed by the
Trustee will succeed to all the responsibilities, duties and liabilities of the
Master Servicer under the Agreement. Thereafter, the successor Master Servicer
will be entitled to the compensation otherwise payable to the Master Servicer.
If, however, a conservator or receiver has been appointed for the Master
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 Master
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 Master 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 Master 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.
<PAGE>
AMENDMENT
The Agreement may be amended by the Seller, the Master 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 Master 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.
LIST OF CERTIFICATEHOLDERS
Upon written request of the Master Servicer, the Trustee will provide
to the Master 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 Master 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 Master Servicer of
any funds paid to the Seller or the Master Servicer in respect of the
Certificates or the Receivables, or the investment of any monies by the Master
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 Master Servicer to perform its
duties under the Agreement which failure constitutes an Event of Servicing
Termination unless a responsible officer of the Trustee obtains actual knowledge
of such failure as specified in the Agreement.
The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. No Class A
Certificateholder or Class B Certificateholder will have any right under the
Agreement to institute any proceeding with respect to the Agreement, unless such
holder has given the Trustee written notice of default and unless, with respect
to the Class A Certificates, the holders of Class A Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates or, with respect to the Class B Certificates, the holders of
Class B Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class B Certificates, have made a written
request to the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity, and the Trustee
for 30 days has neglected or refused to institute any such proceedings.
THE TRUSTEE
_____________, a _______________, will act as Trustee under the Agreement.
The Trustee, in its individual capacity or otherwise, and any of its affiliates,
may hold Certificates in their own names or as pledgee. In addition, for the
purpose of meeting the legal requirements of certain jurisdictions, the Master
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 Master Servicer will
be obligated to appoint a successor trustee. The Master 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 Master 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 Master 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 Master Servicer is required to indemnify the Trustee.
The Trustee's Corporate Trust Office is located at ____________,
___________________. The Seller, the Master Servicer and their respective
affiliates may have other banking relationships with the Trustee and its
affiliates in the ordinary course of their business.
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 Master 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 Master 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 Master 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 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 Master Servicer will hold the certificates of title relating to the
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 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.
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 Servicers 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 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.
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.
<PAGE>
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.
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 Master Servicer or a Servicer 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 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 Master 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 Master 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 Master 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 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 for Ohio tax purposes, as currently applied,
regardless of its classification for federal income tax purposes. 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.
The Ohio legislature is currently considering a biennial budget bill (the
"Bill"), to be enacted no later than June 30, 1997, that contains certain tax
provisions that will be effective generally for tax years beginning on or after
January 1, 1998. The Bill as passed by the Ohio House of Representatives levies
a tax on the Ohio apportioned income of a "qualifying pass-through entity" and
"qualifying trust" attributable to each "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, under the current
version of the Bill, trusts will not be treated as qualifying pass-through
entities and trusts whose activities are limited to the acquisition, holding,
management or disposition of intangible property (as is the case with the Trust)
will not be treated as qualifying trusts.
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") _____, Exemption Application No. D-______, ____ Fed. Reg. ______
(_____), to _______________________________, and PTE ___, Exemption Application
No. D-____, __ Fed. Reg. ____ (____), to ______________________ (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.
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 Master
Servicer, the Servicers, 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 Master Servicer represents not more
than the reasonable compensation for the Master Servicer's services under the
Agreement and reimbursement of the Master 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 Master 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 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.
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 PRINCIPAL
BALANCE BALANCE
OF CLASS A OF CLASS B
UNDERWRITERS CERTIFICATES CERTIFICATES
------------ ------------ ----------------
<S> <C> <C>
--------------................... $------------- $-------------
- --------------.....................
$------------- $-------------
Total..............................
$ $
============= =============
</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.
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 Master 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.
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.
<PAGE>
INDEX OF PRINCIPAL TERMS
Accounts.................................................................27
Affiliated Bank...........................................................1
Affiliated Bank Portfolio.................................................5
Affiliated Banks..........................................................1
Aggregate Net Losses.....................................................32
Agreement.................................................................4
APR.......................................................................5
Bill.....................................................................47
Business Day..............................................................6
Call Report..............................................................23
Cede......................................................................3
Certificate Owner........................................................23
Certificateholders........................................................6
Certificates..............................................................1
Charge-off Rate..........................................................32
Class.....................................................................4
Class A Certificateholders................................................6
Class A Certificates......................................................1
Class A Distribution Account.............................................26
Class A Interest Carryover Shortfall.....................................30
Class A Interest Distribution............................................30
Class A Monthly Interest..................................................6
Class A Monthly Principal.................................................7
Class A Pass-Through Rate.................................................6
Class A Percentage........................................................4
Class A Pool Factor......................................................22
Class A Principal Balance.................................................6
Class A Principal Carryover Shortfall....................................30
Class A Principal Distribution...........................................31
Class B Certificateholders................................................6
Class B Certificates......................................................1
Class B Distribution Account.............................................26
Class B Interest Carryover Shortfall.....................................31
Class B Interest Distribution............................................31
Class B Monthly Interest..................................................6
Class B Monthly Principal.................................................7
Class B Pass-Through Rate.................................................6
Class B Percentage........................................................4
Class B Pool Factor......................................................22
Class B Principal Balance.................................................6
Class B Principal Carryover Shortfall....................................31
Class B Principal Distribution...........................................31
Closing Date..............................................................5
Code.....................................................................10
Collateral Agent..........................................................4
Collection Account.......................................................26
Collection Period.........................................................7
Collections..............................................................29
Commission................................................................3
Cutoff Date...............................................................1
Dealer Agreements.......................................................15
Dealers...................................................................5
Definitive Certificates..................................................23
Delinquency Percentage...................................................33
Determination Date.......................................................28
Direct Participants......................................................24
Distribution Date.........................................................6
Distribution Date Statement..............................................33
DOL......................................................................48
DTC.......................................................................3
Eligible Deposit Account.................................................27
Eligible Institution.....................................................27
Eligible Investments.....................................................27
Eligible Trust Company...................................................27
ERISA....................................................................10
Events of Servicing Termination..........................................35
Exchange Act..............................................................3
Excluded Plan............................................................49
Exemption................................................................48
FDIC.....................................................................12
Final Scheduled Distribution Date.........................................1
Final Scheduled Maturity Date.............................................5
Financed Vehicles.........................................................5
FIRREA...................................................................12
FTC Rule.................................................................42
Holders..................................................................25
Indirect Participants....................................................24
Interest Collections.....................................................29
IRS......................................................................43
Issuer....................................................................4
Liquidated Receivables...................................................29
Liquidation Proceeds.....................................................29
Master Servicer...........................................................4
Motor Vehicle Loans......................................................15
Obligors..................................................................5
OCC......................................................................43
Ohio Tax Counsel..........................................................9
OID......................................................................44
Original Class A Principal Balance........................................4
Original Class B Principal Balance........................................4
Original Pool Balance.....................................................8
Paid-Ahead Period........................................................21
Paid-Ahead Receivable....................................................21
Participants.............................................................24
Plan.....................................................................10
Pool Balance..............................................................8
Principal Collections.....................................................7
PTE......................................................................48
Purchase Amount..........................................................26
Purchase Price...........................................................44
Rating Agency............................................................10
Realized Losses.........................................................31
Receivable File..........................................................26
Receivables...............................................................1
Record Date...............................................................6
Recoveries...............................................................29
Registration Statement....................................................3
Regulation...............................................................48
Reserve Fund..............................................................7
Restricted Group.........................................................49
Retained Yield...........................................................44
Rules....................................................................24
Securities Act............................................................3
Seller....................................................................4
Servicer..................................................................4
Servicers.................................................................4
Servicing Fee.............................................................9
Servicing Fee Rate........................................................9
Shortfall Amount.........................................................46
Simple Interest Receivable...............................................18
Specified Reserve Balance.................................................8
Trust.....................................................................1
Trust Property............................................................5
Trustee...................................................................4
UCC......................................................................12
Underwriters.............................................................50
Underwriting Agreement...................................................50
<PAGE>
================================== ======================================
NO DEALER, SALESPERSON OR
OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY $__________________
INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN
THOSE CONTAINED OR BANC ONE AUTO
INCORPORATED BY REFERENCE IN GRANTOR TRUST 1997-A
THIS PROSPECTUS IN
CONNECTION WITH THE OFFER
MADE BY THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH $________________
INFORMATION OR REPRESENTATION CLASS A _____%
MUST NOT BE RELIED UPON AS ASSET BACKED CERTIFICATES
HAVING BEEN AUTHORIZED BY THE
SELLER, THE MASTER SERVICER
OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT $__________________
CONSTITUTE AN OFFER OR CLASS B_____%
SOLICITATION BY ANYONE IN ANY ASSET BACKED CERTIFICATES
STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR BANK ONE, TEXAS, N.A.
SOLICITATION IS NOT SELLER AND MASTER SERVICER
QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS BANK ONE, N.A. BANK ONE,
UNLAWFUL TO MAKE SUCH OFFER WISCONSIN
OR SOLICITATION. SERVICERS
---------------------- ---------------
TABLE OF CONTENTS PROSPECTUS
PAGE JUNE ___, 1997
Reports to Securityholders........ _______________
Available Information.............
Incorporation of Certain
Documents by Reference............
Summary of Terms..................
Risk Factors......................
Formation of the Trust............ BANC ONE CAPITAL
The Trust Property................ CORPORATION
The Seller's Affiliated Bank
Portfolio
of Motor Vehicle Loans........
The Receivables Pool..............
Maturity and Prepayment _____________________
Assumptions.......................
Yield Considerations..............
Pool Factors and Trading
Information.......................
Use of Proceeds...................
The Master Servicer and the
Seller............................
The Certificates..................
Certain Legal Aspects of the
Receivables.......................
Federal Income Tax
Consequences......................
State and Local Tax
Consequences......................
ERISA Considerations..............
Underwriting......................
Legal Opinions....................
Index of Terms....................
----------------------
UNTIL SEPTEMBER __, 1997 (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.
========================================= =================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
SEC Registration Fee $ 303.04
Printing and $ *
Engraving......................... $ *
Trustee's Fees.................... $ *
$ *
Legal Fees and $
Expenses.......................... $ *
Blue Sky Fees and $
Expenses.......................... $ *
Accountant's Fees $
and Expenses...................... $ *
Rating Agency Fees................ $ $
Miscellaneous Fees
and Expenses...................... $ *
-----------
Total Expenses................. $ *
===========
*To be supplied by amendment
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
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)
*To be filed by amendment.
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.
<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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the State of Texas, on April 28, 1997.
BANK ONE, TEXAS, N.A.
By:__/S/ TERRY KELLEY
--------------------------------
Name: Terry Kelley
Title: Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned does
hereby constitute and appoint Terry Kelley, Christopher T. Klimko or Kenneth L.
Wagner, or any of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent with full power of substitution,
for him or her and on his or her behalf to sign, execute and file this
Registration Statement and any and all amendments (including, without
limitation, post-effective amendments and any amendments increasing the amount
of securities for which registration is being sought) to this Registration
Statement and any subsequent Registration Statement filed pursuant to Rule
462(b) under the Securities Act of 1933, together with all exhibits and any and
all documents to be filed with respect thereto, with the Securities and Exchange
Commission or any regulatory authority, granting unto such attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he or
she might or could do if personally present, hereby ratifying and confirming all
that such attorneys-in-fact and agents, or any of them, or their substitute or
substitutes may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- -----
/S/ Terry Kelley Chairman, Chief Executive April 28, 1997
- -------------------- Officer and Director
Terry Kelley
/s/ Mark E. Gresenz Executive Vice President April 28, 1997
- ------------------- and Chief Financial
Mark Gresenz Officer
(principal financial
and accounting
officer)
April 28, 1997
/s/ Jeffrey W. Stewart Vice President
- ---------------------- Division Controller
Jeffrey W. Stewart (principal accounting officer)
/s/ Rita C. Clenents Director April 28, 1997
- ----------------------
Rita C. Clenents
/s/ William L. Schilling Director April 28, 1997
- ------------------------
William L. Schilling
/s/ Ronald G. Steinhart Director April 28, 1997
- -----------------------
Ronald G. Steinhart
/s/ Vernell Sturns Director April 28, 1997
- -----------------------
Vernell Sturns
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER Exhibit Page
- ------- ------- -----
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)
*To be filed by amendment.
