<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1996
REGISTRATION NO. 333-10943
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
(ISSUER WITH RESPECT TO CERTIFICATES)
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 655 MARYVILLE CENTRE 88-0355652
(STATE OR OTHER DRIVE (I.R.S. EMPLOYER
JURISDICTION OF ST. LOUIS, MISSOURI IDENTIFICATION NUMBER)
INCORPORATION OR 63141-5832
ORGANIZATION) (314) 523-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
NARAN BURCHINOW
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
DEUTSCHE FINANCIAL SERVICES CORPORATION
655 MARYVILLE CENTRE DRIVE
ST. LOUIS, MISSOURI 63141-5832
(314) 523-3030
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
JASON H. P. KRAVITT, ESQ. STUART M. LITWIN, ESQ.
MAYER, BROWN & PLATT MAYER, BROWN & PLATT
190 S. LASALLE STREET 190 S. LASALLE STREET
CHICAGO, IL 60603-3441 CHICAGO, IL 60603-3441
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after 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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective 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 the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(2) PER UNIT(1)(2) PRICE(1)(2) FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Floating Rate Asset Backed Certificates,
Series 1996-1, Class A................. $1,000,000,000 100% $1,000,000,000 $303,051.20
- -----------------------------------------------------------------------------------------------------
Floating Rate Asset Backed Certificates,
Series 1996-1, Class B................. $ 31,747,000 100% $ 31,747,000 $ 9,641.20
- -----------------------------------------------------------------------------------------------------
Total................................... $1,031,747,000 100% $1,031,747,000 $312,692.40(3)
- -----------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee.
(2) An indeterminate amount of Floating Rate Asset Backed Certificates, Series
1996-1, Class A and Floating Rate Asset Backed Certificates, Series 1996-
1, Class B are also being registered for the purpose of market making
transactions by Deutsche Morgan Grenfell, an affiliate of the Registrant.
(3) $500,000 of Floating Rate Asset Backed Certificates, Series 1996-1, Class
A (the "Class A Certificates") and $500,000 of Floating Rate Asset Backed
Certificates, Series 1996-1, Class B (the "Class B Certificates") were
included in this Registration Statement prior to October 1, 1996,
requiring a filing fee of $344.83 which was paid upon the filing of this
Registration Statement. $750,000,000 of the Class A Certificates and
$23,810,000 of the Class B Certificates were included in this Registration
Statement after October 1, 1996, requiring an additional filing fee of
$234,184.85, although $266,488.07 was paid upon the filing of Amendment
No. 1 to this Registration Statement. The remaining $45,859.50 required in
connection with the inclusion of $1,000,000,000 of Class A Certificates
and $31,747,000 of Class B Certificates is being paid in connection with
the filing of this Amendment No. 2.
---------------
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INTRODUCTORY NOTE
This Registration Statement contains the Prospectus relating to the offering
of Floating Rate Asset Backed Certificates, Series 1996-1, Class A and
Floating Rate Asset Backed Certificates Series 1996-1, Class B (collectively,
the "Certificates") to be created pursuant to a Pooling and Servicing
Agreement, among Deutsche Floorplan Receivables, L.P., as the seller (the
"Seller"), Deutsche Financial Services Corporation, as servicer, and The Chase
Manhattan Bank, as trustee, and the related Series 1996-1 Supplement. Because
an affiliate of the Seller intends to make a market in the Certificates for
which it acts as an underwriter, immediately following the form of the
Prospectus relating to the offering of the Certificates there follow alternate
pages of the Prospectus, which will be used by such affiliate in connection
with any offers and sales relating to market-making transactions in the
Certificates. All other pages of the form of the Prospectus are also to be
used for the market-making Prospectus.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE +
+TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PRELIMINARY +
+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 QUALIFICATIONS UNDER THE SECURITIES LAWS OF ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 8, 1996
PROSPECTUS
- --------------------------------------------------------------------------------
$1,031,747,000
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
$1,000,000,000 FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1996-1, CLASS
A
$31,747,000 FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1996-1, CLASS B
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
SELLER
DEUTSCHE FINANCIAL SERVICES CORPORATION
SERVICER
- --------------------------------------------------------------------------------
The $1,000,000,000 Floating Rate Asset Backed Certificates, Series 1996-1,
Class A (the "Class A Certificates") and the $31,747,000 Floating Rate Asset
Backed Certificates, Series 1996-1, Class B (the "Class B Certificates" and
together with the Class A Certificates, the "Offered Certificates") offered
hereby evidence undivided interests in certain assets of the Deutsche
Floorplan Receivables Master Trust (the "Trust") created pursuant to a
Pooling and Servicing Agreement among Deutsche Floorplan Receivables, L.P.,
as the seller (the "Seller"), Deutsche Financial Services Corporation, as
servicer ("DFS" or the "Servicer"), and The Chase Manhattan Bank, as trustee.
The Trust will also issue $26,456,000 Floating Rate Asset Backed
Certificates, Series 1996-1, Class C (the "Class C Certificates" and,
together with the Offered Certificates, the "Certificates" or "Series 1996-
1"), which are not being offered hereby. The Trust assets include receivables
(the "Receivables") generated from time to time in a portfolio of revolving
financing arrangements (the "Accounts") with dealers and manufacturers to
finance their inventory and their accounts receivable and the collections on
the Receivables, as more fully described herein. See "The Trust." Certain
assets of the Trust will be allocated to Certificateholders, including the
right to receive a varying percentage of each month's collections with
respect to the Receivables at the times and in the manner described herein.
See "Description of the Certificates--Allocation Percentages." The Seller
will own the remaining interest in the Trust not represented by the
Certificates or the certificates of any other Series issued by the Trust (the
"Seller's Interest"). From time to time, subject to certain conditions, the
Seller may offer other series of certificates (each, a "Series"), which may
have terms significantly different from the terms of the Certificates.
(Continued on next page).
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH ON PAGES 20 TO 27
UNDER "RISK FACTORS."
THE OFFERED CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER,
DEUTSCHE BANK AG OR ANY AFFILIATE THEREOF. NONE OF THE CERTIFICATES, THE
RECEIVABLES OR THE OTHER ASSETS OF THE TRUST ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNT(1) THE SELLER(2)
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $ $ $
</TABLE>
(1) The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting expenses, estimated to be $836,000.
The Offered Certificates are offered subject to prior sale, when, as and if
issued to and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that delivery of the
Offered Certificates will be made in book-entry form only through the
facilities of The Depository Trust Company, Cedel Bank, societe anonyme
("Cedel Bank") and Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system, on or about October , 1996.
DEUTSCHE MORGAN GRENFELL
CITICORP SECURITIES, INC.
DEAN WITTER REYNOLDS INC.
LEHMAN BROTHERS
SALOMON BROTHERS INC
The date of this Prospectus is October , 1996.
<PAGE>
(Continued from previous page).
Interest with respect to the Certificates will accrue from October , 1996,
and is payable on or about the fifteenth day of each January, April, July and
October (each an "Interest Payment Date"); provided that interest will be
payable monthly on or about the fifteenth of each month (each a "Distribution
Date") upon the occurrence of certain events as described herein; provided
further, however, that unless such an event occurs prior to 1997, the first
Interest Payment Date will be January 15, 1997. The per annum rate of interest
with respect to each class of Certificates will be determined as described
herein. See "Description of the Certificates--Interest." The principal of the
Certificates is scheduled to be paid on the October 1999 Distribution Date.
Application is being made to list the Offered Certificates on the Luxembourg
Stock Exchange.
The Class B Certificates will be subordinated to the Class A Certificates as
described herein and the Class C Certificates will be subordinated to the Class
A Certificates and the Class B Certificates to the extent described herein. See
"Description of the Certificates--Distributions" and "--Investor Charge-Offs."
Reference is made to the Index of Principal Terms on page 91 for the location
herein of definitions of certain capitalized terms used herein.
NO ACTION HAS BEEN TAKEN OR WILL BE TAKEN BY THE SELLER OR THE UNDERWRITERS
THAT WOULD PERMIT A PUBLIC OFFERING OF THE OFFERED CERTIFICATES IN ANY COUNTRY
OR JURISDICTION OTHER THAN IN THE UNITED STATES WHERE ACTION FOR THAT PURPOSE
IS REQUIRED. ACCORDINGLY, THE OFFERED CERTIFICATES MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, AND NEITHER THIS PROSPECTUS NOR ANY CIRCULAR,
PROSPECTUS, FORM OF APPLICATION, ADVERTISEMENT OR OTHER MATERIAL MAY BE
DISTRIBUTED IN OR FROM OR PUBLISHED IN ANY COUNTRY OR JURISDICTION EXCEPT UNDER
CIRCUMSTANCES THAT WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND
REGULATIONS. PERSONS INTO WHOSE HANDS THIS PROSPECTUS COMES ARE REQUIRED BY THE
SELLER AND THE UNDERWRITERS TO COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS
IN EACH COUNTRY OR JURISDICTION IN WHICH THEY PURCHASE, SELL OR DELIVER OFFERED
CERTIFICATES OR HAVE IN THEIR POSSESSION OR DISTRIBUTE THIS PROSPECTUS, IN ALL
CASES AT THEIR OWN EXPENSE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Seller has filed a Registration Statement (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with the
Securities and Exchange Commission (the "Commission") with respect to the
Certificates offered pursuant to this Prospectus. This Prospectus, which forms
part of the Registration Statement, does not contain all of the information
contained in the Registration Statement and the exhibits thereto. For further
information, reference is made to the Registration Statement and amendments
thereof and exhibits thereto, which are available for inspection without charge
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New
York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of the Registration Statement and
amendments thereof and exhibits thereto 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 Commission maintains a public
access site on the Internet through the World Wide Web at which site reports,
information statements and other information, including all electronic filings,
may be viewed. The Internet address of such World Wide Web site is
http://www.sec.gov. In addition, for so long as the Offered Certificates are
listed on the Luxembourg Stock Exchange, copies of the Registration Statement
and all of the documents incorporated by reference herein may be obtained at no
charge at the offices of Banque Generale du Luxembourg S.A., 50 Avenue J.F.
Kennedy, L-2951, Luxembourg.
2
<PAGE>
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports, containing information concerning the Trust and prepared by
the Servicer, will be sent on behalf of the Trust to Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC") and registered holder of the
Offered Certificates, pursuant to the Pooling and Servicing Agreement. The
availability of copies of such reports to DTC participants and ultimately to
the beneficial owners of the Offered Certificates ("Certificate Owners") will
be governed by arrangements among DTC and such parties, subject to any
statutory or regulatory requirements from time to time. See "Description of
the Certificates--Reports" and "--Evidence as to Compliance." The Seller, on
behalf of the Trust, will file with the Commission such periodic reports with
respect to the Trust as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder. The Seller intends to continue to file with respect to
the Trust such periodic reports pursuant to the requirements of the Exchange
Act for the period after such filings could be discontinued in reliance on
Section 15(d) thereof until the Certificates are no longer outstanding. For so
long as the Offered Certificates are outstanding, each such report shall be
delivered to the Luxembourg Stock Exchange on the date for delivery of such
report. Copies of such reports may be obtained at no charge at the offices of
Banque Generale du Luxembourg S.A., 50 Avenue J.F. Kennedy, L-2951,
Luxembourg.
OTHER INFORMATION
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Seller or such Underwriter will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by or 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,
shall be deemed to be incorporated by reference in this Prospectus. Any
statement contained in a document incorporated or 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 herein or in any
subsequently filed document which also is or 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 so modified or
superseded, to constitute a part of this Prospectus.
DFS 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 of the
documents incorporated herein by reference, except the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to Deutsche
Financial Services Corporation, 655 Maryville Centre Drive, St. Louis,
Missouri 63141-5832; Telephone (314) 523-3000, Attention: General Counsel.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to the Index of Principal Terms on page 91 for the location herein of the
definitions of certain capitalized terms used herein.
Offered Securities........ $1,000,000,000 Floating Rate Asset Backed
Certificates, Series 1996-1, Class A (the "Class A
Certificates") and $31,747,000 Floating Rate Asset
Backed Certificates, Series 1996-1, Class B (the
"Class B Certificates" and, together with the Class
A Certificates, the "Offered Certificates").
The Offered Certificates will represent beneficial
interests in the Trust only and will not represent
interests in or obligations of Deutsche Financial
Services Corporation, Deutsche Floorplan
Receivables, L.P., Deutsche Bank AG or any of their
affiliates. None of the Offered Certificates, the
Receivables or the other assets of the Trust are
insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental
agency or instrumentality or by Deutsche Financial
Services Corporation, Deutsche Floorplan
Receivables, L.P., Deutsche Bank AG or any of their
affiliates.
Securities Not Offered.... The $26,456,000 Floating Rate Asset Backed
Certificates, Series 1996-1, Class C (the "Class C
Certificates") initially will be issued to the
Seller although the Seller has the right to sell
the Class C Certificates, in whole or part. Only
the Offered Certificates are being offered to
the investors. The Offered Certificates and the
Class C Certificates
are referred to collectively herein as the
"Certificates" or "Series 1996-1." The holders of
the Certificates are referred to collectively
herein as the "Certificateholders" and individually
as the "Class A Certificateholders," "Class B
Certificateholders" and "Class C
Certificateholders."
The certificate evidencing the Seller's Interest
(the "Seller's Certificate") is not being offered
hereby.
Issuer.................... Deutsche Floorplan Receivables Master Trust (the
"Trust"). The Trust was formerly known as the ITT
Floorplan Receivables Master Trust.
Seller.................... Deutsche Floorplan Receivables, L.P. (the "Seller"),
a Delaware limited partnership, the general partner
of which is Deutsche Floorplan Receivables, Inc., a
wholly-owned subsidiary of Deutsche Financial
Services Corporation, and the limited partner of
which is Deutsche Financial Services Corporation.
The Seller was formerly known as ITT Floorplan
Receivables, L.P.; its general partner was formerly
known as ITT Floorplan Receivables, Inc.; and its
limited partner was formerly known as ITT
Commercial Finance Corp.
Servicer.................. Deutsche Financial Services Corporation ("DFS" or,
in its capacity as servicer, the "Servicer"), a
wholly-owned indirect subsidiary of Deutsche Bank
AG. The Servicer was formerly known as ITT
Commercial Finance Corp.
4
<PAGE>
Trustee................... The Chase Manhattan Bank (the "Trustee").
The Trust................. The Trust was formed pursuant to a Pooling and
Servicing Agreement, dated as of December 1, 1993,
as amended and restated as of March 1, 1994, as
further amended as of January 24, 1996, and as
amended and restated as of October 1, 1996 among
the Seller, as seller, DFS, as Servicer, and The
Chase Manhattan Bank, as Trustee (as supplemented
and amended from time to time thereafter (including
as supplemented by the Supplement relating to the
Certificates), the "Pooling and Servicing
Agreement"). The assets of the Trust currently
include and will include (a) certain Receivables
generated from time to time during the term of the
Trust under Accounts that existed at the close of
business on October 31, 1993 (the "Initial Cut-Off
Date"), as well as certain Receivables generated
under any Accounts added to the Trust from time to
time thereafter (less Receivables paid or charged
off and excluding (i) Receivables generated in any
Accounts removed from the Trust from time to time
after the Initial Cut-Off Date and (ii) any
undivided interest in the Receivables in certain
Accounts that has been transferred to a third
party), (b) all funds collected or to be collected
in respect of such Receivables, (c) all funds on
deposit in certain accounts of the Trust, including
funds on deposit in the Excess Funding Account, the
Principal Funding Account, the Interest Funding
Account and the Reserve Fund, (d) any other
Enhancement issued with respect to any other Series
(the drawing on or payment of such Enhancement not
being available to Certificateholders), (e) an
assignment of a security interest in certain
consumer and commercial products, accounts
receivable or other assets (collectively, the
"Collateral Security") securing the Receivables
(exclusive of the Unsecured Receivables), and (f)
the Seller's rights, remedies, powers and
privileges under certain Floorplan Agreements but
only to the extent of the inventory underlying the
Receivables. See "The Trust." The term
"Enhancement" means, with respect to any Series,
any letter of credit, surety bond, cash collateral
account, guaranteed rate agreement, maturity
liquidity facility, tax protection agreement,
interest rate swap agreement or other similar
arrangement for the benefit of certificateholders
of such Series. The Offered Certificates will not
have the benefit of any credit enhancement other
than (i) the subordination of the Class B
Certificates and Class C Certificates for the
benefit of each class of Certificates with an
earlier alphabetical designation, (ii) partial
subordination of the Seller's Interest as described
herein and (iii) the Reserve Fund. See "Description
of the Certificates--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Seller's Interest," "--
Distributions from the Collection Account; Reserve
Fund" and "--Distributions."
The Accounts.............. The Accounts pursuant to which the Receivables have
been or will be generated are revolving credit
agreements entered into with DFS by dealers to
purchase or finance the consumer and commercial
product inventory or the accounts receivable of
dealers in such products. The
5
<PAGE>
Accounts may also include revolving credit
facilities secured by inventory, accounts
receivable and other assets of certain dealers,
manufacturers or distributors or unsecured
revolving credit facilities. The Accounts are
selected from all such credit agreements of DFS or
its affiliate, Deutsche Business Services
Corporation ("Deutsche BSC"), which meet the
criteria provided in the Pooling and Servicing
Agreement (the "Eligible Accounts"). Under certain
circumstances Accounts may be added to, or removed
from, the Trust. In the future the Trust may
include Receivables from Accounts originated by
other affiliates of DFS, subject to satisfaction of
the Rating Agency Condition. (Unless otherwise
specified, references in this Prospectus to
Receivables originated or conveyed by DFS include
those originated or conveyed by Deutsche BSC or any
such other affiliate.) See "The Accounts,"
"Description of the Certificates--Addition of
Accounts" and "--Removal of Accounts."
The Receivables........... The Receivables have arisen or will arise in the
Accounts. The Receivables consist of advances made
or to be made by DFS to dealers located in the
United States to finance their consumer and
commercial product inventory or to manufacturers or
distributors located in the United States to
finance their inventory, finished parts or other
assets (such dealers, manufacturers and
distributors being referred to as "Dealers"). Such
products may include, among others: computers and
computer products, manufactured housing, recreation
vehicles, boats and motors, consumer electronics
and appliances, keyboard and other musical
instruments, industrial and agricultural equipment,
office automation products, snowmobiles and
motorcycles. The types of products may change over
time. Certain advances to Dealers are used by
Dealers to finance the accounts receivable that
arise from sales of their products. Generally, the
principal amount of an advance in respect of a
product is equal to the wholesale purchase price of
the product (in certain cases, at a discount
therefrom) and, subject to certain exceptions, is
due upon the retail sale of the product or, in
certain cases, in accordance with a payment
schedule. Advances in respect of accounts
receivable are generally limited to 80%-85% of the
aggregate amount of the eligible accounts
receivable. See "The Dealer Floorplan Financing
Business of DFS--Creation of Receivables" and "--
Payment Terms." The Receivables bear interest at an
adjustable rate described herein. See "Description
of the Certificates--Interest." Certain Receivables
do not bear interest for a specified period
following their origination. A limited amount of
the Receivables are not secured by collateral (the
"Unsecured Receivables"). See "The Dealer Floorplan
Financing Business of DFS--Creation of
Receivables."
DFS has entered into a Receivables Contribution and
Sale Agreement, dated as of December 1, 1993, as
amended and restated as of March 1, 1994, as
further amended as of January 24, 1996, and as
amended and restated as of October 1, 1996, among
the Seller, as purchaser, and DFS and Deutsche BSC,
as sellers (as amended from time to time, the
"Receivables Contribution and Sale Agreement").
Pursuant to the
6
<PAGE>
Receivables Contribution and Sale Agreement, DFS
and Deutsche BSC (a) contributed and sold,
respectively, as of the Initial Cut-off Date and
thereafter have sold and will sell to the Seller
all of their respective right, title and interest
in and to all Receivables meeting certain
eligibility criteria contained in the Receivables
Contribution and Sale Agreement and the Pooling and
Servicing Agreement ("Eligible Receivables") and
(b) have assigned and will assign their respective
security interests in the Collateral Security to
the Seller. At its option, DFS may contribute (or
cause to be contributed) Receivables and security
interests in Collateral Security to the Seller. The
Seller in turn has transferred and will transfer
such Receivables and security interest in the
Collateral Security to the Trust pursuant to the
Pooling and Servicing Agreement. The Seller has
assigned to the Trust its rights with respect to
the Receivables under the Receivables Contribution
and Sale Agreement. See "Description of the
Receivables Contribution and Sale Agreement."
All new Receivables arising under the Accounts
during the term of the Trust will be sold by
Deutsche BSC and sold or contributed by DFS to the
Seller and transferred by the Seller to the Trust.
Accordingly, the aggregate amount of Receivables in
the Trust will fluctuate from day to day as new
Receivables are generated and as existing
Receivables are collected, charged off as
uncollectible or otherwise adjusted.
Discount Factor; While finance charges are payable on the Receivables
Collections.............. generally, finance charges will not begin to accrue
on a portion of the Receivables until a certain
period of time has elapsed after their origination.
Therefore, in order to create imputed interest in
respect of such Receivables for their non-interest
bearing period and for administrative uniformity in
accounting for Collections, a portion of the
Collections on each Receivable that are not part of
the finance charges, if any, paid on that
Receivable will be treated as finance charges or
non-principal Collections (such non-principal
Collections, together with collections of finance
charges, being referred to as "Non-Principal
Collections"). The remainder of the Collections on
the Receivables will be treated as principal
collections ("Principal Collections"). The portion
of the balance of a Receivable that will be treated
as a finance charge when such Receivable is
collected will be equal to the product of the
balance of such Receivable times the discount
factor (the "Discount Factor") in effect at the
time of the collection of such Receivable. As of
July 31, 1996 (the "Series 1996-1 Cut-off Date")
the Discount Factor was 0.40%. The Discount Factor
may be adjusted as described under "Description of
the Certificates--Discount Factor," but will in no
event exceed 1%.
The Offered Certificates will be issued in the
The Certificates.......... aggregate initial principal amount of
$1,031,747,000 in minimum denominations of $1,000
and in integral multiples of $1,000 in excess
thereof. Except in certain limited circumstances as
described herein under "Description of the
Certificates--Definitive Certificates," the Offered
Certificates will only be available in book-entry
form.
The Trust's assets will be allocated in part to the
Certificateholders (the "Certificateholders'
Interest") and to the certificateholders of any
7
<PAGE>
other outstanding Series (such other
certificateholders, together with the
Certificateholders, are referred to as
"certificateholders"), with the remainder allocated
to the Seller (the "Seller's Interest"). A portion
of the Seller's Interest will be subordinated to
the Certificateholders' Interest, as described
herein. See "Description of the Certificates--
Allocation of Collections; Deposits in Collection
Account; Limited Subordination of Seller's
Interest."
The Class B Certificates will be subordinated to
fund payments of principal and interest on the
Class A Certificates. The Class C Certificates will
be subordinated to fund payments of principal and
interest on the Class A Certificates and the Class
B Certificates. See "Description of the
Certificates--Distributions."
The Class A Certificates will evidence undivided
interests in the assets of the Trust and will
represent the right to receive from such assets
funds up to (but not in excess of) the amounts
required to make payments of interest on each
Interest Payment Date on the Class A Certificates
at the Class A Certificate Rate and the payment of
principal on the Expected Final Payment Date (or
earlier or later under certain circumstances) to
the extent of the Class A Invested Amount (which
may be less than the aggregate unpaid principal
amount of the Class A Certificates, in certain
circumstances, if the Investor Default Amount
exceeds funds allocable thereto and the Class B
Invested Amount and the Class C Invested Amount
have been reduced to zero).
The Class B Certificates will evidence undivided
interests in the assets of the Trust and will
represent the right to receive from such assets
funds up to (but not in excess of) the amounts
required to make payments of interest on each
Interest Payment Date on the Class B Certificates
at the Class B Certificate Rate and the payment of
principal on the Expected Final Payment Date (or
earlier or later under certain circumstances) to
the extent of the Class B Invested Amount (which
may be less than the aggregate unpaid principal
amount of the Class B Certificates, in certain
circumstances, if the Investor Default Amount
exceeds funds allocable thereto and the Class C
Invested Amount has been reduced to zero).
The Class C Certificates will evidence undivided
interests in the assets of the Trust and will
represent the right to receive from such assets
funds up to (but not in excess of) the amounts
required to make payments of interest on each
Interest Payment Date on the Class C Certificates
at the Class C Certificate Rate and the payment of
principal on the Expected Final Payment Date (or
earlier or later under certain circumstances) to
the extent of the Class C Invested Amount (which
may be less than the aggregate unpaid principal
amount of the Class C Certificates, in certain
circumstances, if the Investor Default Amount
exceeds funds allocable thereto).
Registration of Offered The Offered Certificates will initially be
Certificates............. represented by one or more Certificates registered
in the name of Cede & Co., as the nominee of DTC.
No person acquiring an interest in the Offered
Certificates will be entitled to receive a
definitive certificate representing such person's
interest except in the event that Definitive
Certificates are issued under
8
<PAGE>
the limited circumstances described herein. See
"Description of the Certificates--Definitive
Certificates." Class A and Class B
Certificateholders may elect to hold their
interests through DTC, in the United States, or
Cedel Bank, societe anonyme ("Cedel Bank") or the
Euroclear system ("Euroclear"), in Europe.
Transfers within DTC, Cedel Bank or Euroclear, as
the case may be, will be in accordance with the
usual rules and operating procedures of the
relevant system. Cross-market transfers between
persons holding directly or indirectly through DTC,
on the one hand, and counterparties holding
directly or indirectly through Cedel Bank or
Euroclear, on the other, will be effected in DTC
through Citibank, N.A. ("Citibank") or Morgan
Guaranty Trust Company of New York ("Morgan"), the
relevant depositories (collectively, the
"Depositaries") of Cedel Bank or Euroclear,
respectively, and each a participating member of
DTC. See "Description of the Certificates--Book-
Entry Registration" and
"--Definitive Certificates."
Issuance of New Series.... The Pooling and Servicing Agreement provides that,
pursuant to any one or more supplements thereto
(each, a "Supplement"), the Seller may cause the
Trustee to issue one or more new Series of
certificates (a "New Issuance"). The issuance of
the Certificates pursuant to the Supplement related
thereto will constitute a New Issuance. The Pooling
and Servicing Agreement also provides that the
Seller may specify, with respect to any Series, the
Principal Terms of the Series. The Seller may offer
any Series to the public or other investors under a
prospectus or other disclosure document in
transactions either registered under the Securities
Act or exempt from registration thereunder,
directly or through one or more underwriters or
placement agents.
Under the Pooling and Servicing Agreement and
pursuant to a Supplement, a New Issuance may only
occur upon delivery to the Trustee of the
following: (a) a Supplement specifying the
Principal Terms of such Series, (b) an opinion of
counsel to the effect that, for federal income and
Missouri income tax purposes, (x) such issuance
will not adversely affect the characterization of
the certificates of any outstanding Series or class
as debt or as partnership interests, (y) such
issuance will not cause a taxable event to any
certificateholders and (z) such new Series will be
characterized as debt or as partnership interests
and (c) evidence that the Rating Agency Condition
has been satisfied. "Rating Agency Condition"
means, with respect to any action, that each Rating
Agency will have notified the Seller, the Servicer
and the Trustee in writing that such action will
not result in a reduction or withdrawal of the
rating of any outstanding Series or class of
certificates with respect to which it is a Rating
Agency. See "Description of the Certificates--New
Issuances."
Other Series Issuances.... The Trust has issued two Series prior to the date
hereof, only one of which is still outstanding. The
outstanding Series is referred to as
the Floating Rate Asset Backed Certificates, Series
1994-1 ("Series 1994-1" and with respect to the
certificates of such Series, the "Series
9
<PAGE>
1994-1 Certificates"). See "Annex 1: Other
Issuances of Investor Certificates" for a summary
of the Series 1994-1 Certificates.
Allocations............... The Certificateholders' Interest will include the
right to receive (but only to the extent needed to
make required payments under the Pooling and
Servicing Agreement) varying percentages of
Collections collected during each calendar month (a
"Collection Period"). Collections and Defaulted
Receivables for any Collection Period will be
allocated to the Certificateholders' Interest as
described below and as more fully described under
"Description of the Certificates--Allocation
Percentages." Collections and Defaulted Receivables
not allocated to Series 1996-1 will be allocated to
the Seller's Interest and the certificateholders'
interests in other Series.
Non-Principal Collections and Defaulted Receivables
will be allocated at all times to the
Certificateholders' Interest based on the Floating
Allocation Percentage applicable during the related
Collection Period. The Floating Allocation
Percentage for any Collection Period is the
percentage obtained by dividing (a) the Invested
Amount on the last day of the immediately preceding
Collection Period by (b) the product of (i) the
aggregate amount of the principal balances of the
Receivables (exclusive of all Ineligible
Receivables) on the last day of the immediately
preceding Collection Period and (ii) 1 minus the
Discount Factor (such product, the "Pool Balance").
During the Revolving Period, subject to certain
limitations, Principal Collections allocable to the
Certificateholders' Interest will be allocated and
paid to the Seller or allocated to any other Series
in exchange for the allocation to the
Certificateholders' Interest of an equal interest
in the Receivables balances that are new or that
would otherwise be part of the Seller's Interest or
the interest of the certificateholders of such
other Series or, in certain circumstances, will be
deposited into the Excess Funding Account. During
the Accumulation Period and any Early Amortization
Period, Principal Collections will be allocated to
the Certificateholders' Interest based on the
Principal Allocation Percentage. The Principal
Allocation Percentage for a Collection Period
during the Accumulation Period and any Early
Amortization Period is the percentage equivalent of
a fraction, the numerator of which is the Invested
Amount on the last day of the Revolving Period and
the denominator of which is the Pool Balance on the
last day of the immediately preceding Collection
Period. Unless an Early Amortization Event shall
have occurred, monthly deposits of principal with
respect to the Certificates to the Principal
Funding Account will not exceed the Controlled
Distribution Amount and, subject to certain
limitations, any Principal Collections not required
to be deposited in the Principal Funding Account
will be paid to the Seller or allocated to any
other Series as described herein. See "Description
of the Certificates--Allocation Percentages--
Principal Collections for all Series."
Interest.................. Interest on the respective outstanding principal
balance of each class of Offered Certificates will
accrue at the applicable Certificate Rate and
10
<PAGE>
will be payable quarterly to Certificateholders on
the fifteenth day of each January, April, July and
October (or, if such day is not a business day, on
the next succeeding business day) (each, an
"Interest Payment Date"); provided that following
the occurrence of an Early Amortization Event
(unless, in limited circumstances with respect to
the addition of Accounts, such Early Amortization
Event shall have been cured), the interest shall be
paid monthly on the fifteenth of each month (or, if
such day is not a business day, on the next
succeeding business day) (each, a "Distribution
Date"); provided further, however, that unless such
an Early Amortization Event has occurred prior to
the Distribution Date in December 1996, the first
Interest Payment Date will be January 15, 1997.
Interest payable on an Interest Payment Date will
accrue during each Interest Period following the
preceding Interest Payment Date on the Certificates
at the applicable Class A Certificate Rate, Class B
Certificate Rate and Class C Certificate Rate. An
"Interest Period" will be the period from and
including a Distribution Date (or, in the case of
the first Distribution Date, from and including
October , 1996 (the "Closing Date")) to but
excluding the next Distribution Date. Interest due
but not paid on any Interest Payment Date will be
due on the next Interest Payment Date together
with, to the extent lawfully payable, interest on
such amount at the applicable Certificate Rate to
the extent described under "Description of the
Certificates--Distributions from the Collection
Account; Reserve Fund."
Interest on the outstanding principal balance of the
Class A Certificates will accrue for each Interest
Period at a rate per annum equal to the lesser of
(i) LIBOR plus % per annum and (ii) the related
Net Receivables Rate (the "Class A Certificate
Rate"). Interest on the outstanding principal
balance of the Class B Certificates will accrue for
each Interest Period at a rate per annum equal to
the lesser of (i) LIBOR plus % per annum and
(ii) the related Net Receivables Rate (the "Class B
Certificate Rate"). Interest on the outstanding
principal balance of the Class C Certificates will
accrue for each Interest Period at a rate per annum
equal to the lesser of (i) LIBOR plus % per
annum and (ii) the related Net Receivables Rate
(the "Class C Certificate Rate" and, together with
the Class A Certificate Rate and the Class B
Certificate Rate, the "Certificate Rates").
Interest payments on the Certificates will be paid
from Certificateholder Non-Principal Collections
for the related Collection Period, withdrawals, if
any, from the Reserve Fund, Investment Proceeds, if
any, and, under certain circumstances, Available
Seller's Collections to the extent of the Available
Subordinated Amount.
Principal................. It is expected that the final principal payment with
respect to the Offered Certificates will be made on
the Distribution Date in October 1999 (the
"Expected Final Payment Date"). The final principal
payment with respect to the Certificates may be
paid earlier than the Expected Final Payment Date
if an Early Amortization Event occurs, or later
under certain circumstances described herein. See
"Maturity and Principal Payment Considerations" and
"Description of the Certificates--Optional
Repurchase."
11
<PAGE>
Excess Funding Account.... On each Distribution Date during the Revolving
Period, if (a) the Pool Balance at the end of the
preceding Collection Period is less than the Pool
Balance at the end of the second preceding
Collection Period and (b) the Pool Balance at the
end of the preceding Collection Period is less than
the Required Participation Amount for such
Distribution Date (calculated before giving effect
to any deposits to the Excess Funding Account and
any excess funding account for any other Series in
their revolving periods to be made on such
Distribution Date), then certain Available
Certificateholder Principal Collections will be
deposited in the Excess Funding Account on such
Distribution Date. Except as provided herein, any
funds on deposit in the Excess Funding Account will
be withdrawn on a subsequent Distribution Date and
paid to the Seller or allocated to one or more
Series which are in amortization, early
amortization or accumulation periods to the extent
of any increases in the Invested Amount as a result
of the addition of Receivables to the Trust or, in
certain circumstances, the repayment of other
Series. See "Description of the Certificates--
Excess Funding Account" and "--Distributions." Upon
the commencement of an Early Amortization Period or
the Accumulation Period, funds on deposit in the
Excess Funding Account will be deposited into the
Principal Funding Account. No funds will be
deposited into the Excess Funding Account during
any Early Amortization Period.
See "Description of the Certificates--Excess
Funding Account" and "--Distributions."
Revolving Period.......... During the Revolving Period, Principal Collections
allocable to the Certificateholders' Interest
generally will be paid to the Seller, deposited to
the Excess Funding Account or allocated to another
Series (in effect, in exchange for the allocation
to the Certificateholders' Interest of an equal
interest in the Receivables balances that are new
or that would otherwise be part of the Seller's
Interest or the interest of the certificateholders
of such other Series) in order to maintain the sum
of the Invested Amount and the amount, if any, in
the Excess Funding Account at a constant level. The
"Revolving Period" will be the period beginning at
the close of business on the Closing Date and
ending on the earlier of (x) the day immediately
preceding the Accumulation Period Commencement Date
and (y) the business day immediately preceding the
day on which an Early Amortization Event occurs
(unless, in limited circumstances with respect to
the addition of Accounts, such Early Amortization
Event shall have been cured). See "Description of
the Certificates--Early Amortization Events" for a
discussion of certain events which might lead to
the early termination of the Revolving Period.
Accumulation Period....... Unless an Early Amortization Period commences, the
Offered Certificates will have an accumulation
period (the "Accumulation Period"), which will
commence on the Accumulation Period Commencement
Date, and continue until the earlier of (a) the
commencement of an Early Amortization Period and
(b) the Expected Final Payment Date. The
Accumulation Period permits the accumulation of
certain collections in installments over a
specified
12
<PAGE>
period in anticipation of a full principal payment
with respect to the Offered Certificates on the
Expected Final Payment Date. During the
Accumulation Period, Principal Collections
allocable to the Certificateholders' Interest and
certain other amounts allocable to the
Certificateholders' Interest will be deposited on
or before each Distribution Date in a trust account
(the "Principal Funding Account") and, together
with any amounts in the Excess Funding Account,
used to make principal distributions to
Certificateholders when due. The amount to be
deposited in the Principal Funding Account on any
Distribution Date will be limited to an amount
equal to the Controlled Distribution Amount. See
"Description of the Certificates--Distributions
from the Collection Account; Reserve Fund--
Principal Collections."
The Accumulation Period with respect to the
Certificates is scheduled to begin on the first day
of the June 1999 Collection Period (the
"Accumulation Period Commencement Date"), subject
to postponement as described below in this
paragraph. Upon written notice to the Trustee, the
Servicer may elect to postpone the Accumulation
Period Commencement Date, and extend the length of
the Revolving Period, subject to certain conditions
including those set forth below. The Servicer may
make such election only if the Accumulation Period
Length (determined as described below) is less than
four months. On each Determination Date, beginning
with the Determination Date occurring in the May
1999 Collection Period, the Servicer will determine
the "Accumulation Period Length," which is the
number of months expected to be required such that
sufficient funds are on deposit in the Principal
Funding Account no later than the Expected Final
Payment Date to pay the outstanding principal
balances of the Certificates, based on (a) the
expected monthly collections of Receivables (other
than interest and other non-principal charges and
the portion equal to the product of the Discount
Factor and the balance of the Receivables
("Principal Receivables")) expected to be
distributable to the Certificateholders assuming a
principal payment rate no greater than the lowest
Monthly Payment Rate on the Receivables for the
preceding three months and (b) the amount of
principal expected to be distributable to
certificateholders of Series which are not expected
to be in their revolving periods during the
Accumulation Period. If the Accumulation Period
Length is less than four months, the Servicer may,
at its option, postpone the Accumulation Period
Commencement Date such that the number of months
included in the Accumulation Period will be equal
to or exceed the Accumulation Period Length.
The effect of the foregoing calculation is to permit
the reduction of the length of the Accumulation
Period based on the investor interest of certain
other Series which are scheduled to be in their
revolving periods during the Accumulation Period
and on increases in the principal payment rate
occurring after the issuance date with respect to
Series 1996-1. Notwithstanding the foregoing, the
Accumulation
13
<PAGE>
Period Commencement Date may not be postponed
beyond the first day of the September 1999
Collection Period.
Funds on deposit in the Principal Funding Account
will be available to pay the Class A
Certificateholders the Class A Invested Amount on
the Expected Final Payment Date. If the aggregate
principal amount of deposits made to the Principal
Funding Account is insufficient to pay the Class A
Invested Amount on the Expected Final Payment Date,
the Early Amortization Period will commence.
Although it is anticipated that scheduled principal
will be available for distribution to the Class A
Certificateholders on the Expected Final Payment
Date, no assurance can be given in that regard.
On the Expected Final Payment Date, provided that
the Class A Invested Amount is paid in full on the
Expected Final Payment Date and the Early
Amortization Period has not commenced, Principal
Collections will be payable to the Class B
Certificateholders in respect of the Class B
Invested Amount as described herein. See
"Description of the Certificates--Distributions."
If such Principal Collections are insufficient to
pay the Class B Invested Amount in full on the
Expected Final Payment Date, the Early Amortization
Period will commence. Although it is anticipated
that scheduled principal will be available for
distribution to the Class B Certificateholders on
the Expected Final Payment Date, no assurance can
be given in that regard.
Other Series issued by the Trust may have either an
accumulation period or an amortization period. Such
accumulation periods or amortization periods may
have different lengths and begin on different
dates. Thus, certain Series may be in their
revolving periods, while others are in periods
during which Principal Collections are distributed
to, or reserved for, such other Series.
Early Amortization The Certificates will be subject to early payment
Period................... following the occurrence of an Early Amortization
Event through the monthly application of the
Certificateholders' allocable share of Principal
Collections. During the period beginning on the day
on which an Early Amortization Event has occurred
and ending on the earlier of (a) the payment in
full of the outstanding principal balance of the
Certificates, (b) the Termination Date and (c) if
such Early Amortization Period has resulted from
the occurrence of an Early Amortization Event
caused by the failure of the Seller to convey
Receivables in Additional Accounts to the Trust
within five business days after the day on which it
is required by the Pooling and Servicing Agreement,
the end of the first Collection Period during which
such an Early Amortization would no longer be
deemed to exist (the "Early Amortization Period"),
the Revolving Period or the Accumulation Period, as
the case may be, will terminate and Principal
Collections and certain other amounts allocable to
the Certificateholders' Interest will no longer be
deposited in the Excess Funding Account or paid to
the Seller or the
14
<PAGE>
holders of any other outstanding Series as
described above but instead will be distributed to
the Certificateholders monthly on each Distribution
Date beginning with the Distribution Date following
the Collection Period in which an Early
Amortization Period commences. See "Description of
the Certificates--Early Amortization Events" for a
description of events that might result in the
commencement of an Early Amortization Period.
During an Early Amortization Period, distributions
of principal on the Certificates will not be
subject to the Controlled Distribution Amount. See
"Description of the Certificates--Distributions
from the Collection Account; Reserve Fund--
Principal Collections." In addition, on the first
Distribution Date during an Early Amortization
Period (a) any amounts on deposit in the Interest
Funding Account (as needed to pay accrued interest
on the Certificates) will be paid to the
Certificateholders and (b) any amounts on deposit
in the Excess Funding Account, the Principal
Funding Account and the Interest Funding Account
(after the payment of accrued interest on such
date) will be paid to the Certificateholders up to
the excess of the outstanding principal balance of
the Certificates over unreimbursed Investor Charge-
Offs. See "Description of the Certificates--
Distributions."
Other Series may have early amortization events that
are different from the Early Amortization Events
for Series 1996-1. Thus, certain Series may be in
an early amortization period while other Series are
in revolving, accumulation or amortization periods.
Reserve Fund.............. An Eligible Deposit Account will be established and
maintained in the name of the Trustee for the
benefit of the Certificateholders (the "Reserve
Fund"). On the Closing Date, the Seller will cause
to be deposited with the Trustee, and the Trustee
will deposit in the Reserve Fund, funds in an
amount equal to 2% of the aggregate initial
principal balance of the Certificates. Any amounts
on deposit in the Reserve Fund will be withdrawn to
make payments of interest on the Certificates and
for certain other purposes, and funds withdrawn
from the Reserve Fund may be replenished, in the
circumstances described under "Description of the
Certificates--Distributions from the Collection
Account; Reserve Fund." A withdrawal from the
Reserve Fund will constitute an Early Amortization
Event in the circumstances described under
"Description of the Certificates--Early
Amortization Events."
Servicing................. The Servicer (initially, DFS) is responsible for
servicing, managing and making collections on the
Receivables and will, except as provided below,
deposit such collections in the Collection Account
within two business days following the date on
which the Servicer records the collection thereof
on its computer file of accounts, generally up to
the amount of such collections required to be
distributed to Certificateholders with respect to
the related Collection Period. In certain
circumstances, the Servicer will be permitted to
use for its own benefit and not segregate
collections on the Receivables received by it
during each Collection Period until no later than
the business day prior
15
<PAGE>
to the date on which such funds are required to be
distributed to investors. See "Description of the
Certificates--Allocation of Collections; Deposits
in Collection Account; Limited Subordination of
Seller's Interest."
On the second business day preceding each
Distribution Date (each a "Determination Date"),
the Servicer will calculate the amounts to be
allocated as described herein in respect of
collections on Receivables received with respect to
the related Collection Period to the
Certificateholders, to the holders of other
outstanding Series or to the Seller as described
herein. See "Description of the Certificates--
Allocation of Collections; Deposits in Collection
Account; Limited Subordination of Seller's
Interest."
In certain limited circumstances DFS may resign or
be removed as Servicer, in which event either the
Trustee, or, so long as it meets certain
eligibility standards set forth in the Pooling and
Servicing Agreement, a third-party servicer may be
appointed as successor servicer. DFS is permitted
to delegate any of its duties as Servicer to any of
its affiliates, but any such delegation will not
relieve the Servicer of its obligations under the
Pooling and Servicing Agreement. The Servicer will
receive a monthly servicing fee and certain other
amounts as described herein as servicing
compensation from the Trust. See "Description of
the Certificates--Servicing Compensation and
Payment of Expenses."
Mandatory Reassignment
and Transfer of Certain
Receivables..............
The Seller has made certain representations and
warranties in the Pooling and Servicing Agreement
with respect to the Receivables in its capacity as
Seller and DFS has made certain representations and
warranties in the Pooling and Servicing Agreement
in its capacity as Servicer. If the Seller breaches
certain of its representations and warranties with
respect to any Receivables and such breach remains
uncured for a specified period and has a materially
adverse effect on the Certificateholders' Interest
or the interests of the holders of other
outstanding Series therein, the Seller may, subject
to certain conditions, be required to repurchase
the Receivables to which such breach relates or, in
certain cases, all of the Receivables. If DFS, as
Servicer, fails to comply in all material respects
with certain covenants or warranties with respect
to any Receivables and such noncompliance is not
cured within a specified period after DFS becomes
aware or receives notice thereof from the Trustee
and such noncompliance has a materially adverse
effect on the Certificateholders' Interest or such
other certificateholders' interests therein, all
Receivables affected will be purchased by DFS. In
the event of a transfer of servicing obligations to
a successor Servicer, such successor Servicer,
rather than DFS, would be responsible for any
failure to comply with the Servicer's covenants and
warranties arising thereafter.
Tax Matters............... In the opinion of special tax counsel for the Seller
and the Trust, the Offered Certificates will be
characterized as debt for federal income tax
purposes and, in the opinion of Missouri counsel
for the Seller and
16
<PAGE>
the Trust, the Offered Certificates will be
characterized as debt for Missouri income tax
purposes. Each Certificateholder, by the acceptance
of an Offered Certificate, will agree to treat the
Offered Certificates as debt for federal, state and
local income tax purposes. The Offered Certificates
may be issued with original issue discount. See
"Federal Income Tax Considerations" and "State and
Local Tax Consequences" for additional information
concerning the application of federal and Missouri
tax laws.
ERISA Considerations...... Subject to considerations described below, the Class
A Certificates are eligible for purchase by
employee benefit plan investors. Under a regulation
issued by the Department of Labor, the Trust's
assets would not be deemed "plan assets" of an
employee benefit plan holding the Class A
Certificates if certain conditions are met,
including that the Class A Certificates must be
held, upon completion of the public offering made
hereby, by at least 100 investors who are
independent of the Trust and of one another. The
Underwriters expect that the Class A Certificates
will be held by at least 100 independent investors
at the conclusion of the offering, although no
assurance can be given, and no monitoring or other
measures will be taken to ensure, that such
condition will be met with respect to the Class A
Certificates. The Seller anticipates that the other
conditions of the regulation will be met. If the
Trust's assets were deemed to be "plan assets" of
an employee benefit plan investor (e.g., if the 100
independent investor criterion is not satisfied),
violations of the "prohibited transaction" rules of
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), could result and
generate excise tax and other liabilities under
ERISA and section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), unless a
statutory, regulatory or administrative exemption
is available. It is uncertain whether existing
exemptions from the "prohibited transaction" rules
of ERISA would apply to all transactions involving
the Trust's assets if such assets were treated for
ERISA purposes as "plan assets" of employee benefit
plan investors. Accordingly, fiduciaries or other
persons contemplating purchasing the Class A
Certificates on behalf of or with "plan assets" of
any employee benefit plan should consult their
counsel before making a purchase.
The Underwriters currently do not expect that the
Class B Certificates will be held by at least 100
such persons and, therefore, do not expect that the
Class B Certificates will qualify as publicly-
offered securities under the regulation referred to
in the preceding paragraph. Accordingly, the Class
B Certificates may not be acquired by (a) any
employee benefit plan that is subject to ERISA, (b)
any plan or other arrangement (including an
individual retirement account or Keogh plan) that
is subject to section 4975 of the Code or (c) any
entity whose underlying assets include "plan
assets" under the regulation by reason of any such
plan's investment in the entity. By its acceptance
of a Class B Certificate or an interest therein,
each Class B Certificateholder and owner of a
beneficial interest in the Class B
17
<PAGE>
Certificates will be deemed to have represented and
warranted that it is not subject to the foregoing
limitation. See "ERISA Considerations."
Amendments................ The Pooling and Servicing Agreement and any
Supplement may be amended by the Seller, the
Servicer and the Trustee in the circumstances
described in the Pooling and Servicing Agreement.
In certain circumstances, no consent of any
Certificateholders will be required for such an
amendment. In addition, the Pooling and Servicing
Agreement or any Supplement may be amended by the
Servicer and the Trustee at the direction of the
Seller without the consent of any of the
Certificateholders (a) to add, modify or eliminate
such provisions as may be necessary or advisable in
order to enable the Seller or any of its affiliates
(including Deutsche Bank AG) to minimize or avoid
capital charges under any applicable law, rule,
regulation or guideline relating to regulatory or
risk-based capital, (b) to enable all or a portion
of the Trust to qualify as a partnership for
federal income tax purposes, and to modify or
eliminate provisions of the Pooling and Servicing
Agreement or any Supplement relating to the
intended availability of such treatment, (c) to
enable all or a portion of the Trust to qualify as
a "financial asset securitization investment trust"
(and to modify or eliminate provisions of the
Pooling and Servicing Agreement or any Supplement
in connection therewith), or (d) to enable the
Seller or any of its affiliates to comply with or
obtain more favorable treatment under any law or
regulation or any accounting rule or principle, so
long as in each case the Rating Agency Condition
has been satisfied and, in the case of (b) or (c),
the Seller and the Trustee have received an opinion
of counsel to the effect that such amendment will
not affect the characterization of the certificates
of any outstanding Series or class as debt or as
partnership interests. See "Risk Factors--
Amendments Without the Consent of
Certificateholders" and "Description of the
Certificates--Amendments."
Offered Certificate It is a condition to the issuance of the Class A
Ratings.................. Certificates that they be rated in the highest
long-term rating category by at least one
nationally recognized rating agency (a "Rating
Agency"). It is a condition to the issuance of the
Class B Certificates that they be rated in one of
the three highest rating categories by at least one
Rating Agency. The rating of the Offered
Certificates addresses the likelihood of the
ultimate payment of principal and the timely
payment of interest, at the applicable Certificate
Rate, on the Offered Certificates. However, a
Rating Agency does not evaluate, and the rating of
the Offered Certificates will not address, the
likelihood of payment of the outstanding principal
of the Offered Certificates by any date, including
the Expected Final Payment Date, other than the
Termination Date, or the likelihood of the payment
of any Carry-over Amount. A rating is based
primarily on the credit underlying the Receivables
and the level of subordination of the Seller's
Interest and the subordination of the Class B
Certificates and the Class C Certificates for the
benefit of each class of Certificates with an
earlier alphabetical designation.
18
<PAGE>
A security rating is not a recommendation to buy,
sell or hold securities and is subject to revision
or withdrawal in the future by the assigning Rating
Agency. Each rating should be evaluated
independently of any other rating. See "Risk
Factors--Ratings of the Certificates."
Risk Factors.............. Prospective investors should consider the factors
set forth under "Risk Factors" on pages 20 through
27.
19
<PAGE>
RISK FACTORS
Possible Prepayment of Certificates. Because an Early Amortization Event may
occur which would initiate an Early Amortization Period, the Seller may
exercise its option to repurchase the Certificateholders' Interest or the
Seller may have to repurchase the Certificateholders' Interest upon the breach
of certain representations and warranties, the final distribution of principal
on a class of Certificates may be made prior to the scheduled termination of
the Revolving Period or prior to the Expected Final Payment Date. See
"Description of the Certificates--Early Amortization Events," "--Optional
Repurchase" and "--Representations and Warranties." Certificateholders will
bear the risk of being able to reinvest principal received on the Certificates
at a yield at least equal to their yield on the Certificates. If an investor
acquires a Certificate at a discount, the repayment of principal of the
Certificate later than on the Expected Final Payment Date will likely result
in a lower than anticipated yield. In addition, if an investor acquires
Certificates at a premium, repayment of principal at a rate that is faster
than the rate anticipated by such investor will result in a yield to that
investor that is lower than anticipated by that investor. See "Maturity and
Principal Payment Considerations."
Limited Liquidity. There is currently no market for the Certificates. The
Underwriters currently intend to make a market in the Offered Certificates,
but the Underwriters are not under an 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 Offered Certificates.
Limited Assets. The Trust will not have any significant assets or sources of
funds other than the Receivables. The Certificates will be payable only from
the assets of the Trust. Holders of the Certificates must rely for repayment
upon payments on the Receivables and, if and to the extent available, amounts
on deposit in the Reserve Fund. However, amounts to be deposited in the
Reserve Fund are limited in amount. If the Reserve Fund is exhausted, the
Trust will depend solely on current collections on the Receivables to make
payments on the Certificates. If losses occur with respect to Receivables
which are not covered by payments on other Receivables or by the Reserve Fund,
Certificateholders may be unable to receive payment in full of principal and
interest on their respective Certificates.
Limited Obligations. The Certificates will not represent an interest in or
obligation of the Seller, DFS, Deutsche Bank AG or any of their affiliates.
The only obligations of the foregoing entities with respect to the
Certificates or the Receivables will be (i) the obligations (if any) of the
Seller and Servicer, if applicable, pursuant to certain limited
representations and warranties made with respect to the Receivables and (ii)
the Servicer's servicing obligations under the Pooling and Servicing
Agreement. Neither the Certificates nor the underlying Receivables will be
guaranteed or insured by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality, or by the Seller, DFS, Deutsche
Bank AG, or any of their affiliates. PROCEEDS OF THE ASSETS INCLUDED IN THE
TRUST (INCLUDING THE RECEIVABLES) WILL BE THE SOLE SOURCE OF PAYMENTS ON THE
CERTIFICATES, AND THERE WILL BE NO RECOURSE TO THE SELLER, DFS, DEUTSCHE BANK
AG, ANY OF THEIR AFFILIATES OR ANY OTHER ENTITY IN THE EVENT THAT SUCH
PROCEEDS ARE INSUFFICIENT OR OTHERWISE UNAVAILABLE TO MAKE PAYMENTS PROVIDED
FOR UNDER THE CERTIFICATES.
Possible Prior Interests in Receivables. There are certain limited
circumstances under the Uniform Commercial Code (the "UCC") and applicable
federal law in which prior or subsequent transferees of Receivables could have
an interest in such Receivables with priority over the Trust's interest.
Claims of such transferees could reduce the amount of collections on the
Receivables available for distribution to Certificateholders. See "Certain
Legal Aspects of the Receivables--Transfer of Receivables." Under the
Receivables Contribution and Sale Agreement, DFS has warranted to the Seller
and, under the Pooling and Servicing Agreement, the Seller has warranted to
the Trust that the Receivables have been or will be transferred free and clear
of the lien of any third party (exclusive of any Participation of a third
party). Each of DFS and the Seller has also covenanted that it will not sell,
pledge, assign, transfer or grant any lien on any Receivable or, except as
described under "Description of the Certificates--Supplemental Certificates,"
the Seller's Certificate
20
<PAGE>
(or any interest therein) other than to the Trust or in the form of a
Participation. With respect to participations of third parties in the
Receivables, see "The Dealer Floorplan Financing Business of DFS--Participation
Arrangements."
Certain Risks Relating to the Insolvency of DFS, Deutsche BSC or the Seller.
Each of DFS and Deutsche BSC has warranted to the Seller in the Receivables
Contribution and Sale Agreement that the initial contribution and subsequent
sales of the Receivables by it to the Seller are valid sales of the Receivables
to the Seller. In addition, DFS, Deutsche BSC and the Seller have and will
treat the transactions described herein as a sale of the Receivables to the
Seller and DFS and Deutsche BSC have and will take all actions that are
required under Missouri law and Georgia law, respectively, to perfect the
Seller's ownership interest in the Receivables. See "Certain Legal Aspects of
the Receivables--Transfer of Receivables." Notwithstanding the foregoing, if
DFS or Deutsche BSC were to become a debtor in a bankruptcy case and a creditor
or trustee-in-bankruptcy of such debtor or such debtor itself were to take the
position that the sale of Receivables to the Seller should be recharacterized
as a pledge of such Receivables to secure a borrowing of such debtor, then
delays in payments of collections of Receivables to the Seller could occur or
(should the court rule in favor of any such trustee, debtor or creditor) delays
in such payments or reductions in the amount of such payments could result. If
the transfer of Receivables to the Seller is recharacterized as a pledge, a tax
or government lien on the property of DFS or Deutsche BSC arising before any
Receivables originated by it come into existence may have priority over the
Seller's interest in such Receivables. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Bankruptcy." If the transactions
contemplated herein are treated as a sale, the Receivables would not be part of
DFS's or Deutsche BSC's bankruptcy estate and would not be available to DFS's
or Deutsche BSC's creditors.
In addition, in Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th
Cir.), cert. denied, 114 S. Ct. 554 (1993), the United States Court of Appeals
for the Tenth Circuit said, in effect, that accounts sold by a debtor under
Article 9 of the UCC would remain property of the debtor's bankruptcy estate.
If, following a bankruptcy of DFS, Deutsche BSC or the Seller, a court were to
follow the reasoning of the Tenth Circuit, delays in distributions of
collections on or in respect of the Receivables could occur, and reductions
(which, in certain circumstances, could be substantial) in the amount of
payments to Certificateholders could result.
In addition, if DFS or Deutsche BSC were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to request a bankruptcy court to order that DFS or Deutsche BSC, as
applicable, be substantively consolidated with the Seller, delays in and
reductions in the amount of distributions on the Certificates could occur.
The Seller has warranted in the Pooling and Servicing Agreement that the
transfer of the Receivables to the Trust is a valid sale of the Receivables to
the Trust. The Seller has agreed to take all actions that are required under
Missouri law to perfect the Trust's interest in the Receivables and the Seller
has warranted that the Trust will at all times have a first priority perfected
ownership interest therein and, with certain exceptions, in the proceeds
thereof. However, the transfer of the Receivables to the Trust could be deemed
to create a security interest therein. If the transfer of the Receivables to
the Trust were deemed to create a security interest therein under the UCC as in
effect in Missouri, a tax or statutory lien on property of DFS, Deutsche BSC or
the Seller arising before a Receivable is transferred to the Trust may have
priority over the Trust's interest in such Receivables. If the Seller were to
become a debtor in a bankruptcy case and a bankruptcy trustee or the Seller as
debtor in possession or a creditor of the Seller were to take the position that
the transfer of the Receivables from the Seller to the Trust should be
recharacterized as a pledge of such Receivables, then delays in distributions
on the Certificates or, should the bankruptcy court rule in favor of any such
trustee, debtor in possession or creditor, delays and reductions in such
distributions could result.
If certain events relating to the bankruptcy of DFS or the Seller were to
occur, then an Early Amortization Event would occur and, pursuant to the terms
of the Pooling and Servicing Agreement, additional Receivables would not be
transferred to the Trust and distributions of principal on the Certificates
would not be subject to the
21
<PAGE>
Controlled Distribution Amount. See "Certain Legal Aspects of the Receivables--
Transfer of Receivables" and "--Certain Matters Relating to Bankruptcy of DFS,
the Seller or Deutsche FRI."
Payments made in respect of repurchases of Receivables by DFS or the Seller
pursuant to the Pooling and Servicing Agreement may be recoverable by DFS or
the Seller as debtor in possession or by a creditor or a trustee-in-bankruptcy
of DFS or the Seller as a preferential transfer from DFS or the Seller if such
payments are made within one year prior to the filing of a bankruptcy case in
respect of DFS or the Seller.
Risk of Commingling. The Servicer, no later than two business days after the
processing date, will deposit all collections received with respect to the
Receivables (excluding, with certain exceptions, certain portions thereof
allocable to the Seller) in each Collection Period into the Collection Account.
Notwithstanding the foregoing requirement for daily deposits, for so long as
certain conditions are satisfied, DFS need not deposit collections into the
Collection Account until the business day immediately preceding the related
Distribution Date, at which time DFS will make such deposits in an amount equal
to the net amount of such deposits and withdrawals which would have been made
had the conditions referred to in this sentence not applied.
Until such payments on the Receivables collected by the Servicer are
deposited into the Collection Account, such funds may be used by the Servicer
for its own benefit and will not be segregated from the assets of the Servicer,
and the proceeds of any short-term investment of such funds will accrue to the
Servicer. The Servicer will pay no fee to the Trust or any Certificateholder
for any use by the Servicer of funds representing collections on the
Receivables. See "Description of the Certificates--Allocation of Collections;
Deposits to Collection Account; Limited Subordination of Seller's Interest." If
the Servicer became insolvent, the Certificateholders might incur a loss with
respect to collections not deposited in the Collection Account.
Effect of Insolvency Laws on Enforceability of Receivables. Application of
federal and state bankruptcy and debtor relief laws could affect the interests
of the Certificateholders in the Receivables if such laws result in any
Receivables being written off as uncollectible or result in delays in payments
due on such Receivables. See "Description of the Certificates--Defaulted
Receivables and Recoveries."
Lack of Security Interest in Certain Cases. The Seller has represented and
warranted in the Pooling and Servicing Agreement that each Receivable, other
than Unsecured Receivables, is at the time of creation generally secured by a
first priority perfected security interest in the related product, account
receivable or other asset; provided that such perfected security interest need
not be of a first priority in the case of Receivables arising in an Account for
which the payment terms are on a scheduled payment plan basis and whose maximum
credit limit does not exceed $250,000, if such Account was designated for the
Trust on or before March 23, 1994 (the "Series 1994-1 Closing Date"). Claims of
secured parties with first priority perfected security interests in such
accounts, accounts receivable or other assets could reduce the amount of
collections on the related Receivables available for distribution to
Certificateholders. Generally, under applicable state laws, a security interest
in goods or accounts receivable which secure wholesale financing obligations
may be perfected by the filing of UCC financing statements. DFS endeavors to
take all actions necessary under applicable state laws to perfect DFS's
security interest in the goods or accounts receivable. However, at the time a
product is sold, DFS's security interest in the product will terminate.
Therefore, if a Dealer is not required to remit, or fails to remit, to DFS
amounts owed with respect to products that have been sold, the related
Receivables will no longer be secured by such products, and delays or
reductions in the amounts of collections on such Receivables could result.
Effect of Timing of Origination of, and Payments on, Receivables on Payments
on the Certificates. Receivables arising from the purchase of inventory
financed by DFS are generally payable by Dealers either upon retail sale of the
related product or, in some cases, in accordance with a predetermined schedule,
whether or not the product has been sold. Such scheduled payment dates range,
in substantially all cases, from 10 up to 180 days, but usually not more than
90 days, after the Dealer receives the product. The timing of sales of products
is uncertain and varies depending on the product type. Moreover, the relative
portions of the Trust's pool of Receivables made up of Receivables secured by
products, Receivables secured by accounts receivable, Receivables secured by
other assets and Unsecured Receivables may vary over time and cannot be
predicted.
22
<PAGE>
The mix of products securing Receivables may also be expected to vary over time
and cannot be predicted. As a result, it is possible that the credit quality of
the Receivables in the Trust, as a whole, may decline as a result of the
addition of additional Receivables. In addition, there is no assurance that
there will be additional Receivables created under the Accounts or that any
particular pattern of Dealer repayments will occur. The payment of principal on
the Certificates is dependent on Dealer repayments, and Collections during the
Accumulation Period may not be sufficient to fully amortize the Certificates on
the Expected Final Payment Date. In addition, a significant decline in the
amount of Receivables generated could cause an Early Amortization Event.
However, a decline in the amount of Receivables generated would initially be
absorbed by an increase in the Excess Funding Account. The Pooling and
Servicing Agreement provides that the Seller will be required to transfer
Receivables in Additional Accounts to the Trust in the event that the amount of
the Pool Balance is not maintained at a certain minimum level. If an insolvency
event relating to DFS or the Seller were to occur, then an Early Amortization
Event would occur, additional Receivables would not be transferred to the Trust
and distributions of principal on the Certificates would not be subject to the
Controlled Distribution Amount. See "The Dealer Floorplan Financing Business of
DFS" and "Maturity and Principal Payment Considerations" and see also
"Description of the Certificates--Early Amortization Events" for a discussion
of other events which might lead to the occurrence of an Early Amortization
Period.
In addition, because a portion of the Receivables do not bear interest until
a period of time has elapsed from their origination, the Receivables will be
sold to the Trust at a discount, which is received as Receivables are
collected, in order to generate imputed interest collections. As a result,
reductions in the payment rate will result in a reduction in the amount of
imputed interest collections and the amounts available to pay interest on the
Certificates and the Servicing Fee and to cover defaults and delinquencies on
the Receivables. Under certain circumstances, typically those involving a
Dealer in default or about to become in default, DFS may change the due date or
offer the Dealer extended payment terms. See also "--Ability of the Servicer to
Change Payment Terms" below.
Addition of Trust Assets; Additional Product Types. The Seller expects, and
in some cases will be obligated, to designate Additional Accounts, the
Receivables in which will be conveyed to the Trust. Such Additional Accounts
may include Accounts with Dealers originated by DFS under criteria different
from those which were applied to the Dealers on previously designated
Additional Accounts, because such Accounts were originated at a different date.
Such Accounts may also provide financing for products of types different from
those included in the Trust on the Closing Date. Consequently, there can be no
assurance that Additional Accounts designated in the future will relate to the
same types of products or will be of the same credit quality as previously
designated Accounts or that new product types that, if applicable, secure the
Receivables in new Accounts will provide security that is as favorable as that
provided by existing product types. The designation of Additional Accounts will
be subject to the satisfaction of certain conditions described herein under
"Description of the Certificates--Addition of Accounts."
Basis Risk. The Receivables generally bear interest at prime rates announced
by certain banks plus a margin. DFS may reduce the interest rates applicable to
any of the Receivables, so long as DFS does not reasonably expect any such
reduction to result in an Early Amortization Event. Certain Receivables are
originated at a discount and do not bear interest for a specified period after
their origination. It is possible that with respect to any Interest Period,
LIBOR plus the margin used to compute the applicable Certificate Rate will
exceed the Net Receivables Rate for the preceding Collection Period. In such
event, interest will accrue on such Certificates during such Interest Period at
a rate equal to the Net Receivables Rate. A reduction in interest rates on any
Receivables, or the inclusion of a greater proportion of non-interest bearing
Receivables in the Pool Balance, could have the effect of reducing or possibly
eliminating the positive spread, if any, between the Net Receivables Rate and
the applicable Certificate Rates based upon LIBOR, with a corresponding risk of
a reduction in yield to Certificateholders. While the distribution of Carry-
over Amounts would mitigate the effect of such reduction in yield, the Carry-
over Amounts are distributable only to the extent of the funds available
therefor as described under "Description of the Certificates--Distributions
from the Collection Account; Reserve Fund" and there can be no assurance that
Carry-over Amounts, if any, will be distributed. See "The Accounts--Yield
Information."
23
<PAGE>
Trust's Relationship to DFS. DFS is not obligated to make any payments in
respect of the Certificates or the Receivables (other than the obligation of
DFS to purchase certain Receivables from the Trust due to the failure to
comply with certain covenants or representations and warranties, as described
under "Description of the Certificates--Servicer Covenants" and "Description
of the Receivables Contribution and Sale Agreement--Representations and
Warranties"). However, the Trust is completely dependent upon DFS for the
generation of new Receivables. There can be no assurance that DFS will
continue to generate Receivables at the same rate as in prior years. See "--
Social, Economic and Other Factors; Competition" below.
Moreover, if an insolvency event were to occur with respect to DFS, (i)
Receivables would no longer be transferred to the Seller or the Trust and an
Early Amortization Event would occur and (ii) any Delayed Funding Receivables
that had not yet been funded may not become funded and may be executory
contracts subject to disaffirmance by DFS's trustee-in-bankruptcy, in which
case the related Dealers would no longer be obligated to pay such Delayed
Funding Receivables, which the Trust has already paid for. In addition, if DFS
were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in
delays in payments to the Certificateholders.
Social, Economic and Other Factors; Competition. DFS's ability to generate
new Receivables, and the Dealer's ability to make payments on the Receivables
owned by the Trust, will depend upon the sales of the products relating to
such Receivables. The level of sales of such products will be affected by a
variety of social and economic factors, including national and regional
unemployment levels and levels of economic activity in general, interest rates
and consumer perceptions of economic conditions. In addition, DFS competes
with various other financing sources, including independent finance companies,
manufacturer-affiliated finance companies and banks, which are in the business
of providing floorplan financing arrangements to dealers. If, for any reason,
DFS were unable to or ceased to generate new Receivables, an Early
Amortization Event would occur. See "Maturity and Principal Payment
Considerations" below.
Credit Enhancement. Credit enhancement of the Certificates will be provided
by the subordination of the Seller's Interest to the extent of the Available
Subordinated Amount as described herein and amounts in the Reserve Fund and by
the subordination of the Class B Certificates and the Class C Certificates for
the benefit of each class of Certificates with an earlier alphabetical
designation. The amount of such credit enhancement is limited and will be
reduced from time to time as described herein. If the amount available under
such credit enhancement is reduced to zero, Certificateholders will bear
directly the credit and other risks associated with their undivided interest
in the Trust and will be more likely to suffer a loss on their investment in
the Certificates. See "Description of the Certificates--Allocation of
Collections; Deposits in Collection Account; Limited Subordination of Seller's
Interest" and "Risk Factors--Subordination of Class B Certificates." Credit
enhancement provided to any other Series will not be available to the Series
1996-1 Certificates.
Subordination of Class B Certificates. The Class B Certificates will be
subordinated to fund payments of principal and interest on the Class A
Certificates. Payments of principal in respect of the Class B Certificates
will not commence until after the Class A Invested Amount has been paid in
full. Class B Monthly Interest accrued during the related Interest Period(s)
will not be paid on an Interest Payment Date until accrued Class A Monthly
Interest for such Interest Payment Date has been paid in full. Moreover, the
Class B Invested Amount is subject to reduction on any Distribution Date if
the Available Subordinated Amount is reduced to zero, the Class C Invested
Amount is reduced to zero and the Deficiency Amount is greater than zero. If
the Class B Invested Amount suffers such a reduction, there will be a
reduction in the amount of collections allocable to the Class B
Certificateholders, resulting in a possible delay or reduction in principal
and interest payments on the Class B Certificates. Moreover, in the event of a
sale of the Receivables in the Trust due to the occurrence of an insolvency
event with respect to the Seller or due to the Invested Amount being greater
than zero on the Termination Date, the portion of the net proceeds of such
sale will be paid first to Class A Certificateholders until accrued and unpaid
Class A Monthly Interest and all Class A Additional Interest is paid in full
and the Class A Invested Amount is reduced to zero and then to Class B
Certificateholders until accrued and unpaid Class B Monthly Interest and all
Class B Additional Interest is paid in full and the Class B Invested Amount is
reduced to zero. See "Description of the Certificates--Allocation
Percentages," "--Distributions from the Collection Account; Reserve Fund," "--
Distributions" and "--Investor Charge-Offs."
24
<PAGE>
Negative Carry. If funds are deposited in the Excess Funding Account at any
time, such funds are expected to be invested in Eligible Investments and, as a
result, would be expected to earn a rate of return lower than the yield on a
comparable amount of Receivables. Accordingly, any deposit of funds in the
Excess Funding Account may be expected to reduce the amount of Non-Principal
Collections available to the Trust, until DFS is able to generate sufficient
Receivables to permit such funds to be released from the Excess Funding
Account.
Requirement of Consent of the Holders of Certificates of Other Series. Under
certain circumstances, the consent or approval of the holders of a specified
percentage of the aggregate unpaid principal amount of all outstanding
investor certificates of all outstanding Series will be required to direct
certain actions, including amending the Pooling and Servicing Agreement in
certain circumstances and directing a reassignment of the entire portfolio of
Receivables. In addition, following the occurrence of an insolvency event with
respect to the Seller, the holders of certificates evidencing more than 50% of
the aggregate unpaid principal amount of each Series or each class of each
Series (and any holder of a Supplemental Certificate) will be required to
direct the Trustee not to sell or otherwise liquidate the Receivables.
Amendments Without the Consent of Certificateholders. The Pooling and
Servicing Agreement or any Supplement may be amended by the Seller, the
Servicer and the Trustee, without certificateholder consent, so long as any
such action shall not, as evidenced by an opinion of counsel, adversely affect
in any material respect the interests of the certificateholders.
Notwithstanding the foregoing, the Pooling and Servicing Agreement may be
amended by the Servicer, the Seller and the Trustee without the consent of any
of the Certificateholders to change in any manner the treatment of Delayed
Funding Receivables under the Pooling and Servicing Agreement, but only upon
satisfaction of the Rating Agency Condition. In addition, the Pooling and
Servicing Agreement or any Supplement may be amended by the Servicer and the
Trustee at the direction of the Seller without the consent of any of the
Certificateholders (1) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable the Seller or any of its affiliates
(including Deutsche Bank AG) to minimize or avoid capital charges under any
applicable law, rule, regulation or guideline relating to regulatory or risk-
based capital, (2) to enable all or a portion of the Trust to qualify as a
partnership for federal income tax purposes under applicable regulations on
the classification of entities as partnerships or corporations under the Code
adopted as final regulations after the date hereof, and to the extent that
such regulations eliminate or modify the need therefor, to modify or eliminate
existing provisions of the Pooling and Servicing Agreement or any Supplement
relating to the intended availability of partnership treatment of the Trust
for federal income tax purposes, (3) to enable all or a portion of the Trust
to qualify as, and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust," as described
in the provisions of the "Small Business Job Protection Act of 1996," H.R.
3448 (and, in connection with any such election, to modify or eliminate
existing provisions of the Pooling and Servicing Agreement or any Supplement
relating to the intended Federal income tax treatment of the Certificates and
the Trust in the absence of such election, which may include elimination of
the sale of Receivables upon the occurrence of an insolvency event with
respect to the Seller pursuant to the Pooling and Servicing Agreement and
certain provisions of the Pooling and Servicing Agreement relating to the
liability of the Seller), or (4) to enable the Seller or any of its affiliates
to comply with or obtain more favorable treatment under any law or regulation
or any accounting rule or principle, so long as in each case the Rating Agency
Condition has been satisfied and, in the case of (2) or (3), the Seller and
the Trustee have received an opinion of counsel to the effect that such
amendment will not adversely affect the characterization of the certificates
of any outstanding Series or class as debt or as partnership interests;
provided, however, that if any such amendment occurs while Series 1994-1 is
outstanding an opinion of counsel for the Seller, addressed and delivered to
the Trustee, shall be required providing that such amendment will not
adversely affect in an material respect the interests of any investor
certificateholders of Series 1994-1. See "Description of the Certificates--
Amendments."
Additional Series. The Trust, as a master trust, is expected to issue
additional Series (which may be represented by different classes within a
Series) from time to time. A Supplement delivered in connection with the
issuance of other Series will specify certain Principal Terms applicable to
such Series. Such Principal Terms may include methods for determining
applicable allocation percentages and allocating collections, provisions
25
<PAGE>
creating different or additional security or other credit enhancement,
different classes of certificates (including subordinated classes of
certificates) and any other amendment or supplement to the Pooling and
Servicing Agreement which is made applicable only to such Series. The
provisions of such a Supplement may give the holders of the related
certificates or the provider of any Enhancement for the related Series consent,
approval or other rights that may cause the Seller, the Servicer or the Trustee
to take or refrain from taking certain actions under the Pooling and Servicing
Agreement, which may affect the interests of the Certificateholders. No such
Supplement, however, may change the terms of the Certificates or the terms of
the Pooling and Servicing Agreement as applied to the Certificates. See
"Description of the Certificates--New Issuances." As long as the Offered
Certificates are outstanding, satisfaction of the Rating Agency Condition will
be a condition to the execution of any such Supplement. There can be no
assurance, however, that the terms of any other Series might not have an impact
on the timing or amount of payments received by a Certificateholder. The
issuance of an additional Series does not require the consent of or notice to
any Certificateholders.
Ability of Servicer to Change Payment Terms. DFS, as Servicer, will have the
right to change payment terms and various other terms with respect to the
Receivables, subject to the conditions described below. In servicing the
Receivables, DFS, as Servicer, will be required to service and administer the
Receivables and collect payments due under the Receivables in accordance with
its customary and usual servicing procedures for servicing receivables owned by
it and comparable to the Receivables. In addition, DFS, as Servicer, will
covenant that it will only change the terms relating to the Receivables
generally if, in its reasonable judgment, no Early Amortization Event will
occur as a result of the change. Except as specified above, there are no
restrictions on the ability of the Servicer to change the terms of the
Receivables. While the Servicer has no current intention of taking actions
which would change the payment or other terms of the Receivables, other than in
accordance with its customary and usual procedures, there can be no assurances
that changes in the marketplace or prudent business practice might not result
in a determination to do so. Any such changes could impact the repayment of
principal on the Certificates. See "Maturity and Principal Payment
Considerations."
Ability to Change Discount Factor. As described under "Description of the
Certificates--Discount Factor," in order to create imputed interest in respect
of those Receivables that have a non-interest-bearing period and for uniformity
in accounting for collections, a portion of the Collections on each Receivable
that are not part of the finance charges, if any, paid on that Receivable will
be treated as Non-Principal Collections. The portion of the balance of a
Receivable that will be treated as a Non-Principal Collection will be equal to
the product of the balance of such Receivable times the Discount Factor. As of
the Series 1996-1 Cut-off Date, the Discount Factor was 0.40%. The Discount
Factor may be adjusted upwards or downwards, without the consent of
Certificateholders, as described under "Description of the Certificates--
Discount Factor," but may in no event exceed 1%. Any increase in the Discount
Factor will result in a higher amount of Non-Principal Collections on the
Receivables and a lower amount of Principal Collections than would otherwise
occur. Conversely, any decrease in the Discount Factor would result in a lower
amount of Non-Principal Collections and a higher amount of Principal
Collections than would otherwise occur.
Ratings of the Certificates. It is a condition to the issuance of the Class A
Certificates that they be rated in the highest long-term rating category by at
least one nationally recognized rating agency (such rating agency and each
other rating agency designated by the Seller in the related Supplement in
respect of any outstanding Series or class, a "Rating Agency"). It is a
condition to the issuance of the Class B Certificates that they be rated in one
of the three highest rating categories by at least one Rating Agency. A rating
is based primarily on the credit underlying the Receivables and the level of
subordination of the Seller's Interest. The rating of the Offered Certificates
addresses the likelihood of the ultimate payment of principal and the timely
payment of interest, at the applicable Certificate Rate, on the Offered
Certificates. However, a Rating Agency does not evaluate, and the rating of the
Offered Certificates does not address, the likelihood that any Carry-over
Amount will be paid or the likelihood that the outstanding principal amount of
the Offered Certificates will be paid by any date, including the Expected Final
Payment Date, other than the Termination Date. There is 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
26
<PAGE>
if in its judgment circumstances so warrant. A security rating is not a
recommendation to buy, sell, or hold securities and is subject to revision or
withdrawal in the future by the assigning rating agency. Each rating should be
evaluated independently of any other rating.
Book-Entry Registration. The Offered Certificates will be initially
represented by one or more certificates registered in the name of Cede, the
nominee for DTC, and will not be registered in the names of the Class A or
Class B Certificateholders or their nominees. Because of this, unless and until
Definitive Certificates are issued, Class A and Class B Certificateholders will
not be recognized by the Trustee as "Certificateholders" (as that term is used
in the Pooling and Servicing Agreement). Consequently, until such time
beneficial owners of the Offered Certificates ("Certificate Owners") will only
be able to exercise the rights of Certificateholders indirectly through DTC,
Cedel Bank, Euroclear and their participating organizations. See "Description
of the Certificates--Book-Entry Registration" and "--Definitive Certificates."
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
AND DEUTSCHE FLOORPLAN RECEIVABLES, INC.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
The Seller is a limited partnership formed under the laws of the State of
Delaware, of which Deutsche Floorplan Receivables, Inc. ("Deutsche FRI") is the
general partner and DFS is the limited partner. DFS's limited partnership
interest in the Seller constitutes ninety-nine percent (99%) of the total
partnership interests in the Seller, with the remaining one percent (1%) owned
by the general partner. The Seller was formerly known as ITT Floorplan
Receivables, L.P.; its general partner was formerly known as ITT Floorplan
Receivables, Inc.; and its limited partner was formerly known as ITT Commercial
Finance Corp. The Seller was organized for limited purposes, which include
purchasing receivables from DFS and its affiliates and transferring such
receivables to third parties and any activities incidental to and necessary or
convenient for the accomplishment of such purposes. The principal executive
offices of the Seller are located at 655 Maryville Centre Drive, St. Louis,
Missouri 63141-5832. The telephone number of such offices is (314) 523-3000.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary
application for relief by DFS under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in
consolidation of the assets and liabilities of the Seller with those of DFS.
These steps include the creation of Deutsche FRI as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of Deutsche FRI's business
and a restriction on the Seller's ability to commence a voluntary case or
proceeding under any Insolvency Law without the unanimous affirmative vote of
all of its directors). Deutsche FRI's Certificate of Incorporation includes a
provision that requires Deutsche FRI to have not less than two directors who
qualify under the Articles of Incorporation as an "Independent Director." No
assurance can be given, however, that such a consolidation will not occur. See
"Risk Factors--Certain Legal Aspects."
If Additional Accounts are added to the Trust, DFS may make additional
contributions of capital to the Seller to fund a portion of the purchase price
of the Receivables arising in Additional Accounts.
DEUTSCHE FLOORPLAN RECEIVABLES, INC.
Deutsche Floorplan Receivables, Inc., a wholly-owned subsidiary of DFS, was
incorporated in the State of Nevada on October 22, 1993. Deutsche FRI was
formerly known as ITT Floorplan Receivables, Inc. Deutsche FRI was organized
for limited purposes, which include acting as the general partner in a limited
partnership engaged in purchasing receivables from DFS and its affiliates,
transferring such receivables to third parties, acting as general partner in
limited partnerships that acquire receivables and any activities incidental to
and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of Deutsche FRI are located at Bank of America
Plaza, 300 South Fourth Street, Suite 1100, Las Vegas, Nevada 89101. The
telephone number of such offices is (702) 385-1668.
27
<PAGE>
THE TRUST
The Trust was formed in accordance with the laws of the State of New York
pursuant to the Pooling and Servicing Agreement. The Seller has conveyed and
will convey to the Trust, without recourse, the Receivables arising under the
Accounts. The property of the Trust will consist of the Receivables existing in
the Accounts on the Initial Cut-Off Date, all Receivables generated in the
Accounts from time to time thereafter during the term of the Trust as well as
Receivables generated in any Accounts added to the Trust from time to time
(less Receivables paid or charged off and excluding (i) Receivables in any
Accounts that are removed from the Trust from time to time after the Initial
Cut-Off Date and (ii) any undivided interest in the Receivables in certain
Accounts that has been transferred to a third party as described under "The
Dealer Floorplan Financing Business of DFS--Participation Agreements"), an
assignment of all the Seller's rights and remedies under the Receivables
Contribution and Sale Agreement, all funds collected or to be collected in
respect of the Receivables, all funds on deposit in certain accounts of the
Trust including funds on deposit in the Excess Funding Account, the Principal
Funding Account, the Interest Funding Account, the Reserve Fund and any other
Enhancement issued with respect to any other Series, a security interest in the
other Collateral Security and rights of the Seller with respect to the financed
inventory under the Floorplan Agreements. See "Description of the
Certificates--Addition of Accounts." See "Description of the Receivables
Contribution and Sale Agreement" for a summary of certain terms of the
Receivables Contribution and Sale Agreement.
The property of the Trust may include Enhancements for the benefit of
certificateholders of other Series. The Certificateholders will not have any
interest in any Enhancements provided for the benefit of the certificateholders
of other Series. Pursuant to the Pooling and Servicing Agreement the Seller
will be allowed (subject to certain limitations and conditions), and in some
circumstances will be obligated, to designate from time to time Additional
Accounts to be included as Accounts and to convey to the Trust the Receivables
of such Additional Accounts, and to designate from time to time certain
Accounts to be removed and to require the Trustee to convey receivables in such
Removed Accounts to the Seller. The Seller may, but is not obligated to, cause
the Trust to convey to it an interest in certain Receivables, which the Seller
may transfer or participate to others.
The Trust has been formed for this and like transactions pursuant to the
Pooling and Servicing Agreement and prior to formation had no assets or
obligations. The Trust will not engage in any business activity other than
acquiring and holding the Receivables and the other assets of the Trust and
proceeds therefrom, issuing the Certificates and the Seller's Certificate (and
any Supplemental Certificates), issuing additional Series and making payments
thereon and related activities. As a consequence, the Trust is not expected to
have any need for, or source of, capital resources other than the assets of the
Trust.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the Seller
as consideration for the transfer of the Receivables to the Trust. The Seller
will use such proceeds for general operating purposes (including the
distribution thereof to its limited partner, DFS). DFS may use the proceeds it
receives to repay inter-company debt and for other general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS OF DFS
GENERAL
The Receivables sold or to be sold to the Seller have been or will generally
be selected from extensions of credit made by DFS to (i) dealers, manufacturers
and distributors ("Dealers") of certain consumer and commercial products in
order to enable such Dealers to acquire inventory (the "Floorplan Business")
and (ii) Dealers to finance their accounts receivable arising from the sales of
their products (the "Accounts Receivable Business"). The products financed
within the Floorplan Business may include, among others: computers and
28
<PAGE>
computer products, manufactured housing, recreation vehicles, boats and motors,
consumer electronics and appliances, keyboards and other musical instruments,
industrial and agricultural equipment, office automation products, snowmobiles,
and motorcycles. The types of products financed may change over time. The
receivables arising from the Floorplan Business are herein called the
"Floorplan Receivables" and receivables arising from the Accounts Receivable
Business are called the "A/R Receivables." Occasionally, specific transactions
under the Accounts Receivable Business are documented as sales of receivables
by the originator thereof to DFS. Asset Based Receivables and Unsecured
Receivables, which have been sold to the Trust and may be sold, are described
below.
The Floorplan Receivables are generally secured by the products being
financed and, in limited cases, by other personal property, personal
guarantees, mortgages on real estate, assignments of certificates of deposit,
or letters of credit. The amount of the advances are generally equal to 100% of
the invoice price of the product. The A/R Receivables are secured by the
accounts receivable owed to the Dealer against which such extension of credit
was made and, in limited cases, by other personal property of such borrowers,
mortgages on real estate, assignments of certificates of deposit or letters of
credit. The accounts receivable which are pledged to DFS as collateral may or
may not be secured by collateral. The amount advanced generally does not exceed
80%-85% of the amount of the eligible accounts receivable. Both Floorplan
Receivables and A/R Receivables are generally full recourse obligations of the
related Dealer.
DFS originates and services its receivables from its principal office in St.
Louis, Missouri and in branch offices located throughout the United States.
Receivables originated in the State of Louisiana arise from extensions of
credit to Dealers by Deutsche BSC, which Receivables are serviced by DFS. In
the future, Receivables in the Trust may include Receivables originated by
other affiliates of DFS, subject to satisfaction of the Rating Agency
Condition. References in this Prospectus to originations by DFS will be deemed
to include originations by Deutsche BSC and any such other affiliate.
CREDIT UNDERWRITING PROCESS
A Dealer requesting the establishment of a credit line with DFS is required
to submit an application and financial information, including audited or
unaudited financial statements and, in some cases, tax returns. DFS attempts to
talk to, or receive reference letters from, several of the applicant's current
creditors and may also obtain a credit agency report on the applicant's credit
history. In addition to such current financial information and historical
credit information, DFS will consider the following factors: the reason for the
request for the extension of credit; the need for the credit line; the products
to be financed and the financial status of the manufacturer of such products,
if any, that would enter into a related Floorplan Agreement; and the experience
of the Dealer's management. The determination of whether to extend credit and
of the amount to be extended is based upon a weighing of the above factors. The
Dealer credit underwriting process of DFS also involves the use of its Expert
Credit System ("ECS"), which employs artificial intelligence technology to
simulate the analytical approach of senior underwriting personnel. By utilizing
a standardized review process to analyze credit information, ECS adds greater
consistency to underwriting decisions across geographic areas and product
lines. While all Dealer applications are processed through ECS, DFS does not
use ECS as a credit scoring system that results in a numerical score that
approves or disapproves the extension of credit or that indicates what amount
of credit may be extended.
Extensions of credit lines in excess of $10,000,000 if secured and $5,000,000
if unsecured may be approved by management of Deutsche Financial Services
Holding Corporation or Deutsche Bank AG. Extensions of credit up to $10,000,000
if secured and $5,000,000 if unsecured may be approved by the president of DFS;
and extensions of credit up to $5,000,000 may be approved by DFS's director of
portfolio control. A DFS Division President may approve extensions of credit in
amounts which vary by program but do not exceed $1,500,000. Less senior
officers have lower levels of approval authority. DFS reviews individual Dealer
credit limits (i) prior to any increase in such credit limit, (ii) generally
every 12 to 18 months and (iii) upon becoming aware that the Dealer is
experiencing financial difficulties or is in default on its obligations under
its agreement with DFS.
29
<PAGE>
CREATION OF RECEIVABLES
The Floorplan Business is typically documented by an agreement between DFS
and the Dealer which provides for both the extension of credit and a grant of
security interest. Such agreements are generally for an unspecified period of
time and create discretionary lines of credit, which DFS may terminate at any
time in its sole discretion, subject, however, to prevailing standards of
commercial reasonableness and good faith, which may require commercially
reasonable notice and other accommodations by DFS. Absent default by the
Dealer, the outstanding Floorplan Receivables owed by such Dealer cannot be
accelerated, even if the line of credit is terminated. After the effective date
of termination, DFS is under no obligation to continue to provide additional
financing, but the then current outstanding balance will be repayable in
accordance with the Pay-as-Sold or Scheduled Payment Plan terms of such
Dealer's program with DFS, as described below.
With respect to the Floorplan Receivables, advances made for the purchase of
inventory are most commonly arranged in the following manner: The Dealer will
contact the manufacturer, distributor or other vendor (each, a "Manufacturer")
and place a purchase order for a shipment of inventory. If the Manufacturer has
been advised that DFS is the Dealer's inventory financing source, the
Manufacturer will contact DFS to obtain an approval number with respect to such
purchase order. Upon such request, DFS will determine whether (i) the
Manufacturer is in compliance with its Floorplan Agreement, (ii) the Dealer is
in compliance with its program with DFS and (iii) such purchase order is within
the Dealer's credit limit. If so, DFS will issue an approval number to the
Manufacturer. The Manufacturer will then ship the inventory and directly submit
its invoice for such purchase order to DFS for payment. Interest or finance
charges normally begin to accrue on the Dealer's accounts as of the invoice
date. The proceeds of the loan being made by DFS to the Dealer are paid
directly to the Manufacturer in satisfaction of the invoice price and will
normally be funded at that time. In some cases, however, DFS will negotiate a
delay in funding the advance for a period which in most cases ranges from a few
days to up to 30 days, and in some cases ranges up to 90 days, after the date
of the invoice. Any such receivable that is funded on a delayed basis (a
"Delayed Funding Receivable") will be sold to and paid for by the Trust on the
date of the invoice, even though such receivable is not funded by DFS until a
later time (i.e., when DFS pays the advance to the Manufacturer in payment of
the invoice price). DFS and the Manufacturer may also agree that DFS may
discount the invoice price of the inventory ordered by the Dealer. Under this
arrangement, the Manufacturer will deem itself paid in full upon receipt of
such discounted amount. Typically, in exchange for the float permitted by the
payment delay and/or the discount, DFS will agree to provide the Manufacturer's
Dealers with reduced interest, or perhaps no interest, for some period of time.
Thus, the Dealer's financing program may provide for so-called "interest free"
or "free flooring" periods during which no interest or finance charges will
accrue on their accounts.
The creation of Asset Based Receivables and Unsecured Receivables is
discussed under "--Asset Based Receivables" and "--Unsecured Receivables"
below.
PAYMENT TERMS
DFS's Floorplan Business provides two basic payment terms to Dealers: Pay-as-
Sold financing programs or Scheduled Payment Plan. Under a "Pay-as-Sold"
program, the Dealer is obligated to pay interest or finance charges monthly,
but principal repayment with respect to any particular item of inventory
financed by DFS is due and payable only upon the sale of such item by the
Dealer or at a predetermined maturity date. On occasion, DFS may require
particular Dealers to begin repaying principal in installments if the unit has
not been sold within a specified period of time. These payments are referred to
as "curtailments." Even if a unit is subject to curtailment payments, the
outstanding balance with respect to such unit will remain fully payable if such
unit is sold. Pay-as-Sold programs are principally offered in the motorcycle,
recreation vehicle, boat and motor, agricultural equipment, and other product
lines in which the individual inventory price is high and the product inventory
turn is relatively slow.
"Scheduled Payment Plans", in contrast, require that principal be repaid in
accordance with a particular schedule. Depending upon the product line and the
particular inventory turns of the individual Dealer, the
30
<PAGE>
majority of these payment terms are generally no longer than ninety (90) days.
Under a Scheduled Payment Plan, the Dealer is only obligated to make payments
in accordance with an agreed upon schedule, regardless of when the item of
inventory is actually sold.
With respect to A/R Receivables, the Dealer is obligated to pay interest or
finance charges monthly. Principal repayment is due in the amount of the
collections on the underlying accounts receivable at the time of such
collections. With respect to Asset Based Receivables, interest is payable
monthly, while principal is payable upon the end of the term of the credit
facility, or, if earlier, when and to the extent principal outstandings exceed
eligible collateral at negotiated advance rates. With respect to Unsecured
Receivables, interest is payable monthly, while principal may be payable either
on Pay-as-Sold or Scheduled Payment Plan terms.
FLOORPLAN AGREEMENTS WITH MANUFACTURERS
DFS will provide financing for products for a particular Dealer, in most
instances, only if DFS has also entered into a floorplanning agreement (the
"Floorplan Agreement") with the Manufacturer of such product. Pursuant to the
Floorplan Agreement, the Manufacturer will agree, among other matters, to
purchase from DFS those products sold by such Manufacturer to a Dealer and
financed by DFS if DFS acquires possession of such products pursuant to
repossession, voluntary surrender, or other circumstances. This arrangement
reduces the time, expense and risk normally associated with a secured lender's
disposition of collateral. The terms of such repurchase obligations may vary,
both by industry and by Manufacturer. In some instances, the Manufacturer will
be obligated to repurchase the product for a price equal to the unpaid
principal balance owed by the Dealer for the product in question whenever DFS
acquires possession thereof. On occasion, different terms may be negotiated.
Such terms may provide for a smaller purchase price, or a purchase price which
declines over time, or time periods beyond which no obligation to purchase by
the Manufacturer shall apply. Certain Floorplan Agreements may also eliminate
the repurchase obligation or reduce the purchase price payable by the
Manufacturer, depending upon the condition of the inventory acquired by DFS.
In determining whether to include a Manufacturer's products in its Floorplan
Business, DFS considers the Manufacturer's financial status, its number of
years in the business, the number of years the product has been sold and
whether its products are sold nationally or in a limited area. In general, the
more favorable DFS's determination of such factors, the larger the amount of
Dealer outstanding payables to DFS that will be permitted. DFS generally
reviews Manufacturers annually in the case of Manufacturers whose Dealers have
outstanding payables to DFS in excess of $10,000,000 and less frequently in the
case of other Manufacturers.
BILLING PROCEDURES
At the beginning of each month DFS sends to each Account obligor a billing
statement for the interest, if any, and any other non-principal charges accrued
or arising in the prior month. Payment is generally due in respect of such
statement by the 15th of such month.
DEALER MONITORING
Inventory inspections are performed to physically verify the collateral used
to secure a Dealer's loan, check the condition of the inventory, account for
any missing inventory and collect funds due to DFS. The inventory inspection,
or "floorcheck," is one of the key tools for monitoring inventory financed by
DFS on Pay-as-Sold terms. Floorchecks are usually performed every 30-45 days,
or every 60-75 days for industrial or agricultural equipment. These floorchecks
are performed by field service representatives ("FSRs") who are specially
trained to audit Dealer inventory. DFS has developed the "Field Audit System,"
a computerized field audit communications network providing FSRs with timely
and accurate inventory reports on the day of inspection. Any discrepancies in a
Dealer's inventory or payment schedule, or other problems discovered by an FSR,
are promptly reported to regional office management.
31
<PAGE>
Floorchecks generally are not performed on Dealers on Scheduled Payment
Plans. However, DFS monitors these Dealers for payment delinquencies. The
regional office makes telephone contact with delinquent Dealers after a
Scheduled Payment Plan payment of $10,000 or more is 5 days past due in order
to resolve any problems. If a Dealer is 10 days past due with a Scheduled
Payment Plan payment in an amount greater than $100,000 or 15 days past due
with a payment of $10,000-$100,000, FSRs will visit the Dealer to verify the
related collateral and report their findings to the regional office.
In addition to monitoring an A/R Receivables Dealer's weekly activity, one of
the key control elements of the A/R Receivables program is the field audit,
during which an accounts receivable auditor reviews certain books and records
of an A/R Receivables Dealer. The audits are performed generally on a quarterly
basis. Any deficiencies revealed during the audit are discussed with the Dealer
and reported to regional office management.
REALIZATION ON RECEIVABLES
Upon any default by a Dealer of its obligations to DFS under the related
financing agreement and expiration of any and all applicable notice and cure
periods that may have been agreed to between DFS and such Dealer, DFS may
declare such Dealer's obligations immediately due and payable and enforce all
of its legal rights and remedies, including commencement of proceedings to
realize upon any collateral, subject to prevailing standards of commercial
reasonableness and good faith. Upon learning of such a default, DFS makes
contact with the Dealer to determine whether it can develop a workout
arrangement with the Dealer to cure all defaults. If disputes with the Dealer
exist, such disputes may be submitted to arbitration. If DFS determines that
such an arrangement to cure a default cannot be successfully implemented, the
Dealer's payment obligations are accelerated. DFS then attempts to obtain
possession of the collateral, except in the case of Unsecured Receivables or
A/R Receivables, and in the case of A/R Receivables, DFS attempts to collect
directly from the obligors on the accounts receivable (with respect to certain
Accounts relating to A/R Receivables, DFS will already control the collection
of accounts receivable through the use of lockboxes). If a Manufacturer is
obligated to repurchase the collateral under a Floorplan Agreement as described
above under "--Floorplan Agreements with Manufacturers," the collateral is
delivered to the related Manufacturer. DFS repossesses, stores and then
attempts to sell all other salable collateral in a commercially reasonable
manner. See "The Accounts--Loss Experience."
ASSET BASED RECEIVABLES
Other receivables ("Asset Based Receivables") that may be sold to the Seller
arise from asset based revolving credit facilities provided to certain Dealers.
These facilities typically involve a revolving line of credit, often for a
contractually committed period of time, pursuant to which the borrower may draw
the lesser of the maximum amount of such line of credit or a specifically
negotiated loan availability amount. The loan availability amount is determined
by multiplying agreed upon advance rates against the value of certain types of
assets. In these facilities, DFS will most typically lend against finished
inventory and parts in the Dealer's possession which are free and clear of
other liens and otherwise in compliance with specified standards. DFS will also
lend in accordance with an advance rate against a borrower's eligible accounts
receivable. DFS's asset based revolving credit facilities are usually secured
by the assets which constitute the borrowing base against which the loan
availability amount is calculated and, occasionally, by other personal
property, mortgages or other assets of the borrower. Asset Based Receivables
are not always supported by any Floorplan Agreement with a Manufacturer.
UNSECURED RECEIVABLES
Certain receivables ("Unsecured Receivables") constitute unsecured advances
to Dealers that are made in the same manner as in the case of Floorplan
Receivables. As of July 31, 1996, 2% of the total balance of Receivables in the
Trust Portfolio were Unsecured Receivables.
32
<PAGE>
PRIVATE LABEL PROGRAMS
Under DFS's so-called "Private Label" programs, DFS will agree to provide
inventory financing and accounts receivable financing for Dealers of a
Manufacturer under the name of the Manufacturer. Presently DFS operates under
the following names: Carrier Distribution Credit Corporation, to provide
financing for Dealers of products manufactured or sold by Carrier Corporation
(heating, ventilation and air conditioning); Resellers Credit Corporation, to
provide financing to Dealers of products manufactured or sold by Ingram Micro,
Inc. (computer products); IE Financial Services, to provide financing to
Dealers of products manufactured or sold by Intelligent Electronics, Inc.
(computer products); MicroAge Commercial Credit, to provide financing to
Dealers of products manufactured or sold by MicroAge Computer Centers, Inc.
(computer products); Snapper Finance Company, to provide financing to Dealers
of products manufactured or sold by Snapper, Inc. (lawn mowers and other garden
products); and Tracker Marine L.P., which provides financing to Dealers of
products manufactured by Tracker Marine L.P. (boats and motors). The
Manufacturer may or may not have an equity participation in certain of the
receivables funded by such Private Label programs. Other private label programs
may be developed from time to time.
PARTICIPATION ARRANGEMENTS
From time to time DFS will enable other financing sources to participate in
certain of its credit facilities ("Participations"). Pursuant to a typical
Participation, the documentation for the underlying line of credit will remain
in the name of DFS, as lender. In a separate contractual arrangement with DFS,
the participant will agree to provide a portion of the funding for such
facility in exchange for an agreed upon interest rate. Occasionally, fees and
other charges may also be shared with the participant. In certain cases, DFS
will advise a borrower that the size of its credit facility is expressly
conditioned upon the availability of participants in the facility. In those
situations, if no participants can be found, or if such participants cease to
participate, the size of the credit facility may be reduced. In other
circumstances, there will be no such condition and DFS may be obligated to
maintain a credit facility notwithstanding its expectation that a portion of it
would be participated. The Receivables to be sold by DFS to the Seller, and in
turn by the Seller to the Trust, may include the non-participated portion of
receivables from accounts which have been participated. In addition, subject to
substantially the same limitations that apply to the removal of Accounts, the
Seller may cause the Trust to transfer an interest in certain Receivables to
the Seller, which may thereafter transfer such interest to another person in
the form of a Participation. In addition, DFS may, from time to time, enter
into syndicated credit facilities, pursuant to which multiple lenders,
including DFS, will jointly establish a credit facility administered by a
lender agent. Under these facilities, DFS and its co-lenders will agree,
pursuant to the terms of the loan agreement with the borrower, to provide a
portion of the overall credit facility up to their respective maximum
commitment amounts. In return, DFS and its co-lenders generally share in the
interest and principal payments and other fees and charges on a pro-rata basis.
THE ACCOUNTS
GENERAL
The Receivables arise in the Accounts. The Accounts have been selected from
all the accounts that were Eligible Accounts (the "Eligible Portfolio") at the
Initial Cut-Off Date. In order to be included in the Eligible Portfolio, each
Account must be an account established by DFS in the ordinary course of
business and meet certain other criteria provided in the Pooling and Servicing
Agreement. See "Description of the Certificates--Representations and
Warranties."
Pursuant to the Pooling and Servicing Agreement, the Seller and, pursuant to
the Receivables Contribution and Sale Agreement, DFS have the right (subject to
certain limitations and conditions), and in some circumstances the Seller is
obligated, to designate from time to time additional qualifying Accounts to be
included as Accounts and to convey to the Trust the Receivables of such
Additional Accounts, including Receivables thereafter created. These accounts
must meet the eligibility criteria set forth above as of the date such accounts
are designated as Additional Accounts. DFS will convey the Receivables then
existing, with
33
<PAGE>
certain exceptions, or thereafter created under such Additional Accounts to the
Seller, which will in turn convey them to the Trust. See "Description of the
Certificates--Addition of Accounts."
As of July 31, 1996, there was $3,713.3 million of Receivables in the total
U.S. portfolio of DFS of which $2,035.8 million of Receivables were included in
the Trust as of such date. Prior to the Closing Date, DFS will transfer to the
Seller and, in turn, the Seller will transfer to the Trust additional Accounts
which contained $1,342.2 million of Receivables as of July 31, 1996. In
addition, Accounts which contained $198.9 million of Receivables as of July 31,
1996 will be removed from the Trust. The tables set forth below under the
heading
"--Description of the Trust Portfolio" contain information as of July 31, 1996
with respect to the Receivables in the Trust after giving effect to Receivables
in the Accounts which will be added to or removed from the Trust on or before
the Closing Date (collectively, the "Trust Portfolio").
The sum in any column in the tables set forth below may not equal the
indicated total due to rounding.
DESCRIPTION OF THE TRUST PORTFOLIO
The following tables set forth the composition of the Trust Portfolio, as of
July 31, 1996, by business line and payment plan. Due to the variability and
uncertainty with respect to the rates at which Receivables are created, paid or
otherwise reduced, the characteristics set forth below may vary significantly
as of any other date of determination.
COMPOSITION OF RECEIVABLES IN THE TRUST PORTFOLIO BY BUSINESS LINE
JULY 31, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER PERCENTAGE OF
RECEIVABLES RECEIVABLES OF NUMBER OF
BUSINESS LINE BALANCE BALANCES ACCOUNTS ACCOUNTS
- ------------- ----------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Floorplan Receivables.......... $2,691.4 84.7% 10,702 97.5%
Accounts Receivable............ 207.9 6.5 183 1.7
Asset Based Lending............ 217.8 6.9 81 0.7
Unsecured...................... 62.0 2.0 11 0.1
-------- ----- ------ -----
Total...................... $3,179.1 100.0% 10,977 100.0%
======== ===== ====== =====
</TABLE>
COMPOSITION OF FLOORPLAN RECEIVABLES IN THE
TRUST PORTFOLIO BY PAYMENT PLAN
JULY 31, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER PERCENTAGE OF
RECEIVABLES RECEIVABLES OF NUMBER OF
PAYMENT PLAN BALANCE BALANCES ACCOUNTS ACCOUNTS
- ------------ ----------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Pay-as-Sold.................... $1,963.7 73.0% 9,304 86.9%
Scheduled Payment Plan......... 727.7 27.0 1,398 13.1
-------- ----- ------ -----
Total...................... $2,691.4 100.0% 10,702 100.0%
======== ===== ====== =====
</TABLE>
The following tables set forth the composition of the Receivables in the
Trust Portfolio by account balance, product type and geographic distribution of
such Receivables. Due to the variability and uncertainty with respect to the
rates at which Receivables are created, paid or otherwise reduced, the
characteristics set forth below may vary significantly as of any other date of
determination.
34
<PAGE>
COMPOSITION OF RECEIVABLES IN THE TRUST PORTFOLIO BY ACCOUNT BALANCE
AS OF JULY 31, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER PERCENTAGE OF
RECEIVABLES RECEIVABLES OF NUMBER OF
ACCOUNT BALANCE RANGE BALANCE BALANCES ACCOUNTS ACCOUNTS
- --------------------- ----------- ------------- -------- -------------
<S> <C> <C> <C> <C>
$1 to $999,999.99.............. $1,560.8 49.1% 10,482 95.5%
$1,000,000 to $2,499,999.99.... 497.0 15.6 334 3.0
$2,500,000 to $4,999,999.99.... 329.8 10.4 94 0.9
$5,000,000 to $9,999,999.99.... 264.4 8.3 41 0.4
Over $10,000,000.00............ 527.1 16.6 26 0.2
-------- ----- ------ -----
Total...................... $3,179.1 100.0% 10,977 100.0%
======== ===== ====== =====
</TABLE>
COMPOSITION OF RECEIVABLES IN THE TRUST PORTFOLIO BY PRODUCT TYPE
AS OF JULY 31, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER PERCENTAGE OF
RECEIVABLES RECEIVABLES OF NUMBER OF
PRODUCT TYPE BALANCE BALANCES ACCOUNTS ACCOUNTS
- ------------ ----------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Computers and Computer
Products..................... $ 589.3 18.5% 1,091 9.9%
Manufactured Housing.......... 544.3 17.1 1,181 10.8
Accounts Receivable(1)........ 425.7 13.4 264 2.4
Recreation Vehicles........... 384.6 12.1 619 5.6
Boats and Motors.............. 311.0 9.8 1,388 12.6
Industrial and Agricultural
Equipment.................... 310.6 9.8 716 6.5
Motorcycles................... 219.1 6.9 1,032 9.4
Snowmobiles................... 104.5 3.3 986 9.0
Other(2)...................... 134.9 4.2 3,113 28.4
Consumer Electronics and
Appliances................... 77.5 2.4 215 2.0
Keyboard and Other Musical
Instruments.................. 77.6 2.4 372 3.4
-------- ----- ------ -----
Total..................... $3,179.1 100.0% 10,977 100.0%
======== ===== ====== =====
</TABLE>
- --------
(1) Accounts Receivable includes Asset Based Receivables of $217.8 million.
(2) Includes, among other products, heating, ventilating, and air conditioning
equipment, and irrigation systems.
35
<PAGE>
GEOGRAPHIC DISTRIBUTION OF RECEIVABLES IN THE TRUST PORTFOLIO
AS OF JULY 31, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER PERCENTAGE OF
RECEIVABLES RECEIVABLES OF NUMBER OF
STATE BALANCE BALANCES ACCOUNTS ACCOUNTS
- ----- ----------- ------------- -------- -------------
<S> <C> <C> <C> <C>
California..................... $ 408.5 12.8% 1,111 10.1%
Texas.......................... 240.2 7.6% 1,071 9.8%
Florida........................ 233.2 7.3% 900 8.2%
Georgia........................ 150.0 4.7% 435 4.0%
Oregon......................... 128.4 4.0% 275 2.5%
Washington..................... 120.1 3.8% 317 2.9%
New York....................... 118.2 3.7% 584 5.3%
North Carolina................. 115.3 3.6% 454 4.1%
Michigan....................... 106.8 3.4% 600 5.5%
Virginia....................... 104.7 3.3% 310 2.8%
Minnesota...................... 104.4 3.3% 388 3.5%
New Jersey..................... 97.4 3.1% 373 3.4%
Other States(1)................ 1,251.9 39.4% 4,159 37.9%
-------- ----- ------ -----
Total...................... $3,179.1 100.0% 10,977 100.0%
======== ===== ====== =====
</TABLE>
- --------
(1) The percentage of the Receivables Balance represented by Receivables in
each state not specifically listed is less than 3% of the Receivables
Balance.
YIELD INFORMATION
The Receivables bear interest in their accrual periods at rates generally
equal to a prime rate selected in the related financing agreement plus a
margin. Certain Receivables do not bear interest for a specified period after
their origination. For 1995, the receivables in DFS's U.S. portfolio had a
yield of 11.48% per annum, of which (i) approximately 7.80% was attributable to
yield from the payment of interest accruing on those receivables and (ii)
approximately 3.68% was attributable to the payment of the discounted portion
of the receivables balances and other income. For the first 6 months of 1996,
the receivables in DFS's U.S. portfolio had a yield of 10.91% per annum, of
which (i) approximately 7.68% was attributable to yield from the payment of
interest accruing on those receivables and (ii) approximately 3.23% was
attributable to the payment of the discounted portion of the receivables
balances and other income. The reduction of yield for the first six months of
1996 compared to 1995 reflects competitive pricing pressures as well as
seasonality in DFS's U.S. portfolio. With respect to the Receivables in the
Trust, the Trust will receive the yield attributable to the payment of interest
accruing on the Receivables (i.e., the type of yield referred to in clause (i)
in the preceding sentence), but not the yield attributable to the payment of
the discounted portion of the receivable balance attributable to DFS's funding
the receivable at a discount at the origination of the receivable (i.e., the
type of yield referred to in clause (ii) of the preceding sentence). However,
in order to create imputed interest, the Trust has been and will be purchasing
all of the Receivables from the Seller at the Discount Factor (0.40% as of the
Series 1996-1 Cut-off Date) and will receive the interest payments on the
Receivables in accordance with their terms. If the receivables in DFS's U.S.
portfolio during 1995 were originated at a discount equal to a Discount Factor
of 0.40% and had a Monthly Payment Rate of 50% and the collection of such
discount amounts were treated as interest, during 1995 the yield on such
receivables would have been 10.20%. If the receivables in DFS's U.S. portfolio
during the first 6 months of 1996 were originated at a discount equal to a
Discount Factor of 0.40% and had a Monthly Payment Rate of 50% and the
collection of such discount amounts were treated as interest, during the first
6 months of 1996 the yield on such receivables would have been 10.08%. The
Trust's yield on its Receivables will be affected by the interest rates borne
by Receivables, the Discount Factor and the rate at which the Receivable
balances are paid.
36
<PAGE>
MAJOR CUSTOMERS; MAJOR MANUFACTURERS
At June 30, 1996 no one Dealer accounted for more than 5% of the aggregate
balance of the Receivables in the Trust. At June 30, 1996 no one Manufacturer
was obligated under Floorplan Agreements relating to Receivables in the Trust
aggregating more than 10% of the aggregate balance of such Receivables. No
prediction can be made as to what percentage of the Receivables in the future
may be obligations of a single Dealer or be related to a single Manufacturer
under its Floorplan Agreements. See "Description of the Certificates--
Ineligible Receivables and the Overconcentration Amounts."
DELINQUENCY EXPERIENCE
The following table sets forth the delinquency experience as of the dates
indicated for the entire U.S. portfolio. Because the Eligible Accounts from
which the Receivables in the Trust will be generated constitute only a portion
of DFS's entire U.S. portfolio, the actual delinquency experience with respect
to the Eligible Accounts may be different. There can be no assurance that the
delinquency experience for the Receivables in the future will be similar to the
experience shown below.
DELINQUENCY EXPERIENCE FOR TOTAL U.S. PORTFOLIO
RECEIVABLES BALANCES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF JULY 31, ------------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Principal
Balance................ $3,713.3 $4,124.0 $3,560.3 $2,924.6 $2,757.4 $2,186.1
SAU/NSF 31 days or
more(1)................ 2.2 2.4 1.2 1.9 5.4 7.7
Scheduled Payment Plan
past due 31 days or
more(2)................ 3.1 13.7 2.7 0.8 1.3 3.6
-------- -------- -------- -------- -------- --------
Total................. $ 5.3 $ 16.1 $ 3.9 $ 2.7 $ 6.7 $ 11.3
======== ======== ======== ======== ======== ========
SAU/NSF 31 days or
more/Aggregate
Principal Balance...... 0.06% 0.06% 0.03% 0.06% 0.20% 0.35%
Scheduled Payment Plan
past due 31 days or
more/Aggregate
Principal Balance...... 0.08% 0.33% 0.08% 0.03% 0.05% 0.16%
-------- -------- -------- -------- -------- --------
Total/Aggregate
Principal Balance...... 0.14% 0.39% 0.11% 0.09% 0.24% 0.52%
======== ======== ======== ======== ======== ========
</TABLE>
- --------
(1) A "SAU/NSF" Account is one that is deemed delinquent when (i) in the case
of a Pay-as-Sold receivable, there is an unpaid receivable balance as to
which the related product has been sold and such receivable balance not
paid by the related Dealer or (ii) a check from the related Dealer has been
returned because of insufficient funds.
(2) Includes an immaterial amount of Canadian receivables, which are not part
of the U.S. portfolio.
LOSS EXPERIENCE
The following table sets forth DFS's average principal receivables balance
and loss experience for each of the periods shown with respect to its U.S.
portfolio. Because the Eligible Accounts will be only a portion of the entire
U.S. portfolio, actual loss experience with respect to the Eligible Accounts
may be different. There can be no assurance that the loss experience for the
Receivables in the future will be similar to the historical experience set
forth below with respect to the U.S. portfolio. The historical experience set
forth below includes the effect of the financial obligations of Manufacturers
in respect of repossessed products as described above under "The Dealer
Floorplan Financing Business of DFS--Floorplan Agreements with Manufacturers."
If Manufacturers are not able to perform such obligations in the future, the
loss experience in respect of the U.S. portfolio and the Receivables may be
adversely affected. See "Risk Factors--Trust's Relationship to DFS."
37
<PAGE>
LOSS EXPERIENCE FOR THE U.S. PORTFOLIO
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED JULY 31, ------------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables Balance(1). $3,943.6 $4,014.1 $3,135.4 $2,712.1 $2,321.6 $1,826.5
Gross Losses............ 6.8 13.5 12.5 14.6 29.1 24.5
Net Losses(2)........... 4.2 7.9 7.1 10.2 24.3 17.3
Net Losses/Liquidations. 0.03% 0.03% 0.03% 0.06% 0.20% 0.20%
Net Losses/Average
Principal Receivables
Balance(3)............. 0.11% 0.20% 0.23% 0.38% 1.05% 0.95%
</TABLE>
- --------
(1) Average Principal Receivables Balance is the average weekly principal
balances for the twelve months ending on the last day of the period.
(2) Net Losses in any period are gross losses less recoveries for such period.
Recoveries include recoveries from collateral security in addition to
recoveries from the products.
(3) The percentage indicated for the seven months ended July 31, 1996 is not
annualized.
AGING EXPERIENCE
The following table provides the age distribution of inventory for all
dealers in the U.S. portfolio, as a percentage of total principal outstanding
at the date indicated. Because the Eligible Accounts will only be a portion of
the entire U.S. portfolio, actual age distribution with respect to the
Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE U.S. PORTFOLIO(1)
(DOLLARS IN MILLIONS)
RECEIVABLE BALANCES
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF JULY 31, AS OF JULY 31, --------------------------------------
DAYS 1996 1995 1995 1994 1993 1992
- ---- -------------- -------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1-30.................... $ 978.4 $1,022.8 $1,052.3 $1,158.2 $ 932.2 $ 801.5
31-60................... 571.1 580.9 767.3 615.2 440.9 488.2
61-90................... 280.0 221.7 364.6 293.0 213.0 277.5
91-120.................. 214.6 185.7 275.6 249.0 170.8 205.7
121-180................. 326.5 288.1 291.6 243.4 171.1 166.5
181-270................. 289.3 261.5 222.6 169.5 125.8 129.6
Over 270................ 424.3 310.5 391.3 239.3 192.8 250.6
-------- -------- -------- -------- -------- --------
Total................... $3,084.2 $2,871.2 $3,365.3 $2,967.6 $2,246.6 $2,319.6
======== ======== ======== ======== ======== ========
PERCENTAGE OF RECEIVABLES BALANCE
<CAPTION>
AS OF DECEMBER 31,
AS OF JULY 31, AS OF JULY 31, --------------------------------------
DAYS 1996 1995 1995 1994 1993 1992
- ---- -------------- -------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1-30.................... 31.7% 35.6% 31.3% 39.0% 41.5% 34.6%
31-60................... 18.5 20.2 22.8 20.7 19.6 21.0
61-90................... 9.1 7.7 10.8 9.9 9.5 12.0
91-120.................. 7.0 6.5 8.2 8.4 7.6 8.9
121-180................. 10.6 10.0 8.7 8.2 7.6 7.2
181-270................. 9.4 9.1 6.6 5.7 5.6 5.6
Over 270................ 13.8 10.8 11.6 8.1 8.6 10.8
-------- -------- -------- -------- -------- --------
Total................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
======== ======== ======== ======== ======== ========
</TABLE>
- --------
(1) Excludes asset based receivables and receivables secured by accounts
receivable. Age distribution is not available prior to March 31, 1992.
38
<PAGE>
DEUTSCHE FINANCIAL SERVICES CORPORATION
DFS was incorporated in Nevada in 1975. It is an indirect, wholly-owned
subsidiary of Deutsche Bank AG. DFS was formerly known as ITT Commercial
Finance Corp. The stock of ITT Commercial Finance Corp. was acquired by
Deutsche Financial Services Holding Corporation, a wholly owned subsidiary of
Deutsche Bank North America Holding Corporation, on May 2, 1995. Effective
January 1, 1997, Deutsche Financial Services Holding Corporation will be
merged into DFS. DFS will be the surviving corporation. Following the
aforementioned merger, Melvin F. Brown, President and Chief Executive Officer
of DFS will become its Vice Chairman; Robert M. Martin, currently President
and Chief Executive Officer of Deutsche Financial Services Holding
Corporation, will become President and Chief Executive Officer of DFS; and
Geoffrey D. Lyon, Executive Vice President of DFS, will become President of
the inventory finance group of DFS. DFS is a financial services company which
primarily provides inventory financing, accounts receivable financing and
asset based financing to dealers, distributors and manufacturers of consumer
and commercial durable goods. Industries served by DFS include, but are not
limited to: computers and computer products, manufactured housing, recreation
vehicles, boats and motors, consumer electronics and appliances, keyboards and
other musical instruments, industrial and agricultural equipment, office
automation products, snowmobiles, and motorcycles. As of June 30, 1996, none
of the Dealers were affiliates of DFS and none of the products being financed
by the Receivables were made or distributed by affiliates of DFS. In addition
to owning the stock of DFS, Deutsche Financial Services Holding Corporation is
in the business of providing equipment loans and leases, franchisee loans,
vendor finance programs and private label retail finance programs. Following
the aforementioned merger, DFS will continue to engage in such businesses of
Deutsche Financial Services Holding Corporation.
As of June 30, 1996, DFS was providing inventory or accounts receivable
financing to over 13,000 dealers in the United States and its approved U.S.
manufacturer/distributor list exceeded 1,100.
DFS has offices in major metropolitan areas of the United States. Its
principal executive offices are located at 655 Maryville Centre Drive, St.
Louis, Missouri 63141-5832. The telephone number of such office is (314) 523-
3000.
DEUTSCHE BANK AG
Deutsche Bank AG is the largest banking institution in the Federal Republic
of Germany, with total assets at December 31, 1995 in excess of $500 billion.
The Deutsche Bank group has operations in over 50 countries and employs over
70,000 people. With a presence in all of the world's major financial centers,
the Deutsche Bank group offers a full range of financial services including
private banking, commercial and institutional banking, and investment banking
through Deutsche Morgan Grenfell Inc. ("Deutsche Morgan Grenfell").
DFS and Deutsche Morgan Grenfell are each indirect, wholly-owned
subsidiaries of Deutsche Bank AG. DFS is the limited partner of the Seller and
the parent of Deutsche FRI, the general partner of the Seller.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal with respect to the Certificates will not be payable until the
Distribution Date in October 1999 (the "Expected Final Payment Date"), unless
an Early Amortization Event has occurred. Full amortization of the
Certificates by the Expected Final Payment Date depends on, among other
things, repayment by Dealers of the Receivables and may not occur if Dealer
payments are insufficient therefor. Because the Receivables are, in large
part, paid upon retail sale of the related product, the timing of such
payments is uncertain. In addition, there is no assurance that DFS will
generate additional Receivables under the Accounts or that any particular
pattern of payments will occur. See "Description of the Certificates--
Interest" and "--Principal" and "The Dealer Floorplan Financing Business of
DFS."
The amount of new Receivables generated in any month and monthly payment
rates on the Receivables may vary because of seasonal variations in product
sales and inventory levels, retail incentive programs provided by product
manufacturers and various economic factors affecting product sales generally.
The following table sets forth the highest and lowest monthly payment rates
for DFS's U.S. portfolio during any month in the periods shown and the average
of the monthly payment rates for all months during the periods shown, in each
case
39
<PAGE>
calculated as the percentage equivalent of a fraction, the numerator of which
is the aggregate of all collections of principal plus non-cash reductions in
the principal balances of the Receivables in the U.S. portfolio during the
period and the denominator of which is the average aggregate principal
balances of such Receivables for such period. There can be no assurance that
the rate of Principal Collections will be similar to the historical experience
set forth below. Because the Eligible Accounts will be only a portion of the
entire U.S. portfolio, actual monthly payment rates with respect to the
Eligible Accounts may be different. DFS believes that the increase in payment
rates since 1991 is due in part to Dealers maintaining lower levels of
inventory as well as to an increasing percentage in the U.S. portfolio of
Receivables which liquidate more frequently.
MONTHLY PAYMENT RATES FOR THE U.S. PORTFOLIO
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------- ------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month................................ 56% 57% 62% 61% 53% 46% 44%
Lowest Month................................. 50% 49% 49% 43% 35% 37% 33%
Average of the Months in the Period.......... 53% 53% 55% 53% 48% 42% 40%
</TABLE>
Because (i) an Early Amortization Event may occur which would initiate an
Early Amortization Period, (ii) the Seller may exercise its option to
repurchase the Certificateholders' Interest, or (iii) the Seller may have to
repurchase the Certificateholders' Interest upon the breach of certain
representations and warranties, the final distribution of principal on a class
of Certificates may be made prior to the scheduled termination of the
Revolving Period or prior to the Expected Final Payment Date. See "Description
of the Certificates--Early Amortization Events," "--Optional Repurchase" and
"--Representations and Warranties." Certificateholders will bear the risk of
being able to reinvest principal received on the Certificates at a yield at
least equal to their yield on the Certificates. If an investor acquires a
Certificate at a discount, the repayment of principal of the Certificate later
than on the Expected Final Payment Date will likely result in a lower than
anticipated yield. In addition, if an investor acquires Certificates at a
premium, repayment of principal at a rate that is faster than the rate
anticipated by such investor will result in a yield to that investor that is
lower than anticipated by that investor.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, as supplemented by the Supplement relating to the Certificates (as
so supplemented and as further supplemented or amended from time to time, the
"Pooling and Servicing Agreement"), among the Seller, as Seller of the
Receivables, DFS, as Servicer of the Receivables, and the Trustee,
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus is a part. Copies of the Pooling and Servicing Agreement
will be filed with the Luxembourg Stock Exchange following the issuance of the
Certificates. The Trustee will make available for inspection a copy of the
Pooling and Servicing Agreement (without exhibits or schedules) to
Certificateholders of record on written request. See "--The Trustee" below.
The following summary describes certain terms of the Pooling and Servicing
Agreement, but it does not purport to be complete and is qualified in its
entirety by reference to the Pooling and Servicing Agreement.
The Certificates will evidence undivided beneficial interests in the assets
of the Trust allocated to the Certificateholders' Interest representing the
right to receive from such Trust assets funds up to (but not in excess of) the
amounts required to make payments of interest on and principal of the
Certificates pursuant to the Pooling and Servicing Agreement.
The Offered Certificates will initially be represented by one or more
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the Seller, the "Depository"), except as set
forth below. The Offered Certificates will be available for purchase in
minimum denominations of $1,000
40
<PAGE>
and integral multiples thereof in book-entry form. The Seller has been
informed by DTC that DTC's nominee will be Cede & Co. ("Cede"). Accordingly,
Cede is expected to be the holder of record of the Offered Certificates. No
Certificate Owner will be entitled to receive a certificate representing such
person's beneficial interest in the Offered Certificates. Unless and until
Definitive Certificates are issued under the limited circumstances described
herein, all references herein to actions by Class A or Class B
Certificateholders shall refer to actions taken by DTC upon instructions from
its Participants (as defined below), and all references herein to
distributions, notices, reports and statements to Class A and Class B
Certificateholders shall refer to distributions, notices, reports and
statements to Cede, as the registered holder of the Offered Certificates. See
"--Book-Entry Registration" and "--Definitive Certificates" below.
INTEREST
Interest on the respective outstanding principal balance of each class of
Offered Certificates will accrue at the applicable Certificate Rate for such
class and will be payable to the Certificateholders on each Interest Payment
Date; provided, however, that during an Early Amortization Period, interest
will be paid on each Distribution Date; provided further, however, that unless
an Early Amortization Period has occurred prior to the Distribution Date in
December 1996, the first Interest Payment Date will be January 15, 1997.
Certificateholder Non-Principal Collections will be deposited into the
Interest Funding Account and used to make interest payments to the
Certificateholders on each Interest Payment Date. Interest to be deposited
into the Interest Funding Account on each Distribution Date will accrue from
and including the preceding Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing Date) to but excluding such
Distribution Date (each such period, an "Interest Period"). Interest for any
Distribution Date will be calculated on the basis of the actual number of days
in the related Interest Period divided by 360 and interest due but not
deposited into the Interest Funding Account on any Distribution Date will be
deposited into the Interest Funding Account on the next Distribution Date.
Interest payable but not paid to Certificateholders on an Interest Payment
Date will be payable on the next Interest Payment Date together with, to the
extent lawfully payable, interest on such amount at the applicable Certificate
Rate to the extent described under "Description of the Certificates--
Distributions from the Collection Account; Reserve Fund." Interest payments on
the Offered Certificates will be derived from Certificateholder Non-Principal
Collections for the related Collection Period, withdrawals, if any, from the
Reserve Fund, Investment Proceeds, if any, and, under certain circumstances,
collections allocable to the Seller.
Interest on the outstanding principal balance of the Class A Certificates
will accrue for each Interest Period at a rate per annum equal to the lesser
of (i) LIBOR (calculated as described below) plus % per annum and (ii) the
related Net Receivables Rate (as described below) (the "Class A Certificate
Rate"). Interest on the outstanding principal balance of the Class B
Certificates will accrue for each Interest Period at a rate per annum equal to
the lesser of (i) LIBOR plus % per annum and (ii) the related Net
Receivables Rate (the "Class B Certificate Rate"). Interest on the outstanding
principal balance of the Class C Certificates will accrue for each Interest
Period at a rate per annum equal to the lesser of (i) LIBOR plus % per
annum and (ii) the related Net Receivables Rate (the "Class C Certificate
Rate" and, together with the Class A Certificate Rate and the Class B
Certificate Rate, the "Certificate Rates"). The "Net Receivables Rate" with
respect to each Distribution Date immediately following an Interest Period is
(i) the weighted average of the interest rates borne by the Receivables during
the second Collection Period preceding such Distribution Date (interest
payments on the Receivables at such rates will be due and payable in the
Collection Period preceding such Distribution Date), plus (ii) the product of
(x) the Monthly Payment Rate for the Collection Period preceding such
Distribution Date, (y) the Discount Factor for such Distribution Date and (z)
twelve, less (iii) 2% per annum, unless the Servicing Fee has been waived for
such Collection Period. The "Monthly Payment Rate" for a Collection Period is
the percentage equivalent of a fraction, the numerator of which is the
Principal Collections (without deducting therefrom the discount portion)
collected during such Collection Period and the denominator of which is the
average daily aggregate principal balance of the Receivables (without
deducting therefrom the discount portion) for such Collection Period.
If the applicable Certificate Rate for a class of Certificates for any
Distribution Date is based on the Net Receivables Rate, the "Carry-Over
Amount" for such class, which equals the excess of (a) Class A Monthly
Interest, Class B Monthly Interest or Class C Monthly Interest, as applicable,
for such Distribution Date determined as if the applicable Certificate Rate
were based on the LIBOR formula set forth below over (b) the actual Class A
Monthly Interest, Class B Monthly Interest or Class C Monthly Interest, as
applicable, for such
41
<PAGE>
Distribution Date, will be paid to the holders of the applicable class of
Certificates on subsequent Interest Payment Dates to the extent available from
Non-Principal Collections and Investment Proceeds after distribution of the
Monthly Interest for such Interest Payment Date. The ratings of the Offered
Certificates do not address the likelihood of the payment of any Carry-Over
Amount.
The Class B Certificates will be subordinated to fund payments of interest
(and principal) on the Class A Certificates. See "Description of the
Certificates--Distributions."
"Adjustment Date" shall mean with respect to any Interest Period, the second
London Business Day prior to the Interest Payment Date preceding such Interest
Period (and with respect to an Interest Period commencing on an Interest
Payment Date, the second London Business Day preceding such Interest Payment
Date); provided that with respect to the first Interest Period and each other
Interest Period prior to the first Interest Payment Date, the Adjustment Date
will be a date determined prior to the Closing Date.
"LIBOR" shall mean, with respect to any Interest Period, the offered rates
for deposits in United States dollars having a maturity of three months (the
"Index Maturity") commencing on the related Adjustment Date which appears on
Telerate Page 3750 as of approximately 11:00 A.M., London time, on such date of
calculation. If at least two such offered rates appear on Telerate Page 3750,
LIBOR will be the arithmetic mean (rounded upwards, if necessary, to the
nearest one-sixteenth of a percent) of such offered rates. If fewer than two
such quotations appear, LIBOR with respect to such Interest Period will be
determined at approximately 11:00 A.M., London time, on such Adjustment Date on
the basis of the rate at which deposits in United States dollars having the
Index Maturity are offered to prime banks in the London interbank market by
four major banks in the London interbank market selected by the Trustee and in
a principal amount equal to an amount of not less than US $1,000,000 and that
is representative for a single transaction in such market at such time. The
Trustee will request the principal London office of each of such banks to
provide a quotation of its rate. If at least two such quotations are provided,
LIBOR will be the arithmetic mean (rounded upwards as aforesaid) of such
quotations. If fewer than two quotations are provided, LIBOR with respect to
such Interest Period will be the arithmetic mean (rounded upwards as aforesaid)
of the rates quoted at approximately 11:00 A.M., New York City time, on such
Adjustment Date by three major banks in New York, New York selected by the
Trustee for loans in United States dollars to leading European banks having the
Index Maturity and in a principal amount equal to an amount of not less than US
$1,000,000 and that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, LIBOR in effect for the applicable
period will be LIBOR in effect for the previous period; provided further,
however, that on any Adjustment Date during the Early Amortization Period, the
"Index Maturity" shall equal one month.
"London Business Day" shall mean any business day on which dealings in
deposits in United States dollars are transacted in the London interbank
market.
PRINCIPAL
In general, no principal payments will be made to the Certificateholders
until the Expected Final Payment Date or, upon the occurrence of an Early
Amortization Event, until the first Distribution Date following such event. On
each Distribution Date with respect to the Revolving Period, Principal
Collections allocable to the Certificateholders' Interest, subject to certain
limitations, will either be (a) allocated to the Excess Funding Account as
described herein, (b) allocated to one or more Series which are in
amortization, early amortization or accumulation periods to cover principal
payments due to the investor certificateholders of any such Series or which
provide for excess funding accounts or similar arrangements or (c) if no such
Series is then amortizing or accumulating principal or otherwise does not
provide for excess funding accounts or similar arrangements, paid to the Seller
to maintain the Certificateholders' Interest or held as Unallocated Principal
Collections. See
"--Allocation Percentages--Principal Collections for all Series" and "--
Distributions from the Collection Account; Reserve Fund--Principal Collections"
below.
Unless and until an Early Amortization Event shall have occurred and until
the outstanding principal balance of the Certificates is paid in full, on each
Distribution Date with respect to the Accumulation Period, Principal
Collections allocable to the Certificateholders' Interest plus certain other
amounts comprising Monthly Principal will no longer be paid for the benefit of
another Series or to the Seller as described above but instead an amount
42
<PAGE>
thereof up to the Controlled Distribution Amount for each such Distribution
Date will be deposited in the Principal Funding Account. The funds on deposit
in the Principal Funding Account (including any amounts deposited therein from
the Excess Funding Account) will be used to pay the outstanding principal
balance of the Certificates on the Expected Final Payment Date. If on such date
the amount in the Principal Funding Account is less than the outstanding
principal balance of the Certificates, the amounts in such accounts will
nevertheless be distributed to Certificateholders on such date, the Early
Amortization Period will commence and on each Distribution Date thereafter the
Certificateholders will receive distributions of Monthly Principal and Monthly
Interest until the outstanding principal balance of the Certificates has been
paid in full or the Termination Date has occurred.
It is expected that the final principal payment with respect to the Offered
Certificates will be made on the Expected Final Payment Date, but the principal
of the Certificates may be paid earlier or, depending on the actual payment
rate on the Receivables, later, as described under "Risk Factors--Effect of
Timing of Origination of, and Payments on, Receivables on Payments on the
Certificates." If the Receivables are sold or repurchased as described below,
principal payments on the Certificates will be made on the Distribution Date
following such sale or repurchase. See "--Allocation Percentages--Principal
Collections for all Series" and "--Distributions from the Collection Account;
Reserve Fund--Principal Collections."
The Class B Certificates will be subordinated to fund payments of principal
(and interest) on the Class A Certificates. See "Description of the
Certificates--Distributions."
Distributions on the Certificates will be made on each Distribution Date or
Interest Payment Date to the holders of Certificates in whose names the
Certificates were registered (expected to be Cede, as nominee of DTC, with
respect to the Offered Certificates) at the close of business on the day
preceding such Distribution Date or Interest Payment Date (or, if Definitive
Certificates are issued, on the last day of the preceding calendar month) (each
a "Record Date"). However, the final distribution on the Certificates will be
made only upon presentation and surrender of the Certificates. Distributions
will be made to DTC in immediately available funds.
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York UCC and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations ("Participants") and facilitate
the clearance and settlement of securities transactions between Participants
through electronic computerized book-entry changes in their accounts, thereby
eliminating the need for physical movement of certificates. Participants
include the Underwriters, securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Offered Certificates under the DTC system must be made by or
through Participants, which will receive a credit for the Offered Certificates
on DTC's records. The ownership interest of each actual Certificate Owner is in
turn to be recorded on the Participants' and Indirect Participants' records.
Certificate Owners will not receive written confirmation from DTC of their
purchase, but Certificate Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant or Indirect Participant through which the
Certificate Owner entered into the transaction. Transfers of ownership
interests in the Offered Certificates are to be accomplished by entries made on
the books of Participants acting on behalf of Certificate Owners. Certificate
Owners will not receive certificates representing their ownership interest in
Offered Certificates, except in the event that use of the book-entry system for
the Offered Certificates is discounted.
43
<PAGE>
To facilitate subsequent transfers, all Offered Certificates deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede. The deposit of Offered Certificates with DTC and their registration in
the name of Cede effects no change in beneficial ownership. DTC has no
knowledge of the actual Certificate Owners; DTC's records reflect only the
identity of the Participants to whose accounts such Offered Certificates are
credited, which may or may not be the Certificate Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Certificate Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede will consent or vote with respect to the Offered
Certificates. Under its usual procedures, DTC mails an omnibus proxy to the
issuer as soon as possible after the record date, which assigns Cede's
consenting or voting rights to those Participants to whose accounts the Offered
Certificates are credited on the record date (identified in a listing attached
thereto).
Principal and interest payments on the Offered Certificates will be made to
DTC. DTC's practice is to credit Participants' accounts on the applicable
Distribution Date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such Distribution Date. Payments by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the Trustee or the Seller, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Trustee, disbursement of such
payments to Participants shall be the responsibility of DTC, and disbursement
of such payments to the Certificate Owners shall be the responsibility of
Participants and Indirect Participants.
Under a book-entry format, Class A and Class B Certificateholders will
receive payments after the applicable Distribution Date because, while payments
are required to be forwarded to Cede, as nominee for DTC, on each such date,
DTC will forward such payments to its Participants which thereafter will be
required to forward them to Indirect Participants or Class A or Class B
Certificateholders. It is anticipated that the only Class A and Class B
Certificateholder (as such terms are used in the Pooling and Servicing
Agreement) will be Cede, as nominee of DTC, and that Certificate Owners will
not be recognized by the Trustee as Class A or Class B Certificateholders under
the Pooling and Servicing Agreement.
Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants and certain banks, the ability of a Certificate Owner
to pledge Offered Certificates to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such Offered
Certificates, may be limited due to the lack of a physical certificate for such
Offered Certificates.
DTC may discontinue providing its services as securities depository with
respect to the Offered Certificates at any time by giving reasonable notice to
the Seller or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates are
required to be printed and delivered.
Cedel Bank is incorporated under the laws of Luxembourg as a professional
depository. Cedel Bank holds securities for its participating organizations
("Cedel Participants") and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic book-
entry changes in accounts of Cedel Participants, thereby eliminating the need
for physical movement of certificates. Cedel Bank provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel Bank interfaces with domestic markets in several
countries. As a professional depository, Cedel Bank is subject to regulation by
the Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain
44
<PAGE>
other organizations. Indirect access to Cedel Bank is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedel Participant, either directly or
indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Euroclear includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear
through or maintain a custodial relationship with a Euroclear Participant,
either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission. Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "Terms and Conditions"). The Terms
and Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to the Offered Certificates held through Cedel
Bank or Euroclear will be credited to the cash accounts of Cedel Participants
or Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Federal Income Tax Considerations" and "State and Local
Tax Consequences." Cedel Bank or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Class A or Class B
Certificateholder under the Pooling and Servicing Agreement on behalf of a
Cedel Participant or Euroclear Participant only in accordance with its relevant
rules and procedures and subject to its Depositary's ability to effect such
actions on its behalf through DTC.
Holders of Offered Certificates may hold their Offered Certificates through
DTC (in the United States) or Cedel Bank or Euroclear (in Europe) if they are
participants of such systems, or indirectly through organizations which are
participants in such systems.
The Offered Certificates will initially be registered in the name of Cede &
Co., the nominee of DTC. Cedel Bank and Euroclear will hold omnibus positions
on behalf of their participants through customers' securities accounts in Cedel
Bank's and Euroclear's names on the books of their respective depositories
which in turn will hold such positions in customers' securities accounts in the
depositories' names on the books of DTC. Citibank, N.A. ("Citibank") will act
as depositary for Cedel Bank and Morgan Guaranty Trust Company of New York
("Morgan") will act as depositary for Euroclear (in such capacities,
individually the "Depositary" and collectively the "Depositaries").
45
<PAGE>
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly through
DTC, on the one hand, and directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing system
by its Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC,
and making or receiving payment in accordance with normal procedures for same-
day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time zone differences, credits of securities received in Cedel
Bank or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel
Bank or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel
Bank or Euroclear cash account only as of the business day following settlement
in DTC. For information with respect to tax documentation procedures relating
to the Offered Certificates, see "Federal Income Tax Considerations--Foreign
Investors."
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Certificates among
participants of DTC, Cedel Bank and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
DEFINITIVE CERTIFICATES
Class A and Class B Certificates will be issued in fully registered,
certificated form to Certificate Owners or their nominees ("Definitive
Certificates"), 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
properly discharge its responsibilities as Depository with respect to the Class
A and Class B Certificates, as applicable, and the Trustee or the Seller is
unable to locate a qualified successor, (ii) the Seller, at its option, elects
to terminate the book-entry system through DTC with respect to such class or
(iii) after the occurrence of a Servicer Default, Class A or Class B
Certificateholders, as applicable, representing not less than 50% of the
aggregate unpaid principal amount of such Certificates advise the Trustee and
DTC through Participants in writing that the continuation of a book-entry
system through DTC (or a successor thereto) is no longer in the best interests
of such Certificateholders.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates for the Class A or Class B
Certificates, as applicable. Upon surrender by DTC of the certificate or
certificates representing such Class A or Class B Certificates and instructions
for re-registration, the Trustee will issue such Class A or Class B
Certificates, as applicable, in the form of Definitive Certificates, and
thereafter the Trustee will recognize the holders of such Definitive
Certificates as Class A or Class B Certificateholders under the Pooling and
Servicing Agreement ("Holders"). In the event that Definitive Certificates are
issued or DTC ceases to be the clearing agency for the Class A or Class B
Certificates, the Pooling and Servicing Agreement provides that the Class A or
Class B Certificateholders will be notified of such event.
46
<PAGE>
Distributions of principal of and interest on the Offered Certificates will
be made by the Trustee directly to Holders in accordance with the procedures
set forth herein and in the Pooling and Servicing Agreement. See "--
Distributions from the Collection Account; Reserve Fund" and "--Distributions"
below. Distributions on each Distribution Date or Interest Payment Date will be
made to Holders in whose names the Definitive Certificates were registered at
the close of business on the related Record Date. 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 distribution on any Certificate (whether
Definitive Certificates or the certificate or certificates registered in the
name of Cede representing the Certificates), however, will be made only upon
presentation and surrender of such Certificate on the final payment date at
such office or agency as is specified in the notice of final distribution to
Certificateholders. The Trustee will provide such notice to registered
Certificateholders not later than the fifth day of the month of the final
distribution.
Definitive Certificates will be transferable or exchangeable at the offices
of the Trustee, which shall initially be 450 West 33rd Street, New York, New
York 10001. 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.
SUPPLEMENTAL CERTIFICATES
The Pooling and Servicing Agreement provides that the Seller may exchange a
portion of the certificate evidencing the Seller's Interest (the "Seller's
Certificate") for another certificate (a "Supplemental Certificate") for
transfer or assignment to a person designated by the Seller upon the execution
and delivery of a supplement to the Pooling and Servicing Agreement (which
supplement shall be subject to the amendment section of the Pooling and
Servicing Agreement to the extent that it amends any of the terms of the
Pooling and Servicing Agreement); provided that (a) the Seller shall after
giving effect thereto have an interest in the Pool Balance of not less than 2%
of the Pool Balance, (b) the Seller shall have delivered to the Trustee, each
Rating Agency and any Enhancement Provider a Tax Opinion (as defined below)
with respect to such exchange and (c) the Seller shall have delivered to the
Trustee evidence of satisfaction of the Rating Agency Condition. Any subsequent
transfer or assignment of a Supplemental Certificate is also subject to the
conditions described in clauses (b) and (c) in the preceding sentence.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that the Trust will issue two
types of certificates: (i) one or more Series of investor certificates
(including the Certificates) which are transferable and have the
characteristics described below and (ii) the Seller's Certificate (and any
Supplemental Certificate) which will evidence the Seller's Interest and will be
transferable only upon the satisfaction of certain conditions described above
under "--Supplemental Certificates." The Pooling and Servicing Agreement
provides that, pursuant to one or more Supplements, the Seller may cause the
Trustee to issue one or more new Series. Under the Pooling and Servicing
Agreement, the Seller may specify, among other things, with respect to any
Series: (a) its name or designation, (b) its initial principal amount, (c) its
certificate rate (or the method for determining its certificate rate), (d) a
date on which it will begin its amortization period or controlled amortization
period, if any, (e) the method for allocating principal and interest to
certificateholders, (f) the percentage used to calculate monthly servicing
fees, (g) the issuer and terms of any Enhancement with respect thereto or the
level of subordination provided by the Seller's Interest, (h) the terms on
which the certificates of such Series may be exchanged for certificates of
another Series, be subject to repurchase, optional redemption or mandatory
redemption by the Seller or be remarketed by any remarketing agent, (i) the
series termination date and (j) any other terms permitted by the Pooling and
Servicing Agreement (all such terms, the "Principal Terms" of such Series). The
Seller may offer any Series under a prospectus or other disclosure document in
transactions either registered under the Securities Act or exempt from
registration thereunder, directly or through one or more underwriters or
placement agents. There is no limit to the number of Series that may be issued
under the Pooling and Servicing Agreement.
47
<PAGE>
The Pooling and Servicing Agreement provides that the Seller may specify
Principal Terms of a new Series such that each Series has an amortization
period or accumulation period which may have a different length and begin on a
different date than the amortization period or accumulation period for any
other Series. Further, one or more Series may be in their early amortization
periods or accumulation periods while other Series are not. Thus, certain
Series may be amortizing or accumulating principal, while other Series are not
amortizing or accumulating principal. Moreover, different Series may have the
benefits of different forms of Enhancement issued by different entities. Under
the Pooling and Servicing Agreement, the Trustee will hold each form of
Enhancement only on behalf of the Series (or a particular class within a
Series) to which it relates. The Pooling and Servicing Agreement also provides
that the Seller may specify different certificate rates and monthly servicing
fees with respect to each Series (or a particular class within a Series). In
addition, the Seller has the option under the Pooling and Servicing Agreement
to vary between Series (or classes within a Series) the terms upon which a
Series (or classes within a Series) may be repurchased by the Seller.
Under the Pooling and Servicing Agreement and pursuant to a Supplement, a new
Series may be issued only upon the satisfaction of certain specified
conditions. The Seller may cause the issuance of a new Series by notifying the
Trustee at least five business days in advance of the applicable Series
Issuance Date. The Pooling and Servicing Agreement provides that the Trustee
will issue any such Series only upon delivery to it of the following: (i) a
Supplement in form satisfactory to the Trustee signed by the Seller and the
Servicer and specifying the Principal Terms of such Series, (ii) the form of
any Enhancement and any related agreement, (iii) an opinion of counsel to the
effect that, for federal income and Missouri income tax purposes, (x) such
issuance will not adversely affect the characterization of the certificates
(including the Certificates) of any outstanding Series or class as debt or as
partnership interests, (y) such issuance will not cause a taxable event to any
certificateholders (including the Certificateholders) (an opinion of counsel to
the effect referred to in clauses (x) and (y) with respect to any action is
referred to herein as a "Tax Opinion") and (z) such new Series will be
characterized as debt or as partnership interests and (iv) evidence of
satisfaction of the Rating Agency Condition. Such issuance is also subject to
the conditions that (a) the Seller shall have represented and warranted that
such issuance shall not, in the reasonable belief of the Seller, cause an Early
Amortization Event to occur and (b) after giving effect to such issuance, the
Seller's interest in the Pool Balance shall not be less than 2% of the Pool
Balance. In addition, it will be a condition to the issuance of any new Series
that all of the conditions listed in the preceding sentence would be satisfied
if the Delayed Funding Receivables in the Trust were not in the Trust; provided
that this condition will be eliminated if the Seller has received evidence of
satisfaction of the Rating Agency Condition. Upon satisfaction of all such
conditions, the Trustee will issue such Series.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
On the date on which the initial Series was issued by the Trust (the "Initial
Closing Date"), the Seller sold and assigned to the Trust all of its right,
title and interest in and to the Receivables and the related Collateral
Security as of the Initial Cut-Off Date, all receivables thereafter created in
the Accounts and its interests in the related Collateral Security and the
Receivables Contribution and Sale Agreement, and the proceeds of all of the
foregoing. See "The Trust."
In connection with the contribution and sale of the Receivables to the Seller
by DFS and the transfer of the Receivables by the Seller to the Trust, DFS
indicated in their books and records, which may include computer records, that
the Receivables in the Accounts and the related Collateral Security had been
conveyed to the Trust. In addition, the Seller provided to the Trustee a
computer file or microfiche or written list containing a true and complete list
showing for each Account, as of the Initial Cut-Off Date, (i) its account
number and (ii) the outstanding balance of Principal Receivables in such
Account. DFS has retained and will retain and will not deliver to the Trustee
any other records or agreements relating to the Receivables. Except as set
forth above, the records and agreements relating to the Receivables have not
been and will not be segregated from those relating to other accounts of DFS,
and the physical documentation relating to the Receivables has not and will not
be stamped or marked to reflect the transfer of the Receivables to the Trust.
The Seller filed one or more financing statements in accordance with Missouri
law (and, with respect to Deutsche BSC, Georgia law) to perfect the
48
<PAGE>
Trust's interest in the Receivables, the Collateral Security, the Receivables
Contribution and Sale Agreement and the proceeds thereof. See "Risk Factors--
Certain Legal Aspects" and "Certain Legal Aspects of the Receivables."
REPRESENTATIONS AND WARRANTIES
The Seller has made and will make representations and warranties to the
Trustee and the Trust relating to the Accounts, the Receivables and the
Collateral Security to the effect, among other things, that (a) as of the
Initial Cut-Off Date, the Closing Date and the date of issuance of any other
Series (a "Series Issuance Date") (or, in the case of an Additional Account, as
of the cut-off date for such Additional Account (the "Additional Cut-Off Date")
and the date the related Receivables are transferred to the Trust (an "Addition
Date")), each Account or Additional Account was or is an Eligible Account or,
if it was or is an Ineligible Account on such date, such Account is being
removed from the Trust in accordance with the requirements of the Pooling and
Servicing Agreement, (b) as of the Initial Cut-Off Date (or as of the
Additional Cut-Off Date, in the case of any Additional Accounts) or as of the
date any future Receivable is generated (a "Transfer Date"), each Receivable
conveyed to the Trust is an Eligible Receivable or, if such Receivable is not
an Eligible Receivable, such Receivable is conveyed to the Trust as described
below under "--Eligible Accounts and Eligible Receivables," (c) each Receivable
and all Collateral Security conveyed to the Trust on the Initial Closing Date
and on each Transfer Date or, in the case of Additional Accounts, on the
Addition Date, and all of the Seller's right, title and interest in the
Receivables Contribution and Sale Agreement, have been conveyed to the Trust
free and clear of any liens, and (d) all appropriate consents and governmental
authorizations required to be obtained by the Seller in connection with the
conveyance of each such Receivable or Collateral Security have been duly
obtained. If the Seller breaches any representation and warranty described in
this paragraph and such breach remains uncured for 30 days or such longer
period as may be agreed to by the Trustee, after the earlier to occur of the
discovery of such breach by the Seller or the Servicer or receipt of written
notice of such breach by the Seller or the Servicer, and such breach has a
material adverse effect on the Certificateholders' Interest or the interests of
the holders of other outstanding Series in any Receivable or Account, the
Certificateholders' Interest and such other certificateholders' interests in
such Receivable or, in the case of a breach relating to an Account, all
Receivables in the related Account ("Ineligible Receivables") will be
reassigned to the Seller on the terms and conditions set forth below and such
Account shall no longer be included as an Account.
Each such Receivable shall be reassigned to the Seller on or before the end
of the Collection Period in which such reassignment obligation arises by the
Seller directing the Servicer to deduct the principal balance of such
Receivable (discounted by the Discount Factor for the Collection Period
preceding such Determination Date) from the Pool Balance. In the event that
such deduction would cause the Pool Balance to be less than the Required
Participation Amount on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date), on the date on which such
reassignment is to occur the Seller will be obligated to make a deposit into
the Collection Account in immediately available funds in an amount equal to the
amount by which the Pool Balance would be less than the Required Participation
Amount (the amount of any such deposit being referred to herein as a "Transfer
Deposit Amount"), provided that if the Transfer Deposit Amount is not so
deposited, the principal balance of the related Receivables will be deducted
from the Pool Balance only to the extent the Pool Balance is not reduced below
the Required Participation Amount and any principal balance not so deducted
will not be reassigned and will remain part of the Trust. The reassignment of
any such Receivable to the Seller and the payment of any related Transfer
Deposit Amount will be the sole remedy respecting any breach of the
representations and warranties described in the preceding paragraph with
respect to such Receivable available to Certificateholders or the Trustee on
behalf of Certificateholders.
The Seller will also make representations and warranties to the Trust to the
effect, among other things, that as of the Closing Date and each Series
Issuance Date (a) it is duly organized as a limited partnership and in good
standing, it has the authority to consummate the transactions contemplated by
the Pooling and Servicing Agreement and the Pooling and Servicing Agreement
constitutes a valid, binding and enforceable agreement of
49
<PAGE>
the Seller and (b) the Pooling and Servicing Agreement constitutes a valid
sale, transfer and assignment to the Trust of all right, title and interest of
the Seller in or under (i) the Receivables and the Collateral Security,
whether then existing or thereafter created, (ii) the Receivables Contribution
and Sale Agreement, and (iii) the proceeds thereof (including proceeds in any
of the accounts established for the benefit of the certificateholders) and
upon the filing of financing statements under the UCC as then in effect in the
State of Missouri, which is effective as to each Receivable existing on the
Closing Date (or as of the Addition Date, if applicable) or, as to each
Receivable arising thereafter, upon the creation thereof the Trust, shall have
a perfected ownership interest in such property. In the event that the breach
of any of the representations and warranties described in this paragraph has a
material adverse effect on the Certificateholders' Interest or the interests
of the holders of other outstanding Series in the Receivables, then either the
Trustee or the holders of certificates of all outstanding Series (including
the Certificates) evidencing more than 50% of the aggregate unpaid principal
amount of all outstanding Series, by written notice to the Seller and the
Servicer (and to the Trustee and any issuer or provider of any Enhancement (an
"Enhancement Provider") if given by certificateholders), may direct the Seller
to accept the reassignment of the Certificateholders' Interest and the
certificateholders' interests of other Series within 60 days of such notice,
or within such longer period specified in such notice. The Seller will be
obligated to accept the reassignment of the Certificateholders' Interest and
such other certificateholders' interests on a Distribution Date occurring
within such 60-day period. Such reassignment will not be required to be made,
however, if at the end of such applicable period, the representations and
warranties shall then be true and correct in all material respects and any
material adverse effect caused by such breach shall have been cured. The
portion of the price for such reassignment in respect of the Certificates will
be equal to the sum of (i) the Invested Amount of the Certificates on the
Determination Date preceding the Distribution Date on which the purchase is
scheduled to be made and (ii) accrued and unpaid interest on the unpaid
principal amount of the Certificates at the applicable Certificate Rates
(together with interest on overdue interest, to the extent lawfully payable).
The payment of the reassignment price for all outstanding Series, in
immediately available funds, will be considered a payment in full of the
Certificateholders' Interest and such other certificateholders' interests. The
portion of such funds allocable to the Certificateholders' Interest will be
distributed upon presentation and surrender of the Certificates. If the
Trustee or the certificateholders give a notice as provided above, the
obligation of the Seller to make any such deposit will constitute the sole
remedy respecting a breach of the representations and warranties available to
certificateholders or the Trustee on behalf of the certificateholders.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
As stated elsewhere in this Prospectus, references to DFS in connection with
the origination or conveyance of Receivables include Deutsche BSC in its
origination and conveyance of Receivables and each other affiliate of DFS that
may originate or convey Receivables in the future (subject to satisfaction of
the Rating Agency Condition).
An "Eligible Account" is defined to mean each arrangement to provide a
revolving extension of credit by DFS to a Dealer (i) in order to finance the
purchase by a Dealer of consumer and commercial product inventory, (ii) as a
credit facility secured by the accounts receivable owned by such Dealer, (iii)
as a line of credit secured by unencumbered assets of such Dealer or (iv) as
an unsecured line of credit, which extension of credit, as of the date of
determination thereof (a) is established by DFS in the ordinary course of
business pursuant to a floorplan, accounts receivable, asset based or
unsecured lending financing agreement, (b) is in favor of a Dealer doing
business in the United States which is an eligible Dealer (which excludes
Dealers subject to voluntary or involuntary bankruptcy proceedings or
voluntary or involuntary liquidation), (c) is in existence and maintained and
serviced by DFS and (d) in respect of which no amounts have been charged off
as uncollectible. Eligible Accounts include Accounts in which another lender
participates. See "The Dealer Floorplan Financing Business of DFS--
Participation Arrangements." Receivables arising in Accounts in which another
lender participates include only DFS's undivided interest in the related
advance and not the undivided interest therein of the other lender.
50
<PAGE>
An "Eligible Receivable" is defined to mean each Receivable: (a) which was
originated or acquired by DFS in the ordinary course of business, (b) which
arose under an Account that at such time was an Eligible Account, (c) which is
owned by DFS at the time of sale or contribution by DFS to the Seller, (d)
which represents the obligation of a Dealer to repay an advance made to or on
behalf of such Dealer, (e) which at the time of creation and at the time of
transfer to the Trust is, except in the case of an Unsecured Receivable,
secured, to the extent required by the related financing agreement, by a
perfected first priority security interest (whether by prior filing, purchase
money security interest statutory priority, or subordination agreement from
prior filers) in the products, accounts receivable or other collateral
relating thereto (except that such security interest need not be a first
priority security interest in the case of a Receivable arising in an Account
for which the payment terms are on a Scheduled Payment Plan basis and the
maximum credit line is $250,000 or less, but only if such Account was
designated as an Account as of the Series 1994-1 Closing Date) and the
perfection of such security interest is governed by the laws of one or more of
the States of the United States, the District of Columbia or, if acceptable to
each Rating Agency, a territory or possession of the United States, (f) which
was created in compliance in all respects with all requirements of law
applicable thereto and pursuant to a floorplan, accounts receivable, asset
based lending or unsecured receivable financing agreement which complies in
all respects with all requirements of law applicable to any party thereto, (g)
with respect to which all consents and governmental authorizations required to
be obtained by DFS or the Seller in connection with the creation of such
Receivable or the transfer thereof to the Trust or the performance by DFS of
the floorplan, accounts receivable, asset based lending or unsecured
receivable financing agreement pursuant to which such Receivable was created,
have been duly obtained and are in full force and effect, (h) as to which at
all times following the transfer of such Receivable to the Trust, the Trust
will have good and marketable title thereto free and clear of all liens
arising prior to the transfer or arising at any time, other than liens
permitted pursuant to the Pooling and Servicing Agreement, (i) which has been
the subject of a valid transfer and assignment from the Seller to the Trust of
all the Seller's interest therein (including any proceeds thereof), (j) which
will at all times be the legal and assignable payment obligation of the Dealer
relating thereto, enforceable against such Dealer in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy
or other similar laws, (k) which at the time of transfer to the Trust is not
subject to any right of rescission, setoff, or any other defense (including
defenses arising out of violations of usury laws) of the Dealer, (l) as to
which, at the time of transfer of such Receivable to the Trust, DFS and the
Seller have satisfied all their respective obligations with respect to such
Receivable required to be satisfied at such time, (m) as to which, at the time
of transfer of such Receivable to the Trust, neither DFS nor the Seller has
taken or failed to take any action which would impair the rights of the Trust
or the certificateholders therein, (n) which constitutes "chattel paper," an
"account" or a "general intangible" as defined in Article 9 of the UCC as then
in effect in the State of Missouri (the financing agreement giving rise to
said Receivable may, however, be subject by its terms, or by judicial
interpretation, to the laws of other states), (o) which was transferred to the
Trust with all applicable governmental authorizations and (p) if such
Receivable has the benefit of a Floorplan Agreement with a Manufacturer, such
Floorplan Agreement provides, subject to the specific terms thereof and any
limitations therein (which may vary among Floorplan Agreements), that the
Manufacturer is obligated to repurchase the products securing the Receivable
upon the Servicer's repossession thereof upon the related Dealer's default.
For a description of the various terms of the Floorplan Agreements, see "The
Dealer Floorplan Financing Business of DFS--Floorplan Agreements."
Notwithstanding the foregoing, together with the Ineligible Receivables
referred to under "--Representations and Warranties" above, (i) all
Receivables that, at the time of its transfer to the Trust, have been SAU or
NSF for more than 30 days will also be "Ineligible Receivables," and (ii) the
aggregate of Receivables that, at the time of transfer of each such Receivable
to the Trust, have been SAU or NSF for a period of one to 30 days will also be
"Ineligible Receivables" to the extent that such aggregate amount exceeds
0.75% of the Pool Balance at the end of such Collection Period. All Ineligible
Receivables will be transferred to the Trust, but the "Pool Balance" will for
all purposes be calculated by excluding all Ineligible Receivables from the
Receivables. Delayed Funding Receivables, as described under "The Dealer
Floorplan Financing Business of DFS--Creation of Receivables," will be
Eligible Receivables, but, unless the required statement from each Rating
Agency is received as described under "--New Issuances" above, Delayed Funding
Receivables will be deemed not to be part of the Pool Balance for purposes of
determining whether a new Series of certificates may be issued. Once a
Receivable that was initially a Delayed Funding Receivable is funded by DFS,
then such Receivable will no
51
<PAGE>
longer be considered to be a Delayed Funding Receivable for purposes of the
Pooling and Servicing Agreement. In addition, Delayed Funding Receivables
(including any Collections thereon and Defaulted Amounts in respect thereof)
will cease to be included in the Trust on the day, if any, on which an
Insolvency Event in respect of DFS occurs.
It is not required or anticipated that the Trustee will make any initial or
periodic general examination of the Receivables or any records relating to the
Receivables for the purpose of establishing the presence or absence of defects,
compliance with representations and warranties of the Seller or for any other
purpose. In addition, it is not anticipated or required that the Trustee will
make any initial or periodic general examination of the Servicer for the
purpose of establishing the compliance by the Servicer with its representations
or warranties, the observation of its obligations under the Pooling and
Servicing Agreement or for any other purpose. The Servicer, however, will
deliver to the Trustee on or before April 30 of each calendar year a
certificate with respect to its performance under the Pooling and Servicing
Agreement and each Supplement.
THE OVERCONCENTRATION AMOUNTS
The Available Subordinated Amount shall be adjusted to reflect, on each
Determination Date, the aggregate principal amount of Receivables in the Trust
on such Distribution Date which are A/R Receivable Overconcentrations, Asset
Based Receivable Overconcentrations, Dealer Overconcentrations, Manufacturer
Overconcentrations, Product Line Overconcentrations and Unsecured Receivable
Overconcentrations (the "Overconcentration Amount") allocable to the
Certificateholders' Interest.
"A/R Receivable Overconcentration" on any Determination Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in
accounts created pursuant to Accounts Receivable Financing Agreements on
the last day of the Collection Period immediately preceding such
Determination Date over (b) 20% of the Pool Balance on the last day of such
immediately preceding Collection Period.
"Asset Based Receivable Overconcentration" on any Determination Date
means the excess of (a) the aggregate of all amounts of Principal
Receivables in Accounts created pursuant to Asset Based Lending Financing
Agreements on the last day of the Collection Period immediately preceding
such Determination Date over (b) 15% of the Pool Balance on the last day of
such immediately preceding Collection Period.
"Dealer Overconcentration" on any Determination Date means, (i) with
respect to any Account with a Dealer other than a Specified Dealer, the
excess of (a) the aggregate amount of Principal Receivables in such Account
on the last day of the Collection Period immediately preceding such
Determination Date over (b) 2% of the Pool Balance on the last day of such
immediately preceding Collection Period; and (ii) with respect to any
Account with a Specified Dealer, the excess of (a) the aggregate amount of
Principal Receivables in such Account on the last day of the Collection
Period immediately preceding such Determination Date over (b) 3% of the
Pool Balance as of such immediately preceding Collection Period. As used in
this paragraph, "Specified Dealer" means, with respect to a Dealer, that on
the last day of such immediately preceding Collection Period any Account
with such Dealer is among one of the fifteen Accounts having the largest
amount of all Principal Receivables in all of the Accounts as of such last
day.
"Manufacturer Overconcentration" on any Determination Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts created pursuant to Floorplan Agreements with a single
Manufacturer on the last day of the Collection Period immediately preceding
such Determination Date over (b) 15% of the Pool Balance on the last day of
such immediately preceding Collection Period.
"Product Line Overconcentration" on any Determination Date means, with
respect to Accounts created pursuant to Wholesale Financing Agreements, the
excess of (a) the aggregate of all amounts of Principal Receivables in such
Accounts that represent financing for a single product line on the last day
of the Collection Period immediately preceding such Determination Date over
(b) 25% (40% in the case of computer products) of the Pool Balance on the
last day of such immediately preceding Collection Period.
"Unsecured Receivable Overconcentration" on any Determination Date means,
without duplication, the sum of (i) the excess of (a) the aggregate of all
amounts of Principal Receivables in Accounts created pursuant to Unsecured
Receivable Financing Agreements on the last day of the Collection Period
52
<PAGE>
immediately preceding such Determination Date over (b) 3% of the Pool
Balance on the last day of such immediately preceding Collection Period and
(ii) the aggregate of the Individual Unsecured Receivable
Overconcentrations for such Determination Date. The "Individual Unsecured
Receivable Overconcentration" on any Determination Date means, with respect
to any Account for Unsecured Receivables, the excess of (i) the aggregate
of all amounts of Principal Receivables in such Account on the last day of
the Collection Period immediately preceding such Determination Date over
(ii) (a) in the case of a Dealer whose unsecured debt is rated at least A-
or its equivalent, 1% of the Pool Balance on the last day of such
immediately preceding Collection Period and (b) in the case of a Dealer
whose unsecured debt is rated less than A- or its equivalent or is not
rated, 0.5% of such Pool Balance.
Notwithstanding the above, in the case of each such Overconcentration, the
percentage in clause (b) (in the case of an Individual Unsecured Receivable
Concentration, both clause (a) and clause (b) and in the case of a Dealer
Overconcentration, the percentage in clause (i)(b) or (ii)(b)) may be increased
by the Seller, without the consent of any Certificateholder, to a level
acceptable to each Rating Agency as long as the Rating Agency Condition is
satisfied. See "--Allocation of Collections; Deposits in Collection Account;
Limited Subordination of Seller's Interest--Available Subordinated Amount."
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Seller has the right to
designate from time to time additional accounts to be included as Accounts (the
"Additional Accounts"). In addition, the Seller is required to add the
Receivables of Additional Accounts if either (i) the Pool Balance (exclusive of
Delayed Funding Receivables) on the last day of any Collection Period is less
than the Required Participation Amount as of the following Distribution Date or
(ii) the Seller's Participation Amount (exclusive of Delayed Funding
Receivables) as of the following Distribution Date multiplied by the portion of
the Seller's Interest (exclusive of Delayed Funding Receivables) represented by
the Seller's Certificate is less than 5% of the Pool Balance (exclusive of
Delayed Funding Receivables) on such last day. In either case, unless certain
insolvency events have occurred with respect to the Seller, the Seller under
the Pooling and Servicing Agreement will be required to transfer and assign to
the Trust, within 10 business days after the end of such Collection Period,
interests in all Receivables arising in such Additional Accounts, whether such
Receivables are then existing or thereafter created. Any designation of
Additional Accounts is subject to the following conditions, among others: (i)
each such Additional Account must be an Eligible Account; (ii) the Seller shall
represent and warrant that the addition of such Additional Accounts shall not,
in the reasonable belief of the Seller, cause an Early Amortization Event to
occur; (iii) the Seller shall not select such Additional Accounts in a manner
that it believes is adverse to the interests of the certificateholders or any
Enhancement Provider; (iv) the Seller shall deliver a Tax Opinion, other than
in the case of a required addition, and certain other opinions of counsel with
respect to the addition of such Additional Accounts to the Trustee and any
Enhancement Provider and (v) if the Automatic Addition Condition is not
satisfied, the Rating Agency Condition has been satisfied. If the Automatic
Addition Condition is satisfied and the Account being added will contain
Receivables which represent a type of product not previously financed by DFS or
is supported by a Manufacturer that is not an Existing Manufacturer, then such
addition is subject to satisfaction of the Rating Agency Condition.
Each Additional Account must be an Eligible Account at the time of its
addition. However, since Additional Accounts may not have been a part of the
initial portfolio of DFS, they may not be of the same credit quality as the
initial Accounts. Additional Accounts may have been originated by DFS at a
later date using credit criteria different from those which were applied to the
initial Accounts.
"Automatic Addition Condition" shall mean, with respect to the addition
of Accounts that (i) during the calendar quarter in which such addition
occurs, the number of new Accounts for Dealers that are financing products
of the type already being financed by DFS and purchasing such products from
Existing Manufacturers does not exceed 5% of the number of all Accounts at
the end of the preceding calendar quarter, (ii) during the twelve months
ending at the beginning of such calendar quarter, the number of such new
Accounts does not exceed 20% of the number of all Accounts at the beginning
of such twelve month
53
<PAGE>
period, (iii) the average for the three months preceding the month of such
addition of the aggregate balance of Receivables that have been SAU or NSF
for more than 30 days does not exceed 1.25% of the Pool Balance at the end
of the month preceding the month of such addition, and (iv) the annualized
average for such three month period of the net losses incurred in respect
of the Receivables does not exceed 1.75% of the Pool Balance at the end of
the month preceding the month of such addition.
"Existing Manufacturer" shall mean (i) each Manufacturer with which DFS
has entered into a business arrangement, either through a Floorplan
Agreement or another arrangement, on or prior to the Series 1994-1 Closing
Date, (ii) each Manufacturer with which DFS enters into such a business
arrangement after the Series 1994-1 Closing Date so long as the aggregate
balances of the Receivables subject to such Floorplan Agreement do not
exceed the lesser of (a) 1% of the Pool Balance at the beginning of the
Collection Period in which the addition of the related Account occurs and
(b) $25 million and (iii) each Manufacturer with which DFS enters into such
a business arrangement after the Series 1994-1 Closing Date and as to which
the Rating Agency Condition is satisfied.
"Required Participation Amount" for any date will mean an amount equal to
the sum of (a) the sum of the product for each Series of (i) the Required
Participation Percentage for such Series times (ii) the initial invested
amount of such Series minus the amount of any deposits into its excess
funding account in connection with a reduction in the Pool Balance plus the
amount of any withdrawals from its excess funding account in connection
with an increase in the Pool Balance plus (b) the Trust Available
Subordinated Amount on the immediately preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits
to be made on the Distribution Date following such Determination Date).
"Required Participation Percentage" will mean, (a) with respect to Series
1996-1, 105%, (b) with respect to Series 1994-1, 105% and (c) with respect
to any future Series, the percentage specified therefor in the related
Supplement; provided, however, that the Seller may, upon ten days' prior
notice to the Trustee, each Rating Agency and any Enhancement Provider
reduce the Required Participation Percentage to not less than 100%, so long
as the Rating Agency Condition has been satisfied.
REMOVAL OF ACCOUNTS; TRANSFERS OF PARTICIPATIONS
The Seller shall have the right at any time to require the removal from the
Trust of Eligible Accounts, including all amounts then held by the Trust or
thereafter received by the Trust in respect of the Eligible Accounts to be
removed. To remove any Eligible Account and such amounts, the Seller (or the
Servicer on its behalf) shall, among other things, (a) on or before the fifth
business day prior to the date of removal (the "Removal Date"), furnish to the
Trustee, any Enhancement Provider, and each Rating Agency a written notice (the
"Removal Notice") specifying the Removal Date; (b) on or before the fifth
business day after the Removal Date, the Seller shall have furnished to the
Trustee a computer file, microfiche list or other list of the Accounts (the
"Removed Accounts") that were removed on the Removal Date, specifying for each
Removed Account as of the date of the Removal Notice its number, the aggregate
amount outstanding in such Removed Account and the aggregate amount of
Receivables therein; (c) represent and warrant that the removal of any such
Eligible Account on the Removal Date will not, in the reasonable belief of the
Seller, cause an Early Amortization Event to occur or cause the Pool Balance to
be less than the Required Participation Amount; (d) represent and warrant that
no selection procedures believed by the Seller to be adverse to the interest of
the certificateholders were utilized in selecting the Removed Accounts; (e)
obtain evidence that the Rating Agency Condition has been satisfied; and (f) on
or before the related Removal Date, deliver to the Trustee and any Enhancement
Provider an officers' certificate confirming the items set forth in clauses
(c), (d) and (e) above and a Tax Opinion with respect to such removal.
All Receivables existing in the Removed Accounts will be assigned to the
Seller as of the Removal Date. On or prior to the tenth business day following
the date on which an Account becomes an Ineligible Account (which date will be
deemed the Removal Date for such Account), the Seller will commence the removal
of such Account from the Trust. However, all Receivables existing in any such
Account (other than an Account that was
54
<PAGE>
an Ineligible Account at the time it was originally designated as an Account)
as of the Removal Date will continue to be a Trust asset.
The Seller may cause the Trust to transfer to the Seller a Participation in
the Receivables in one or more Accounts subject to the same limitations
described above with respect to the removal of Accounts, except that the
removal will relate to an undivided percentage interest in the Receivables in
an Account rather than a dollar amount. The Seller may thereafter transfer
such Participation to other persons.
Accounts that are terminated by their Dealers after they have paid the
related Receivables in full will be deemed to be removed from the Trust
without having to follow the procedures described above.
COLLECTION ACCOUNT
The Servicer has established and is required to maintain, or cause to be
established and maintained, an Eligible Deposit Account in the name of the
Trustee, on behalf of the Trust, for the benefit of the Seller,
certificateholders of all Series and any Enhancement Providers (the
"Collection Account"). "Eligible Deposit Account" means either (a) a
segregated account with an Eligible Institution or (b) a segregated trust
account with the corporate trust department of a depository institution or
trust company organized under the laws of the United States or any one of the
states thereof (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 or trust company
has a credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade. "Eligible Institution" means (a)
the corporate trust department of the Trustee or (b) a depository institution
or trust company organized under the laws of the United States or any one of
the states thereof (or a domestic branch of a foreign bank) which at all times
(i) has either (x) a long-term unsecured debt rating acceptable to each Rating
Agency or (y) a certificate of deposit rating acceptable to each Rating Agency
and (ii) is a member of the FDIC. Funds in the Collection Account generally
will be invested in investments acceptable to each such Rating Agency as being
consistent with the then-current rating of the certificates (collectively,
"Eligible Investments"). Any earnings (net of losses and investment expenses)
on funds in the Collection Account will be credited to the Collection Account.
The Servicer will have the revocable power to instruct the Trustee to make
withdrawals and payments from the Collection Account for the purpose of
carrying out its duties under the Pooling and Servicing Agreement.
EXCESS FUNDING ACCOUNT
The Servicer has established and is required to maintain an Eligible Deposit
Account in the name of the Trustee, on behalf of the Trust (the "Excess
Funding Account"). On each Distribution Date during the Revolving Period, if
(a) the Pool Balance at the end of the preceding Collection Period is less
than the Pool Balance at the end of the second preceding Collection Period and
(b) the Pool Balance at the end of the preceding Collection Period is less
than the Required Participation Amount for such Distribution Date (calculated
before giving effect to any deposits to the Excess Funding Account and any
excess funding account for any other Series in its revolving period to be made
on such Distribution Date), then certain Available Certificateholder Principal
Collections will be deposited in the Excess Funding Account on such
Distribution Date. If (i) on any Determination Date during the Revolving
Period there are any funds in the Excess Funding Account and (ii) the Pool
Balance at the end of the preceding Collection Period is greater than the Pool
Balance at the end of the second preceding Collection Period, then, the
Invested Amount and the invested amounts (but, in each case, not in excess of
the initial principal amount of such Series) for all other outstanding Series
that provide for an excess funding account or similar arrangement and are in
their revolving periods shall be increased such that, after giving effect to
such increases, the Required Participation Amount is at least equal to the
Pool Balance. On such Determination Date, the Servicer shall notify the
Trustee of the amount, if any, of such increase in the Invested Amount and the
Trustee shall withdraw from the Excess Funding Account and pay to the Seller
or allocate to one or more other Series, on the immediately succeeding
Distribution Date, an amount equal to the amount of such increase in the
Invested Amount. To the extent that the Invested Amount is increased by any
payment to
55
<PAGE>
the Seller or any allocation to one or more other Series, the Seller's Interest
or such other Series' invested amount, as applicable, shall be reduced by the
amount of such payment. In addition, any increase in the Invested Amount is
subject to the condition that after giving effect to such increase the Pool
Balance equals or exceeds the sum of (A) the Required Participation Amount
(exclusive of the amount in clause (b) of the definition thereof), (B) the sum
of the Available Subordinated Amount and the sum of the required subordinated
amounts for all other Series (or, if such other Series shall have no required
subordinated amounts, the available subordinated amounts with respect to such
Series) and (C) the sum of any subordinated amounts supporting any Enhancement
for all other Series. Under certain circumstances, such deposits in and
withdrawals from the Excess Funding Account may be made on a daily basis. The
allocation of additional Receivables to increase the Invested Amount and the
invested amounts of such other Series will be pro rata based on the proportion
that the amount on deposit in the Excess Funding Account bears to the aggregate
amounts in all of the Trust's excess funding accounts (including the Excess
Funding Account) and similar arrangements for accommodating the fluctuation in
the principal balances of the Receivables. The deposit of amounts into the
Excess Funding Account and the excess funding accounts and such similar
arrangements for other Series will be based on the proportion that the Invested
Amount bears to the aggregate of the invested amounts (including the Invested
Amount) for all Series.
Any funds on deposit in the Excess Funding Account at the beginning of the
Early Amortization Period or the Accumulation Period will be deposited in the
Principal Funding Account. In addition, no funds will be deposited in the
Excess Funding Account during the Accumulation Period or any Early Amortization
Period.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Servicer in investments rated in the highest
short-term category of each Rating Agency or in such other investments that are
acceptable to each Rating Agency. Such investments are required to mature by
the next Distribution Date. On each Distribution Date, all net investment
income earned on amounts in the Excess Funding Account since the preceding
Distribution Date will be withdrawn from the Excess Funding Account and applied
as described herein. See "--Distributions from the Collection Account; Reserve
Fund" below.
ALLOCATION PERCENTAGES
Allocation to the Certificateholders' Interest. The Servicer will allocate
amounts to the Certificateholders' Interest for each Collection Period as
follows:
(i) Non-Principal Collections and the Defaulted Amount will be allocated
to Certificateholders based on the Floating Allocation Percentage;
(ii) during the Revolving Period, Principal Collections will be allocated
to Certificateholders based on the Floating Allocation Percentage (subject
to the following sentence);
(iii) during the Accumulation Period and any Early Amortization Period,
Principal Collections will be allocated to Certificateholders based on the
Principal Allocation Percentage (subject to the following sentence); and
(iv) Miscellaneous Payments will at all times be allocated to
Certificateholders on the basis of the Series 1996-1 Allocation Percentage.
With respect to Principal Collections among Series for any Collection Period,
if the sum of (i) the sum of the floating allocation percentages (including the
Floating Allocation Percentage, if applicable) for each Series in its revolving
period and (ii) the principal allocation percentage (including the Principal
Allocation Percentage, if applicable) for each Series in its amortization,
accumulation or early amortization period exceeds 100%, then Principal
Collections for such Collection Period will be allocated among the Series pro
rata on the basis of such floating allocation percentages and principal
allocation percentages. Amounts not allocated to the Certificateholders as
described above will be allocated to the Seller and the other outstanding
Series of certificates, if any.
56
<PAGE>
"Class A Initial Invested Amount" for any date means the initial principal
amount of the Class A Certificates, which is $1,000,000,000, plus (x) the
product of (i) the Class A Percentage multiplied by (ii) the amount of any
withdrawals from the Excess Funding Account in connection with an increase in
Pool Balance since the Closing Date, minus (y) the product of (i) the Class A
Percentage multiplied by (ii) the amount of any additions to the Excess
Funding Account in connection with a reduction in the Pool Balance since the
Closing Date.
"Class A Invested Amount" for any date means an amount equal to the sum of
(a)(i) the Class A Initial Invested Amount, minus (ii) the aggregate amount of
principal payments made to Class A Certificateholders prior to such date,
minus (iii) the aggregate amount of all unreimbursed Class A Investor Charge-
Offs.
"Class A Percentage" means the percentage equivalent of a fraction the
numerator of which is the outstanding principal balance of the Class A
Certificates and the denominator of which is the outstanding principal balance
of all Certificates.
"Class B Initial Invested Amount" for any date means the initial principal
amount of the Class B Certificates, which is $31,747,000, plus (x) the product
of (i) the Class B Percentage multiplied by (ii) the amount of any withdrawals
from the Excess Funding Account in connection with an increase in Pool Balance
since the Closing Date, minus (y) the product of (i) the Class B Percentage
multiplied by (ii) the amount of any additions to the Excess Funding Account
in connection with a reduction in the Pool Balance since the Closing Date.
"Class B Invested Amount" for any date means an amount equal to the sum of
(a)(i) the Class B Initial Invested Amount, minus (ii) the aggregate amount of
principal payments made to Class B Certificateholders prior to such date,
minus (iii) the aggregate amount of all unreimbursed Class B Investor Charge-
Offs.
"Class B Percentage" means the percentage equivalent of a fraction the
numerator of which is the outstanding principal balance of the Class B
Certificates and the denominator of which is the outstanding principal balance
of all Certificates.
"Class C Initial Invested Amount" for any date means the initial principal
amount of the Class C Certificates, which is $26,456,000, plus (x) the product
of (i) the Class C Percentage multiplied by (ii) the amount of any withdrawals
from the Excess Funding Account in connection with an increase in Pool Balance
since the Closing Date, minus (y) the product of (i) the Class C Percentage
multiplied by (ii) the amount of any additions to the Excess Funding Account
in connection with a reduction in the Pool Balance since the Closing Date.
"Class C Invested Amount" for any date means an amount equal to the sum of
(a) (i) the Class C Initial Invested Amount, minus (ii) the aggregate amount
of principal payments made to Class C Certificateholders prior to such date,
minus (iii) the aggregate amount of all unreimbursed Class C Investor Charge-
Offs.
"Class C Percentage" means the percentage equivalent of a fraction the
numerator of which is the outstanding principal balance of the Class C
Certificates and the denominator of which is the outstanding principal balance
of all Certificates.
"Floating Allocation Percentage" for any Collection Period means the
percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Pool Balance as of such last day; provided, however, that, with respect to the
first Collection Period, the Floating Allocation Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is the sum of the
initial principal balances of the Certificates and the denominator of which is
the Pool Balance on the Series 1996-1 Cut-Off Date.
"Invested Amount" means for any date the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount.
57
<PAGE>
"Miscellaneous Payments" for any Collection Period means the sum of (a)
Adjustment Payments and Transfer Deposit Amounts received with respect to such
Collection Period and (b) Unallocated Principal Collections on such
Distribution Date available to be treated as Miscellaneous Payments as
described below under "--Principal Collections for all Series."
"Principal Allocation Percentage" for any Collection Period means the
percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the last day of the Revolving
Period and the denominator of which is the Pool Balance as of the last day of
the immediately preceding Collection Period; provided, however, that with
respect to that portion of any Collection Period that falls after the date on
which any Early Amortization Event occurs (unless, in limited circumstances
with respect to the addition of Accounts, such Early Amortization Event shall
have been cured), the Principal Allocation Percentage shall be reset using the
Pool Balance as of the close of business on the date on which such Early
Amortization Event shall have occurred and Principal Collections shall be
allocated for such portion of such Collection Period using such reset Principal
Allocation Percentage.
"Series 1996-1 Allocation Percentage" means, for any Collection Period, the
percentage equivalent of a fraction, the numerator of which is the Invested
Amount as of the last day of the immediately preceding Collection Period and
the denominator of which is the Trust Invested Amount as of such last day.
"Trust Available Subordinated Amount" means the sum of the Available
Subordinated Amount and the aggregate available subordinated amounts for all
other outstanding Series.
"Trust Invested Amount" means, with respect to any Collection Period, the sum
of the Invested Amount and the invested amounts for all other outstanding
Series.
The Floating Allocation Percentage and the Principal Allocation Percentage
will be adjusted for any Collection Period in which Additional Accounts are
designated to reflect the additional Receivables added to the Trust.
Principal Collections for all Series. Principal Collections allocated to the
Certificateholders' Interest, for any Collection Period with respect to the
Accumulation Period or any Early Amortization Period, will first be allocated
to make required payments of principal to the Principal Funding Account during
the Accumulation Period and to the Certificateholders during the Early
Amortization Period. See "--Distributions from the Collection Account; Reserve
Fund--Principal Collections" and "--Distributions." The Servicer will determine
the amount of Available Certificateholder Principal Collections for any
Collection Period remaining after such required payments or deposits into the
Excess Funding Account (with respect to the Revolving Period) and the amount of
any similar excess for any other Series ("Excess Principal Collections"). The
Servicer will allocate Excess Principal Collections to cover any principal
distributions to certificateholders for any Series which are either scheduled
or permitted and which have not been covered out of Principal Collections and
certain other amounts allocated to such Series ("Principal Shortfalls"). Excess
Principal Collections will generally not be used to cover investor charge-offs
for any Series. Any such reallocation will not result in a reduction in the
invested amount of the Series to which such collections were initially
allocated. This feature permits amounts that may otherwise be payable to the
holder of the Seller's Certificate to be used for the benefit of Series of
certificates that would otherwise experience a shortfall or delay in the
payment of principal thereon. If Principal Shortfalls exceed Excess Principal
Collections for any Collection Period, Excess Principal Collections will be
allocated pro rata among the applicable Series based on the relative amounts of
Principal Shortfalls. To the extent that Excess Principal Collections exceed
Principal Shortfalls, the balance will be paid to the Seller if the Pool
Balance (determined after giving effect to any Principal Receivables
transferred to the Trust on such date) exceeds the Required Participation
Amount for the immediately preceding Determination Date (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date). Any amount
not allocated to the Seller because the Pool Balance does not exceed the
Required Participation Amount will be held unallocated ("Unallocated Principal
Collections") until the Pool Balance exceeds the Required Participation Amount,
at which time such amount will be allocated to the Seller, or until an early
amortization event occurs or an amortization period commences for any Series,
after which such amount will be treated as a Miscellaneous Payment.
58
<PAGE>
DISCOUNT FACTOR
While finance charges are payable on the Receivables generally, finance
charges will not begin to accrue on a portion of the Receivables until a
certain period of time has elapsed after their origination. Therefore, in
order to create imputed interest in respect of such Receivables for their non-
interest bearing period and for administrative uniformity in accounting for
Collections, a portion of the Collections on each Receivable that is not part
of the finance charges, if any, paid on that Receivable will be treated as
Non-Principal Collections. The portion of the balance of a Receivable that
will be treated as a finance charge when such Receivable is collected will be
equal to the product of the balance of such Receivable times the discount
factor (the "Discount Factor") in effect at the time of the collection of such
Receivable.
As of the Series 1996-1 Cut-Off Date, the Discount Factor was 0.40% and will
be adjusted as described in this paragraph. If on any Distribution Date the
Net Receivables Rate for such Distribution Date less (i) the weighted average
of the certificate rates (as determined below in this paragraph) for all
outstanding Series of certificates for such Distribution Date less (ii) the
annualized Net Loss Rate (as defined in the Pooling and Servicing Agreement)
for the preceding twelve Collection Periods is less than 1%, then the Discount
Factor for such Distribution Date shall be adjusted upwards, rounded up to the
nearest 0.1% (but in no event will the Discount Factor exceed 1%), so that the
Net Receivables Rate less the rate in clause (i) less the rate in clause (ii)
shall be equal to 1%; and the Discount Factor shall remain at such adjusted
percentage amount until it is further adjusted by the terms of this sentence
or either of the following two sentences. Notwithstanding the foregoing, the
Seller, at its discretion, may increase or decrease the Discount Factor, but
in no event shall the Discount Factor exceed 1% or be less than the percentage
amount required by the immediately preceding sentence or be greater than the
percentage amount required by the next sentence. Notwithstanding the
foregoing, if the application of the Discount Factor would cause the Pool
Balance to be less than the Required Participation Amount, then the Discount
Factor shall be the percentage (which shall in no event be less than 0%),
rounded down to the nearest 0.1%, which, when applied, will cause the Pool
Balance to at least equal the Required Participation Amount. For purposes of
this definition, (i) if a certificate rate is calculated as the lesser of (x)
a fixed rate or a formula rate and (y) the Net Receivables Rate, then such
certificate rate shall be the rate in clause (x) and (ii) if an interest rate
swap agreement provides the interest distributable on a Series or Class of
certificates then the certificate rate for such Series or Class of
certificates shall be the interest rate payable to the related swap
counterparty.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT; LIMITED
SUBORDINATION OF SELLER'S INTEREST
The Servicer, no later than two business days after the processing date,
will deposit all collections received with respect to the Receivables
(excluding, with certain exceptions, certain portions thereof allocable to the
Seller) in each Collection Period into the Collection Account. Notwithstanding
the foregoing requirement for daily deposits, for so long as (i) DFS remains
the Servicer under the Pooling and Servicing Agreement, (ii) no Servicer
Default has occurred and is continuing and (iii) (x) DFS arranges for and
maintains a letter of credit or other form of Enhancement in respect of the
Servicer's obligation to make deposits of collections on the Receivables in
the Collection Account that is acceptable in form and substance to each Rating
Agency or (y) DFS otherwise obtains each Rating Agency confirmation described
below, then, subject to any limitations in the confirmations referred to
below, DFS need not deposit collections into the Collection Account on the day
indicated in the preceding sentence until the business day immediately
preceding the date on which such funds are required to be distributed to
investors, at which time DFS will make such deposits in an amount equal to the
net amount of such deposits and withdrawals which would have been made had the
conditions of this sentence not applied; provided, however, that prior to
ceasing daily deposits as described above the Seller shall have delivered to
the Trustee evidence that the Rating Agency Condition has been satisfied.
Until such Collections are deposited into the Collection Account, such funds
may be used by the Servicer for its own benefit, and the proceeds of any
short-term investment of such funds will accrue to the Servicer. During such
times as the Servicer holds collections and is permitted to use such funds for
its own benefit, the Certificateholders are subject to risk of loss, including
risk resulting from the bankruptcy or insolvency of the Servicer. The Servicer
will pay no fee to the Trust or any Certificateholder for any use by the
Servicer of funds representing collections on the Receivables.
59
<PAGE>
In addition, during any Collection Period the Servicer will generally be
required to deposit Non-Principal Collections and Principal Collections into
the Collection Account only to the extent of, without duplication, the
distributions required to be made to certificateholders, the amounts required
to be deposited into any deposit, trust, reserve or similar account maintained
for the benefit of certificateholders and the amounts required to be paid to
any Enhancement Provider on the Distribution Date relating to such Collection
Period and if, at any time prior to such Distribution Date, the amount of
collections deposited in the Collection Account exceeds the amount required to
be deposited, the Servicer will be permitted to withdraw such excess from the
Collection Account. In addition, as an administrative convenience, the Servicer
will be permitted to make the deposit of Non-Principal Collections, Principal
Collections and other amounts net of distributions or payments to be made to
the Servicer on such date. However, the Servicer will account for such
deposits, distributions and payments as if they were made individually.
In respect of any date on which collections are made, the Servicer will
distribute directly to the Seller an amount equal to (a) the Excess Seller's
Percentage for the related Collection Period of Non-Principal Collections for
such date and (b) the Excess Seller's Percentage for the related Collection
Period of Principal Collections for such date, if the Seller's Participation
Amount (determined after giving effect to any Principal Receivables transferred
to the Trust on such date) exceeds the Trust Available Subordinated Amount for
the immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date). In addition,
during the Revolving Period, subject to certain limitations, the Servicer will
distribute directly to the Seller in respect of each such date an amount equal
to the Available Seller's Principal Collections for such date, if the Seller's
Participation Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such date) exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on the Distribution Date immediately following such date).
"Available Seller's Collections" for any date means the sum of (a) the
Available Seller's Non-Principal Collections for such date and (b) the
Available Seller's Principal Collections for such date; provided, however,
that the Available Seller's Collections will be zero for any Collection
Period with respect to which the Available Subordinated Amount is zero on
the Determination Date immediately following the end of such Collection
Period.
"Available Seller's Non-Principal Collections" for any date means an
amount equal to the result obtained by multiplying (a) the excess of (i)
the Seller's Percentage for the related Collection Period over (ii) the
Excess Seller's Percentage for such Collection Period by (b) Non-Principal
Collections for such date.
"Available Seller's Principal Collections" for any date means an amount
equal to the product of (a) the excess of (i) the Seller's Percentage for
the related Collection Period over (ii) the Excess Seller's Percentage for
such Collection Period and (b) Principal Collections for such date.
"Excess Seller's Percentage" for any Collection Period means a percentage
(which percentage shall never be less than 0% nor more than 100%) equal to
(a) when used with respect to Non-Principal Collections and Defaulted
Receivables, 100% minus the sum of (i) the aggregate of the floating
allocation percentages for each outstanding Series with respect to such
Collection Period and (ii) the percentage equivalent of a fraction, the
numerator of which is the aggregate of the available subordinated amounts
for each outstanding Series as of the Determination Date occurring in such
Collection Period (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date immediately
following such Determination Date), and the denominator of which is the
Pool Balance as of the last day of the immediately preceding Collection
Period and (b) when used with respect to Principal Collections, 100% minus
the sum of (i) the sum of the aggregate of the principal allocation
percentages for each outstanding Series in its amortization, accumulation
or early amortization period with respect to such Collection Period and the
aggregate of the floating allocation percentages for each outstanding
Series in its revolving period with respect to such Collection Period and
(ii) the percentage described in clause (a) (ii) above for such Collection
Period.
60
<PAGE>
"Seller's Participation Amount" for any date means an amount equal to the
Pool Balance on such date minus the aggregate of invested amounts for all
outstanding Series on such date minus certain adjustments by the Servicer
to Receivables described in the first sentence of the last paragraph under
"--Defaulted Receivables and Recoveries" below.
"Seller's Percentage" means 100% minus (a) when used with respect to Non-
Principal Collections and Defaulted Receivables, the aggregate of the
floating allocation percentages for each outstanding Series (including the
Certificates), and (b) when used with respect to Principal Collections, the
sum of (i) the aggregate of the floating allocation percentages for each
outstanding Series (including the Certificates, if applicable) in its
revolving period and (ii) the aggregate of the principal allocation
percentages for each outstanding Series (including the Certificates, if
applicable) in its amortization, accumulation or early amortization period,
but in each case shall not be less than 0%.
Deficiency Amount. On each Determination Date, the Servicer will determine
for the Certificates the amount (the "Deficiency Amount"), if any, by which
(a) the sum of (i) Monthly Interest for the following Distribution Date, (ii)
any Monthly Interest for any prior Distribution Dates required to be but not
deposited in the Interest Funding Account on a prior Distribution Date, (iii)
Additional Interest, if any, for such Distribution Date and any Additional
Interest for any prior Distribution Dates required to be but not deposited
into the Interest Funding Account on a prior Distribution Date, but only to
the extent permitted by applicable law, (iv) the Monthly Servicing Fee for
such Distribution Date, (v) the Investor Default Amount for such Distribution
Date, and (vi) the amount of any Adjustment Payment allocated to the
Certificates for such Distribution Date that has not been deposited in the
Collection Account as required under the Pooling and Servicing Agreement
exceeds (b) the sum of Investor Non-Principal Collections for such
Distribution Date plus any Investment Proceeds, if any, with respect to such
Distribution Date. The lesser of the Deficiency Amount and the Available
Subordinated Amount is the "Required Subordination Draw Amount."
Monthly Interest. "Monthly Interest" for any Distribution Date shall mean an
amount equal to the sum of the Class A Monthly Interest, the Class B Monthly
Interest and the Class C Monthly Interest.
"Class A Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class A Certificate Rate, (ii) a fraction
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, and (iii) (A) the outstanding
principal balance of the Class A Certificates as of the close of business
on the preceding Distribution Date (after giving effect to all repayments
of principal made to Class A Certificateholders on such preceding
Distribution Date, if any) or (B) with respect to the first Distribution
Date, the initial principal amount of the Class A Certificates.
"Class B Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class B Certificate Rate, (ii) a fraction
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, and (iii) (A) the outstanding
principal balance of the Class B Certificates as of the close of business
on the preceding Distribution Date (after giving effect to all repayments
of principal made to Class B Certificateholders on such preceding
Distribution Date, if any) or (B) with respect to the first Distribution
Date, the initial principal amount of the Class B Certificates.
"Class C Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class C Certificate Rate, (ii) a fraction
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, and (iii) (A) the outstanding
principal balance of the Class C Certificates as of the close of business
on the preceding Distribution Date (after giving effect to all repayments
of principal made to Class C Certificateholders on such preceding
Distribution Date, if any) or (B) with respect to the first Distribution
Date, the initial principal amount of the Class C Certificates.
Additional Interest. "Additional Interest" for any Distribution Date shall
mean an amount equal to the sum of the Class A Additional Interest, the Class
B Additional Interest and the Class C Additional Interest.
61
<PAGE>
On the Determination Date preceding each Interest Payment Date, the Servicer
shall determine the excess, if any (the "Class A Interest Shortfall"), of (x)
the sum of (i) the Class A Monthly Interest for the Interest Period applicable
to such Interest Payment Date plus (ii) the Class A Monthly Interest for each
Interest Period applicable to each other Distribution Date, if any, occurring
after the immediately preceding Interest Payment Date (or with respect to the
first Interest Payment Date, after the Closing Date) over (y) the amount which
will be available to be paid to the Class A Certificateholders from the
Interest Funding Account on such Interest Payment Date in respect thereof
pursuant to the Supplement relating to Series 1996-1. If, as of any Interest
Payment Date, an amount covering any Class A Interest Shortfall for any prior
Distribution Date shall not have been deposited into the Interest Funding
Account, then an additional amount ("Class A Additional Interest") equal to the
product of (i) the Class A Certificate Rate, (ii) a fraction the numerator of
which is the actual number of days in the period from and including such prior
Interest Payment Date to but excluding the current Interest Payment Date and
the denominator of which is 360, and (iii) such Class A Interest Shortfall (or
the portion thereof which has not been paid or deposited in the Interest
Funding Account) shall be payable as described herein with respect to the Class
A Certificates. See "--Distribution from the Collection Account; Reserve Fund--
Non-Principal Collections" below. Class A Additional Interest shall be payable
to the Interest Funding Account or distributed to Class A Certificateholders
only to the extent permitted by applicable law.
On the Determination Date preceding each Interest Payment Date, the Servicer
shall determine the excess, if any (the "Class B Interest Shortfall"), of (x)
the sum of (i) the Class B Monthly Interest for the Interest Period applicable
to such Interest Payment Date plus (ii) the Class B Monthly Interest for each
Interest Period applicable to each other Distribution Date, if any, occurring
after the immediately preceding Interest Payment Date (or with respect to the
first Interest Payment Date, after the Closing Date) over (y) the amount which
will be available to be paid to the Class B Certificateholders from the
Interest Funding Account on such Interest Payment Date in respect thereof
pursuant to the Supplement relating to Series 1996-1. If, as of any Interest
Payment Date, an amount covering any Class B Interest Shortfall for any prior
Distribution Date shall not have been deposited into the Interest Funding
Account, then an additional amount ("Class B Additional Interest") equal to the
product of (i) the Class B Certificate Rate, (ii) a fraction the numerator of
which is the actual number of days in the period from and including such prior
Interest Payment Date to but excluding the current Interest Payment Date and
the denominator of which is 360, and (iii) such Class B Interest Shortfall (or
the portion thereof which has not been paid or deposited in the Interest
Funding Account) shall be payable as described herein with respect to the Class
B Certificates. See "--Distribution from the Collection Account; Reserve Fund--
Non-Principal Collections" below. Class B Additional Interest shall be payable
to the Interest Funding Account or distributed to Class B Certificateholders
only to the extent permitted by applicable law.
On the Determination Date preceding each Interest Payment Date, the Servicer
shall determine the excess, if any (the "Class C Interest Shortfall"), of (x)
the sum of (i) the Class C Monthly Interest for the Interest Period applicable
to such Interest Payment Date plus (ii) the Class C Monthly Interest for each
Interest Period applicable to each other Distribution Date, if any, occurring
after the immediately preceding Interest Payment Date (or with respect to the
first Interest Payment Date, after the Closing Date) over (y) the amount which
will be available to be paid to the Class C Certificateholders from the
Interest Funding Account on such Interest Payment Date in respect thereof
pursuant to the Supplement relating to Series 1996-1. If, as of any Interest
Payment Date, an amount covering any Class C Interest Shortfall for any prior
Distribution Date shall not have been deposited into the Interest Funding
Account, then an additional amount ("Class C Additional Interest") equal to the
product of (i) the Class C Certificate Rate, (ii) a fraction the numerator of
which is the actual number of days in the period from and including such prior
Interest Payment Date to but excluding the current Interest Payment Date and
the denominator of which is 360, and (iii) such Class C Interest Shortfall (or
the portion thereof which has not been paid or deposited in the Interest
Funding Account) shall be payable as described herein with respect to the Class
C Certificates. See "--Distribution from the Collection Account; Reserve Fund--
Non-Principal Collections" below. Class C Additional Interest shall be payable
to the Interest Funding Account or distributed to Class C Certificateholders
only to the extent permitted by applicable law.
Available Subordinated Amount. The "Available Subordinated Amount" for a
Determination Date is equal to (i) the result of (x) a fraction, the numerator
of which is the Invested Amount on the last day of the
62
<PAGE>
immediately preceding Collection Period (or with respect to the first
Determination Date with respect to Series 1996-1, the Invested Amount on the
issuance date for Series 1996-1), and the denominator of which is the Pool
Balance on such last day multiplied by (y) the Trust Incremental Subordinated
Amount, minus (ii) with certain limitations, the aggregate of the Required
Subordination Draw Amounts for all preceding Distribution Dates.
"Incremental Default Amount" on any Determination Date equals (a) the
Overconcentration Default Amount on such Determination Date minus (b) the full
amount of any Defaulted Receivables included in the definition of
Overconcentration Default Amount which are subject to a reassignment or
assignment to the Seller or the Servicer in accordance with the terms of the
Pooling and Servicing Agreement (but not less than zero); provided, however,
that, if certain events of bankruptcy, insolvency or receivership have
occurred with respect to the Seller, the amount of such Defaulted Receivables
which are subject to reassignment to the Seller will not be so subtracted and,
if certain events of bankruptcy, insolvency or receivership have occurred with
respect to the Servicer, the amount of such Defaulted Receivables which are
subject to assignment to the Servicer will not be so subtracted.
"Overconcentration Default Amount" on any Determination Date means the
lesser of (a) the aggregate amount of Receivables which became Defaulted
Receivables during such Collection Period and which arose in an Account that
is included in the calculation of the Overconcentration Amount and (b) the
Overconcentration Amount on such Determination Date.
"Trust Incremental Subordinated Amount" on any Determination Date equals the
excess, if any, of (a) the Overconcentration Amount on such Determination Date
over (b) the Incremental Default Amount for such Determination Date.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND
Non-Principal Collections. On each Distribution Date, the Trustee will apply
Certificateholder Non-Principal Collections and Investment Proceeds, if any,
deposited into the Collection Account in respect the related Collection Period
to make the following distributions in the following order of priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest for any prior
Distribution Dates not deposited in the Interest Funding Account or
distributed on such prior Distribution Dates (plus, but only to the extent
permitted under applicable law, the amount of any Class A Additional
Interest for the immediately preceding Interest Payment Date that has not
been deposited in the Interest Funding Account and, without duplication,
any Class A Additional Interest previously due but not deposited in the
Interest Funding Account or distributed), shall be deposited to the
Interest Funding Account;
(ii) an amount equal to Class B Monthly Interest for such Distribution
Date, plus the amount of any Class B Monthly Interest for any prior
Distribution Dates not deposited in the Interest Funding Account or
distributed on such prior Distribution Dates (plus, but only to the extent
permitted under applicable law, the amount of any Class B Additional
Interest for the immediately preceding Interest Payment Date that has not
been deposited in the Interest Funding Account and, without duplication,
any Class B Additional Interest previously due but not deposited in the
Interest Funding Account or distributed), shall be deposited to the
Interest Funding Account;
(iii) an amount equal to Class C Monthly Interest for such Distribution
Date, plus the amount of any Class C Monthly Interest for any prior
Distribution Dates not deposited in the Interest Funding Account or
distributed on such prior Distribution Dates (plus, but only to the extent
permitted under applicable law, the amount of any Class C Additional
Interest for the immediately preceding Interest Payment Date that has not
been deposited in the Interest Funding Account and, without duplication,
any Class C Additional Interest previously due but not deposited in the
Interest Funding Account or distributed), shall be deposited to the
Interest Funding Account;
(iv) an amount equal to the Monthly Servicing Fee for such Distribution
Date shall be distributed to the Servicer (unless such amount has been
netted against deposits to the Collection Account as described above or
waived as described below);
63
<PAGE>
(v) an amount equal to the Reserve Fund Deposit Amount, if any, for such
Distribution Date shall be deposited in the Reserve Fund;
(vi) an amount equal to the Investor Default Amount, if any, for such
Distribution Date shall be treated as a portion of Available
Certificateholder Principal Collections for such Distribution Date;
(vii) an amount required to reimburse unreimbursed Class A Investor
Charge-Offs, Class B Investor Charge-Offs and Class C Investor Charge-Offs
(as described below) shall be treated as a portion of Investor Principal
Collections for such Distribution Date;
(viii) any Class A Carry-over Amount, Class B Carry-over Amount or Class
C Carry-over Amount not previously distributed shall be deposited to the
Interest Funding Account; and
(ix) the balance, if any, shall constitute "Excess Servicing".
If Certificateholder Non-Principal Collections and Investment Proceeds are
not sufficient to make the entire distributions required by clauses (i), (ii),
(iii), (iv) and (vi), the Servicer will direct the Trustee to withdraw funds
from the Reserve Fund and apply such funds, to the extent available, to
complete the distributions pursuant to such clauses in the numerical order
thereof.
If there is a Required Subordination Draw Amount for such Distribution Date,
the Servicer will apply or direct the Trustee to apply the Available Seller's
Collections on deposit in the Collection Account on such Distribution Date, but
only up to the amount of the Required Subordination Draw Amount, to make up the
shortfall in the distributions required by clauses (i)-(iv) and (vi) above and
that have not been made through the applications of funds from the Reserve Fund
described above. Any such Available Seller's Collections remaining after the
application thereof pursuant to the preceding sentence will be treated as a
portion of Available Certificateholder Principal Collections for such
Distribution Date and applied as described under "--Principal Collections"
below, but only up to the amount of unpaid Adjustment Payments allocated to
Series 1996-1. If the Required Subordination Draw Amount exceeds Available
Seller's Collections for such Distribution Date, the Available Subordinated
Amount will be further reduced in accordance with clause (ii) of the definition
of Available Subordinated Amount in an amount equal to such Available Seller's
Collections. If for such Distribution Date the sum of the Required
Subordination Draw Amount and the aggregate of the required subordination draw
amounts for all other Series outstanding exceeds the Available Seller's
Collections on deposit in the Collection Account on such Distribution Date,
then such Available Seller's Collections will be allocated to such Series
(including Series 1994-1 and Series 1996-1) pro rata on the basis of such
required subordination draw amounts (including the Required Subordination Draw
Amount).
"Certificateholder Non-Principal Collections" for any Distribution Date
means the portion of Non-Principal Collections for the related Collection
Period allocated to the Certificateholders' Interest as described under "--
Allocation Percentages--Allocation to the Certificateholders' Interest."
"Excess Servicing" for any Distribution Date means the amount described
in clause (ix) above.
"Investment Proceeds" for any Distribution Date means an amount equal to
the sum of (a) the net investment earnings credited to the Collection
Account on the related Determination Date with respect to funds held in the
Interest Funding Account, the Principal Funding Account, the Excess Funding
Account and the Reserve Fund and (b) the Series 1996-1 Allocation
Percentage of net investment earnings credited to the Collection Account on
the related Determination Date with respect to funds held in the Collection
Account.
Reserve Fund. An Eligible Deposit Account will be established and maintained
in the name of the Trustee for the benefit of the Certificateholders (the
"Reserve Fund"). On the Closing Date, the Seller will cause to be deposited
with the Trustee, and the Trustee will deposit in the Reserve Fund, funds in an
amount equal to 2% of the aggregate initial principal balance of the
Certificates. The "Reserve Fund Required Amount" means an amount which upon any
Distribution Date will equal the product of 2% and the aggregate outstanding
balance of the Certificates as of such Distribution Date (after giving effect
to any change therein on such Distribution Date). If, after giving effect to
the allocations, distributions and deposits in the Reserve Fund described above
64
<PAGE>
under "--Non-Principal Collections," the amount in the Reserve Fund is less
than the Reserve Fund Required Amount, the Trustee shall deposit any remaining
Certificateholder Non-Principal Collections and Investment Proceeds (to the
extent available pursuant to clause (v) under "--Non-Principal Collections"
above) for the related Collection Period into the Reserve Fund until the
amount in the Reserve Fund is equal to such Reserve Fund Required Amount. The
"Reserve Fund Deposit Amount" is the amount, if any, by which the Reserve Fund
Required Amount exceeds the amount on deposit in the Reserve Fund. Funds in
the Reserve Fund will be invested in the same manner in which funds in the
Collection Account may be invested. On each Determination Date, the Servicer
will credit to the Collection Account any investment earnings (net of losses
and investment expenses) with respect to the Reserve Fund. After the earlier
of the payment in full of the outstanding principal balance of the
Certificates and the Termination Date, any funds remaining on deposit in the
Reserve Fund will be paid to the Seller.
Excess Servicing. On each Distribution Date, the Servicer will allocate
Excess Servicing with respect to the Collection Period immediately preceding
such Distribution Date, in the following order of priority:
(a) an amount equal to the aggregate outstanding amounts of the Monthly
Servicing Fee which have been previously waived as described under "--
Servicing Compensation and Payment of Expenses" will be distributed to the
Servicer; and
(b) the balance, if any, shall be distributed to the Seller.
Principal Collections. On each Distribution Date, the Servicer will allocate
Available Certificateholder Principal Collections as follows:
(a) for each Distribution Date with respect to the Revolving Period, all
Available Certificateholder Principal Collections will be allocated, first,
if (i) the Pool Balance at the end of the preceding Collection Period is
less than the Pool Balance at the end of the second preceding Collection
Period and (ii) the Pool Balance at the end of the preceding Collection
Period is less than the Required Participation Amount for such Distribution
Date (calculated before giving effect to any deposits to the Excess Funding
Account and any excess funding account for any other Series in their
revolving periods to be made on such Distribution Date), then the Servicer
will cause to be deposited into the Excess Funding Account an amount which
will reduce the Invested Amount such that, together with the deposits to
the excess funding accounts (and the resulting reductions in the invested
amounts) for other outstanding Series in their revolving periods for such
Distribution Date, the Pool Balance is equal to the Required Participation
Amount and, second, to Excess Principal Collections as described under "--
Allocation Percentages--Principal Collections for all Series"; and
(b) for each Distribution Date (x) with respect to the Accumulation
Period or (y) any Early Amortization Period (if a responsible officer of
the Trustee has actual knowledge thereof): (i) an amount equal to Monthly
Principal for such Distribution Date will be deposited to the Principal
Funding Account; and (ii) during the Accumulation Period, the balance, if
any, will be allocated to Excess Principal Collections.
In the event that the Invested Amount is greater than zero on the
Termination Date, any funds remaining in the Reserve Fund (after the
application of funds in the Reserve Fund as described above under "--Non-
Principal Collections") will be treated as a portion of Available
Certificateholder Principal Collections for the Distribution Date occurring on
the Termination Date.
"Available Certificateholder Principal Collections" for any Distribution
Date means the sum of (a) the product of (i) the Floating Allocation
Percentage, with respect to the Revolving Period, or the Principal
Allocation Percentage, with respect to the Accumulation Period or any Early
Amortization Period, for the related Collection Period (or any partial
Collection Period which occurs as the first Collection Period during an
Early Amortization Period) and (ii) Principal Collections for the related
Collection Period (or any partial Collection Period which occurs as the
first Collection Period during an Early Amortization Period), (b) the
amount, if any, of Non-Principal Collections, funds in the Reserve Fund as
described above, Excess Servicing and Available Seller's Collections,
allocated in each case to cover the Investor Default Amount or reimburse
Investor Charge-Offs and (c) the Series 1996-1 Allocation Percentage of
Miscellaneous Payments with respect to such Distribution Date.
65
<PAGE>
"Controlled Amortization Amount" means an amount equal to the Invested
Amount as of the Determination Date on which the Accumulation Period Length
is determined (after giving effect to any changes therein on such date)
divided by the number of months comprising the Accumulation Period Length.
"Controlled Distribution Amount" for a Distribution Date means the
excess, if any, of (i) the product of the Controlled Amortization Amount
and the number of Distribution Dates with respect to the Accumulation
Period through and including such Distribution Date over (ii) the amount on
deposit in the Excess Funding Account and the Principal Funding Account
(including any amounts deposited therein from the Excess Funding Account),
before giving effect to any withdrawals from or deposits to such accounts
on such Distribution Date.
"Monthly Principal" with respect to any Distribution Date relating to the
Accumulation Period or any Early Amortization Period will equal Available
Certificateholder Principal Collections for such Distribution Date;
provided, however, that for each Distribution Date with respect to the
Accumulation Period, Monthly Principal may not exceed the Controlled
Distribution Amount for such Distribution Date; and provided, further, that
Monthly Principal will not exceed the aggregate outstanding principal
balances of the Certificates.
INTEREST FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account for the benefit of the
Certificateholders (the "Interest Funding Account"). On each Distribution Date
Monthly Interest will be deposited in the Interest Funding Account as provided
above under
"--Distributions from the Collection Account; Reserve Fund."
All amounts on deposit in the Interest Funding Account on any Distribution
Date (after giving effect to distributions to be made on such Distribution
Date) (the "Interest Funding Account Balance") will be invested from the date
of their deposit to a date on or prior to the next succeeding Distribution Date
by the Trustee at the direction of the Servicer in Eligible Investments. On
each Distribution Date, the interest and other investment income on the
Interest Funding Account Balance will be paid to the Collection Account and
distributed on such Distribution Date.
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account for the benefit of the
Certificateholders (the "Principal Funding Account"). On each Distribution Date
with respect to the Accumulation Period, Monthly Principal will be deposited in
the Principal Funding Account as provided above under "--Distributions from the
Collection Account; Reserve Fund"; provided that if an Early Amortization Event
occurs during the Accumulation Period (unless, in limited circumstances with
respect to the required addition of Accounts, such Early Amortization Event
shall have been cured), the Principal Funding Account Balance (as defined
below) shall be paid to the Certificateholders on the first Distribution Date
thereafter.
All amounts on deposit in the Principal Funding Account on any Distribution
Date (after giving effect to distributions to be made on such Distribution
Date) (the "Principal Funding Account Balance") will be invested from the date
of their deposit to a date on or prior to the succeeding Distribution Date by
the Trustee at the direction of the Servicer in Eligible Investments. On each
Distribution Date, the interest and other investment income on the Principal
Funding Account Balance will be applied as provided above under "--
Distributions from the Collection Account; Reserve Fund."
DISTRIBUTIONS
Payments to Certificateholders will be made from the Interest Funding
Account, the Principal Funding Account and the Excess Funding Account. The
Servicer shall instruct the Trustee to apply the funds on deposit in the
Interest Funding Account, the Principal Funding Account and the Excess Funding
Account and shall instruct the Trustee to make, without duplication, the
following distributions:
66
<PAGE>
(a) On each Distribution Date which is an Interest Payment Date,
available amounts on deposit in the Interest Funding Account shall be
distributed in the following order of priority:
(i) to the Class A Certificateholders, an amount equal to (x) the sum
of Class A Monthly Interest for such Distribution Date, plus the Class
A Monthly Interest for any prior Distribution Date, if any, occurring
after the immediately preceding Interest Payment Date (or with respect
to the first Interest Payment Date, after the Closing Date), plus (y)
any amount determined on any prior Interest Payment Date pursuant to
clause (x) that was not distributed on any prior Interest Payment Date,
plus (z) to the extent permitted under applicable law, the amount of
any Class A Additional Interest for the current Interest Payment Date
and, without duplication, any Class A Additional Interest previously
due but not distributed;
(ii) to the Class B Certificateholders, an amount equal to (x) the
sum of Class B Monthly Interest for such Distribution Date, plus the
Class B Monthly Interest for any prior Distribution Date, if any,
occurring after the immediately preceding Interest Payment Date (or
with respect to the first Interest Payment Date, after the Closing
Date), plus (y) any amount determined on any prior Interest Payment
Date pursuant to clause (x) that was not distributed on any prior
Interest Payment Date, plus (z) to the extent permitted under
applicable law, the amount of any Class B Additional Interest for the
current Interest Payment Date and, without duplication, any Class B
Additional Interest previously due but not distributed;
(iii) to the Class C Certificateholders, an amount equal to (x) the
sum of Class C Monthly Interest for such Distribution Date, plus the
Class C Monthly Interest for any prior Distribution Date, if any,
occurring after the immediately preceding Interest Payment Date (or
with respect to the first Interest Payment Date, after the Closing
Date), plus (y) any amount determined on any prior Interest Payment
Date pursuant to clause (x) that was not distributed on any prior
Interest Payment Date, plus (z) to the extent permitted under
applicable law, the amount of any Class C Additional Interest for the
current Interest Payment Date and, without duplication, any Class C
Additional Interest previously due but not distributed;
(iv) to the Class A Certificateholders, the sum of any Class A Carry-
over Amount for such Interest Payment Date plus any Class A Carry-over
Amount for each other Distribution Date, if any, occurring after the
immediately preceding Interest Payment Date (or with respect to the
first Interest Payment Date, after the Closing Date);
(v) to the Class B Certificateholders, the sum of any Class B Carry-
over Amount for such Interest Payment Date plus any Class B Carry-over
Amount for each other Distribution Date, if any, occurring after the
immediately preceding Interest Payment Date (or with respect to the
first Interest Payment Date, after the Closing Date); and
(vi) to the Class C Certificateholders, the sum of any Class C Carry-
over Amount for such Interest Payment Date plus any Class C Carry-over
Amount for each other Distribution Date, if any, occurring after the
immediately preceding Interest Payment Date (or with respect to the
first Interest Payment Date, after the Closing Date).
(b) On each Distribution Date during an Early Amortization Period (if a
responsible officer of the Trustee has actual knowledge of such Early
Amortization Period) and on any other Distribution Date after the end of
the Accumulation Period, the amount on deposit in the Excess Funding
Account, the Principal Funding Account and (after the payment of accrued
interest and Carry-over Amounts on the Certificates as described in
paragraph (a) above) any amounts in the Interest Funding Account shall be
distributed to the Certificateholders in the following order of priority:
(A) first, to the Class A Certificateholders until the outstanding
principal balance of the Class A Certificates has been reduced to zero; (B)
second, to the Class B Certificateholders until the outstanding principal
balance of the Class B Certificates has been reduced to zero; and (C)
third, to the Class C Certificateholders until the outstanding principal
balance of the Class C Certificates has been reduced to zero; provided,
however, that the maximum amount distributed pursuant to this paragraph on
any such date shall not exceed the excess of (x) the sum of the outstanding
principal balance of the Class A, Class B and Class C Certificates, as
applicable, over (y) the sum of unreimbursed Class A, Class B and Class C
Investor Charge-Offs, each on such date.
67
<PAGE>
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Determination Date are (i) all Receivables
(other than all Ineligible Receivables) which were charged off as
uncollectible in respect of the immediately preceding Collection Period and
(ii) all Receivables which were Eligible Receivables when transferred to the
Trust, which arose in an Account which became an Ineligible Account after the
date of transfer of such Receivables to the Trust and which remained
outstanding for any six consecutive Determination Dates thereafter. DFS's
charge-off policy is based on SAU/NSF aging. For pay-as-sold accounts,
receivables which are coded as SAU/NSF are charged off at the end of the month
in which such receivables had been so coded for at least 181 days. For
delinquent scheduled payment accounts, DFS performs inventory inspections to
evaluate its collateral position with the related Dealer as DFS deems
necessary. If the inspection reveals an uncollateralized position, the
shortage is coded SAU. The SAU will be charged off on or before 181 days.
"SAU" is the code on DFS's servicing records representing the unpaid portion
of a receivable balance as to which the related Product has been sold but not
paid in full. DFS's "NSF" code represents checks from customers returned for
insufficient funds. DFS's charge off policy may change over time.
The "Defaulted Amount" for any Determination Date will be an amount (which
shall not be less than zero) equal to (a) the principal amount (exclusive of
the discounted portion that, if collected, would have been treated as a Non-
Principal Collection) of Receivables that became Defaulted Receivables during
the preceding Collection Period less (b) the full amount (exclusive of such
discounted portion) of any Defaulted Receivables subject to reassignment to
the Seller or purchase by the Servicer for such Collection Period unless
certain events of bankruptcy, insolvency, or receivership have occurred with
respect to either of the Seller or the Servicer, in which event the Defaulted
Amount will not be reduced for those Defaulted Receivables. Receivables will
be charged off as uncollectible in accordance with the Servicer's customary
and usual policies and procedures for servicing its own comparable revolving
dealer wholesale loan accounts. A portion of the Defaulted Amount equal to the
product of (x) the Defaulted Amount for such Collection Period and (y) the
Floating Allocation Percentage for such Collection Period will be allocated to
the Certificateholders. The portion of the Defaulted Amount allocated to the
Certificateholders is referred to as the "Investor Default Amount."
If the Servicer adjusts the amount of any Receivable because of a rebate,
refund, credit adjustment or billing error to a Dealer, or because such
Receivable was created in respect of inventory which was refused or returned
by a Dealer, the Seller's Participation Amount will be reduced by the amount
of the adjustment. Furthermore, if following such reduction the Pool Balance
would be less than the Required Participation Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
immediately following such Determination Date), the Seller will be required to
deposit a cash amount equal to such deficiency (up to the amount of such
Adjustment) into the Collection Account in immediately available funds (an
"Adjustment Payment") on the day on which such adjustment occurs.
INVESTOR CHARGE-OFFS
If on any Distribution Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution Date),
(i) the Available Subordinated Amount on the preceding Determination Date is
zero, (ii) the balance of the Reserve Fund on such Distribution Date is zero
and (iii) the Deficiency Amount is greater than zero, then the Class C
Invested Amount will be reduced by the amount of the excess of such Deficiency
Amount over any remaining Available Subordinated Amount on such Determination
Date, but not by more than the Investor Default Amount for the related
Collection Period (a "Class C Investor Charge-Off"). In the event that any
such reduction of the Class C Invested Amount would cause the Class C Invested
Amount to be a negative number, the Class C Invested Amount will be maintained
at or reduced to zero, and the Class B Invested Amount will be reduced by the
aggregate amount of such excess, but not more than the remaining Investor
Default Amount for such Collection Period (a "Class B Investor Charge-Off").
In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount will be maintained at or reduced to zero, and the Class A
Invested Amount
68
<PAGE>
will be reduced by the aggregate amount of such excess, but not more than the
remaining Investor Default Amount for such Collection Period (a "Class A
Investor Charge-Off"). Class A Investor Charge-Offs, Class B Investor Charge-
Offs and Class C Investor Charge-Offs will thereafter be reimbursed (in that
order) and the Class A Invested Amount, Class B Invested Amount and Class C
Invested Amount increased (in that order) (but not by an amount in excess of
the aggregate unreimbursed Class A Investor Charge-Offs, Class B Investor
Charge-Offs and Class C Investor Charge-Offs, as the case may be) on any
Distribution Date by the sum of (a) the Series 1996-1 Allocation Percentage of
Miscellaneous Payments with respect to such Distribution Date and (b) the
amount of Excess Servicing allocated and available for that purpose as
described above.
OPTIONAL REPURCHASE
On any Distribution Date occurring after the Invested Amount of the
Certificates is reduced to 10% of the initial outstanding principal amount of
the Certificates or less, the Seller will have the option, subject to certain
conditions, to repurchase the Certificateholders' Interest. The purchase price
will be equal to such outstanding Invested Amount plus accrued and unpaid
interest on the Certificates through the day preceding the Distribution Date on
which the repurchase occurs. The purchase price will be deposited in the
Collection Account in immediately available funds on the Distribution Date on
which the Seller exercises such option. Following any such purchase, the
Certificateholders will have no further rights with respect to the
Certificateholders' Interest, other than the right to receive the final
distribution on the Certificates. In the event that the Seller fails for any
reason to deposit such purchase price, payments will continue to be made to the
Certificateholders as described under "--Distributions from the Collection
Account; Reserve Fund."
EARLY AMORTIZATION EVENTS
Commencing on the first Distribution Date following the Collection Period in
which an Early Amortization Event has occurred, Principal Collections allocable
to the Certificateholders' Interest will no longer be deposited in the Excess
Funding Account or paid to the Seller or allocated to any other Series but
instead will be distributed to Certificateholders monthly on each Distribution
Date, except as described below, and the Controlled Distribution Amount will no
longer apply to distributions of principal on the Certificates. An "Early
Amortization Event" refers to any of the following events:
1. failure by the Seller to convey Receivables in Additional Accounts to
the Trust within five business days after the day on which it is required
to convey such Receivables pursuant to the Pooling and Servicing Agreement;
2. failure on the part of the Seller, the Servicer or DFS, as applicable,
(i) to make any payment or deposit required by the Pooling and Servicing
Agreement or the Receivables Contribution and Sale Agreement, including but
not limited to any Transfer Deposit Amount or Adjustment Payment, on or
before the date occurring five business days after the date such payment or
deposit is required to be made therein; or (ii) to deliver a Distribution
Date Statement on the date required under the Pooling and Servicing
Agreement (or within ten business days after notice from the Trustee of
such failure); (iii) to comply with its covenant not to create any lien on
a Receivable which failure has a material adverse effect on the
certificateholders and which continues unremedied for a period of 60 days
after written notice; provided, however, that an Early Amortization Event
shall not be deemed to have occurred if the Seller shall have repurchased
the related Receivables or, if applicable, all the Receivables during such
period in accordance with the provisions of the Pooling and Servicing
Agreement; or (iv) to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and Servicing Agreement or
the Receivables Contribution and Sale Agreement, which failure has a
materially adverse effect on the certificateholders and which continues
unremedied for a period of 45 days after written notice of such failure;
3. any representation or warranty made by DFS in the Receivables
Contribution and Sale Agreement or by the Seller in the Pooling and
Servicing Agreement or any information required to be given by the Seller
to the Trustee to identify the Accounts proves to have been incorrect in
any material respect when
69
<PAGE>
made and continues to be incorrect in any material respect for a period of
60 days after written notice and as a result the interests of the
certificateholders are materially and adversely affected (excluding,
however, any representation or warranty made by the Seller that the Pooling
and Servicing Agreement constitutes, or the transfer of the Receivables to
the Trust is, a valid sale, transfer and assignment to the Trust of all
right, title and interest of the Seller in the Receivables and the
Collateral Security if the Pooling and Servicing Agreement constitutes the
grant of a security interest in the Receivables and Collateral Security);
provided, however, that an Early Amortization Event shall not be deemed to
occur thereunder if the Seller has repurchased the related Receivables or
all such Receivables, if applicable, during such period in accordance with
the provisions of the Pooling and Servicing Agreement;
4. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of DFS, the Seller or Deutsche Bank North
America Holding Corporation (so long as DFS is a direct or indirect
subsidiary of Deutsche Bank North America Holding Corporation);
5. the Trust or the Seller becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
6. any Servicer Default occurs;
7. a Carry-over Amount is outstanding on six consecutive Distribution
Dates (after giving effect to the distribution on each such Distribution
Date);
8. on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Collection Periods, where the Monthly Payment Rate
for a Collection Period is the percentage obtained by dividing the
aggregate of the Receivables balances (without deducting therefrom the
discount portion) collected during such Collection Period by the average
daily aggregate Receivables balance (without deducting therefrom the
discount portion) for such Collection Period, is less than 27.5%;
9. the failure to pay the outstanding principal amount of the
Certificates by the Expected Final Payment Date;
10. the ratio (expressed as a percentage) of (i) the average for each
month of the net losses on the Receivables (exclusive of the Ineligible
Receivables) owned by the Trust (i.e., gross losses less recoveries on any
such Receivables (including, without limitation, recoveries from collateral
security in addition to recoveries from the products, recoveries from
Manufacturers and insurance proceeds)) during any three consecutive
calendar months to (ii) the average of the month-end aggregate balances of
such Receivables (without deducting therefrom the discount portion) for
such three-month period, exceeds 5% on an annualized basis; provided, that
this clause (10) may be amended or waived with the consent of the Seller
and each Rating Agency and without the consent of any Certificateholder;
11. the sum of all Eligible Investments and amounts on deposit in the
Excess Funding Account and any excess funding accounts for any other Series
represents more than 50% of the total assets of the Trust on each of six or
more consecutive Determination Dates, after giving effect to all payments
made or to be made on the Distribution Date next succeeding each such
respective Determination Date; and
12. on any Distribution Date, the balance of the Reserve Fund is less
than 2% of the aggregate outstanding principal balance of the Certificates,
in each case after giving effect to all deposits and distributions on such
Distribution Date.
Upon the occurrence of any event described above, an Early Amortization Event
will be deemed to have occurred without any notice or other action on the part
of any other party immediately upon the occurrence of such event. The Early
Amortization Period will commence as of the day on which the Early Amortization
Event occurs. Monthly distributions of principal to the Certificateholders will
begin on the first Distribution Date following the Collection Period in which
an Early Amortization Period has commenced and will continue, to the extent
described under "--Distributions" above, on subsequent Distribution Dates.
In addition to the consequences of an Early Amortization Event discussed
above, if an insolvency event occurs with respect to the Seller, or the Seller
violates its covenant not to create any lien on any Receivable, in
70
<PAGE>
each case as provided in the Pooling and Servicing Agreement, on the day of
such insolvency event or such violation, as applicable, the Seller will
immediately cease to transfer Receivables to the Trust and promptly give notice
to the Trustee of such insolvency event or violation, as applicable, and the
Trust will be deemed to have terminated, subject to the liquidation, winding up
and dissolution procedures described below. Under the terms of the Pooling and
Servicing Agreement (unless the provisions of the Pooling and Servicing
Agreement have been amended, as described under "--Amendments" below, to
eliminate the provisions relating to the sale of Receivables upon the
occurrence of an insolvency event with respect to the Seller), within 15 days
the Trustee will publish a notice of such insolvency event or violation stating
that the Trustee intends to sell, liquidate or otherwise dispose of the
Receivables in a commercially reasonable manner and on commercially reasonable
terms, unless within a specified period of time holders of Certificates and
certificates of each other outstanding Series representing more than 50% of the
aggregate outstanding principal amount of the certificates of each such Series
(or, with respect to any Series with two or more classes, the certificates of
each such class) and each person holding a Supplemental Certificate, instruct
the Trustee not to sell, liquidate or dispose of the Receivables and to
continue transferring Receivables as before such insolvency event or violation,
as applicable. If the portion of such proceeds allocated to the
Certificateholders' Interest and the proceeds of any collections on the
Receivables in the Collection Account allocable to the Certificateholders'
Interest are not sufficient to pay the aggregate unpaid principal balance of
the Certificates in full plus accrued and unpaid interest thereon,
Certificateholders will incur a loss. Notwithstanding the above, in the case of
the violation of the covenant not to create a lien on any Receivable, the Trust
will not sell the Receivables unless the proceeds allocable to the
Certificateholders' Interest are sufficient to pay the aggregate unpaid
principal balance of the Certificates in full plus accrued and unpaid interest
thereon.
TERMINATION
The Trust will terminate on the earlier to occur of (a) the day following the
Distribution Date on which the aggregate Invested Amounts for all Series is
zero, if the Seller elects to terminate the Trust at such time, and (b)
December 31, 2014. Upon termination of the Trust, all right, title and interest
in the Receivables and other funds of the Trust (other than amounts in the
Collection Account for the final distribution of principal and interest to
certificateholders) will be conveyed and transferred to the Seller.
In any event, the last payment of principal and interest on the Certificates
will be due and payable no later than the October 2001 Distribution Date (the
"Termination Date"). In the event that the Invested Amount is greater than zero
on the Termination Date, the Trustee will sell or cause to be sold (and apply
the proceeds to the extent necessary to pay such remaining amounts to all
Certificateholders) an interest in the Receivables or certain Receivables, as
specified in the Pooling and Servicing Agreement, in an amount equal to the sum
of (a) 110% of the Invested Amount (after giving effect to deposits and
distributions otherwise to be made on the Termination Date) and (b) the
Available Subordinated Amount on the preceding Determination Date (after giving
effect to allocations to be made on the Distribution Date following such
Determination Date); provided, however, that in no event shall such amount
exceed the Series 1996-1 Allocation Percentage of Receivables on such
Termination Date. The net proceeds of such sale and any collections on the
Receivables will be paid first to Class A Certificateholders, until the accrued
and unpaid Class A Monthly Interest and all Class A Additional Interest is paid
in full and the Class A Invested Amount is reduced to zero, second to Class B
Certificateholders, until the accrued and unpaid Class B Monthly Interest and
all Class B Additional Interest is paid in full and the Class B Invested Amount
is reduced to zero, and third to Class C Certificateholders, until the accrued
and unpaid Class C Monthly Interest and all Class C Additional Interest is paid
in full the Class C Invested Amount is reduced to zero. Any remaining proceeds
will be paid to the Seller.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Servicer will indemnify
the Trust and the Trustee from and against any loss, liability, expense, damage
or injury suffered or sustained arising out of any acts or omissions arising
out of activities of the Trust, the Trustee or the Servicer pursuant to the
Pooling and Servicing
71
<PAGE>
Agreement; provided that the Trust or the Trustee will not be so indemnified if
such acts or omissions constitute fraud, gross negligence, breach of fiduciary
duty or willful misconduct by the Trustee. In addition, the Servicer will not
indemnify the Trust, the Trustee or the certificateholders for any act taken by
the Trustee at the request of the certificateholders or for any tax required to
be paid by the Trust or the certificateholders or for any loss as an investor
in the certificates.
The Pooling and Servicing Agreement provides that, except as described above
and with certain other exceptions, neither the Seller, the Servicer, Deutsche
FRI nor any of their directors, officers, employees or agents will be under any
liability to the Trust, the Trustee, the certificateholders or any other person
for taking any action, or for refraining from taking any action, pursuant to
the Pooling and Servicing Agreement. However, neither the Seller, the Servicer,
Deutsche FRI nor any of their directors, officers, employees or agents will be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence of any such person in the
performance of their duties or by reason of reckless disregard of their
obligations and duties thereunder.
In addition, the Pooling and Servicing Agreement provides that the Servicer
is not under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its servicing responsibilities under the Pooling and
Servicing Agreement. The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
certificateholders with respect to the Pooling and Servicing Agreement and the
rights and duties of the parties thereto and the interest of the
certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer is responsible
for servicing, collecting, enforcing and administering the Receivables in
accordance with customary and usual procedures for servicing its own revolving
credit line dealer wholesale loans, except where the failure to so act would
not materially and adversely affect the rights of the Trust.
DFS covenants that it may only change the terms relating to the Accounts if
(i) in the Servicer's reasonable judgment, no Early Amortization Event will
occur as a result of the change and (ii) the change is made applicable to the
comparable segment of the portfolio of revolving credit line dealer wholesale
loan accounts with similar characteristics owned or serviced by DFS and not
only to the Accounts.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with dealers, investigating payment
delinquencies, evaluating the increase of credit limits, and maintaining
internal records with respect to each Account. Managerial and custodial
services performed by the Servicer on behalf of the Trust include providing
assistance in any inspections of the documents and records relating to the
Accounts and Receivables by the Trustee pursuant to the Pooling and Servicing
Agreement, maintaining the agreements, documents and files relating to the
Accounts and Receivables as custodian for the Trust and providing related data
processing and reporting services for certificateholders and on behalf of the
Trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the Servicer covenants that: (a) it
will duly satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and Accounts, will maintain in effect all
qualifications required in order to service the Receivables and Accounts and
will comply in all material respects with all requirements of law in connection
with servicing the Receivables and the Accounts, the failure to comply with
which would have a material adverse effect on the certificateholders of any
outstanding Series; (b) it will not permit any rescission or cancellation of a
Receivable except as ordered by a court of competent jurisdiction or other
government authority; (c) it will do nothing to impair the rights of the
certificateholders in the Receivables; and (d) it will not reschedule, revise
or defer payments due on any Receivable except in accordance with its
guidelines for servicing revolving credit line dealer loans.
72
<PAGE>
Under the terms of the Pooling and Servicing Agreement, if the Seller or the
Servicer discovers, or receives written notice, that any covenant of the
Servicer set forth above has not been complied with in all material respects
and such noncompliance has not been cured within 30 days thereafter (or such
longer period as the Trustee may agree to) and has a material adverse effect on
the interests of all certificateholders in any Receivable or Account, DFS, as
Servicer, will purchase such Receivable or all Receivables in such Account, as
applicable. Such purchase will be made on the Determination Date following the
expiration of the 30 day cure period and the Servicer will be obligated to
deposit into the Collection Account an amount equal to the amount of such
Receivable plus accrued and unpaid interest thereon in the Collection Account.
The amount of such deposit shall be deemed a "Transfer Deposit Amount." The
purchase by the Servicer constitutes the sole remedy available to the
certificateholders if such covenant or warranty of the Servicer is not
satisfied and the Trust's interest in any such purchased Receivables shall be
automatically assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation with respect to the Receivables for its servicing
activities and reimbursement for its expenses will be a monthly servicing fee
(the "Servicing Fee") in an amount payable in arrears on each Distribution Date
prior to the Termination Date generally equal to one-twelfth of the product of
(a) 2% or, if the Servicing Fee has been waived as described below, 0% for the
Distribution Date in respect of which the Servicing Fee has been waived (the
"Servicing Fee Rate"), and (b) the Series 1996-1 Allocation Percentage of the
Pool Balance as of the last day of the second preceding Collection Period. The
share of the Servicing Fee allocable to the Certificateholders with respect to
any Distribution Date (the "Monthly Servicing Fee") will generally be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the Invested
Amount as of the last day of the second preceding Collection Period. The
remainder of the Servicing Fee shall be paid by the Seller and the
certificateholders of other Series. The Monthly Servicing Fee shall be payable
to the Servicer solely to the extent amounts are available for distribution
therefor in accordance with the terms of the Pooling and Servicing Agreement.
The Servicer will be permitted to waive its right to receive the Servicing
Fee on any Distribution Date, so long as it believes that sufficient Non-
Principal Collections will be available on a future Distribution Date to pay
the Monthly Servicing Fee relating to such waived Servicing Fee, in which case
the Servicing Fee and the Monthly Servicing Fee for such Distribution Date
shall be deemed to be zero.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, payment of fees and disbursements of the Trustee
and independent accountants and all other fees and expenses which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
Trust or the certificateholders other than federal, state and local income and
franchise taxes, if any, of the Trust or the certificateholders.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the Pooling
and Servicing Agreement, except upon determination that such duties are no
longer permissible under applicable law. No such resignation will become
effective until the Trustee or a successor to the Servicer has assumed the
Servicer's responsibilities and obligations under the Pooling and Servicing
Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any
person succeeding to the business of the Servicer, will be the successor to the
Servicer under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default, the Trustee, by written notice to the
Servicer, may terminate all of the rights and obligations of the Servicer, as
servicer, under the Pooling and Servicing Agreement and in and to the
73
<PAGE>
Receivables and the proceeds thereof and appoint a new Servicer (a "Service
Transfer"). The rights and interest of the Seller under the Pooling and
Servicing Agreement in the Seller's Interest will not be affected by any
Service Transfer. The Trustee shall as promptly as possible appoint a successor
Servicer and if no successor Servicer has been appointed by the Trustee and has
accepted such appointment by the time the Servicer ceases to act as Servicer,
all rights, authority, power and obligations of the Servicer under the Pooling
and Servicing Agreement shall pass to and be vested in the Trustee. Prior to
any Service Transfer, the Trustee will review any bids obtained from potential
servicers meeting certain eligibility requirements set forth in the Pooling and
Servicing Agreement to serve as successor Servicer for servicing compensation
not in excess of the Servicing Fee plus certain excess amounts payable to the
Seller.
A "Servicer Default" refers to any of the following events:
1. failure by the Servicer to make any payment, transfer or deposit, or
to give instructions to the Trustee to make any payment, transfer or
deposit or to take action under any Enhancement, on the date the Servicer
is required to do so under the Pooling and Servicing Agreement, which is
not cured within five business days after written notice from the Trustee
of such failure;
2. failure on the part of the Servicer duly to observe or perform (i) its
covenant not to create any lien on any Receivable which failure has a
material adverse effect on the certificateholders and which continues
unremedied for a period of 60 days after written notice to it; provided,
however, that a Servicer Default shall not be deemed to have occurred if
the Seller or the Servicer shall have repurchased the related Receivables
or, if applicable, all the Receivables during such period in accordance
with the terms and provisions of the Pooling and Servicing Agreement or
(ii) any other covenants or agreements of the Servicer in the Pooling and
Servicing Agreement (exclusive of breaches of covenants in respect of which
the Servicer repurchases the related Receivables, as described under "--
Servicer Covenants") which failure has a materially adverse effect on the
certificateholders of any outstanding Series and which continues unremedied
for a period of 30 days after written notice thereof to the Servicer;
3. any representation, warranty or certification made by the Servicer in
the Pooling and Servicing Agreement or in any certificate delivered
pursuant to the Pooling and Servicing Agreement proves to have been
incorrect when made, which has a materially adverse effect on the rights of
the certificateholders of any outstanding Series, and which materially
adverse effect continues for a period of 60 days after written notice;
provided, however, that a Servicer Default shall not be deemed to have
occurred if the Seller or the Servicer shall have repurchased the related
Receivables or, if applicable, all the Receivables during such period in
accordance with the provisions of the Pooling and Servicing Agreement; or
4. the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to under clause (1) above for a period of ten business days or referred to
under clauses (2) or (3) for a period of 60 business days, shall not constitute
a Servicer Default if such delay or failure was caused by an act of God or
other similar occurrence. Upon the occurrence of any such event, the Servicer
shall not be relieved from using its best efforts to perform its obligations in
a timely manner in accordance with the terms of the Pooling and Servicing
Agreement and the Servicer shall provide the Trustee, any Enhancement Provider,
the Seller and the certificateholders prompt notice of such failure or delay by
it, together with a description of its efforts to so perform its obligations.
The Servicer shall immediately notify the Trustee in writing of any Servicer
Default.
REPORTS
On each Distribution Date (including the Expected Final Payment Date), the
Trustee will forward (or cause to be forwarded) to each Certificateholder of
record (which, in the case of Class A and Class B Certificateholders, is
expected to be Cede, as nominee for DTC, unless Definitive Certificates are
issued) a statement (the "Distribution Date Statement") prepared by the
Servicer setting forth the following information: (a) the aggregate amount of
collections, the aggregate amount of Non-Principal Collections and the
aggregate amount
74
<PAGE>
of Principal Collections processed during the immediately preceding Collection
Period and the amount on deposit in the Collection Account; (b) the Series
1996-1 Allocation Percentage, the Floating Allocation Percentage and the
Principal Allocation Percentage for such Collection Period; (c) the total
amount, if any, distributed on the Certificates; (d) the amount of such
distribution allocable to principal on each class of Certificates; (e) the
amount of such distribution allocable to interest on each class of
Certificates; (f) the Investor Default Amount for such Distribution Date; (g)
the Required Subordination Draw Amount, if any, for the preceding Collection
Period; (h) the amount of the Class A, Class B and Class C Investor Charge-Offs
and the amounts of reimbursements thereof for the preceding Collection Period;
(i) the amount of the Monthly Servicing Fee for the preceding Collection
Period; (j) the Controlled Distribution Amount; (k) the Invested Amount
(separately stating the Class A, Class B and Class C Invested Amounts), the
Excess Funding Account balance and the outstanding principal balance of each
class of Certificates for such distribution (after giving effect to all
distributions which will occur on such Distribution Date); (l) the "pool
factor" for each class of Certificates as of the Determination Date with
respect to such Distribution Date (consisting of an eleven-digit decimal
expressing the Invested Amount of each class as of such Determination Date
(determined after taking into account any reduction in the Invested Amount for
such class which will occur on such Distribution Date) as a portion of the
initial principal balance of such class); (m) the Available Subordinated Amount
for such Determination Date; (n) the Reserve Fund balance for such date; and
(o) the Principal Funding Account Balance and the Interest Funding Account
Balance with respect to such date.
On or before January 31 of each calendar year, the Trustee will furnish (or
cause to be furnished) to each person who at any time during the preceding
calendar year was a Certificateholder of record (which, in the case of Class A
and Class B Certificateholders, is expected to be Cede, as nominee for DTC,
unless Definitive Certificates are issued) a statement containing the
information required to be provided by an issuer of indebtedness under the Code
for such preceding calendar year or the applicable portion thereof during which
such person was a Certificateholder, together with such other customary
information as is necessary to enable the Certificateholders to prepare their
tax returns. Moreover, as long as the Class A and Class B Certificateholder of
record is Cede, as nominee for DTC, Certificate Owners will receive tax and
other information from Participants and Indirect Participants rather than from
the Trustee. See "Federal Income Tax Considerations" and "State and Local Tax
Consequences."
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before April 30 of
each calendar year the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Seller) to furnish a report relating to certain matters in
connection with the servicing of the Receivables.
The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before April 30 of each calendar year of a statement signed by an officer of
the Servicer to the effect that the Servicer has fully performed, or caused to
be fully performed its obligations in all material respects under the Pooling
and Servicing Agreement throughout the preceding year or, if there has been a
default in the performance of any such obligation, specifying the nature and
status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee. See "--The
Trustee" below.
AMENDMENTS
The Pooling and Servicing Agreement or any Supplement may be amended by the
Seller, the Servicer and the Trustee, without certificateholder consent, so
long as any such action shall not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of the
certificateholders. Notwithstanding the foregoing, the Pooling and Servicing
Agreement may be amended by the Servicer, the Seller and the Trustee without
the consent of any of the Certificateholders to change in any manner the
treatment of Delayed Funding
75
<PAGE>
Receivables under the Pooling and Servicing Agreement, but only upon
satisfaction of the Rating Agency Condition. In addition, the Pooling and
Servicing Agreement or any Supplement may be amended by the Servicer and the
Trustee at the direction of the Seller without the consent of any of the
Certificateholders (1) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable the Seller or any of its affiliates
(including Deutsche Bank AG) to minimize or avoid capital charges under any
applicable law, rule, regulation or guideline relating to regulatory or risk-
based capital, (2) to enable all or a portion of the Trust to qualify as a
partnership for federal income tax purposes under applicable regulations on
the classification of entities as partnerships or corporations under the Code
adopted as final regulations after the date hereof, and to the extent that
such regulations eliminate or modify the need therefor, to modify or eliminate
existing provisions of the Pooling and Servicing Agreement or any Supplement
relating to the intended availability of partnership treatment of the Trust
for federal income tax purposes, (3) to enable all or a portion of the Trust
to qualify as, and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust," as described
in the provisions of the "Small Business Job Protection Act of 1996," H.R.
3448 (and, in connection with any such election, to modify or eliminate
existing provisions of the Pooling and Servicing Agreement or any Supplement
relating to the intended Federal income tax treatment of the Certificates and
the Trust in the absence of such election, which may include elimination of
the sale of Receivables upon the occurrence of an insolvency event with
respect to the Seller pursuant to the Pooling and Servicing Agreement and
certain provisions of the Pooling and Servicing Agreement relating to the
liability of the Seller), or (4) to enable the Seller or any of its affiliates
to comply with or obtain more favorable treatment under any law or regulation
or any accounting rule or principle, so long as in each case the Rating Agency
Condition has been satisfied and, in the case of (2) or (3), the Seller and
the Trustee have received an opinion of counsel to the effect that such
amendment will not adversely affect the characterization of the certificates
of any outstanding Series or class as debt or partnership interests; provided,
however, that if any such amendment occurs while Series 1994-1 is outstanding
an opinion of counsel for the Seller, addressed and delivered to the Trustee,
shall be required providing that such amendment will not adversely affect in
any material respect the interests of any investor certificateholders of
Series 1994-1.
The Pooling and Servicing Agreement or any Supplement may be amended by the
Seller, the Servicer and the Trustee with the consent of the holders of
certificates evidencing more than 50% of the aggregate unpaid principal amount
of the certificates of all adversely affected Series for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or any Supplement or of
modifying in any manner the rights of certificateholders. No such amendment,
however, may (a) reduce in any manner the amount of, or delay the timing of,
distributions required to be made on any certificate, (b) change the
definition of or the manner of calculating the interest of any
certificateholder, (c) reduce the amount available under any Enhancement, (d)
adversely affect the rating of any Series or class by any Rating Agency
without the consent of all holders of certificates of such Series or class or
(e) reduce the aforesaid percentage of the unpaid principal amount of
certificates the holders of which are required to consent to any such
amendment, in the case of (a), (b) and (c) without the consent of the holder
of such certificate and, in the case of (e), without the consent of all
certificateholders of the adversely affected Series. Promptly following the
execution of any such amendment (other than an amendment described in the
preceding paragraph), the Trustee will furnish written notice of the substance
of such amendment to each certificateholder.
The Pooling and Servicing Agreement may not be amended in any manner which
materially adversely affects the interests of any Enhancement Provider without
its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more certificateholders of record the
Trustee will afford such certificateholders access during business hours to
the current list of certificateholders for purposes of communicating with
other certificateholders with respect to their rights under the Pooling and
Servicing Agreement. See "--Book-Entry Registration" and "--Definitive
Certificates."
The Pooling and Servicing Agreement does not provide for any annual or other
meetings of Certificateholders.
76
<PAGE>
THE TRUSTEE
The Chase Manhattan Bank, a New York banking corporation, will act as Trustee
under the Pooling and Servicing Agreement. The Trustee is located at, and any
request for copies of statements, certificates and reports furnished to the
Trustee should be addressed to the Trustee at, 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Advanced Structured Products Group.
The Seller, the Servicer and their respective affiliates may from time to time
enter into normal banking and trustee relationships with the Trustee and its
affiliates. The Trustee may hold Certificates in its own name with the same
rights it would have if it were not the Trustee. In addition, for purposes of
meeting the legal requirements of certain local jurisdictions, the Trustee
shall have the power to appoint a co-trustee or separate trustees of all or a
part of the Trust. In the event of such appointments, all rights, powers,
duties and obligations shall be conferred or imposed upon the Trustee and such
separate trustee or co-trustee jointly, or in any jurisdiction in which the
Trustee shall be incompetent or unqualified to perform certain acts singly upon
such separate trustee or co-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 Seller will be
obligated to appoint a successor Trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Servicer may appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee does not become
effective until the acceptance of the appointment by the successor Trustee.
DESCRIPTION OF THE RECEIVABLES CONTRIBUTION AND SALE AGREEMENT
The following summary describes certain terms of the Receivables Contribution
and Sale Agreement, but it does not purport to be complete and is qualified in
its entirety by reference to the Receivables Contribution and Sale Agreement.
If other affiliates of DFS originate receivables and sell them to the Seller
for transfer to the Trust, such other affiliates will become parties to the
Receivables Contribution and Sale Agreement and make representations,
warranties and covenants similar to those described below with respect to DFS
and Deutsche BSC.
SALE OR TRANSFER OF RECEIVABLES
Pursuant to the Receivables Contribution and Sale Agreement, DFS and Deutsche
BSC have contributed or sold to the Seller all of their right, title and
interest in and to all of the Receivables and the Collateral Security as of the
Initial Cut-Off Date and all of the Receivables thereafter created with respect
thereto. Pursuant to the Pooling and Servicing Agreement, the Seller has
transferred to the Trust all of its right, title and interest in and to the
Receivables Contribution and Sale Agreement.
In connection with the contribution or sale of the Receivables to the Seller,
DFS and Deutsche BSC have and will continue to indicate in their books and
records, which may include their computer files, that the Receivables have been
sold or transferred to the Seller, and that such Receivables have been
transferred by the Seller to the Trust. In addition, DFS and Deutsche BSC
provided to the Seller a computer file or microfiche or written list containing
a true and complete list of all such Receivables, identifying the balances of
the Receivables as of the Initial Cut-Off Date. The records and agreements
relating to the Accounts and Receivables have not been, and will not be,
segregated by DFS and Deutsche BSC from other documents and agreements relating
to other accounts and receivables and have not been, and will not be, stamped
or marked to reflect the sale or transfer of the Receivables to the Seller, but
the books and records of DFS and Deutsche BSC which may include computer files,
evidence such sale or transfer. DFS and Deutsche BSC filed UCC financing
statements with respect to the Receivables meeting the requirements of Missouri
and Georgia state law, respectively. See "Risk Factors--Certain Legal Aspects"
and "Certain Legal Aspects of the Receivables--Transfer of Receivables."
REPRESENTATIONS AND WARRANTIES
Each of DFS and Deutsche BSC has or will make certain representations and
warranties to the Seller to the effect that, among other things, as of the
Initial Closing Date, the Closing Date and each Series Issuance Date, it was
duly incorporated and in good standing and that it has the authority to
consummate the transactions contemplated by the Receivables Contribution and
Sale Agreement.
77
<PAGE>
Each of DFS and Deutsche BSC has or will also make representations and
warranties to the Seller relating to the Receivables to the effect, among other
things, that (a) as of the Initial Cut-Off Date and each closing date, each of
the Accounts is an Eligible Account and, in the case of Additional Accounts, on
the applicable Additional Cut-Off Date and each subsequent closing date, such
Additional Account is an Eligible Account and (b) on the Initial Closing Date,
each Additional Cut-Off Date and on each Transfer Date, each Receivable
conveyed on such date is an Eligible Receivable or, if such Receivable is not
an Eligible Receivable, such Receivable is conveyed to the Seller. In the event
of a breach of any representation and warranty set forth in this paragraph
which results in a transfer of such Receivable to the Seller pursuant to the
Pooling and Servicing Agreement, then DFS or Deutsche BSC, as the case may be,
shall repurchase such Receivable from the Seller on the date of such
retransfer. The purchase price for such Ineligible Receivable shall be the face
amount thereof plus any accrued and unpaid interest thereon.
Each of DFS and Deutsche BSC has or will also make representations and
warranties to the Seller to the effect, among other things, that as of the
Initial Closing Date, the Closing Date and each Series Issuance Date (a) the
Receivables Contribution and Sale Agreement constitutes a legal, valid and
binding obligation of DFS or Deutsche BSC, as the case may be, and (b) the
Receivables Contribution and Sale Agreement constitutes a valid sale or
transfer to the Seller of all right, title and interest of DFS and Deutsche BSC
in and to the Receivables, whether then existing or thereafter created in the
Accounts, the Collateral Security and the proceeds thereof which is effective
as to each Receivable upon the creation thereof. If the breach of any of the
representations and warranties described in this paragraph results in the
obligation of the Seller under the Pooling and Servicing Agreement to accept
retransfer of the Receivables, DFS and Deutsche BSC will be obligated to
repurchase the Receivables retransferred to DFS for an amount of cash equal to
the amount of cash the Seller is required to deposit under the Pooling and
Servicing Agreement in connection with such retransfer.
DFS and Deutsche BSC will agree to indemnify the Seller and to hold the
Seller harmless from and against any and all losses, damages and expenses
(including reasonable attorneys' fees) suffered or incurred by the Seller if
the foregoing representations and warranties are materially false.
CERTAIN COVENANTS
In the Receivables Contribution and Sale Agreement, each of DFS and Deutsche
BSC has covenanted that it will perform its obligations under the agreements
relating to the Receivables and the Accounts in conformity with its then-
current policies and procedures relating to the Receivables and the Accounts.
Each of DFS and Deutsche BSC has covenanted further that, except for the sale
and conveyances under the Receivables Contribution and Sale Agreement and the
interests created under Participations, DFS and Deutsche BSC will not sell,
pledge, assign or transfer any interest in the Receivables to any other person.
Each of DFS and Deutsche BSC also has covenanted to defend and indemnify the
Seller for any loss, liability or expense incurred by the Seller in connection
with a breach by DFS or Deutsche BSC of any of its representations, warranties
or covenants contained in the Receivables Contribution and Sale Agreement.
In addition, DFS and Deutsche BSC have expressly acknowledged and consented
to the Seller's assignment of its rights relating to the Receivables under the
Receivables Contribution and Sale Agreement to the Trustee.
TERMINATION
The Receivables Contribution and Sale Agreement will terminate immediately
after the Trust terminates. In addition, if DFS or Deutsche BSC becomes party
to any bankruptcy or similar proceeding (other than as a claimant) and, if such
proceeding is not voluntary and is not dismissed within 60 days of its
institution, DFS or Deutsche BSC, as the case may be, will immediately cease to
sell or transfer Receivables to the Seller and will promptly give notice of
such event to the Seller and to the Trustee.
78
<PAGE>
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Initial Closing Date, DFS contributed, and Deutsche BSC sold,
Receivables to the Seller, which Receivables were immediately sold and assigned
to the Trust. The Seller has represented and warranted and will represent and
warrant on the Closing Date that such sale to the Trust constituted a valid
transfer and assignment to the Trust of all right, title and interest of the
Seller in and to the Receivables and that, under the UCC (as in effect in
Missouri), there exists a valid, subsisting and enforceable first priority
perfected ownership interest in the Receivables, in existence at the time of
the formation of the Trust or at the date of addition of any Additional
Accounts, in favor of the Trust and a valid, subsisting and enforceable first
priority perfected ownership interest in the Receivables created thereafter in
favor of the Trust on and after their creation. However, the transfer of
Receivables by the Seller to the Trust could be deemed to create a security
interest under the UCC. For a discussion of the Trust's rights arising from
these representations and warranties not being satisfied, see "Description of
the Certificates--Representations and Warranties."
Each of DFS, Deutsche BSC and the Seller has represented that the Receivables
are "chattel paper", "accounts" or "general intangibles" for purposes of the
UCC as in effect in Missouri (in the case of Deutsche BSC, Georgia). If the
Receivables are deemed to be chattel paper and the transfer thereof by either
DFS or Deutsche BSC to the Seller or by the Seller to the Trust is deemed
either to be a sale or to create a security interest, the UCC as in effect in
Missouri (in the case of Deutsche BSC, Georgia) applies and the transferee must
either take possession of the chattel paper or file an appropriate financing
statement or statements in order to perfect its interest therein. If the
Receivables are treated as accounts and the transfer thereof by either DFS or
Deutsche BSC to the Seller or by the Seller to the Trust is deemed either to be
a sale or to create a security interest, the transferee must file an
appropriate financing statement or statements in order to perfect its interest
therein under the UCC in Missouri (in the case of Deutsche BSC, Georgia). If a
transfer of general intangibles is deemed to create a security interest, filing
an appropriate financing statement or statements is also required under the UCC
as in effect in Missouri (in the case of Deutsche BSC, Georgia) in order to
perfect the Trust's security interest. If a transfer of general intangibles is
deemed to be a sale, then the UCC as in effect in Missouri (in the case of
Deutsche BSC, Georgia) is not applicable and no further action under the UCC is
required to protect the Trust's interest from third parties. Financing
statements covering the Receivables have been filed under the UCC as in effect
in Missouri (in the case of Deutsche BSC, Georgia) by both the Seller and the
Trust to perfect their respective interests in the Receivables and continuation
statements will be filed as required to continue the perfection of such
interests. The Receivables will not be segregated or stamped to indicate the
interest of the Seller or the Trustee. Any interest in Receivables acquired by
the Seller (and the Trust) will be subject to the rights and defenses
(including rights of setoff) of the applicable Dealer against DFS or Deutsche
BSC, as the case may be.
There are certain limited circumstances under the UCC and applicable federal
law in which prior or subsequent transferees of Receivables could have an
interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables who gives new value and takes possession of the
instruments which evidence the Receivables (i.e., the chattel paper) in the
ordinary course of such purchaser's business may, under certain circumstances,
have priority over the interest of the Trust in the Receivables. A tax or other
government lien on property of DFS, Deutsche BSC or the Seller arising prior to
the time a Receivable is conveyed to the Trust may also have priority over the
interest of the Trust in such Receivable. Under the Receivables Contribution
and Sale Agreement, each of DFS and Deutsche BSC has warranted to the Seller,
and under the Pooling and Servicing Agreement the Seller has warranted to the
Trust, that the Receivables have been transferred free and clear of the lien of
any third party. Each of DFS, Deutsche BSC and the Seller has also covenanted
that it will not sell, pledge, assign, transfer or grant any lien on any
Receivable or, except as described under "Description of the Certificates--
Supplemental Certificates," the Seller's Certificate (or any interest therein)
other than to the Trust. In addition, while DFS is the Servicer, cash
collections on the Receivables may, under certain circumstances, be commingled
with the funds of DFS prior to deposit in the Collection Account. If DFS became
subject to bankruptcy proceedings, the Certificateholders might incur a loss
with respect to collections not deposited in the Collection Account. See "Risk
Factors--Risk of Commingling."
79
<PAGE>
The Seller has warranted to the Trust that the transfer of the Receivables to
the Trust is a sale of the Receivables to the Trust. The Seller is required to
take all actions that are required under Missouri law to perfect the Trust's
ownership interest in the Receivables and the Seller has warranted to the Trust
that the Trust will at all times have a first priority perfected ownership
interest therein and, with certain exceptions, proceeds thereof. Nevertheless,
a tax or government lien on property of DFS, Deutsche BSC or the Seller arising
prior to the time a Receivable is conveyed to the Trust may have priority over
the interest of the Trust in such Receivable.
In administering the Receivables, the Servicer may exercise a right of set-
off in a Floorplan Agreement against a Manufacturer that becomes insolvent. It
is possible that such exercise of a right of set-off may take the form of not
funding a Delayed Funding Receivable owned by the Trust and applying such funds
toward an obligation of the Manufacturer in respect of a receivable owned by
DFS or one of its affiliates. The Dealer obligated under such Delayed Funding
Receivable may in turn take the position that DFS has failed to perform its
obligation under the Delayed Funding Receivable and, consequently, that it is
discharged from its obligation to pay such Delayed Funding Receivable.
CERTAIN MATTERS RELATING TO BANKRUPTCY OF DFS, THE SELLER OR DEUTSCHE FRI
Each of DFS and Deutsche BSC has warranted to the Seller in the Receivables
Contribution and Sale Agreement that the sale of the Receivables by it to the
Seller is a valid sale of the Receivables to the Seller. In addition, DFS,
Deutsche BSC and the Seller have agreed to treat the transactions described
herein as a sale of the Receivables to the Seller, and DFS and Deutsche BSC
have and will take all actions that are required under Missouri law (in the
case of Deutsche BSC, Georgia law) to perfect the Seller's ownership interest
in the Receivables. Notwithstanding the foregoing, if DFS or Deutsche BSC were
to become a debtor in a bankruptcy case and a creditor or trustee in bankruptcy
of such debtor or such debtor itself were to take the position that the sale of
Receivables from such debtor to the Seller should be recharacterized as a
pledge of such Receivables to secure a borrowing from such debtor, then delays
in payments of collections of Receivables to the Seller could occur or (should
the court rule in favor of any such trustee, debtor in possession or creditor)
reductions in the amount of such payments could result.
In addition, if DFS or Deutsche BSC were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to request a court to order that DFS or Deutsche BSC, as
applicable, should be substantively consolidated with the Seller, delays in
payments on the Certificates could result. Should the bankruptcy court rule in
favor of any such creditor, trustee-in-bankruptcy or such debtor, reductions in
such payments could result.
With respect to a Delayed Funding Receivable, if DFS were to become a debtor
in a bankruptcy case prior to funding such Receivable, its trustee-in-
bankruptcy or its creditors may assert that such Delayed Funding Receivable is
an executory contract and such trustee-in-bankruptcy may disaffirm DFS's
obligation to fund such Receivable. Such a disaffirmance would discharge the
obligation of the Dealer on such Delayed Funding Receivable to pay such
Receivable and the Trust would suffer a loss in respect of such Receivable.
A limited partnership could become insolvent upon the insolvency of its
general partner. Deutsche FRI's certificate of incorporation provides that,
under certain circumstances, Deutsche FRI is required to have two independent
directors (as defined therein) in which event it shall not file a voluntary
application for relief under Title 11 of the United States Code (the
"Bankruptcy Code") without the affirmative vote of both independent directors.
Pursuant to the Pooling and Servicing Agreement, the Trustee, all
certificateholders and any Enhancement Provider will covenant that they will
not at any time institute against the Seller any bankruptcy, reorganization or
other proceedings under any federal or state bankruptcy or similar law. In
addition, certain other steps will be taken to avoid the Seller's and Deutsche
FRI's becoming a debtor in a bankruptcy case. Notwithstanding such steps, if
the Seller were to become a debtor in a bankruptcy case, and a bankruptcy
trustee for the Seller or the Seller as debtor in possession or a creditor of
the Seller were to take the position that the transfer of the Receivables from
the Seller to the Trust should be recharacterized as a pledge of such
Receivables, then delays in payments on the Certificates or (should the court
rule in favor of any such trustee, debtor in possession or creditor) reductions
in the amount of such payments could result.
80
<PAGE>
The Seller and Deutsche FRI do not intend to file, and DFS has agreed that it
will not cause Deutsche FRI to file, a voluntary application for relief under
the Bankruptcy Code or any similar applicable state law so long as the Seller
or Deutsche FRI, as applicable, is solvent and does not foresee becoming
insolvent.
If DFS or the Seller were to become a debtor in a bankruptcy case causing an
Early Amortization Event to occur, then, pursuant to the Receivables
Contribution and Sale Agreement, new Receivables would no longer be transferred
to the Seller and, pursuant to the Pooling and Servicing Agreement, only
collections on Receivables theretofore sold to the Seller and transferred to
the Trust would be available to be applied to pay interest accruing on the
Certificates and to pay the principal amount of the Certificates. Under such
circumstances, the Servicer is obligated to allocate all Principal Collections
to the oldest principal balance first. If such allocation method were to be
altered by the bankruptcy court, the rate of payment on the Certificates might
be adversely affected. In addition, distributions of principal on each
Certificate would not be subject to the applicable Controlled Distribution
Amount.
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in an Early Amortization Event. If no other
Servicer Default other than the commencement of such bankruptcy or similar
event exists, a trustee-in-bankruptcy of the Servicer may have the power to
prevent either the Trustee or the certificateholders from appointing a
successor Servicer.
In addition, under federal or state fraudulent transfer laws, a court could,
among other things, subordinate the rights of the Certificateholders in the
Receivables to the rights of creditors of DFS or Deutsche BSC, if a court were
to find, among other things, that DFS or Deutsche BSC, as applicable, received
less than reasonably equivalent value or fair consideration for such
Receivables and at the time of any transfers were insolvent. However, each of
DFS and Deutsche BSC believes that it will receive reasonably equivalent value
or fair consideration for the Receivables and that it will not be insolvent at
the time of such transfers.
Payments made in respect of repurchases of Receivables by DFS or the Seller
pursuant to the Pooling and Servicing Agreement may be recoverable by DFS or
the Seller, as debtor in possession, or by a creditor or a trustee-in-
bankruptcy of DFS or the Seller as a preferential transfer from DFS or the
Seller if such payments are made within one year prior to the filing of a
bankruptcy case in respect of DFS.
FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a discussion of the material federal income tax
consequences generally applicable to holders of the Offered Certificates, which
has been prepared based on the advice of Mayer, Brown & Platt ("Tax Counsel").
In the opinion of Tax Counsel such discussion, to the extent it includes
matters of law or legal conclusions with respect thereto, is accurate in all
material respects. This discussion does not purport to deal with all aspects of
federal income taxation that may be relevant to holders of the Offered
Certificates in light of their personal investment circumstances, nor to
certain types of holders subject to special treatment under the federal income
tax laws (for example, banks, life insurance companies and tax-exempt
organizations). Prospective investors are advised to consult their own tax
advisors with regard to the federal income tax consequences of holding and
disposing of the Offered Certificates, as well as the tax consequences arising
under the laws of any state, foreign country or other jurisdiction. This
discussion is based upon present provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations promulgated thereunder, and
judicial or ruling authority, all of which are subject to change, which change
may be retroactive. No ruling on any of the issues discussed below will be
sought from the Internal Revenue Service (the "IRS").
Treatment of the Certificates as Debt. The Seller and the Certificateholders
will express in the Pooling and Servicing Agreement the intent that, for
federal, state and local income tax purposes and franchise taxes (imposed on or
measured by income), the Offered Certificates will be debt secured by the
Receivables. The Seller, by initially entering into the Pooling and Servicing
Agreement, and each Certificateholder, by the acceptance of an
81
<PAGE>
Offered Certificate, will agree to treat the Offered Certificates as debt for
federal, state and local income tax purposes and franchise taxes (imposed on or
measured by income). However, the Pooling and Servicing Agreement generally
refers to the transfer of the Receivables as a "sale", and because different
criteria are used in determining the non-tax accounting treatment of the
transaction, the Seller will treat the Pooling and Servicing Agreement, for
certain non-tax purposes, as effecting a transfer of an ownership interest in
the Receivables and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of a
transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though the
participants in the transaction have characterized it differently for non-tax
purposes.
The determination of whether the economic substance of a property transfer is
a sale or a loan secured by the transferred property has been made by the IRS
and the courts on the basis of numerous factors designed to determine whether
the transferor has relinquished (and the transferee has obtained) substantial
incidents of ownership in the property. Among those factors, the primary
factors examined are whether the transferee has the opportunity to gain if the
property increases in value, and has the risk of loss if the property decreases
in value. Based upon its analysis of such factors, Tax Counsel is of the
opinion that the Offered Certificates will properly be characterized for
federal income tax purposes as debt that is secured by the Receivables and that
the Trust will not be treated as an association (or publicly traded
partnership) taxable as a corporation.
Interest Income to Certificateholders. Assuming the Certificateholders are
holders of debt obligations for federal income tax purposes, interest thereon
will be taxable as ordinary income for federal income tax purposes when
received by Certificateholders utilizing the cash basis method of accounting
and when accrued by Certificateholders utilizing the accrual method of
accounting. Interest received on the Offered Certificates may also constitute
"investment income" for purposes of certain limitations of the Code concerning
the deductibility of investment interest expense. In addition, a
Certificateholder who buys an Offered Certificate for less than its principal
amount (assuming the Offered Certificate is issued without OID) will be subject
to the "market discount" rules of the Code, and a Certificateholder who buys an
Offered Certificate for more than its principal amount will be subject to the
premium amortization rules of the Code. See "--Original Issue Discount" below
for a description of the federal income tax consequences if the Offered
Certificates are issued with OID.
The Trustee will be required to report annually to the IRS, and to each
Certificateholder of record, the amount of interest paid (and OID accrued, if
any) on the Offered Certificates (and the amount of interest withheld for
federal income taxes, if any) for each calendar year, except as to exempt
holders (generally, holders that are corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status as
nonresidents). As long as the only "Certificateholder" of record is Cede, as
nominee for DTC, Certificateholders and the IRS will receive tax and other
information only from Participants and Indirect Participants rather than from
the Trustee. Accordingly, each nonexempt Certificateholder will be required to
provide, under penalties of perjury, a certificate on IRS Form W-9 containing
such holder's name, address, federal taxpayer identification number and a
statement that such holder is not subject to backup withholding. Should a
nonexempt Certificateholder fail to provide the required certification, the
Trustee (or the Participants or Indirect Participants) will be required to
withhold (or cause to be withheld) 31% of the interest (and principal)
otherwise payable to the holder, and remit the withheld amounts to the IRS as a
credit against the holder's federal income tax liability.
Original Issue Discount. The following summary is a general discussion of the
United States federal income tax consequences to Certificateholders who are
United States persons owning Offered Certificates issued with original issue
discount ("OID Certificates" and "OID", respectively).
In general, the OID with respect to any OID Certificate will equal the
difference between the principal amount of the Certificate and its issue price
(defined as the first price to the public at which a substantial amount of the
OID Certificates have been sold), if such excess is 0.25% or more of the OID
Certificate's principal
82
<PAGE>
amount multiplied by the number of complete years to its maturity (the "de
minimis amount"). Even if such excess is less than the de minimis amount,
because a failure to pay interest currently on the Offered Certificate is not a
default, it is possible that all stated interest could be treated as principal
for this purpose (and for purposes of the computations described below) with
the result that the Offered Certificates could be viewed as OID Certificates.
Tax Counsel is unable to opine as to whether the Offered Certificates will be
treated as issued with OID. Holders of OID Certificates (including holders of
Offered Certificates that report income on the cash method of accounting) must
include OID in income for United States federal income tax purposes as it
accrues under a method that takes account of the compounding of interest, in
advance of receipt of the related cash payments.
In general, each Certificateholder of an OID Certificate, whether such
Certificateholder uses the cash or accrual method of accounting for tax
purposes, will be required to include in ordinary gross income the sum of the
"daily portions" of OID on the Certificate for each day during the taxable year
that the Certificateholder owns the Offered Certificate. The daily portion of
OID on an OID Certificate is determined by allocating to each day in any
"accrual period" a ratable portion of the original issue discount allocable to
that accrual period. The term accrual period means the period between
Distribution Dates or the shorter period from the date of issue to the first
Distribution Date. In the case of an initial Certificateholder, the amount of
original issue discount on an OID Certificate allocable to each accrual period
is determined by (i) multiplying the "adjusted issue price" (as defined below)
of the Offered Certificate by a fraction, the numerator of which is the annual
yield to maturity of such Certificate and the denominator of which is the
number of accrual periods in a year, and (ii) subtracting from the product the
amount of interest paid during that accrual period. The "adjusted issue price"
of an OID Certificate at the beginning of any accrual period will be the sum of
its issue price and the amount of OID allocable to all prior accrual periods,
minus the amount of all payments (other than payments of interest) previously
made with respect to the OID Certificate. As a result of such "constant yield"
method of including OID income, the amounts so includible in income are lower
in the early years and greater in the later years than the amounts that would
be includible on a straight-line basis.
If an Early Amortization Event occurs, the early payments of principal as a
result of either such event could result in acceleration of income
corresponding to a portion of the unaccrued OlD.
In the event that a Certificateholder purchases an OID Certificate at an
"acquisition premium," i.e., at a price in excess of the Certificate's issue
price, plus the OID accrued prior to acquisition and minus any principal
payments made with respect to the OID Certificate prior to acquisition, the
amount includible in income in each taxable year as OID will be reduced by that
portion of the premium properly allocable to such year. Moreover, a
Certificateholder who purchases an OID Certificate at a price less than the
price described in the preceding sentence will be subject to the market
discount rules of the Code.
Sale or Exchange. A Certificateholder's tax basis in an Offered Certificate
generally will be the Certificateholder's cost increased by any interest
(including OID) included in income (and market discount, if any, if the
Certificateholder has elected to include accrued market discount in income on a
current basis) and decreased by the amount of any principal payment received
with respect to the Certificate. Gain or loss on the sale, exchange or
redemption of an Offered Certificate generally will be long-term capital gain
or loss if the Offered Certificate has been held for more than a year (assuming
that the Offered Certificate is held as a capital asset) except to the extent
that such gain represents market discount not previously included in the
Certificateholder's income. Capital losses generally may be used by a corporate
taxpayer only to offset capital gains and by an individual taxpayer only to the
extent of capital gains plus $3,000 of other income.
The Code currently provides for a top marginal tax rate applicable to
ordinary income of individuals of 39.6% while maintaining a maximum marginal
rate for long-term capital gains of individuals of 28%. The maximum tax rate on
both ordinary income and long-term capital gains of corporate taxpayers is 35%.
Possible Classification of the Pooling and Servicing Agreement as a
Partnership or Association. Although, as described above, it is the opinion of
Tax Counsel that the Offered Certificates will properly be characterized
83
<PAGE>
as debt for federal income tax purposes, such opinion is not binding on the IRS
and thus no assurance can be given that such a characterization will prevail.
If the IRS were to contend successfully that the Offered Certificates were not
debt for federal income tax purposes, the arrangement among the Seller, the
Certificateholders and any other holder of investor certificates might be
classified for federal income tax purposes as a partnership, an association
taxable as a corporation or a "publicly traded partnership" taxable as a
corporation.
If the Offered Certificates are treated as interests in such a partnership,
the partnership could be treated as a "publicly traded partnership".
Regulations published by the Treasury Department on December 4, 1995 (the
"Regulations") could cause the Trust to constitute a publicly traded
partnership even if all holders of interests in the publicly offered
Certificates are treated as holding debt. If the Trust were classified as a
publicly traded partnership, whether by reason of the treatment of publicly
offered Certificates as equity or by reason of the Regulations, it would avoid
taxation as a corporation if its income was not derived in the conduct of a
"financial business;" however, whether the income of the Trust would be so
classified is unclear.
Under the Code and the Regulations, a partnership will be classified as a
publicly traded partnership if equity interests therein are traded on an
"established securities market," or are "readily tradable" on a "secondary
market" or its "substantial equivalent." The Seller intends to take measures
designed to reduce the risk that the Trust could be classified as a publicly
traded partnership by reason of interests in the Trust other than the publicly
traded Certificates. Although the Seller expects such measures will ultimately
be successful, certain of the actions that may be necessary for avoiding the
treatment of such interests as "readily tradable" on a "secondary market" or
its "substantial equivalent" are not fully within the control of the Seller. As
a result, there can be no assurance that the measures the Seller intends to
take will in all circumstances be sufficient to prevent the Trust from being
classified as a publicly traded partnership under the Regulations.
If the partnership were not taxable as a corporation (because of an exception
for an entity whose income is interest income that is not derived in the
conduct of a financial business) it would not be subject to federal income tax.
Rather, each item of income, gain, loss, deduction and credit generated through
the ownership of the Receivables by the partnership would be passed through to
the partners in the partnership (including the Certificateholders) according to
their respective interests therein. Tax Counsel is unable to opine as to
whether the Trust would qualify for the exception for an entity whose income is
interest income not derived in the conduct of a financial business.
The income reportable by the Certificateholder as partners in such a
partnership could differ from the income reportable by the Certificateholders
as holders of debt. If the Certificateholders were treated as partners, a cash
basis Certificateholder might be required to report income when it accrues to
the partnership rather than when it is received by the Certificateholder.
Moreover, if the Offered Certificates are interests in a partnership, an
individual's share of expenses of the partnership would be miscellaneous
itemized deductions that in the aggregate are allowed only to the extent they
exceed two percent of the individual's adjusted gross income (and are subject
to certain other limitations), meaning that the individual might be taxed on a
greater amount of income than the stated interest on the Certificates. Finally,
if the Offered Certificates are interests in a partnership, any taxable income
allocated to a Certificateholder that is a pension, profit-sharing or employee
benefit plan or other tax-exempt entity (including an individual retirement
account) may constitute "unrelated business taxable income" generally taxable
to the holder under the Code.
If, alternatively, the arrangement created by the Pooling and Servicing
Agreement were treated as either an association or a "publicly traded
partnership" taxable as a corporation, the resulting entity would be subject to
federal income taxes at corporate tax rates on its taxable income generated by
ownership of the Receivables. Moreover, distributions by the entity would
probably not be deductible in computing the entity's taxable income and all or
part of distributions to Certificateholders would probably be treated as
dividend income to the Certificateholders. Such an entity-level tax could
result in reduced distributions to Certificateholders and the
Certificateholders could be liable for a share of such a tax.
84
<PAGE>
Because the Offered Certificates will be treated as indebtedness for federal
income tax purposes, the Trustee (and Participants and Indirect Participants)
will not comply with the tax reporting requirements that would apply under
these alternative characterizations of the Offered Certificates.
FASIT. In August, 1996, the United States Congress passed and President
Clinton signed into law the "Small Business Job Protection Act of 1996," H.R.
3448 (the "Job Protection Act of 1996"). The Job Protection Act of 1996 creates
a new type of entity for federal income tax purposes called a "financial asset
securitization investment trust" or "FASIT." The effective date of the FASIT
provisions of the Job Protection Act of 1996 is September 1, 1997. The Job
Protection Act of 1996 enables certain arrangements similar to the Trust to
elect to be treated as a FASIT. Under the FASIT provisions of the Job
Protection Act of 1996, a FASIT generally would avoid federal income taxation
and could issue securities substantially similar to the Certificates, and those
securities would be treated as debt for federal income tax purposes. Upon
satisfying certain conditions set forth in the Pooling and Servicing Agreement
or the Supplement with respect to Series 1996-1, the Seller and Servicer will
be permitted to amend the Pooling and Servicing Agreement or the Supplement
with respect to Series 1996-1 in order to enable all or a portion of the Trust
to qualify as a FASIT and to permit a FASIT election to be made with respect
thereto, and to make such modifications to the Pooling and Servicing Agreement
or the Supplement with respect to Series 1996-1 as may be permitted by reason
of the making of such an election. However, there can be no assurance that the
Seller will or will not cause any permissible FASIT election to be made with
respect to the Trust or amend the Pooling and Servicing Agreement or the
Supplement with respect to Series 1996-1 in connection with any election. In
addition, if such an election is made, it may cause a holder to recognize gain
(but not loss) with respect to any Certificates held by it, even though Tax
Counsel will deliver its opinion that an Offered Certificate will be treated as
debt for federal income tax purposes without regard to the election and the
Offered Certificate would be treated as debt following the election.
Additionally, any such election and any related amendments to the Pooling and
Servicing Agreement or the Supplement with respect to Series 1996-1 may have
other tax and non-tax consequences to Certificateholders. Accordingly,
prospective Certificateholders should consult their tax advisors with regard to
the effects of any such election and any permitted related amendments on them
in their particular circumstances.
Foreign Investors. Tax Counsel has given its opinion that the Offered
Certificates will properly be classified as debt for federal income tax
purposes. If the Offered Certificates are treated as debt:
(a) interest paid to a nonresident alien or foreign corporation or
partnership would be exempt from U.S. withholding taxes (including backup
withholding taxes), provided the holder complies with applicable
identification requirements (and does not actually or constructively own
10% or more of the voting stock of the Seller and is not a controlled
foreign corporation with respect to the Seller). Applicable identification
requirements will be satisfied if there is delivered to a securities
clearing organization (or bank or other financial institution that holds
the Certificates on behalf of the customer in the ordinary course of its
trade or business) (i) IRS Form W-8 signed under penalties of perjury by
the beneficial owner of such Certificates stating that the holder is not a
U.S. person and providing such holder's name and address, (ii) IRS Form
1001 signed by the beneficial owner of such Certificates or such owner's
agent claiming exemption from withholding under an applicable tax treaty,
or (iii) IRS Form 4224 signed by the beneficial owner of such Certificates
of such owner's agent claiming exemption from withholding of tax on income
connected with the conduct of a trade or business in the United States;
provided in any such case (x) the applicable form is delivered pursuant to
applicable procedures and is properly transmitted to the United States
entity otherwise required to withhold tax and (y) none of the entities
receiving the form has actual knowledge that the holder is a U.S. person or
that any certification on the form is false;
(b) a holder of an Offered Certificate who is a nonresident alien or
foreign corporation will not be subject to United States federal income tax
on gain realized on the sale, exchange or redemption of such Certificate,
provided that (i) such gain is not effectively connected to a trade or
business carried on by the holder in the United States, (ii) in the case of
a holder that is an individual, such holder is not present in the United
States for 183 days or more during the taxable year in which such sale,
exchange or redemption occurs and (iii) in the case of gain representing
accrued interest, the conditions described in clause (a) are satisfied; and
85
<PAGE>
(c) an Offered Certificate held by an individual who at the time of death
is a nonresident alien will not be subject to United States federal estate
tax as a result of such individual's death if, immediately before his
death, (i) the individual did not actually or constructively own 10% or
more of the voting stock of the Seller and (ii) the holding of such
Certificate was not effectively connected with the conduct by the decedent
of a trade or business in the United States.
If the IRS were to contend successfully that the Offered Certificates are
interests in a partnership (not taxable as a corporation), a Certificateholder
that is a nonresident alien or foreign corporation or partnership might be
adversely affected. If the Offered Certificates are recharacterized as
interests in an association taxable as a corporation or a "publicly traded
partnership" taxable as a corporation, to the extent distributions on the
Offered Certificates were treated as dividends, a nonresident alien individual
or foreign corporation would generally be taxed on the gross amount of such
dividends (and subject to withholding) at a rate of 30% unless such rate were
reduced by an applicable treaty.
STATE AND LOCAL TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables may be considered to take place in Missouri. The State of
Missouri imposes a state income tax which is based partially upon the net
income of corporations, partnerships and other entities doing business in the
State of Missouri. This discussion is based upon present provisions of Missouri
statutes and the regulations promulgated thereunder, and applicable judicial or
ruling authority, all of which are subject to change, which change may be
retroactive. No ruling on any of the issues discussed below will be sought from
the Missouri Department of Revenue.
If the Offered Certificates are treated as debt for federal income tax
purposes, in the opinion of Bryan Cave LLP ("Missouri Tax Counsel"), this
treatment will also apply for Missouri income tax purposes. Pursuant to this
treatment, the Trust will not be subject to the Missouri income tax and
Certificateholders not otherwise subject to Missouri tax would not become
subject to such tax solely because of their mere ownership of the Offered
Certificates. Certificateholders already subject to taxation in Missouri,
however, could be required to pay tax on the income generated from ownership of
these Certificates.
In the alternative, if the arrangement created by the Pooling and Servicing
Agreement is treated as a partnership (not taxable as a corporation) for
federal income tax purposes, in the opinion of Missouri Tax Counsel, the same
treatment should also apply for Missouri income tax purposes.
Certificateholders, whether Missouri residents or non-residents, who were
partners in the constructive partnership would be subject to Missouri income
tax on their distributive shares of the income from the constructive
partnership. However, based on past and current practices of the Missouri
Department of Revenue classification of the arrangement as a "partnership"
would not cause a Certificateholder not otherwise subject to taxation in
Missouri to pay Missouri income tax on income beyond that derived from the
Offered Certificates.
If the arrangement created by the Pooling and Servicing Agreement is treated
as an association taxable as a corporation or a "publicly traded partnership"
taxable as a corporation, then the hypothetical entity could be subject to the
Missouri income tax. Such taxes could result in reduced distributions to
Certificateholders. A Certificateholder not otherwise subject to tax in
Missouri would not become subject to Missouri income tax as a result of its
mere ownership of such an interest.
Notwithstanding the foregoing, regardless of the treatment of the Offered
Certificates or the arrangement for federal income tax purposes, a
Certificateholder could be subject to Missouri income tax if such
Certificateholder participated in the negotiation of the Pooling and Servicing
Agreement or otherwise developed a taxable nexus to Missouri.
In the opinion of Missouri Tax Counsel, if the Trust is not treated as an
association taxable as a corporation for federal income tax purposes, the Trust
will not be subject to any Missouri franchise tax imposed under Chapter 147 of
the Revised Statutes of Missouri.
86
<PAGE>
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the Certificateholders in all of the state taxing
jurisdictions in which they are already subject to tax. Certificateholders are
urged to consult their own tax advisors with respect to state and local income
and franchise taxes.
DUE TO THE COMPLEXITY OF THESE RULES AND THE CURRENT UNCERTAINTY AS TO THE
MANNER OF THEIR APPLICATION TO THE TRUST AND CERTIFICATEHOLDERS, IT IS
PARTICULARLY IMPORTANT THAT POTENTIAL INVESTORS CONSULT THEIR OWN TAX ADVISORS
REGARDING THE TAX TREATMENT OF THEIR ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE CERTIFICATES.
ERISA CONSIDERATIONS
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit-
sharing or other employee benefit plan from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to the plan. A violation
of these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and the Code for such person. For example, a prohibited
transaction would arise, unless an exemption (such as one of the class
exemptions described below) were available, if the Seller were a disqualified
person or party in interest with respect to a plan that acquired Certificates.
By its acceptance of a Class A Certificate or an interest therein, each Class A
Certificateholder and owner of any beneficial interest therein will be deemed
to represent and warrant that its purchase and holding of the Certificate will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
Moreover, additional prohibited transactions could arise if the assets of the
Trust were deemed to constitute assets of any plan that owned Certificates. The
Department of Labor ("DOL") has issued a final regulation (the "Plan Assets
Regulation") concerning the definition of what constitutes the "plan assets" of
an employee benefit plan subject to ERISA or the Code, or an individual
retirement account ("IRA") (collectively referred to as "Benefit Plans"). Under
the Plan Assets Regulation the assets and properties of certain corporations,
partnerships and certain other entities in which a Benefit Plan acquires an
"equity interest" could be deemed to be assets of the Benefit Plan in certain
circumstances. Accordingly, if Benefit Plans purchase Certificates, the Trust
could be deemed to hold plan assets of such Benefit Plan unless one of the
exceptions under the Plan Assets Regulation is applicable to the Trust.
Purchasers which are insurance companies should consult with their counsel
with respect to the recent United States Supreme Court decision interpreting
the fiduciary responsibility rules of ERISA, John Hancock Mutual Life Insurance
Co. v. Harris Bank and Trust (114 S.Ct. 517). In John Hancock, the Supreme
Court ruled that assets held in an insurance company's general account may be
deemed to be "plan assets" for ERISA purposes under certain circumstances.
Prospective purchasers should determine whether that decision affects their
ability to make purchases of the Certificates.
PLAN ASSETS AND THE AVAILABILITY OF EXEMPTIONS FOR CERTIFICATES
The Plan Assets Regulation contains an exception (the "Publicly-Offered
Securities Exception") that provides that if a Benefit Plan acquires a
"publicly-offered security", the issuer of the security is not deemed to hold
plan assets. A publicly-offered security is a security that is (i) freely
transferable, (ii) part of a class of securities that is held, upon completion
of the public offering made hereby, by 100 or more investors independent of the
Trust and of one another and (iii) either is (A) part of a class of securities
registered under Section 12(b) or 12(g) of the Exchange Act or (B) sold to the
plan as part of an offering of securities to the public pursuant to an
effective registration statement under the Securities Act and the class of
securities of which such security is a part is registered under the Exchange
Act within 120 days (or such later time as may be allowed by the Commission)
after the end of the fiscal year of the issuer during which the offering of
such securities to the public occurred.
87
<PAGE>
It is anticipated that the Class A Certificates will meet the criteria of the
Publicly-Offered Securities Exception as set forth above. The Underwriters
expect that the Class A Certificates will be held by at least 100 independent
persons at the conclusion of the offering, although no assurance can be given,
and no monitoring or other measures will be taken to ensure, that such
condition will be met with respect to the Class A Certificates; there are no
restrictions imposed on the transfer of the Class A Certificates; and the Class
A Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act, and then will be timely
registered under the Exchange Act.
If the Certificates fail to meet the criteria of the Publicly-Offered
Securities Exception and the Trust's assets are deemed to include assets of
Benefit Plans that are holders of Certificates, transactions involving the
Trust and "parties in interest" or "disqualified persons" with respect to such
plans might be prohibited under Section 406 of ERISA and Section 4975 of the
Code unless an ERISA prohibited transaction exemption is applicable. Thus, for
example, if a participant in any Benefit Plan is an obligor or guarantor of one
of the Receivables, under DOL interpretations the purchase of the Certificates
by such plan could constitute a prohibited transaction. There are five class
exemptions issued by the DOL that may apply in such event: DOL Prohibited
Transaction Exemption 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers), 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment Funds),
90-1 (Class Exemption for Transactions Involving Insurance Company Pooled
Separate Accounts), 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts), and 96-23 (Class Exemption for Plan Asset
Transactions Determined by an In-House Asset Manager). There is no assurance
that these exemptions, even if all of the conditions specified therein are
satisfied, will apply to all transactions involving the Trust's assets.
The Underwriters currently do not expect that the Class B Certificates will
be held by at least 100 such persons and, therefore, do not expect that the
Class B Certificates will qualify as publicly-offered securities under the
Publicly-Offered Securities Exemption. Accordingly, the Class B Certificates
may not be acquired by (a) any employee benefit plan that is subject to ERISA,
(b) any plan or other arrangement (including an individual retirement account
or Keogh plan) that is subject to section 4975 of the Code or (c) any entity
whose underlying assets include "plan assets" under the Publicly-Offered
Securities Exemption by reason of any such plan's investment in the entity. By
its acceptance of a Class B Certificate or an interest therein, each Class B
Certificateholder and owner of a beneficial interest in the Class B
Certificates will be deemed to have represented and warranted that it is not
subject to the foregoing limitation.
REVIEW BY BENEFIT PLAN FIDUCIARIES
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is especially important that any
Benefit Plan fiduciary who proposes to cause a Benefit Plan to purchase
Certificates should consult with its own counsel with respect to the potential
consequences under ERISA and the Code of the Benefit Plan's acquisition and
ownership of Certificates. Assets of a Benefit Plan should not be invested in
the Certificates unless it is clear that the assets of the Trust will not be
plan assets.
88
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), the Seller has agreed to cause the Trust to
sell to each of the underwriters listed below (the "Underwriters"), and each
of the Underwriters for whom Deutsche Morgan Grenfell is acting as the
representative (the "Representative"), has severally agreed to purchase the
principal amount of Offered Certificates set forth opposite the name below.
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL
AGGREGATE PRINCIPAL AMOUNT OF CLASS B
AMOUNT OF CLASS A CERTIFICATES TO BE
UNDERWRITER CERTIFICATES TO BE PURCHASED PURCHASED
----------- ---------------------------- --------------------
<S> <C> <C>
Deutsche Morgan Grenfell
Inc.................... $ $
------------------- --------------------
Citicorp Securities,
Inc.................... $ $
------------------- --------------------
Dean Witter Reynolds
Inc.................... $ $
------------------- --------------------
Lehman Brothers Inc..... $ $
------------------- --------------------
Salomon Brothers Inc.... $ $
------------------- --------------------
Total................. $ $
=================== ====================
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the Offered
Certificates offered hereby if any of the Offered Certificates are purchased.
In the event of a default by any Underwriter, the Underwriting Agreement
provides that, in certain circumstances, purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
The Seller has been advised by the Representative that the several
Underwriters propose initially to offer the Offered Certificates to the public
at the public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of %
of the principal amount of the Offered Certificates. The Underwriters may
allow and such dealers may reallow to other dealers a discount not in excess
of % of such principal amount. After the initial public offering, such
public offering price, concession and reallowance may be changed.
The Underwriting Agreement provides that the Seller will indemnify the
Underwriters against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the Underwriters may be
required to make in respect thereof. The Underwriting Agreement provides that
DFS will indemnify the Underwriters against certain liabilities, including
liabilities under applicable securities laws, or contribute to payments the
Underwriters may be required to make in respect thereof.
Deutsche Morgan Grenfell and DFS are each indirect, wholly-owned
subsidiaries of Deutsche Bank AG. DFS is the limited partner of the Seller and
the parent of Deutsche Floorplan Receivables, Inc., the general partner of the
Seller. Any obligations of Deutsche Morgan Grenfell are the sole
responsibility of Deutsche Morgan Grenfell and do not create any obligation on
the part of any affiliate of Deutsche Morgan Grenfell.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Seller by Naran U. Burchinow, Esq., General Counsel of the Servicer, and
by Mayer, Brown & Platt, Chicago, Illinois, and for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois. Certain federal income tax matters will be
passed upon for the Seller and the Trust by Mayer, Brown & Platt, Chicago,
Illinois, and certain Missouri income tax matters will be passed upon for the
Seller and the Trust by Bryan Cave LLP, St. Louis, Missouri.
89
<PAGE>
LISTING AND GENERAL INFORMATION
1. Application is being made for listing the Offered Certificates on the
Luxembourg Stock Exchange. There can be no assurance that such application
will be accepted. In connection with the listing application made to the
Luxembourg Stock Exchange, the Agreement of Limited Partnership of the Seller,
the Pooling and Servicing Agreement and a legal notice relating to the
issuance of the Offered Certificates will be deposited prior to the listing
with the Chief Registrar of the District Court of Luxembourg, where copies
thereof may be obtained upon request.
2. Copies of the Pooling and Servicing Agreement and the Receivable
Contribution and Sale Agreement will be available for inspection during the
term of the Offered Certificates, and for so long as the Offered Certificates
are listed on the Luxembourg Stock Exchange, copies of the reports to
Certificateholders to be delivered by the Trustee will be obtainable, at the
offices of Banque Generale du Luxembourg S.A., 50 Avenue J.F. Kennedy, L-2951,
Luxembourg.
3. The execution and delivery of the Pooling and Servicing Agreement and the
sale of the Offered Certificates were authorized by Deutsche Floorplan
Receivables, Inc., the general partner of the Seller, as of October 4, 1996.
4. There has been no material adverse change in the information provided
herein with respect to the Receivables or the Trust since the Series 1996-1
Cut-off Date.
5. Neither DFS nor any of its subsidiaries are involved in, nor are there
any, legal or arbitration proceedings or claims pending or threatened of which
DFS is aware which may have or have had during the 12 months prior to the date
hereof a material effect on the financial position of the Seller or of DFS and
its subsidiaries on a consolidated basis.
6. The Offered Certificates have been accepted for clearance through the
Cedel Bank and Euroclear systems. The Common Code for the Class A Certificates
is 7031807 and for the Class B Certificates is 7031831, and the ISIN number
for the Class A Certificates is US251548AB96 and for the Class B Certificates
is US251548AC79.
7. For so long as the Offered Certificates are listed on the Luxembourg
Stock Exchange, notices to holders of the Offered Certificates will be given
by publication in a leading daily newspaper of general circulation in
Luxembourg or, if publication in Luxembourg is not practical, in Europe. Such
publication is expected to be made in the Luxemburger Wort. In addition, if
Definitive Certificates are issued, such notices will be mailed to the
addresses of holders of Definitive Certificates at the addresses therefor as
they appear in the register maintained by the Trustee prior to such mailing.
Such notices will be deemed to have been given on the date of such publication
or mailing.
8. For so long as the Offered Certificates are listed on the Luxembourg
Stock Exchange, the Trustee will maintain a paying agent in Luxembourg. The
initial paying agent will be Chase Manhattan Luxembourg S.A., 5 Rue Plaetis,
L-2338, Luxembourg-Grund BP 240 L-2021. If Definitive Certificates are issued,
they may be presented for payment, transfer or exchange at the offices of the
paying agent.
9. No action has been taken or will be taken by the Seller or the
Underwriters that would permit a public offering of the Offered Certificates
in any country or jurisdiction other than in the United States where action
for that purpose is required. Accordingly, the Offered Certificates may not be
offered or sold, directly or indirectly, and neither this Prospectus nor any
circular, prospectus, form of application, advertisement or other material may
be distributed in or from or published in any country or jurisdiction except
under circumstances that will result in compliance with any applicable laws
and regulations. Persons into whose hands this Prospectus comes are required
by the Seller and the Underwriters to comply with all applicable laws and
regulations in each country or jurisdiction in which they purchase, sell or
deliver Offered Certificates or have in their possession or distribute this
Prospectus, in all cases at their own expense.
90
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<S> <C>
A/R Receivable Overconcentration....................................... 52
A/R Receivables........................................................ 29
Accounts............................................................... 1
Accounts Receivable Business........................................... 28
Accumulation Period.................................................... 12
Accumulation Period Commencement Date.................................. 13
Accumulation Period Length............................................. 13
Addition Date.......................................................... 49
Additional Accounts.................................................... 53
Additional Cut-Off Date................................................ 49
Additional Interest.................................................... 61
Adjustment Date........................................................ 42
Adjustment Payment..................................................... 68
Asset Based Receivable Overconcentration............................... 52
Asset Based Receivables................................................ 32
Automatic Addition Condition........................................... 53
Available Certificateholder Principal Collections...................... 65
Available Seller's Collections......................................... 60
Available Seller's Non-Principal Collections........................... 60
Available Seller's Principal Collections............................... 60
Available Subordinated Amount.......................................... 62
Bankruptcy Code........................................................ 80
Benefit Plans.......................................................... 87
Carry-Over Amount...................................................... 41
Cede................................................................... 2, 41
Cedel Bank............................................................. 1, 9
Cedel Participants..................................................... 44
Certificate Owners..................................................... 2, 27
Certificate Rates...................................................... 11, 41
Certificateholder Non-Principal Collections............................ 64
Certificateholders..................................................... 4, 7, 27
Certificateholders' Interest........................................... 7
Certificates........................................................... 1, 4
Citibank............................................................... 9, 45
Class A Additional Interest............................................ 62
Class A Certificate Rate............................................... 11, 41
Class A Certificateholders............................................. 4
Class A Certificates................................................... 1, 4
Class A Initial Invested Amount........................................ 57
Class A Interest Shortfall............................................. 62
Class A Invested Amount................................................ 57
Class A Investor Charge-Off............................................ 69
Class A Monthly Interest............................................... 61
Class A Percentage..................................................... 57
Class B Additional Interest............................................ 62
Class B Certificate Rate............................................... 11, 41
Class B Certificateholders............................................. 4
Class B Certificates................................................... 1, 4
Class B Initial Invested Amount........................................ 57
Class B Interest Shortfall............................................. 62
</TABLE>
91
<PAGE>
<TABLE>
<S> <C>
Class B Invested Amount.................................................. 57
Class B Investor Charge-Off.............................................. 68
Class B Monthly Interest................................................. 61
Class B Percentage....................................................... 57
Class C Additional Interest.............................................. 62
Class C Certificate Rate................................................. 11, 41
Class C Certificateholders............................................... 4
Class C Certificates..................................................... 1, 4
Class C Initial Invested Amount.......................................... 57
Class C Interest Shortfall............................................... 62
Class C Invested Amount.................................................. 57
Class C Investor Charge-Off.............................................. 68
Class C Monthly Interest................................................. 61
Class C Percentage....................................................... 57
Closing Date............................................................. 11
Code..................................................................... 17, 81
Collateral Security...................................................... 5
Collection Account....................................................... 55
Collection Period........................................................ 10
Commission............................................................... 2
Controlled Amortization Amount........................................... 66
Controlled Distribution Amount........................................... 66
Cooperative.............................................................. 45
curtailments............................................................. 30
de minimis amount........................................................ 83
Dealer Overconcentration................................................. 52
Dealers.................................................................. 6, 28
Defaulted Amount......................................................... 68
Defaulted Receivables.................................................... 68
Deficiency Amount........................................................ 61
Definitive Certificates.................................................. 46
Delayed Funding Receivable............................................... 30
Depositaries............................................................. 9, 45
Depositary............................................................... 45
Depository............................................................... 40
Determination Date....................................................... 16
Deutsche BSC............................................................. 6
Deutsche FRI............................................................. 27
Deutsche Morgan Grenfell................................................. 39
DFS...................................................................... 1, 4
Discount Factor.......................................................... 7, 59
Distribution Date........................................................ 2, 11
Distribution Date Statement.............................................. 74
DOL...................................................................... 87
DTC...................................................................... 2
Early Amortization Event................................................. 69
Early Amortization Period................................................ 14
ECS...................................................................... 29
Eligible Account......................................................... 50
Eligible Accounts........................................................ 6
Eligible Deposit Account................................................. 55
Eligible Institution..................................................... 55
</TABLE>
92
<PAGE>
<TABLE>
<S> <C>
Eligible Investments..................................................... 55
Eligible Portfolio....................................................... 33
Eligible Receivable...................................................... 51
Eligible Receivables..................................................... 7
Enhancement.............................................................. 5
Enhancement Provider..................................................... 50
ERISA.................................................................... 17
Euroclear................................................................ 9
Euroclear Operator....................................................... 45
Euroclear Participants................................................... 45
Excess Funding Account................................................... 55
Excess Principal Collections............................................. 58
Excess Seller's Percentage............................................... 60
Excess Servicing......................................................... 64
Exchange Act............................................................. 2
Existing Manufacturer.................................................... 54
Expected Final Payment Date.............................................. 11, 39
FASIT.................................................................... 85
Field Audit System....................................................... 31
financial asset securitization investment trust.......................... 85
Floating Allocation Percentage........................................... 57
Floorplan Agreement...................................................... 31
Floorplan Business....................................................... 28
Floorplan Receivables.................................................... 29
FSRs..................................................................... 31
Holders.................................................................. 46
Incremental Default Amount............................................... 63
Independent Director..................................................... 27
Index Maturity........................................................... 42
Indirect Participants.................................................... 43
Individual Unsecured Receivable Overconcentration........................ 53
Ineligible Receivables................................................... 49, 51
Initial Closing Date..................................................... 48
Initial Cut-Off Date..................................................... 5
Insolvency Laws.......................................................... 27
Interest Funding Account................................................. 66
Interest Funding Account Balance......................................... 66
Interest Payment Date.................................................... 2, 11
Interest Period.......................................................... 11, 41
Invested Amount.......................................................... 57
Investment Proceeds...................................................... 64
Investor Default Amount.................................................. 68
IRA...................................................................... 87
IRS...................................................................... 81
Job Protection Act of 1996............................................... 85
LIBOR.................................................................... 42
London Business Day...................................................... 42
Manufacturer............................................................. 30
Manufacturer Overconcentration........................................... 52
Miscellaneous Payments................................................... 58
Missouri Tax Counsel..................................................... 86
Monthly Interest......................................................... 61
</TABLE>
93
<PAGE>
<TABLE>
<S> <C>
Monthly Payment Rate..................................................... 41
Monthly Principal........................................................ 66
Monthly Servicing Fee.................................................... 73
Morgan................................................................... 9, 45
Net Receivables Rate..................................................... 41
New Issuance............................................................. 9
Non-Principal Collections................................................ 7
NSF...................................................................... 68
Offered Certificates..................................................... 1, 4
OID...................................................................... 82
OID Certificates......................................................... 82
Overconcentration Amount................................................. 52
Overconcentration Default Amount......................................... 63
Participants............................................................. 43
Participations........................................................... 33
Pay-as-Sold.............................................................. 30
plan assets.............................................................. 17
Plan Assets Regulation................................................... 87
Pool Balance............................................................. 10
Pooling and Servicing Agreement.......................................... 5, 40
Principal Allocation Percentage.......................................... 58
Principal Collections.................................................... 7
Principal Funding Account................................................ 12, 66
Principal Funding Account Balance........................................ 66
Principal Receivables.................................................... 13
Principal Shortfalls..................................................... 58
Principal Terms.......................................................... 47
Private Label............................................................ 33
Product Line Overconcentration........................................... 52
prohibited transaction................................................... 17
Publicly-Offered Securities Exception.................................... 87
Rating Agency............................................................ 18, 26
Rating Agency Condition.................................................. 9
Receivables.............................................................. 1
Receivables Contribution and Sale Agreement.............................. 6
Record Date.............................................................. 43
Registration Statement................................................... 2
Regulations.............................................................. 84
Removal Date............................................................. 54
Removal Notice........................................................... 54
Removed Accounts......................................................... 54
Representative........................................................... 89
Required Participation Amount............................................ 54
Required Participation Percentage........................................ 54
Required Subordination Draw Amount....................................... 61
Reserve Fund............................................................. 15, 64
Reserve Fund Deposit Amount.............................................. 65
Reserve Fund Required Amount............................................. 64
Revolving Period......................................................... 12
SAU...................................................................... 68
Scheduled Payment Plans.................................................. 30
Securities Act........................................................... 2
</TABLE>
94
<PAGE>
<TABLE>
<S> <C>
Seller................................................................... 1, 4
Seller's Certificate..................................................... 4, 47
Seller's Interest........................................................ 1, 8
Seller's Participation Amount............................................ 61
Seller's Percentage...................................................... 61
Series................................................................... 1
Series 1994-1............................................................ 9
Series 1994-1 Certificates............................................... 9
Series 1994-1 Closing Date............................................... 22
Series 1996-1............................................................ 1, 4
Series 1996-1 Allocation Percentage...................................... 58
Series 1996-1 Cut-off Date............................................... 7
Series Issuance Date..................................................... 49
Service Transfer......................................................... 74
Servicer................................................................. 1, 4
Servicer Default......................................................... 74
Servicing Fee............................................................ 73
Servicing Fee Rate....................................................... 73
Specified Dealer......................................................... 52
Supplement............................................................... 9
Supplemental Certificate................................................. 47
Tax Counsel.............................................................. 81
Tax Opinion.............................................................. 48
Termination Date......................................................... 71
Terms and Conditions..................................................... 45
Transfer Date............................................................ 49
Transfer Deposit Amount.................................................. 49, 73
Trust.................................................................... 1, 4
Trust Available Subordinated Amount...................................... 58
Trust Incremental Subordinated Amount.................................... 63
Trust Invested Amount.................................................... 58
Trust Portfolio.......................................................... 34
Trustee.................................................................. 5
UCC...................................................................... 20
Unallocated Principal Collections........................................ 58
Underwriters............................................................. 89
Underwriting Agreement................................................... 89
Unsecured Receivable Overconcentration................................... 52
Unsecured Receivables.................................................... 6, 32
</TABLE>
95
<PAGE>
ANNEX 1
OTHER ISSUANCES OF INVESTOR CERTIFICATES
This Annex 1 sets forth certain characteristics of Series 1994-1.
Initial principal balance.. $1,000,000,000
Scheduled interest payment The fifteenth day of each month (or, if such day
dates..................... is not a business day, the next succeeding
business day)
Current outstanding
principal balance.........
$1,000,000,000
Revolving Period........... February 28, 1994 to the earlier of (i) the day
immediately preceding the Accumulation Period
Commencement Date (which day could be October 1,
1998) and (ii) the business day immediately
preceding an Early Amortization Period.
Expected Final Payment February 1999 Distribution Date
Date......................
Termination Date........... February 2001 Distribution Date
A-1
<PAGE>
EXHIBIT B
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Certificates
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel Bank or Euroclear. The Global
Securities will be tradeable as home market instruments in both the European
and U.S. domestic markets. Initial settlements and all secondary trades will
settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel Bank and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations and prior asset backed certificates issues.
Secondary cross-market trading between Cedel Bank or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedel Bank and Euroclear
(in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
CEDE & CO. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel Bank and Euroclear
will hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior asset backed certificates issues.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel Bank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior asset
backed certificates issues in same-day funds.
Trading between Cedel Bank and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel Bank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a Cedel Participant or a Euroclear Participant,
B-1
<PAGE>
the purchaser will send instructions to Cedel Bank or Euroclear through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. Cedel Bank or Euroclear will instruct the respective Depositary, as
the case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date, on the basis of a
calendar year consisting of twelve 30-day calendar months. Payment will then be
made by the respective Depositary of the DTC Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel Bank or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel Bank or Euroclear. Under this
approach, they may take on credit exposure to Cedel Bank or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel Bank or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges, although this result will depend on each
Cedel Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel Bank or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel Bank or Euroclear through a Cedel Participant or Euroclear Participant
at least one business day prior to settlement. In these cases, Cedel Bank or
Euroclear will instruct the respective Depositary, as appropriate, to deliver
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment to and excluding the settlement date on the basis of a
calendar year consisting of twelve 30-day calendar months. The payment will
then be reflected in the account of the Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date, (i.e., the trade fails), receipt
of the cash proceeds in the Cedel Participant's or Euroclear Participant's
account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel Bank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
B-2
<PAGE>
(a) borrowing through Cedel Bank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel Bank or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel Bank or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel Bank
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original interest discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such beneficial
owner and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons (and each of which does not actually
or constructively own 10% or more of the voting stock of the Seller and is
not a controlled foreign corporation with respect to the Seller) can obtain
a complete exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at
that rate unless the filer alternatively files Form W-8. Form 1001 may be
filed by the Certificate Owner or his agent.
Exemption of U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate or trust the
income of which is includible in gross income for United States tax purposes,
regardless of its source. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
B-3
<PAGE>
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY DEUTSCHE FLOORPLAN RECEIVABLES, L.P. OR THE UN-
DERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLIC-
ITATION OR AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JU-
RISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................... 2
Reports to Certificateholders........................................... 3
Other Information....................................................... 3
Incorporation of Certain Documents By Reference......................... 3
Prospectus Summary...................................................... 4
Risk Factors............................................................ 20
Deutsche Floorplan Receivables, L.P. and Deutsche Floorplan Receivables,
Inc.................................................................... 27
The Trust............................................................... 28
Use of Proceeds......................................................... 28
The Dealer Floorplan Financing Business of DFS.......................... 28
The Accounts............................................................ 33
Deutsche Financial Services Corporation................................. 39
Deutsche Bank AG........................................................ 39
Maturity and Principal Payment Considerations........................... 39
Description of the Certificates......................................... 40
Description of the Receivables Contribution and Sale Agreement.......... 77
Certain Legal Aspects of The Receivables................................ 79
Federal Income Tax Considerations....................................... 81
State and Local Tax Consequences........................................ 86
ERISA Considerations.................................................... 87
Underwriting............................................................ 89
Legal Matters........................................................... 89
Listing and General Information......................................... 90
Index of Principal Terms................................................ 91
Annex 1................................................................. A-1
Global Clearance, Settlement and Tax Documentation Procedures........... B-1
</TABLE>
- -------------------------------------------------------------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DIS-
TRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRIT-
ERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
DEUTSCHE FLOORPLAN
RECEIVABLES MASTER TRUST
$1,031,747,000
$1,000,000,000 FLOATING RATE
ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS A
$31,747,000 FLOATING RATE
ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS B
DEUTSCHE FLOORPLAN
RECEIVABLES, L.P.
SELLER
DEUTSCHE FINANCIAL
SERVICES CORPORATION
SERVICER
DEUTSCHE MORGAN GRENFELL
CITICORP SECURITIES, INC.
DEAN WITTER REYNOLDS INC.
LEHMAN BROTHERS
SALOMON BROTHERS INC
PROSPECTUS
OCTOBER , 1996
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE +
+TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PRELIMINARY +
+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 STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[ALTERNATE COVER]
SUBJECT TO COMPLETION, DATED OCTOBER 8, 1996
PROSPECTUS
- --------------------------------------------------------------------------------
$1,031,747,000
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
$1,000,000,000 FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1996-1, CLASS
A
$31,747,000 FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1996-1, CLASS B
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
SELLER
DEUTSCHE FINANCIAL SERVICES CORPORATION
SERVICER
- --------------------------------------------------------------------------------
The $1,000,000,000 Floating Rate Asset Backed Certificates, Series 1996-1,
Class A (the "Class A Certificates") and the $31,747,000 Floating Rate Asset
Backed Certificates, Series 1996-1, Class B (the "Class B Certificates" and
together with the Class A Certificates, the "Offered Certificates") offered
hereby evidence undivided interests in certain assets of the Deutsche
Floorplan Receivables Master Trust (the "Trust") created pursuant to a
Pooling and Servicing Agreement among Deutsche Floorplan Receivables, L.P.,
as the seller (the "Seller"), Deutsche Financial Services Corporation, as
servicer ("DFS" or the "Servicer"), and The Chase Manhattan Bank, as trustee
(the "Trustee"). The Trust will also issue $26,456,000 Floating Rate Asset
Backed Certificates, Series 1996-1, Class C (the "Class C Certificates" and,
together with the Offered Certificates, the "Certificates" or "Series 1996-
1"), which are not being offered hereby. The Trust assets include receivables
(the "Receivables") generated from time to time in a portfolio of revolving
financing arrangements (the "Accounts") with dealers and manufacturers to
finance their inventory and their accounts receivable and the collections on
the Receivables, as more fully described herein. See "The Trust." Certain
assets of the Trust will be allocated to Certificateholders, including the
right to receive a varying percentage of each month's collections with
respect to the Receivables at the times and in the manner described herein.
See "Description of the Certificates--Allocation Percentages." The Seller
will own the remaining interest in the Trust not represented by the
Certificates or the certificates of any other Series issued by the Trust (the
"Seller's Interest"). From time to time, subject to certain conditions, the
Seller may offer other series of certificates (each, a "Series"), which may
have terms significantly different from the terms of the Certificates.
(Continued on next page).
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH ON PAGES 20 TO 27
UNDER "RISK FACTORS."
THE OFFERED CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER,
DEUTSCHE BANK AG OR ANY AFFILIATE THEREOF. NONE OF THE CERTIFICATES, THE
RECEIVABLES OR THE OTHER ASSETS OF THE TRUST ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNT(1) THE SELLER(2)
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $ $ $
</TABLE>
(1) The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting expenses, estimated to be $836,000.
This Prospectus may be used by Deutsche Morgan Grenfell, an affiliate of the
Seller and the Servicer, in connection with market making transactions in the
Offered Certificates. Deutsche Morgan Grenfell 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 or otherwise. Certain information in this
Prospectus will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
DEUTSCHE MORGAN GRENFELL
The date of this Prospectus is October , 1996.
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
This Prospectus may be used by Deutsche Morgan Grenfell in connection with
offers and sales related to market-making transactions in the Offered
Certificates. Deutsche Morgan Grenfell 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 or otherwise. Deutsche Morgan Grenfell does not
have any obligation to make a market in the Offered Certificates, and it may
discontinue any such market-making activities at any time without notice, in
its sole discretion. Deutsche Morgan Grenfell is among the underwriters
participating in the initial distribution of the Offered Certificates.
Deutsche Morgan Grenfell and DFS are each indirect, wholly-owned
subsidiaries of Deutsche Bank AG. DFS is the limited partner of the Seller and
the parent of Deutsche Floorplan Receivables, Inc., the general partner of the
Seller. Any obligations of Deutsche Morgan Grenfell are the sole
responsibility of Deutsche Morgan Grenfell and do not create any obligation on
the part of any affiliate of Deutsche Morgan Grenfell.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Seller by Naran U. Burchinow, Esq., General Counsel of the Servicer, and
by Mayer, Brown & Platt, Chicago, Illinois, and for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois. Certain federal income tax matters will be
passed upon for the Seller and the Trust by Mayer, Brown & Platt, Chicago,
Illinois, and certain Missouri income tax matters will be passed upon for the
Seller and the Trust by Bryan Cave, St. Louis, Missouri.
89
<PAGE>
[ALTERNATE BACK COVER]
- --------------------------------------------------------------------------------
DEUTSCHE FLOORPLAN
RECEIVABLES MASTER TRUST
$1,031,747,000
$1,000,000,000 FLOATING RATE
ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS A
$31,747,000 FLOATING RATE
ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS B
DEUTSCHE FLOORPLAN
RECEIVABLES, L.P.
SELLER
DEUTSCHE FINANCIAL
SERVICES CORPORATION
SERVICER
DEUTSCHE MORGAN GRENFELL
PROSPECTUS
OCTOBER , 1996
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OR AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEI-
THER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................... 2
Reports to Certificateholders........................................... 3
Other Information....................................................... 3
Incorporation of Certain Documents By Reference......................... 3
Prospectus Summary...................................................... 4
Risk Factors............................................................ 20
Deutsche Floorplan Receivables, L.P., and Deutsche Floorplan
Receivables, Inc....................................................... 27
The Trust............................................................... 28
Use of Proceeds......................................................... 28
The Dealer Floorplan Financing Business of DFS.......................... 28
The Accounts............................................................ 33
Deutsche Financial Services Corporation................................. 39
Deutsche Bank AG........................................................ 39
Maturity and Principal Payment Considerations........................... 39
Description of the Certificates......................................... 40
Description of the Receivables Contribution and Sale Agreement.......... 77
Certain Legal Aspects of The Receivables................................ 79
Federal Income Tax Considerations....................................... 81
State and Local Tax Consequences........................................ 86
ERISA Considerations.................................................... 87
Underwriting............................................................ 89
Legal Matters........................................................... 89
Listing and General Information......................................... 90
Index of Principal Terms................................................ 91
Annex 1................................................................. A-1
Global Clearance, Settlement and Tax Documentation Procedures........... B-1
</TABLE>
- --------------------------------------------------------------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING TRANS-
ACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBU-
TION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OB-
LIGATION 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 table sets forth the estimated expenses in connection with the
offering of the Certificates being registered under this Registration
Statement, other than underwriting discounts and commissions:
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $312,692.40
Printing and Engraving........................................ 10,000.00
Legal Fees and Expenses....................................... 250,000.00
Trustee Fees and Expenses..................................... 7,500.00
Blue Sky Fees and Expenses.................................... 10,000.00
Rating Agency Fees............................................ 245,000.00
Miscellaneous................................................. 807.60
-----------
Total..................................................... $836,000.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ninth of Deutsche Floorplan Receivables, Inc.'s Articles of
Incorporation provides for indemnification of directors and officers of the
Registrant to the full extent permitted by Nevada law.
Section 78.751A of the Nevada General Corporation Law provides, in
substance, that Nevada corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they were
or are such directors, officers, employees or agents, against expenses
incurred in any such action, suit or proceeding. The Nevada General
Corporation Law also provides that the Registrant may purchase insurance on
behalf of any such director, officer, employee or agent.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S> <C>
1.1 Form of Underwriting Agreement**
3.1 Form of Agreement of Limited Partnership of the Regis-
trant**
4.1 Form of Pooling and Servicing Agreement**
4.2 Form of Series 1996-1 Supplement (including forms of Cer-
tificates)**
5.1 Opinion of Mayer, Brown & Platt as to legality of the Cer-
tificates (including consent of such firm)**
8.1 Opinion of Mayer, Brown & Platt as to certain U.S. tax
matters (including consent of such firm)**
8.2 Opinion of Bryan Cave as to certain Missouri tax matters
(including consent of such firm)**
10.1 Form of Receivables Contribution and Sale Agreement**
23.1 Consent of Mayer, Brown & Platt (included in exhibits 5.1
and 8.1 hereof)**
23.2 Consent of Bryan Cave (included in exhibit 8.2 hereof)**
24.1 Power of Attorney (included at II-3 of the initial filing)
</TABLE>
- --------
**Filed Electronically herewith.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, as amended (the "Act"), the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b) (1) or (4) or 497(h) under the Act 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 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) 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
Act;
(ii) To reflect in the prospectus any fact 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;
(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 set forth in the registration
statement.
(4) For purposes of determining any liability under the 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 denomination and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(6) That, for the purpose of determining any liability under the 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.
(7) 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.
B. Insofar as indemnification for liability arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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 of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 2
TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF ST. LOUIS, STATE OF MISSOURI ON THE
8TH DAY OF OCTOBER, 1996.
Deutsche Floorplan Receivables, L.P.
Deutsche Floorplan Receivables,
Inc.,
By: _________________________________
General Partner
/s/ Richard H. Schumacher
By: _________________________________
Richard H. Schumacher
President and Treasurer
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THEIR CAPACITIES AS OFFICERS AND DIRECTORS OF DEUTSCHE FLOORPLAN RECEIVABLES,
INC. IN THE CAPACITIES AND ON THE DATES INDICATED BELOW.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Richard H. Schumacher President and Treasurer October 8, 1996
____________________________________ (Principal Executive
Richard H. Schumacher Officer and Principal
Financial Officer)
/s/ George J. Solovic Senior Vice President and October 8, 1996
____________________________________ Controller (Principal
George J. Solovic Accounting Officer)
/s/ Richard C. Goldman Director October 8, 1996
____________________________________
Richard C. Goldman
/s/ C. Don Brown Director October 8, 1996
____________________________________
C. Don Brown
/s/ Phil Stout Director October 8, 1996
____________________________________
</TABLE> Phil Stout
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT PAGE
------- ---------------------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement**
3.1 Form of Agreement of Limited Partnership**
4.1 Form of Pooling and Servicing Agreement**
4.2 Form of Series 1996-1 Supplement (including form of Certificates)**
5.1 Opinion of Mayer, Brown & Platt as to legality of the
Certificates (including consent of such firm)**
8.1 Opinion of Mayer, Brown & Platt as to certain U.S. tax matters
(including consent of such firm)**
8.2 Opinion of Bryan Cave as to certain Missouri tax matters
(including consent of such firm)**
10.1 Form of Receivables Contribution and Sale Agreement**
23.1 Consent of Mayer, Brown & Platt (included in exhibits 5.1 and
8.1 hereof)**
23.2 Consent of Bryan Cave (included in exhibit 8.2 hereof)**
24.1 Power of Attorney (included at II-3 of the initial filing)
</TABLE>
- --------
**Filed Electronically herewith.
<PAGE>
EXHIBIT 1.1
$_____________
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
$_________ Floating Rate Asset Backed Certificates, Series 1996-1, Class A
$_________ Floating Rate Asset Backed Certificates, Series 1996-1, Class B
UNDERWRITING AGREEMENT
----------------------
Dated October __, 1996
DEUTSCHE MORGAN GRENFELL, INC.
as Representative of the
several Underwriters
31 West 52nd Street, 12th Floor
New York, New York 10019
Ladies and Gentlemen:
Section 1. Introductory. Deutsche Floorplan Receivables, L.P., a Delaware
limited partnership ("Deutsche FRLP"), proposes to sell $____________ Floating
Rate Asset Backed Certificates, Series 1996-1, Class A and $____________
Floating Rate Asset Backed Certificates, Series 1996-1, Class B (the "Offered
Certificates") of the Deutsche Floorplan Receivables Master Trust (the "Trust").
Each Offered Certificate will represent a fractional undivided interest in the
Trust. The assets of the Trust will include, among other things, a pool of
receivables (collectively, the "Receivables") transferred and sold by Deutsche
Financial Services Corporation, a Nevada corporation (together with its
successors in interest, "DFS"), and Deutsche Business Services Corporation, a
Missouri corporation (together with its successors in interest, "Deutsche BSC")
to Deutsche FRLP pursuant to a Receivables Contribution and Sale Agreement (as
supplemented and amended from time to time, the "Receivables Contribution and
Sale Agreement") amended and restated as of March 1, 1994 among DFS, Deutsche
BSC and Deutsche FRLP, and subsequently transferred and sold by Deutsche FRLP to
the Trust pursuant to a Pooling and Servicing Agreement (as supplemented and
amended from time to time, the "P&S"), amended and restated as of October 1,
1996, among Deutsche FRLP, as the Seller, DFS, as the Servicer, and Chase
Manhattan Bank, as trustee (the "Trustee"). The Offered Certificates will be
issued pursuant to the P&S and the Series 1996-1 Supplement to the P&S to be
dated as of October 1, 1996 (the "Supplement"), among Deutsche FRLP, DFS and the
Trustee. The P&S and the Supplement are collectively referred to as the
"Pooling and Servicing Agreement". In addition, $____________ Floating Rate
Asset Backed Certificates, Series 1996-1, Class C (the "Class C Certificates"
and, together with the Offered Certificates, the "Certificates"), will be issued
pursuant to the Pooling and Servicing Agreement. The
<PAGE>
Receivables Contribution and Sale Agreement and the Pooling and Servicing
Agreement are collectively referred to as the "Designated Agreements".
Deutsche FRLP has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-10943), including
the related prospectus, for the registration under the Securities Act of 1933,
as amended (the "Act"), of the Offered Certificates, in the form heretofore
delivered to the Underwriters. The registration statement (including the
prospectus constituting a part thereof and the information, if any, deemed to be
part thereof pursuant to Rule 430A(b) of the rules and regulations of the
Commission under the Act (the "1933 Act Regulations")) in the form in which it
became effective under the Act on October __, 1996 (the "Effective Date"),
including the exhibits thereto, is referred to herein as the "Registration
Statement", and the prospectus dated October __, 1996 in the form in which it
was most recently filed with the Commission (including the information, if any,
deemed to be part thereof pursuant to Rule 430A(b) of the 1933 Act Regulations)
is referred to herein as the "Prospectus", except that if any revised prospectus
shall be provided to you by Deutsche FRLP for use in connection with the
offering of the Offered Certificates which differs from the Prospectus on file
at the Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by Deutsche FRLP
pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus"
shall refer to such revised prospectus from and after the time it is first
provided to you for such use.
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Pooling and Servicing Agreement.
Section 2. Representations, Warranties and Covenants of DFS and Deutsche
FRLP. Each of DFS and Deutsche FRLP, as applicable, represents and warrants to,
and agrees with, Deutsche Morgan Grenfell/C.J. Lawrence Inc., ("Deutsche Morgan
Grenfell") and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Deutsche
Morgan Grenfell is acting as representative (in such capacity, Deutsche Morgan
Grenfell shall hereinafter be referred to as the "Representative"), as of the
date hereof that:
(i) On the Effective Date and on the date hereof, the Registration
Statement did and will comply, in all material respects, with the
requirements of the Act and the 1933 Act Regulations, and did not and will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the date hereof
(unless the term "Prospectus" refers to a prospectus which has been
provided to you by Deutsche FRLP which differs from the Prospectus on file
at the Commission at the time the Registration Statement becomes effective,
in which case at the time it is first provided to you for such use) and at
the Closing Date (as defined herein), will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that these
representations and warranties shall not apply to any statement or omission
made in reliance upon and in conformity with information furnished in
writing to Deutsche FRLP by the Representative expressly for use in the
Registration Statement or the Prospectus.
-2-
<PAGE>
(ii) DFS is a corporation duly incorporated, validly existing and
in good standing under the laws of the state of its incorporation, and is
duly qualified to transact business and is in good standing in each
jurisdiction in the United States of America in which the conduct of its
business or the ownership of its property requires such qualification, with
corporate power to own, lease and operate its property and conduct its
business as it is currently conducted.
(iii) Deutsche FRLP is a limited partnership duly organized,
validly existing and in good standing under the laws of the state of its
organization, and is duly qualified to transact business and is in good
standing in each jurisdiction in the United States of America in which the
conduct of its business or the ownership of its property requires such
qualification.
(iv) Each of DFS and Deutsche FRLP has the requisite power to
execute and deliver each of the Pooling and Servicing Agreement and this
Agreement and to perform their respective obligations under the Designated
Agreements and hereunder.
(v) Each of the Pooling and Servicing Agreement and this Agreement
has been duly and validly authorized, executed and delivered by each of DFS
and Deutsche FRLP, and each of the Designated Agreements constitutes the
valid, legal and binding obligation of each of DFS and Deutsche FRLP,
enforceable against each of DFS and Deutsche FRLP in accordance with its
terms.
(vi) The direction by Deutsche FRLP to the Trustee to authenticate
and deliver the Offered Certificates has been duly authorized by Deutsche
FRLP, and as of the Closing Date, the Offered Certificates will be duly and
validly authorized, and, when duly and validly executed by Deutsche FRLP
and authenticated by the Trustee and delivered to Deutsche FRLP in
accordance with the Pooling and Servicing Agreement, and following delivery
to and payment therefor by the Underwriters as provided herein, will be
validly issued and outstanding and entitled to the benefits of the Pooling
and Servicing Agreement.
(vii) The Offered Certificates will have been duly and validly
executed and authenticated by the Trustee in accordance with the Pooling
and Servicing Agreement on or before the Closing Date referred to below.
(viii) Neither the execution and delivery by DFS or Deutsche FRLP
of the Pooling and Servicing Agreement or of this Agreement nor the
consummation by DFS or Deutsche FRLP of the transactions contemplated in
the Designated Agreements or herein, nor the issuance of the Offered
Certificates by the Trust or the public offering thereof as contemplated in
the Prospectus, will conflict in any material respect with or result in a
material breach of, or constitute a material default (with notice or
passage of time or both) under, or result in the imposition of any lien,
pledge, charge, encumbrance, adverse claim or other security interest of
any other person (collectively, "Liens") upon any of the property or assets
of DFS or Deutsche FRLP (except as required or permitted pursuant thereto
or hereto), pursuant to any material mortgage, indenture, loan agreement,
contract or other instrument to which DFS or Deutsche FRLP is party or by
which either of them is bound, nor will such action result in any violation
of any provisions of any applicable law, administrative regulation or
administrative or court decree, the certificate of incorporation or by-laws
of DFS or the
-3-
<PAGE>
partnership agreement of Deutsche FRLP. Neither DFS nor Deutsche FRLP is
in violation of its certificate of incorporation or partnership agreement,
respectively, in default in any material respect in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease, pooling and servicing agreement or other instrument to which it is a
party or by which it may be bound, or to which any material portion of its
property or assets is subject.
(ix) No legal or governmental proceedings are pending to which DFS
or Deutsche FRLP is a party or of which any property of DFS or Deutsche
FRLP is the subject, which if determined adversely to DFS or Deutsche FRLP
would, individually or in the aggregate, have a material adverse effect on
the financial position, shareholders' equity or results of operations of
DFS or Deutsche FRLP; and to the best of DFS's or Deutsche FRLP's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(x) No consent, approval, authorization or order of, or
registration, filing or declaration with, any court or governmental agency
or body is required in connection with (i) the execution and delivery by
DFS or Deutsche FRLP of the Pooling and Servicing Agreement or this
Agreement or the performance by DFS or Deutsche FRLP of any Designated
Agreement or this Agreement or (ii) the offer, sale or delivery of the
Offered Certificates, except such as shall have been obtained or made, as
the case may be, or will be obtained or made, as the case may be, prior to
the Closing Date, or will not materially adversely affect the ability of
DFS or Deutsche FRLP to perform its obligations under any Designated
Agreement or this Agreement.
(xi) Each of DFS and Deutsche FRLP possesses all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now conducted by it and as described in the Prospectus, except to
the extent that the failure to have such licenses, certificates,
authorities or permits does not have a material adverse effect on the
Offered Certificates or the financial condition of DFS or Deutsche FRLP,
and neither DFS nor Deutsche FRLP has received any notice of proceedings
relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations or financial
condition.
(xii) On the Closing Date, Deutsche FRLP (i) will have good and
marketable title to the Receivables being transferred by it to the Trustee
pursuant thereto, free and clear of any Lien, except to the extent
permitted in the Pooling and Servicing Agreement, (ii) will not have
assigned to any person any of its right, title or interest in such
Receivables or in the Pooling and Servicing Agreement and (iii) will have
the power and authority to sell the Receivables to the Trustee, and upon
execution and delivery of the Pooling and Servicing Agreement by the
Trustee, the Trustee will have good and marketable title thereto, in each
case free of Liens other than any Lien created by an Underwriter.
(xiii) The properties and businesses of each of DFS and Deutsche
FRLP conform, in all material respects, to the descriptions thereof
contained in the Prospectus.
-4-
<PAGE>
Section 3. Purchase, Sale and Delivery of Offered Certificates. (a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, Deutsche FRLP agrees
to sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from Deutsche FRLP, on October __,
1996, or on such other date no later than seven business days thereafter as
shall be mutually agreed upon by Deutsche FRLP and the Representative (the
"Closing Date") the principal amount of the Offered Certificates set forth in
Schedule A opposite the name of such Underwriter. The Offered Certificates are
to be purchased at a purchase price equal to _____% of the aggregate principal
amount thereof.
(b) Against payment of the purchase price in same day funds drawn to the
order of Deutsche FRLP, Deutsche FRLP will deliver the Offered Certificates to
the Underwriters at the offices of Mayer, Brown & Platt, 190 South LaSalle
Street, Chicago, Illinois 60603 on the Closing Date. The Offered Certificates
to be so delivered will be initially represented by one or more Offered
Certificates registered in the name of Cede & Co., the nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Offered
Certificates will be represented by book entries on the records of DTC and
participating members thereof. Definitive Certificates will be available only
under limited circumstances.
Section 4. Public Offering of the Certificates. It is understood by the
parties hereto that, after the Registration Statement becomes effective, the
Underwriters propose to offer the Offered Certificates for sale to the public
(which may include selected dealers), as set forth in the Prospectus.
Section 5. Covenants of DFS and Deutsche FRLP. Each of DFS and Deutsche
FRLP jointly and severally covenants and agrees with each Underwriter:
(a) If required, to file the Prospectus with the Commission pursuant
to and in accordance with Rule 424(b) not later than the time specified
therein. DFS and/or Deutsche FRLP will advise the Underwriters promptly of
any such filing pursuant to Rule 424(b).
(b) To make no amendment or any supplement to the Registration
Statement or the Prospectus as amended or supplemented, without furnishing
the Representative with a copy of the proposed form thereof and providing
the Representative with a reasonable opportunity to review the same and not
to file any such amendment or supplement to which the Representative shall
reasonably object; and to advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus as amended or supplemented or any amended Prospectus has been
filed or mailed for filing, of the issuance of any stop order by the
Commission, of the suspension of the qualification of the Offered
Certificates for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or the Prospectus as amended or supplemented or for additional
information; and, in the event of the issuance of any such stop order or of
any order preventing or suspending the use of any Prospectus relating to
the Offered Certificates or suspending any such qualification, promptly to
use its best efforts to obtain its withdrawal.
-5-
<PAGE>
(c) Promptly from time to time to take such action as the
Representative may reasonably request in order to qualify the Offered
Certificates for offering and sale under the securities laws of such states
as the Representative may request and to continue such qualifications in
effect so long as necessary under such laws for the distribution of such
Offered Certificates; provided, that in connection therewith neither DFS
nor Deutsche FRLP shall be required to qualify as a foreign corporation or
partnership, respectively, to do business or to file a general consent to
service of process in any jurisdiction.
(d) To furnish the Representative with copies of the Registration
Statement (including exhibits) and copies of the Prospectus as amended or
supplemented in such quantities as the Representative may from time to time
reasonably request; and if the delivery of a Prospectus shall be at the
time required by law in connection with sales of any Offered Certificates,
either (i) any event shall have occurred as a result of which the
Prospectus would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or (ii) for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus as amended or
supplemented, to notify the Representative and to prepare and furnish to
the Representative as the Representative may from time to time reasonably
request an amendment or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance.
(e) To make generally available to Certificateholders as soon as
practicable after the Effective Date of the Registration Statement (as such
date is defined in Rule 158(c) under the Act), an earnings statement of
Deutsche FRLP complying with Rule 158 under the Act and covering a period
of at least twelve consecutive months beginning after such Effective Date.
(f) To furnish to each Underwriter copies of the Registration
Statement (one of which will be signed and will include all exhibits), each
related preliminary prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as such Underwriter reasonably requests.
(g) So long as any of the Offered Certificates are outstanding, to
furnish each Underwriter copies of all reports or other communications
(financial or other) furnished to Certificateholders, and to deliver to the
Underwriters during such same period (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with
the Commission and (ii) such additional information concerning the business
and financial condition of Deutsche FRLP as such Underwriter may from time
to time reasonably request.
(h) To pay all expenses incident to the performance of the obligations
under this Agreement, including:
(i) the word processing, printing and filing of the
Registration Statement as originally filed and of each amendment
thereto;
(ii) the reproduction of this Agreement;
-6-
<PAGE>
(iii) the preparation, printing, issuance and delivery of the
Offered Certificates to the Underwriters;
(iv) the fees and disbursements of counsel and accountants for
DFS and/or Deutsche FRLP;
(v) the qualification of the Offered Certificates under
securities laws in accordance with the provisions of Section 5(c)
hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey;
(vi) if requested by the Representative, the determination of
the eligibility of the Offered Certificates for investment and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the
Legal Investment Memorandum;
(vii) the printing and delivery to the Underwriters of copies
of the Registration Statement as originally filed and of each
amendment thereto, of the preliminary prospectuses, and of the
Prospectus and any amendments or supplements thereto;
(viii) the printing and delivery to the Underwriters of
copies of the Blue Sky Survey and, if requested by the Representative,
the Legal Investment Memorandum, if any;
(ix) the fees of Moody's Investors Service, Inc., Standard &
Poor's Ratings Services and Fitch Investors Service Inc. for rating
the Offered Certificates; and
(x) the fees and expenses of the Trustee and its counsel.
If the sale of the Offered Certificates is not consummated by reason of any
failure, refusal or inability on the part of DFS or Deutsche FRLP to
perform any agreement on its part to be performed, or because any condition
of the Underwriters' obligations hereunder required to be fulfilled shall
not have been fulfilled (other than as a result of any breach or default by
the Underwriters), each of DFS and Deutsche FRLP shall jointly and
severally be obligated to reimburse the Underwriters for all out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for
the Underwriters. For purposes of the preceding sentence, the conditions
in clauses (ii) and (iii) of Section 6(d) shall not be conditions required
to be fulfilled by DFS or Deutsche FRLP.
(i) For a period from the date of this Agreement until the retirement
of the Offered Certificates, or until such time as each Underwriter shall
cease to maintain a secondary market in the Offered Certificates, whichever
occurs first, to deliver to each Underwriter the annual statements of
compliance, the Annual Servicer's Certificate and the annual independent
certified public accountants' servicing reports furnished to the Trustee
pursuant to Section 3.5 and Section 3.6, respectively, of the Pooling and
Servicing Agreement
-7-
<PAGE>
and the monthly Distribution Date Statement pursuant to Section 5.2(a) of
the Series 1996-1 Supplement as soon as such statements and reports are
furnished to the Trustee.
(j) From and after the Closing Date, not to take any action
inconsistent with the Trust's ownership of the Receivables other than as
permitted by the Pooling and Servicing Agreement.
(k) To the extent, if any, that the rating provided with respect to
the Offered Certificates by the rating agency or agencies that initially
rate the Offered Certificates is conditional upon the furnishing of
documents or the taking of any other actions by DFS and/or Deutsche FRLP,
to furnish such documents and take any such other actions.
Section 6. Conditions Precedent to the Obligations of the Underwriter.
The obligation of the Underwriters to purchase and pay for the Offered
Certificates is subject to the accuracy of the representations and warranties on
the part of DFS and Deutsche FRLP herein, to the accuracy of the statements of
officers of DFS and Deutsche FRLP made pursuant to the provisions hereof, to the
performance by DFS and Deutsche FRLP of its obligations hereunder and to the
following additional conditions precedent:
(a) The Registration Statement shall have become effective not later
than 4:00 p.m., New York time, on the day following the date of this
Agreement or such later date as shall have been consented to by the
Representative; and prior to the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of DFS or Deutsche FRLP, shall be contemplated by the Commission.
If Deutsche FRLP has elected to rely upon Rule 430A of the 1933 Act
Regulations, the price of the Offered Certificates and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) of the 1933 Act Regulations within the
prescribed time period, and prior to the Closing Date the Company shall
have provided evidence satisfactory to the Representative of such timely
filing, or a post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the 1933 Act Regulations.
(b) Each of DFS and Deutsche FRLP shall have delivered to the
Representative a certificate, dated the Closing Date, signed by its
president, a senior vice president or a vice president to the effect that
the signer of such certificate has carefully examined the Registration
Statement, the Prospectus, each Designated Agreement and this Agreement and
that:
(i) the representations and warranties of DFS and/or Deutsche
FRLP, as the case may be, in each Designated Agreement and this
Agreement are true and correct in all material respects at and as of
the Closing Date with the same effect as if made on the Closing Date;
-8-
<PAGE>
(ii) each of DFS and Deutsche FRLP, as the case may be, has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to DFS's or Deutsche FRLP's knowledge,
threatened as of the Closing Date; and
(iv) nothing has come to such person's attention that would
lead such person to believe that the Prospectus contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) Since the respective dates as of which information is given in the
Prospectus as amended or supplemented, there shall not have occurred any
material adverse change or any development involving a prospective material
adverse change, in or affecting particularly the business or assets of the
Trust, Deutsche FRLP or DFS or any material adverse change in the financial
position or results or operations of the Trust, Deutsche FRLP or DFS
otherwise than as set forth or contemplated in the Prospectus which in any
such case makes it impracticable to inadvisable in the Representative's
reasonable judgment to proceed with the public offering or the delivery of
the Offered Certificates on the terms and in the manner contemplated in the
Prospectus as amended or supplemented.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business, financial
condition or properties of DFS or Deutsche FRLP which, in the
Representative's judgment, materially impairs the investment quality of the
Offered Certificates, (ii) any material adverse change in the financial
markets in the United States or any outbreak of hostilities or other
calamity or crisis, the effect of which is such as to make it, in the
judgment of the Representative, impracticable to market the Offered
Certificates or to enforce contracts for the sale of the Offered
Certificates, (iii) the suspension of trading generally by either the
American Stock Exchange or the New York Stock Exchange, or the
establishment of minimum or maximum prices or ranges of prices, by either
of such exchanges or by order of the Commission or any other governmental
authority, or any banking moratorium declared by Federal, Missouri or New
York authorities or (iv) any event that would constitute a default under
this Agreement or default in the performance of DFS's or Deutsche FRLP's
obligations under any Designated Agreement or which, with the passage of
time or the giving of notice or both, would constitute such default.
(e) The Representative shall have received from counsel (who shall be
satisfactory to the Representative) for DFS and Deutsche FRLP, an opinion,
dated the Closing Date and addressed to the Underwriters and satisfactory
in form and substance to the Representative and to counsel to the
Representative, with respect to the matters set forth in Exhibit A hereto.
(f) The Representative shall have received from Bryan Cave, special
counsel for Deutsche FRLP, an opinion, dated the Closing Date and
satisfactory in form and substance to the Representative and to counsel to
the Underwriters, to the effect that the information in the
-9-
<PAGE>
Prospectus under "State and Local Tax Consequences," to the extent it
constitutes matters of Missouri law or legal conclusions with respect
thereto, has been reviewed by such counsel and is correct in all material
respects and the opinions (addressed to the Underwriters) dated the Closing
Date and required by any rating agency.
(g) The Representative shall have received from Mayer, Brown & Platt,
special counsel to DFS and Deutsche FRLP, an opinion, dated the Closing
Date, addressed to the Underwriters and satisfactory in form and substance
to the Representative and to counsel to the Underwriters, relating to
certain insolvency and bankruptcy matters and federal income tax matters.
(h) The Representative shall have received from Pryor, Cashman,
Sherman & Flynn, counsel for the Trustee, an opinion, dated the Closing
Date and addressed to the Underwriters, DFS and Deutsche FRLP and
satisfactory in form and substance to the Representative and to counsel to
the Underwriters, in substantially the form of Exhibit B hereto.
(i) The Representative shall have received an officer's certificate
dated the Closing Date of the chairman of the board, the president, an
executive vice president or the treasurer of the Trustee in which such
officer shall state that, to the best of his/her knowledge after reasonable
investigation, the representations and warranties of the Trustee contained
in the Pooling and Servicing Agreement are true and correct in all material
respects, and that the Trustee has complied in all material respects with
all agreements and satisfied all conditions on its part to be performed or
satisfied under the Pooling and Servicing Agreement at or prior to the
Closing Date.
(j) The Representative shall have received a copy of a ratings letter
confirming that the Class A Certificates have been rated in the highest
rating category by at least one of Moody's Investors Service, Inc.,
Standard & Poor's Ratings Services and Fitch Investors Service Inc., and
such ratings shall not have been reduced or withdrawn and that the Class B
Certificates have been rated in one of the three highest rating categories
by at least one of Moody's Investors Service, Inc., Standard & Poor's
Ratings Services and Fitch Investors Service Inc., and such ratings shall
not have been reduced or withdrawn.
(k) The Trustee shall have furnished to the Representative a
certificate of the Trustee, signed by one or more duly authorized officers
of the Trustee, dated the Closing Date, as to the due acceptance of the
Pooling and Servicing Agreement by the Trustee and the due execution and
delivery of the Offered Certificates by the Trustee thereunder and such
other matters as the Representative shall reasonably request.
(l) Counsel to DFS and Deutsche FRLP shall have furnished to the
Representative any opinions supplied to the rating agencies relating to
certain matters with respect to the Certificates, which opinion shall also
be addressed to the Underwriters. Drafts of such opinions shall have been
furnished to the Representative no later than five business days prior to
the Closing Date.
-10-
<PAGE>
(m) The Representative shall have received a letter, dated the Closing
Date and addressed to the Underwriters, from KPMG Peat Marwick LLP
certified public accountants, substantially in the form heretofore approved
by the Representative and counsel to the Underwriters.
(n) The Representative shall have received a copy of (i) a file-
stamped acknowledgment copy of the UCC-1 financing statement on Form UCC-1
filed with the Secretary of State of the State of Missouri with respect to
the transfer of the Receivables and the Collateral Security by DFS to
Deutsche FRLP pursuant to the Receivables Contribution and Sale Agreement,
identifying the Receivables and the Collateral Security as collateral and
naming DFS as debtor and Deutsche FRLP as the secured party, and (ii) a
file-stamped acknowledgment copy of the UCC-1 financing statement on Form
UCC-1 filed with the Secretary of State of the State of Missouri with
respect to the transfer of the Receivables and the Collateral Security by
Deutsche FRLP to the Trustee pursuant to the Pooling and Servicing
Agreement, identifying the Receivables and the Collateral Security as
collateral and naming Deutsche FRLP as debtor and the Trustee as the
secured party.
(o) All documents incident to the Designated Agreements and this
Agreement shall be reasonably satisfactory in form and substance to the
Underwriters and counsel to the Underwriters; and all actions taken by
Deutsche FRLP to authorize the offering and sale of the Offered
Certificates, shall be reasonably satisfactory in form and substance to the
Underwriters and counsel to the Underwriters; and DFS and/or Deutsche FRLP
shall furnish the Underwriters and counsel to the Underwriters with such
other opinions, certificates, letters and documents as the Underwriters or
counsel to the Underwriters shall reasonably request.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Seller at any time at or prior to Closing Time,
and such termination shall be without liability of any party to any other party
except as provided in Section 5 hereof.
Section 7. Indemnification and Contribution. (a) Each of DFS and
Deutsche FRLP shall, jointly and severally, indemnify and hold harmless each
Underwriter and each person who controls any Underwriter within the meaning of
Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened,
-11-
<PAGE>
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of Deutsche FRLP and DFS;
and
(iii) against any and all expense whatsoever (including, subject to
Section 7(c) hereof, the fees and disbursements of counsel chosen by you)
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, to the extent that any such expense is
not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to Deutsche FRLP by
the Representative expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(b) Each Underwriter severally agrees to indemnify and hold harmless
Deutsche FRLP and DFS, each of their respective directors, each of their
respective officers who signed the Registration Statement, and each person, if
any, who controls Deutsche FRLP and DFS, respectively, within the meaning of
Section 15 of the Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section
7, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to Deutsche FRLP by such Underwriter through the
Representative expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it with
respect to which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying party
may participate at its own expense in the defense of any such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
SECTION 8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 7 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, Deutsche FRLP and DFS, jointly
and severally, on the one hand, and the Underwriters, on the other, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by Deutsche FRLP,
DFS and one or more Underwriters, as incurred, in such proportions that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount bears to the initial public offering price,
-12-
<PAGE>
and Deutsche FRLP and DFS shall be jointly and severally responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the other provisions of this Section 8, an
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Offered Certificates were offered
to the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay in respect of such losses, liabilities, claims,
damages and expenses. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 16 of the Act shall have
the same rights to contribution as such Underwriter and each director or partner
of Deutsche FRLP, each officer of Deutsche FRI who signed the Registration
Statement, and each person, if any, who controls Deutsche FRLP or DFS within the
meaning of Section 16 of the Act shall have the same rights to contribution as
Deutsche FRLP and DFS.
Section 9. Survival of Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of each of DFS, Deutsche FRLP or its officers and of the Underwriters
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, DFS, Deutsche FRLP or any of their
respective representatives, officers or directors of any controlling person, and
will survive delivery of and payment for the Offered Certificates.
Section 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail on the Closing Date to purchase the Offered
Certificates which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed
10% of the principal amount of Offered Certificates, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
(b) if the principal amount of Defaulted Securities exceeds 10% of the
principal amount of Offered Certificates, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Deutsche FRLP shall have the
right to postpone Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
-13-
<PAGE>
Section 11. Notices. All communications hereunder will be in writing
and:
(i) if sent to the Underwriters, will be mailed, delivered or
sent by facsimile transmission and confirmed to the Representative at:
Deutsche Morgan Grenfell Inc.
31 West 52nd Street, 12th Floor
New York, New York 10019
Attention: Charles W. Kerner
Facsimile: (212) 469-7185;
(ii) if sent to Deutsche FRLP, will be mailed, delivered or sent
by facsimile transmission, and confirmed to it at:
Deutsche Floorplan Receivables, L.P.
655 Maryville Centre Drive
St. Louis, Missouri 63141
Attention: Richard Schumacher
Telephone: (314) 542-3950
Facsimile: (314) 523-3993;
(iii) if sent to DFS, will be mailed, delivered or sent by
facsimile transmission, and confirmed to it at:
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, Missouri 63141
Attention: General Counsel
Telephone: (314) 523-3030
Facsimile: (314) 523-3190;
or to such other address as DFS, Deutsche FRLP or the Representative may
designate in writing to the other parties hereto.
Section 12. Successors. This Agreement will inure to the benefit of
and be binding upon the Underwriters, DFS and Deutsche FRLP and their respective
successors and the officers and directors and controlling persons referred to in
Section 7 hereof, and no other person will have any right or obligations
hereunder.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
-14-
<PAGE>
Section 14. Counterparts. This Agreement may be executed by each of
the parties hereto in any number of counterparts, and by each of the parties
hereto on separate counterparts, each of which counterparts, when so executed
and delivered, shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-15-
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us a counterpart hereof, whereupon this letter and your acceptance
hereof shall constitute a binding agreement between the Underwriters, Deutsche
FRLP and DFS.
Very truly yours,
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC.,
General Partner
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
-16-
<PAGE>
Accepted in New York, New York,
as of the date hereof:
DEUTSCHE MORGAN GRENFELL, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
For itself and as Representative
of the other Underwriters named in
Schedule A hereto.
-17-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount of
Name of Underwriter Offered Certificate
-------------------
<S> <C>
Deutsche Morgan Grenfell......................
Citicorp Securities Markets Inc...............
Dean Witter Reynolds Inc......................
Lehman Brothers, Inc...............................
Salomon Brothers Inc..........................
-----------------
Total $
-----------------
</TABLE>
<PAGE>
EXHIBIT A
TO UNDERWRITING AGREEMENT
1. DFS is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Nevada, and is duly qualified to
transact business and is in good standing in each jurisdiction in the United
States of America in which failure to so qualify would have a material adverse
effect on its business and financial condition.
2. Deutsche FRLP is duly qualified to transact business and is in
good standing in each jurisdiction in the United States of America in which the
conduct of its business or the ownership of its property requires such
qualification.
3. Deutsche FRI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada and is duly qualified to
transact business and is in good standing in each jurisdiction in the United
States in which the conduct of its business or the ownership of its property
requires such qualification.
4. The partnership agreement of Deutsche FRLP has been duly and
validly authorized, executed and delivered by Deutsche FRI and constitutes the
valid and finding agreement of Deutsche FRI, enforceable against Deutsche FRI in
accordance with its terms.
5. Deutsche FRLP has been validly formed and is validly existing as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
(the "Delaware Act"), with full partnership power and authority under the
partnership agreement and the Delaware Act to conduct the business in which it
proposes to engage as described in the Prospectus.
6. The execution and delivery of the Pooling and Servicing Agreement
and the Underwriting Agreement and the performance of the Designated Agreements
and the Underwriting Agreement are permitted under the Delaware Act and will not
violate any applicable Delaware law or regulation.
7. DFS has the requisite power to execute and deliver each of the
Pooling and Servicing Agreement and the Underwriting Agreement and to perform
its obligations under each Designated Agreement and the Underwriting Agreement.
8. Each of the Pooling and Servicing Agreement and the Underwriting
Agreement has been duly and validly authorized, executed and delivered by each
of DFS and Deutsche FRLP, and each Designated Agreement constitutes the valid,
legal and binding obligation of each of DFS and Deutsche FRLP, enforceable
against each of DFS and Deutsche FRLP in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws relating to or affecting the enforcement of creditors'
rights generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
A-1
<PAGE>
9. The direction of Deutsche FRLP to authenticate and deliver the
Offered Certificates has been duly authorized by Deutsche FRLP, and the Offered
Certificates have been duly and validly authorized, and, when duly and validly
executed by Deutsche FRLP and authenticated by the Trustee and delivered to
Deutsche FRLP in accordance with the Pooling and Servicing Agreement, and
following delivery to and payment therefor by the Underwriters as provided
herein, will be validly issued and outstanding and entitled to the benefits of
the Pooling and Servicing Agreement.
10. Neither the execution and delivery by DFS or Deutsche FRLP of the
Pooling and Servicing Agreement or the Underwriting Agreement nor the
consummation of DFS or Deutsche FRLP of the transactions therein contemplated by
the Designated Agreements or the Underwriting Agreement, nor the issuance of the
Offered Certificates by the Trust or the public offering thereof as contemplated
in the Prospectus, will conflict with or result in a breach of, or constitute a
default (with notice or passage of time or both) under, or result in the
imposition of any lien, charge or encumbrance upon any of the property or assets
of DFS or Deutsche FRLP (except as required or permitted pursuant thereto)
pursuant to any indenture, mortgage, contract or other instrument to which DFS
or Deutsche FRLP is party or by which any of them is bound, nor will such action
violate any provision of the certificate of incorporation or by-laws of DFS or
the partnership agreement of Deutsche FRLP. To the best of such counsel's
knowledge and information, the execution and delivery of the Pooling and
Servicing Agreement and the Underwriting Agreement and the consummation of the
transactions contemplated by the Designated Agreements or the Underwriting
Agreement will not result in the violation of the provisions of any applicable
federal or Missouri law, administrative regulation or court decree.
11. There are no legal or governmental proceedings pending or, to the
knowledge of such counsel, threatened which are required to be disclosed in the
Registration Statement, other than those disclosed therein, and all pending
legal or governmental proceedings to which DFS or Deutsche FRLP is a party or to
which any of its property is subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the business,
are, considered in the aggregate, not material. There are no legal or
governmental proceedings pending or, to the best of such counsel's knowledge and
information, threatened (A) asserting the invalidity of the Receivables
Contribution and Sale Agreement, the Pooling and Servicing Agreement or the
Certificates, (B) seeking to prevent the issuance of the Certificates or the
consummation by DFS or Deutsche FRLP of any of the transactions contemplated by
the Designated Agreements or the Underwriting Agreement or (C) which might
materially and adversely affect the performance by DFS or Deutsche FRLP of its
obligations under the Designated Agreements or the Underwriting Agreement.
12. No consent, approval, authorization or order of, or registration,
filing or declaration with, any court or governmental agency or body is required
in connection with (i) the execution and delivery by DFS or Deutsche FRLP of the
Pooling and Servicing Agreement or of the Underwriting Agreement or the
performance by DFS or Deutsche FRLP of any Designated Agreement or of the
Underwriting Agreement or (ii) the offer, sale or delivery of the Offered
Certificates, except such as shall have been obtained or made, as the case may
be, or will be obtained or made, as the case may be, prior to the Closing Date.
A-2
<PAGE>
13. Each of DFS and Deutsche FRLP possesses all material licenses,
certificates, authorities or permits issued by the appropriate state or federal
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus, except to the extent that the failure to
have such licenses, certificates, authorities or permits does not have a
material adverse effect on the Offered Certificates or the financial condition
of DFS or Deutsche FRLP, and neither DFS nor Deutsche FRLP has received any
notice of proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations or financial condition.
14. The Registration Statement has become effective under the Act
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or threatened by the Commission. The
Registration Statement and the Prospectus (other than the financial statements
and other accounting information contained in the Registration Statement or the
Prospectus, or omitted therefrom, as to which such counsel does not express any
opinion) comply as to form in all material respects with the requirements of the
Act and the rules and regulations thereunder.
15. There are no contracts or other documents required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not so filed or described as
required.
16. The Offered Certificates, each Designated Agreement and the
Underwriting Agreement each conform in all material respects with the
descriptions thereof contained in the Registration Statement and the Prospectus.
17. Each of DFS and Deutsche FRLP has full power and authority to
sell and assign the Receivables and the Collateral Security and has duly
authorized its sale and assignment of such property by all necessary corporate
action.
18. Immediately prior to the transfer of the Receivables to Deutsche
FRLP, DFS owned the Receivables and Collateral Security free and clear of any
lien, security interest or charge. With respect to each Receivable (other than
an Unsecured Receivable) constituting part of the Trust, such Receivable is, to
the best of such counsel's knowledge or information, secured by a validly
perfected first priority security interest in the related security property in
favor of DFS as a secured party, other than as permitted by the Pooling and
Servicing Agreement. Each such Receivable and Collateral Security has been duly
and validly assigned to Deutsche FRLP by DFS.
19. All filings necessary under applicable law to perfect the
transfer of the Receivables and Collateral Security by DFS to Deutsche FRLP
pursuant to the Receivables Contribution and Sale Agreement have been made and,
provided that DFS does not relocate its principal place of business in a state
other than Missouri, no other filings (other than the filing of continuation
statements) need be made to maintain the perfection of the sale of the
Receivables and Collateral Security to Deutsche FRLP pursuant to the Receivables
Contribution and Sale Agreement.
20. Immediately prior to the transfer of the Receivables to the
Trustee, Deutsche FRLP is the sole owner of all right, title and interest in,
and has good and marketable title to, the
A-3
<PAGE>
Receivables and the Collateral Security to be transferred by it to the Trust.
The assignment of the Receivables and the Collateral Security, all documents and
instruments relating thereto and all proceeds thereof to the Trustee, pursuant
to the Pooling and Servicing Agreement, vest in the Trustee all interests which
are purported to be conveyed thereby, free and clear of all liens, security
interests, encumbrances or other rights of others, except as specifically
permitted pursuant to the Pooling and Servicing Agreement.
21. Immediately prior to the transfer of the Receivables to the
Trustee, Deutsche FRLP's interest in the Receivables and the Collateral Security
and the proceeds of each of the foregoing were perfected, to the extent any
filing was necessary to effect such perfection, upon the filing of the UCC-1
financing statement, the form of which is attached to such opinion, with the
Secretary of State of the State of Missouri and constituted a perfected
ownership interest therein, free and clear of all liens, security interests,
encumbrances and other rights of others, except as specifically permitted
pursuant to the Pooling and Servicing Agreement. If a court concludes that the
transfer of the Receivables from Deutsche FRLP to the Trustee is a sale, the
interest of the Trustee in the Receivables and the Collateral Security and the
proceeds of each of the foregoing was perfected, to the extent any filing was
necessary to effect such perfection, upon the filing of the UCC-1 financing
statement, the form of which is attached to such opinion, with the Secretary of
State of the State of Missouri and constitutes a perfected ownership interest
therein, free and clear of all liens, security interests, encumbrances and other
rights of others, except as specifically permitted pursuant to the Pooling and
Servicing Agreement. If a court concludes that such transfer is not a sale, the
Pooling and Servicing Agreement constitutes a grant by Deutsche FRLP to the
Trustee of a valid security interest in the Receivables and the Collateral
Security and the proceeds of each of the foregoing, which security interest was
perfected upon the filing of the UCC-1 financing statement, the form of which is
attached to such opinion, with the Secretary of State of the State of Missouri
and constitutes a first priority perfected security interest therein. No filing
or other action, other than the filing of the UCC-1 financing statements with
the Secretary of State of the State of Missouri referred to above, is necessary
to perfect and maintain the ownership interest or the security interest of the
Trustee in the Receivables and the Collateral Security and the proceeds of each
of the foregoing against third parties.
22. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended. Neither Deutsche
FRLP nor the Trust is or will as a result of the offer and sale of the Offered
Certificates as contemplated by the Underwriting Agreement, become an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
23. The statements in the Prospectus under the headings "Prospectus
Summary - Tax Matters", "Prospectus Summary-ERISA Considerations", "Special
Considerations - Certain Risks Relating to the Insolvency of DFS, Deutsche BSC
or the Seller", "Special Considerations - Effect of Insolvency Laws on
Enforceability of Receivables" and "ERISA Considerations", to the extent that
they constitute matters of law or legal conclusions with respect thereto, were
prepared or reviewed by such counsel and are correct in all material respects.
24. The Receivables are either chattel paper, accounts or general
intangibles under the Missouri Uniform Commercial Code.
A-4
<PAGE>
25. Nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, at the date thereof or
on the Closing Date, included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
A-5
<PAGE>
EXHIBIT B
TO UNDERWRITING AGREEMENT
1. The Trustee has been duly incorporated and is validly existing as
a corporation in good standing under the laws of New York with full corporate
trust power and authority to enter into and perform its obligations under the
Pooling and Servicing Agreement.
2. The Pooling and Servicing Agreement has been duly executed and
delivered by the Trustee, and, insofar as the laws governing the trust powers of
the Trustee are concerned and assuming due authorization, execution and delivery
thereof by each of DFS and Deutsche FRLP, the Pooling and Servicing Agreement
constitutes a legal, valid and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganizations or other
similar laws relating to or affecting the enforcement of creditor' rights
generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
3. The Offered Certificates have been duly executed, authenticated
and delivered by the Trustee.
4. Neither the execution nor delivery by the Trustee of the Pooling
and Servicing Agreement, nor the consummation of any of the transactions by the
Trustee contemplated thereby required the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action with respect
to, any governmental authority or agency under any existing federal or New York
State law governing the trust powers of the Trustee, except such as have been
obtained, made or taken.
B-1
<PAGE>
EXHIBIT 3.1
_________________________________________________________________
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
_____________________________________________________
LIMITED PARTNERSHIP AGREEMENT
_______________________________________________________
_____________________________
AMENDED AND RESTATED AS OF OCTOBER 1, 1996
_____________________________
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
This Amended and Restated Partnership Agreement of Deutsche Floorplan
Receivables, L.P. (the "Partnership") is made as of October 1, 1996, by and
between Deutsche Floorplan Receivables, Inc., a Nevada corporation, as general
partner (the "General Partner"), and Deutsche Financial Services Corporation, a
Nevada corporation, as limited partner (the "Limited Partner") (the General
Partner and the Limited Partner are sometimes hereinafter referred to
individually as a "Partner" and collectively as "Partners").
WHEREAS, the General Partner has heretofore formed the Partnership by
filing a Certificate of Limited Partnership with the Office of the Secretary of
State of the State of Delaware on October 22, 1993, executed an Amended and
Restated Certificate of Limited Partnership, dated March 22, 1994, executed an
Amendment to the Certificate of Limited Partnership, dated May 1, 1995, entered
into an Agreement of Limited Partnership of the Partnership, dated as of
December 1, 1993 (the "Original Partnership Agreement"), with the Limited
Partner and entered into an Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of March 1, 1994 (the "Amended and
Restated Partnership Agreement"), with the Limited Partner; and
WHEREAS, the Partners intended at the time of the execution of the Original
Partnership Agreement to date the Original Partnership Agreement as of December
1, 1993, notwithstanding any scrivener's errors which may appear on the
signature page or elsewhere in the Original Partnership Agreement; and
WHEREAS, the parties hereto desire to continue the Partnership as a limited
partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del.
C. (S) 17-101 et seq.) (the "Act") and this Agreement; and
WHEREAS, the parties hereto desire to provide for the governance of the
Partnership and to set forth their respective rights, powers and duties relating
to the Partnership and to amend and restate the Amended and Restated Partnership
Agreement in its entirety.
2
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained herein, the parties, intending to be legally bound, hereby amend and
restate the Amended and Restated Partnership Agreement in its entirety and
hereby agree as follows:
ARTICLE ONE
NAME, PURPOSE AND PARTNERS
--------------------------
1.01. NAME. The name of the limited partnership formed and continued hereby
is Deutsche Floorplan Receivables, L.P. For all purposes, the Original
Partnership Agreement shall be deemed to have been dated as of December 1, 1993.
1.02. PURPOSE. The Partnership is organized for the object and purpose of,
and the nature of the business to be conducted and promoted by the Partnership
is, (i) acquiring, owning, holding, selling, transferring, pledging and
otherwise disposing of receivables, evidences of indebtedness secured by
receivables and participations therein and any related security interests and
any related agreements or other documents, (ii) acting as settlor or depositor
of one or more trusts formed under a trust agreement, pooling and servicing
agreement or other agreement to issue certificates evidencing interests in the
trusts created thereby, (iii) sharing the profits and losses derived therefrom
and (iv) engaging in any and all activities necessary or incidental to the
foregoing. The Partnership is authorized to execute, deliver and perform any
agreement or other instrument in connection with the foregoing purposes,
including without limitation the Receivables Contribution and Sale Agreement,
the Pooling and Servicing Agreement, Supplements thereto and underwriting
agreements.
1.03. REGISTERED OFFICE. The registered office of the Partnership in the
State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
1.04. REGISTERED AGENT. The name and address of the registered agent of the
Partnership for service of process on the Partnership in the State of Delaware
is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
1.05. CERTIFICATE OF LIMITED PARTNERSHIP. On the date of admission of the
Limited Partner, the General Partner shall prepare and execute a certificate of
limited partnership (the "Certificate") to be filed in the office of the
Secretary of State, State of Delaware ("Secretary of State") and such other
offices as may be required by law from time to time. From time to time as
-3-
<PAGE>
required by law, the General Partner shall execute and acknowledge, and shall
cause to be so filed and recorded, appropriate amendments to the Certificate.
1.06. PARTNERS. The names and mailing addresses of the General Partner and
the Limited Partner are as follows:
GENERAL PARTNER
---------------
Deutsche Floorplan Receivables, Inc.
300 South Fourth Street
Suite 1100
Las Vegas, Nevada 89101
LIMITED PARTNER
---------------
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, Missouri 63141-5832
ARTICLE TWO
DEFINITIONS; CAPITAL ACCOUNTS; LIMITATION
-----------------------------------------
OF LIMITED PARTNERS' LIABILITY
------------------------------
2.01. DEFINITIONS. In addition to other definitions provided herein, for
the purpose of this Agreement, the following terms shall have the meaning
hereinafter specified:
(a) "Additional General Partner" means a General Partner admitted to
the Partnership pursuant to Article Three of this Agreement.
(b) "Additional Limited Partner" means a Limited Partner admitted to
the Partnership pursuant to Article Three of this Agreement.
(c) "Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any Person owning or controlling more than 50% of
the outstanding voting interests of such Person, (iii) any officer,
director, or general partner of such Person, or (iv) any Person who is an
officer, director, general partner, trustee, or holder of more than 50% of
the voting interests of any Person described in clauses (i) through (iii)
of this sentence. The term "controls" (including the terms "controlled by"
and "under common control with") means the possession, direct or
-4-
<PAGE>
indirect, of the power to direct or cause the direction of the management
and policies of an entity or individual whether through the ownership of
voting securities, by contract, or otherwise.
(d) "Agreement" means this Partnership Agreement as amended, modified
or supplemented from time to time.
(e) "Built-in Gain" means the difference between the initial Gross
Asset Value of any property contributed to the Partnership and its adjusted
basis for federal income tax purposes immediately prior to contribution.
(f) "Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other
than money) contributed to the capital of the Partnership by or on behalf
of such Partner. Any reference in this Agreement to the Capital
Contribution of a current Partner shall include the Capital Contribution of
any prior Partner if such prior Partner's interest in the Partnership has
been transferred to such current Partner.
(g) "Cash Flow" means gross cash revenues derived from the operation
of the Partnership's business and from the sale, exchange or disposition of
Partnership Property, less any cash expenses and any Reserves established
by the General Partner.
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law), including
effective date and transition rules (whether or not codified).
(i) "Distribution Date" means the date of the close of any fiscal one-
month period on which the General Partner determines the amount of Cash
Flow available for distribution.
(j) "General Partner" means Deutsche Floorplan Receivables, Inc., a
Nevada corporation.
(k) "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of
such asset, as set forth in Exhibit C hereto, as determined by the
General Partner; and
(ii) The Gross Asset Value of all Partnership assets shall be
adjusted to equal their respective gross fair
-5-
<PAGE>
market values, as determined by the General Partner, as of the
following times: (a) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a
de minimis Capital Contribution; (b) the distribution by the
Partnership to a Partner of more than a de miminis amount of cash or
Partnership Property as consideration for an interest in the
Partnership; and (c) a liquidation of the Partnership within the
meaning of the Regulations; provided, however, that the adjustments
pursuant to clauses (a) and (b) above shall be made only if the
General Partner reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of
the Partners in the Partnership.
(l) "Limited Partner" means Deutsche Financial Services Corporation, a
Nevada corporation.
(m) "Net Income" and "Net Losses" means, for a fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for
such year or period, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and is not otherwise taken into account in computing Net
Income or Net Losses pursuant to this definition shall be added to
such taxable income or loss;
(ii) Any non-deductible, non-capitalizable expenditures of the
Partnership (and any expenditures treated as such pursuant to the
Regulations), and not otherwise taken into account in computing Net
Income or Net Losses pursuant to this definition, shall be subtracted
from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subparagraph (ii) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of
computing Net Income or Net Losses;
(iv) Gain or loss resulting from any disposition of Partnership
assets with respect to which gain or loss is recognized for federal
income tax purposes shall be
-6-
<PAGE>
computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;
(v) Notwithstanding any other provision of this definition of Net
Income and Net Losses, any items that are specially allocated pursuant
to Section 6.05 or Section 6.06 hereof shall not be taken into account
in computing Net Income or Net Losses.
(n) "Partners" means the General Partner and the Limited Partner,
where no distinction is required by the context in which the term is used
herein.
(o) "Partnership Interest" means for each Partner the stated
percentage interest in each item of Partnership income, gain, loss,
deduction or credit as set forth on Exhibit A attached hereto, as the same
may be modified from time to time to reflect any changes therein which
occur pursuant to the provisions hereof. Initially, the Partnership
Interest of the General Partner will be 1% and the Partnership Interest of
the Limited Partner will be 99%.
(p) "Partnership Property" means and includes the Receivables, cash
and all of the property described on Exhibit B attached hereto.
(q) "Person" means any individual, partnership, corporation, trust, or
other entity.
(r) "Pooling and Servicing Agreement" means the agreement among
Deutsche Floorplan Receivables, L.P., Deutsche Financial Services
Corporation and Chase Manhattan Bank, amended and restated as of October 1,
1996, as the same may be amended, modified or supplemented from time to
time.
(s) "Rating Agency Condition" shall have the meaning ascribed thereto
in the Pooling and Servicing Agreement.
(t) "Receivables Contribution and Sale Agreement" means the agreement
among Deutsche Financial Services Corporation, Deutsche Business Services
Corporation and Deutsche Floorplan Receivables, L.P., amended and restated
as of October 1, 1996 as the same may be amended, modified or supplemented
from time to time.
(u) "Regulations" means the Income Tax Regulations promulgated under
the Code, as such Regulations may be amended from time to time (including
corresponding provisions of succeeding Regulations).
-7-
<PAGE>
(v) "Reserves" shall have the meaning ascribed thereto in Section
9.04.
(w) "Supplements" shall have the meaning ascribed thereto in the
Pooling and Servicing Agreement.
2.02. INITIAL CAPITAL CONTRIBUTIONS.
(a) Contemporaneously with the execution of the Original Partnership
Agreement, the General Partner contributed cash, Receivables and/or
marketable securities to the Partnership as its Capital Contributions.
(b) Contemporaneously with the execution of the Original Partnership
Agreement, the Limited Partner contributed Receivables as its Capital
Contributions.
2.03. ADDITIONAL CAPITAL CONTRIBUTIONS. No Partner shall be required to
make additional Capital Contributions.
2.04. WITHDRAWAL OF CAPITAL. Except as otherwise provided in this
Agreement, no Partner shall be entitled to demand or receive a return of any
portion of its Capital Contributions from the Partnership without the consent of
the General Partner.
2.05. PARTNERSHIP INTERESTS AND CAPITAL ACCOUNTS. For all purposes of this
Agreement the "Capital Account" of a Partner as of any date shall mean the value
of the Capital Contribution of such Partner as set forth on Exhibit A attached
hereto as the same may be amended from time to time, properly adjusted to
reflect the financial allocations and distributions provided for in Article Six
of this Agreement and any additional Capital Contribution of such Partner.
2.06. LIMITATION OF LIMITED PARTNERS' LIABILITY.
(a) The Limited Partner shall have no personal liability whatever,
whether to the Partnership, to any of the Partners or to the creditors of
the Partnership, for the debts of the Partnership or any of its losses
beyond the amount committed by such Limited Partner to the capital of the
Partnership. Each Partnership Interest on issuance shall be fully paid and
non-assessable.
(b) The Limited Partner does not control the Partnership business
solely by doing one or more of the following:
1. Being a contractor for or an agent or employee of the
Partnership or the General Partner or being an officer, director, or
shareholder of the General Partner;
-8-
<PAGE>
2. Consulting with and advising the General Partner with
respect to the business of the Partnership;
3. Acting as surety for the Partnership or guaranteeing or
assuming one or more specific obligations of the Partnership, or
acting as endorser of its obligations, or providing collateral for its
borrowings;
4. Taking any action required or permitted by law to bring
or pursue a derivative action in the right of the Partnership;
5. Requesting or attending a meeting of Partners;
6. Proposing, approving, or disapproving, by voting or
otherwise, one or more of the following matters:
a. the dissolution and winding up of the Partnership or
continuation of the business of the Partnership upon the
occurrence of any event which otherwise requires the winding up
and termination of its affairs,
b. the sale, exchange, lease, mortgage, pledge or other
transfer of all or substantially all of the assets of the
Partnership,
c. the incurrence of indebtedness by the Partnership other
than in the ordinary course of its business,
d. a change in the nature of the business,
e. the admission or removal of the General Partner,
f. the admission or removal of a Limited Partner,
g. a transaction involving an actual or potential conflict
of interest between the General Partner and the Partnership or
the Limited Partner,
h. an amendment to the Agreement or Certificate of Limited
Partnership,
i. matters related to the business of the Partnership not
otherwise enumerated in this
-9-
<PAGE>
subsection, which the Agreement states in writing may be subject
to the approval or disapproval of Limited Partners, or
j. any other matter required by law or regulation to be
submitted to a vote of Limited Partners;
7. Winding up the Partnership; or
8. Exercising any right or power permitted a Limited
Partner under the Act and not specifically enumerated in this
subsection.
ARTICLE THREE
ADMISSION OF ADDITIONAL PARTNERS
--------------------------------
3.01. AUTHORITY OF GENERAL PARTNER TO ADMIT ADDITIONAL LIMITED PARTNERS.
The Partners agree that the General Partner, may, subject to the satisfaction of
the Rating Agency Condition, admit Additional Limited Partners to the
Partnership, subject to and in accordance with the provisions of Section 4.03.
3.02. PARTNERSHIP INTERESTS ON ADMISSION OF ADDITIONAL LIMITED PARTNERS.
The Partnership Interest of each Additional Limited Partner shall be the
percentage that the amount of capital (based on agreed market value at the time
of contribution) contributed to the Partnership by such Additional Limited
Partner, bears to the total increased capital (based on agreed market value at
the time of contribution) of the Partnership immediately following such
contribution. Upon admission of such Additional Limited Partner to the
Partnership, the Partnership Interests of the existing Partners shall be reduced
pro rata by the amount of such Additional Limited Partner's Partnership
Interest.
3.03. ADMISSION OF ADDITIONAL GENERAL PARTNERS. The Partnership may admit
Additional General Partners to the Partnership only upon the satisfaction of the
following conditions prior to such admission:
(i) the General Partner shall have received the consent of the
Partners holding at least two-thirds of the Partnership Interests; and
(ii) the Rating Agency Condition shall have been satisfied with
respect to such admission.
-10-
<PAGE>
ARTICLE FOUR
MANAGEMENT OF THE PARTNERSHIP
-----------------------------
4.01. AUTHORITY OF GENERAL PARTNER. The General Partner shall have sole
and exclusive authority to manage the operations and affairs of the Partnership
and to make all decisions regarding the business of the Partnership. No Limited
Partner shall have control of the Partnership's business, nor shall it have the
power to act for or bind the Partnership, such powers being vested solely and
exclusively in the General Partner. Pursuant to the foregoing, it is understood
and agreed that the General Partner shall have all of the rights and powers of a
general partner provided in the Act and by this Agreement, and as otherwise
provided by law, and any action taken by the General Partner shall constitute
the act of and serve to bind the Partnership. Persons dealing with the
Partnership are entitled to rely conclusively on the power and authority of the
General Partner as set forth in this Agreement.
4.02. SPECIFIC POWERS OF GENERAL PARTNER. Subject to the provisions of
Section 4.03 below, the General Partner is hereby granted the right, power and
authority to do on behalf of the Partnership all things which, in its sole
judgment, are necessary, proper or desirable to carry out the aforementioned
duties and responsibilities.
4.03. POWERS REQUIRING CONCURRENCE OF LIMITED PARTNERS. Without the
written consent or ratification of the specific act by the Partners holding in
the aggregate, at least 66 2/3% of the Partnership Interests, the General
Partner has no authority to and affirmatively represents and undertakes that it
will not admit a person as a Partner under this Agreement, which in any event
shall always be done in accordance with Article Eight.
4.04. DUTIES OF GENERAL PARTNER. The General Partner shall devote such
time to the Partnership business as it shall deem to be necessary to manage and
supervise the Partnership business and affairs in an efficient manner.
Subject to the foregoing, the General Partner shall manage the
administration of the Partnership, which administration shall include, but not
be limited to, the following:
(a) maintaining customary books and records;
(b) preparing or causing the preparation of the financial statements
provided for in this Agreement;
(c) preparing and filing or causing the preparation and filing of
Partnership tax returns;
-11-
<PAGE>
(d) preparing communications from the Partnership to the Limited
Partner;
(e) filing documents required of the Partnership by law;
(f) causing the Partnership to make or revoke all tax elections
provided for under the Code; and
(g) functioning as tax matters partner for federal, state and local
tax purposes.
4.05. COMPENSATION OF GENERAL PARTNER AND EXPENSES. As compensation for
its administrative management services, the General Partner shall receive a
reasonable fee which shall be an expense of the Partnership and shall be
reviewed from time to time; provided that such fee shall be payable only to the
extent that the Partnership has funds available therefor after payments of any
other obligations. In addition, the General Partner shall be entitled to charge
to the Partnership any filing fees incurred in complying with any requirement
imposed on the Partnership by law, reasonable accountants' and attorneys' fees,
and all other reasonable expenses arising out of the administration of the
Partnership including, but not limited to, those incurred in any administrative
or judicial proceeding in which the Partnership may become involved, including
reasonable attorneys' and accountants' fees in connection therewith.
4.06. SCOPE OF RESPONSIBILITY. Neither the General Partner nor any
director, officer, agent or employee of the General Partner shall be liable,
responsible or accountable in damages or otherwise to the Partnership or the
Limited Partner for any action taken or failure to act on behalf of the
Partnership within the scope of the authority conferred upon the General Partner
by this Agreement or by law unless such action or omission was performed or
omitted fraudulently or in bad faith or constituted willful and wanton
misconduct or gross negligence.
4.07. CONTRACTS WITH AFFILIATES. The General Partner or the Partnership
may enter into an agreement (including the Pooling and Servicing Agreement) with
any of the General Partner's Affiliates to render services for the Partnership;
provided that payments by the Partnership thereunder shall be payable only to
the extent that the Partnership has funds available therefor. Any service
rendered to the Partnership by the General Partner or any Affiliate shall be on
terms that are fair and reasonable to the Partnership and are, in the aggregate,
no less favorable than those which could be obtained from unaffiliated third
parties for comparable quality.
4.08. INDEMNIFICATION. The Partnership shall indemnify and hold harmless,
jointly and severally, the General Partner and its directors, officers, agents
and employees acting within the scope
-12-
<PAGE>
of their authority (herein the "Indemnified Parties") from and against any loss,
expense, damage or injury suffered or sustained by them by reason of any acts,
omissions or alleged acts or omissions arising out of its activities on behalf
of the Partnership or in furtherance of the interests of the Partnership,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim and including
any payments made by one or more Indemnified Parties, if the acts, omissions or
alleged acts or omissions upon which such actual or threatened action,
proceeding or claim is based were not performed or omitted fraudulently or in
bad faith or did not constitute willful and wanton misconduct or gross
negligence by one or more such Indemnified Parties. Any such indemnification
shall only be made from the assets of the Partnership.
4.09. LIMITED PARTNERS' RIGHTS. Except as otherwise set forth in this
Agreement, all Limited Partners will have all rights and authority accorded to
them under the Act.
ARTICLE FIVE
STATEMENTS AND FISCAL YEAR
--------------------------
5.01. STATEMENTS. The General Partner shall send or cause to be sent to
each Limited Partner financial statements for the Partnership as follows:
(a) Not later than June 30 of each year, financial statements for the
preceding fiscal year;
(b) Such statements as may be necessary for preparation of each
Partner's income tax returns.
5.02. FISCAL YEAR. The fiscal year of the Partnership shall be January 1
through December 31.
ARTICLE SIX
FINANCIAL ALLOCATIONS AND DISTRIBUTIONS
---------------------------------------
6.01. MAINTENANCE OF PARTNERS' CAPITAL ACCOUNTS. With respect to each
Partner, a separate Capital Account for such Partner shall be established and
maintained throughout the full term of the Partnership as follows:
(a) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, as set forth
-13-
<PAGE>
and agreed to on Exhibit A attached hereto, such Partner's distributive
share of Net Income, and any items in the nature of income or gain that
are specially allocated pursuant to Sections 6.03 or 6.04 hereof, and the
amount of any Partnership liabilities that are assumed by such Partner or
secured by any Partnership property distributed to such Partner;
(b) From each Partner's Capital Account there shall be subtracted
the amount of cash and the Gross Asset Value of any Partnership assets
distributed to such Partner pursuant to any provision of this Agreement
such Partner's distributive share of Net Losses, and any items in the
nature of deduction or losses that are specially allocated pursuant to
Sections 6.03 or 6.04 hereof, and the amount of any liabilities of such
Partner assumed by the Partnership or secured by any property contributed
by such Partner to the Partnership;
(c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed
to the Capital Account if any, of the transferor to the extent it related
to the transferred interest;
(d) In determining the amount of any liability for purposes of
Sections 6.01(a) and 6.01(b) hereof, there shall be taken into account
Code Section 752 and any other applicable provisions of the Code and
Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such intent. In the event the General Partner shall determine
that it is prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto (including, without limitation, debits or credits
relating to liabilities that are secured by contributed or distributed property
or that are assumed by the Partnership or the Partners), are computed in order
to comply with such Regulations, the General Partner may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Partner pursuant to Section 9.02 hereof upon the
dissolution of the Partnership. The General Partner shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership capital reflected
on the Partnership's balance sheet, as computed for book purposes in accordance
with the Regulations, and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause the Agreement not to comply with
Regulations Section 1.7041(b).
-14-
<PAGE>
6.02. NET INCOME AND NET LOSS; CASH FLOW.
(a) Net Income and Net Loss. Except as provided in Sections 6.03, 6.04,
and 6.06 hereof, the determination of each Partner's distributive share of any
Partnership Net Income and Net Loss with respect to any Partnership fiscal year
shall be made in accordance with and in proportion to such Partner's Partnership
Interest during the particular year, after taking into account any variations in
the Partner's Partnership Interest during that year.
(b) Cash Flow. The distributive share of Cash Flow of any Partner for any
Partnership fiscal year shall be determined in accordance with and in proportion
to such Partner's Partnership Interest during the particular year, after taking
into account any variations in the Partner's Partnership Interest during that
year. Cash Flow shall be distributable only to the extent of Partnership funds
available therefor after payment of all of the Partnership's expenses and the
creation of Reserves, and no Partner shall have any claim against the
Partnership for the distribution of Cash Flow to it.
6.03. SPECIAL TAX ALLOCATIONS. Special tax allocations shall be made to
the extent necessary to comply with the requirements of the Regulations set
forth in Section 1.704-1(b)(2)(ii)(d) and 1.704-2 (the "Regulatory
Allocations").
6.04. CURATIVE ALLOCATIONS. It is the intent of the Partners that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Partnership
income, gain, loss or deduction pursuant to this Section 6.04. Therefore,
notwithstanding any other provision of this Article 6 (other than the Regulatory
Allocations), the General Partner shall make such offsetting special allocations
of Partnership income, gain, loss or deduction in whatever manner he determines
appropriate so that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership items were allocated pursuant to Section
6.02 hereof. In exercising discretion under this Section 6.04, the General
Partner shall take into account certain future Regulatory Allocations that,
although not yet made, are likely to offset other Regulatory Allocations
previously made under Section 6.03.
6.05. OTHER ALLOCATION RULES. For purposes of determining items of
Partnership income, gain, loss or deduction or any other items allocable to any
fiscal year or other period, including upon the transfer of a Partner's interest
in the Partnership, such items shall be determined on a daily, monthly, or other
basis, as determined by the General Partner, using any permissible method
-15-
<PAGE>
under Code Section 706 and the Regulations thereunder. To the extent permitted
by the Regulations, the Partner shall endeavor not to treat distributions of
Cash Flow as having been made from the proceeds of a nonrecourse liability
within the meaning of Section 1.752-2 of the Regulations.
6.06. ALLOCATION OF BUILT-IN GAINS. In accordance with Code Section
704(c) and the Regulations thereunder, income, gain, loss and deduction with
respect to any Partnership Property contributed by the Partners to the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any Built-in Gains or variation between the adjusted basis
of such property to the Partnership for federal income tax purposes and its
initial Gross Asset Value.
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to subparagraph (ii) of the definition of the term Gross Asset Value
in Section 2.01(k) hereof, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall, solely for tax purposes, take
account of any Built-in Gains or variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made
by the General Partner in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations of Built-in Gain pursuant to this
Section 6.06 are solely for purposes of federal, state and local taxes and shall
not affect, or in any way be taken into account in computing, Net Income, Net
Losses, credits or debits to any Partner's Capital Account or share of items of
income, gain, loss, or deduction or distributions pursuant to any provisions of
this Agreement.
6.07. DISTRIBUTION OF CASH FLOW AND OTHER AMOUNTS. As determined by the
General Partner employing reasonable business judgment, to the extent
Partnership Cash Flow is available for distribution at the close of any fiscal
one-month period, such distribution shall be made as soon as reasonably possible
following such period, in the manner provided for in Section 6.02 above as if
the fiscal one-month period were a fiscal year. No such distribution will be
made if it would create a negative Capital Account balance for a Limited
Partner. The General Partner may refuse to consent to said distribution for the
above reason or if said distribution would impair reserves set up by the General
Partner under Section 9.04 hereof. Cash Flow shall be distributable only to the
extent of Partnership funds available therefor after payment of all of the
Partnership's expenses and the creation of Reserves, and no Partner shall have
any claim against the Partnership for the distribution of Cash Flow to it.
-16-
<PAGE>
ARTICLE SEVEN
NO WITHDRAWAL OF PARTNER; DEATH, LEGAL INCAPACITY, DISSOLUTION OR BANKRUPTCY
- ----------------------------------------------------------------------------
OF LIMITED PARTNER; DIVIDED INTERESTS
-------------------------------------
7.01. NO WITHDRAWAL. No Partner shall have the right to withdraw from the
Partnership.
7.02. DEATH, LEGAL INCAPACITY, DISSOLUTION, BANKRUPTCY. The death, legal
incapacity, dissolution or bankruptcy of a Limited Partner shall not cause a
dissolution of the Partnership, but the rights of such Limited Partner to share
in the profits and losses of the Partnership, to receive distributions of
Partnership funds and to assign an interest pursuant to Article Eight hereof
shall, on the happening of any such named event, devolve upon its personal or
legal representative or upon the person or persons entitled to receive its
property under the laws of its domicile, subject to the terms and conditions of
this Agreement, and the Partnership shall continue as a limited partnership.
However, in no event shall such personal or legal representative or person or
persons entitled to receive the interest of such a Limited Partner become a
substitute Limited Partner, except in accordance with Article Eight hereof.
ARTICLE EIGHT
TRANSFER OF PARTNERSHIP INTEREST
--------------------------------
8.01. GENERAL RESTRICTIONS ON TRANSFERS OF PARTNERSHIP INTERESTS. No
Partner shall sell, assign, convey, encumber, hypothecate or otherwise dispose
of all or any part of his or its Partnership Interest to any Person except to an
Affiliate of the General Partner or the Limited Partner.
8.02. EVIDENCE OF TRANSFER, SUBSTITUTE OR ADDITIONAL PARTNERS. In
addition to any other provision contained in this Article Eight:
(a) No transfer of a Partnership Interest, or any part thereof,
although otherwise permitted hereunder, shall be valid and effective, nor
shall the Partnership recognize the same, unless and until (i) there is
filed with the General Partner a written instrument in form acceptable to
it evidencing the transfer of such Partnership Interest to the transferee
and the transferee's acceptance thereof and (ii) the Rating Agency
Condition in respect of such proposed transfer shall have been satisfied.
-17-
<PAGE>
(b) No transfer of a Partnership Interest, or any part thereof,
although otherwise permitted hereunder, shall be valid and effective, nor
shall the Partnership recognize the same, nor shall any transferee become a
substitute or additional Partner of the Partnership unless:
(i) the transferring instrument so provides;
(ii) the transferee agrees in writing to be bound by the
provisions of this Agreement and the Certificate of Limited
Partnership;
(iii) the transferee executes all instruments required to
effectuate the terms of this Agreement including, but not limited
to, those contemplated in Section 1.02 hereof.
(c) If all three conditions of Section 8.02(b) are satisfied and if
required by law, the General Partner shall prepare (or cause to be
prepared) for recordation an appropriate amendment to the Certificate of
Limited Partnership to be signed and sworn to by it, in its own behalf and
as attorney-in-fact for each of the Limited Partners.
(d) The Partnership, each Partner and any other person having business
with the Partnership need deal only with Partners so named or so admitted
and shall not be required to deal with any other person by reason of an
assignment by a Partner or by reason of the death, legal incapacity,
dissolution or bankruptcy of a Partner, except as otherwise provided in
this Agreement.
8.03. NON-TERMINATION. Notwithstanding any other provision contained in
this Article Eight, no Partner may transfer or encumber all or any part of its
Partnership Interest during any Partnership fiscal year if such transfer or
encumbrance, together with all other transfers or encumbrances theretofore made
(including all transfers by death) of Partnership Interests during said fiscal
year, would result in the termination of the Partnership for federal income tax
purposes.
8.04. COMPLIANCE WITH FEDERAL AND STATE LAW. Each Partner represents and
warrants that it is purchasing its Partnership Interest as an investment and not
for distribution within the meaning of any applicable United States federal and
state securities laws and regulations. Any Partner who does any act or omission
to act which results in a breach of such representations and warranties shall
and hereby agrees to indemnify and hold harmless all of the other Partners and
the Partnership from any claims, demand, suits, losses, judgments, and damages,
including
-18-
<PAGE>
reasonable attorneys' fees incidental thereto, arising out of or in any way
connected with such act or omission.
ARTICLE NINE
TERM AND DISSOLUTION
--------------------
9.01. TERM AND DISSOLUTION OF PARTNERSHIP. The Partnership shall be
dissolved upon the occurrence of any of the following events:
(a) The Partnership is in existence on January 1, 2015;
(b) The bankruptcy, death, legal incapacity, withdrawal or dissolution
of, or an assignment for the benefit of creditors by, the General Partner,
unless at the time there is at least one other General Partner, such other
General Partner being hereby authorized to carry on the business of the
Partnership.
9.02. DISTRIBUTION AFTER DISSOLUTION. Upon dissolution, a full accounting
of the assets and liabilities of the Partnership shall be taken and the
Partnership assets shall be distributed as promptly as possible as hereinafter
provided:
(a) to the payment of such debts and liabilities of the Partnership,
as may be necessary as a result of the dissolution, including any necessary
expenses of liquidation, except any debts, liabilities and loans that may
be due to the Partners, in the order of priority as provided by law;
(b) to the payment of any debts and liabilities that may be due to the
Partners and to the payment of the unpaid principal balance and the
interest accrued thereon on loans, if any, made by the Partners to the
Partnership;
(c) each Partner's Capital Account shall be adjusted as provided in
Section 6.01 as if the property were sold for its fair market value and the
resulting gain or loss had been allocated to the respective Partners. Then
the assets of the Partnership shall be distributed to the Partners in
proportion to their respective non-negative Capital Accounts;
(d) all of the assets of the Partnership shall be distributed in kind
on dissolution;
(e) any General Partner with a negative Capital Account shall be
required to repay the deficit in its Capital Account to the Partnership.
If any Limited Partner has a deficit balance in its Capital Account (after
giving effect to all
-19-
<PAGE>
contributions, distributions and allocations for all fiscal years,
including the fiscal year during which such liquidation occurs), such
Limited Partner shall have no obligation to make any contribution to the
capital of the Partnership with respect to such deficit, and such deficit
shall not be considered a debt owed to the Partnership or to any other
Person for any purpose whatsoever.
9.03. DISSOLUTION - NO GENERAL PARTNER REMAINING. In the event of the
dissolution of the Partnership from a cause which results in there being no
General Partner remaining able to act, a liquidating committee selected by a
majority in interest of the Limited Partners shall wind up the affairs of the
Partnership. The Limited Partners shall continue to share profits and losses
during the period of liquidation in the same proportion as before the
dissolution. Such liquidating committee shall have the full right and unlimited
discretion to determine the time, manner and terms of any sale or sales of
Partnership property pursuant to such liquidation having due regard to the
activity and condition of the relevant market and general financial and economic
conditions.
9.04. RESERVES. The General Partner shall have the right to set up
reasonable cash reserves for contingent liabilities or obligations of the
Partnership, capital improvements or for any other purpose necessary to
accomplish the purposes of the Partnership ("Reserves") and such Reserves shall
be deducted from the amount available for distribution.
9.05. STATEMENT. Within a reasonable time following the completion of the
liquidation or distribution of the Partnership's properties, the General Partner
or liquidating committee shall supply to each of the Partners a statement which
shall set forth the assets and the liabilities of the Partnership as of the date
of complete liquidation, and each Partner's Capital Account.
9.06. DISTRIBUTION LIMITED TO PARTNERSHIP ASSETS. No Partner shall have
any right to demand a distribution in a form other than that decided upon by the
General Partner upon dissolution and termination of the Partnership or to demand
the return of its capital contributions to the Partnership, prior to dissolution
and termination of the Partnership.
9.07. TERMINATION. Upon completion of the distribution of all Partnership
assets, the Partnership shall terminate and the General Partner or liquidating
committee shall have authority to execute and record a Cancellation of the
Certificate of Limited Partnership or equivalent document as well as any and all
other documents as may be required by law to effect and evidence dissolution and
termination of the Partnership.
-20-
<PAGE>
ARTICLE TEN
MISCELLANEOUS
-------------
10.01. POWER OF ATTORNEY. The Limited Partner, by its execution
hereof, jointly and severally hereby irrevocably constitute and appoint the
General Partner, with full power of substitution, its true and lawful attorney-
in-fact, in its name, place and stead to make, execute, sign, acknowledge,
record and file, on behalf of it and on behalf of the Partnership, the
following:
(a) One or more Certificates of Limited Partnership, certificates
of doing business under an assumed or fictitious name, and any other
certificates or instruments which may be required to be filed by the
Partnership or the Partners under the laws of the State of Delaware or
any other jurisdiction whose laws may be applicable;
(b) One or more Certificates of Cancellation of the Certificate of
Limited Partnership or equivalent document and such other instruments or
documents as may be deemed necessary or desirable by the General Partner
upon the termination of the Partnership business;
(c) Any and all amendments of the instruments described in subsections
10.01(a) and 10.01(b) above, provided such amendments are either required
by law or are consistent with this Agreement or have been authorized by the
affected Partners;
(d) Any and all such other instruments as may be deemed necessary or
desirable by the General Partner to carry out fully the provisions of this
Agreement in accordance with its terms;
(e) The foregoing grant of authority contained in subsections
10.01(a), (b), (c) and (d) above is a Special Power of Attorney coupled
with an interest, is irrevocable, and shall survive the dissolution or
bankruptcy of the Limited Partner granting the power, may be exercised by
the General Partner on behalf of each Limited Partner by a facsimile
signature or by listing all of the Limited Partners executing any
instrument with a single signature as attorney-in-fact for all of them and
shall survive the delivery of an assignment by a Limited Partner of the
whole or any portion of its interest;
(f) Notwithstanding the provisions of subparagraphs (a) through (e)
above, the General Partner is not authorized to and covenants and agrees
with the Limited Partner that it will not file any Certificate of Limited
Partnership or amendment
-21-
<PAGE>
of any Certificate which reflects an increased capital contribution by the
Limited Partner unless the Limited Partner has first authorized the filing
of such Certificate or amendment in writing.
10.02. GOVERNING LAW AND ARBITRATION. It is the intent of the Partners
that all questions with respect to the construction of this Agreement and the
rights and liabilities of the Partners shall be determined in accordance with
the law of the State of Delaware. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof shall be settled by
arbitration in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof.
10.03. GENDER AND NUMBER. Wherever from the context it shall appear
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
10.04. SUCCESSORS AND ASSIGNS. Except as herein or by law otherwise
provided and subject to Article Eight hereof, this Agreement shall be binding on
and inure to the benefit of the Partners, their legal representatives, heirs,
administrators, executors, successors and assigns.
10.05. COUNTERPARTS, INTEGRATION. This Agreement may be executed in
several counterparts and all so executed shall constitute one Agreement binding
on all Partners, notwithstanding that all the Partners are not signatory to the
original or the same counterpart. This Agreement, including exhibits,
constitutes the entire agreement among the Partners pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the Partners in connection therewith. No covenant,
representation or condition not expressed in this Agreement shall be binding
upon the Partners hereto or shall affect or be effective to interpret, change
or restrict the provisions of this Agreement.
10.06. NO PARTITION. The Partners agree that the Partnership Property is
not and will not be suitable for partition. Accordingly, each of the Partners
hereby irrevocably waives any and all rights that he may have to maintain any
action for partition of any of the Partnership Property.
10.07. CAPTIONS. Captions contained in the Agreement are inserted only
as a matter of convenience and in no way define, limit or extend the scope or
intent of this Agreement or any provision thereof.
-22-
<PAGE>
10.08. SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstances, shall be held
invalid, the remainder of this Agreement, or the application of such provisions
to persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
10.09. NOTICES. All notices under this Agreement shall be in writing and
shall be given to each Partner to whom addressed at the addresses set forth in
Section 1.06 hereof or at such other address as any of the Partners may
hereafter specify in writing and to the Partnership at such address as the
General Partner shall specify to the Partners. Notice shall be deemed effective
hereunder only when actually received by the party to whom notice is given.
10.10. AMENDMENT, WAIVER. No change, termination or attempted waiver of
any of the provisions hereof shall be binding unless agreed to in writing by the
Partners holding in the aggregate at least 66 2/3% of the Partnerships Interests
and unless the Rating Agency Condition is satisfied.
10.11. NO PETITION. Each Partner, by entering into this Agreement,
hereby covenants and agrees that it will not at any time institute against
the Partnership any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal of
state bankruptcy or similar law.
-23-
<PAGE>
IN WITNESS WHEREOF, the Partners hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first above
written.
GENERAL PARTNER:
DEUTSCHE FLOORPLAN RECEIVABLES, INC.
By:____________________________
Title:
By:____________________________
Title:
LIMITED PARTNER:
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By:____________________________
Title:
By:____________________________
Title:
-24-
<PAGE>
EXHIBIT A
---------
Names and Addresses of Partners, Partnership Interests
------------------------------------------------------
and Capital Accounts
--------------------
<TABLE>
<CAPTION>
Agreed upon
Partnership Capital Capital
Interest Accounts Contributions
----------- ----------------- -----------------
<S> <C> <C> <C>
General Partner
- ---------------
Deutsche Floorplan 1% $ 22,680,933.00 $ 22,680,933.00
Receivables, Inc.
Limited Partner
- ---------------
Deutsche Financial Services 99% $2,245,412,373.00 $2,245,412,373.00
Corporation ---- ----------------- -----------------
100% $2,268,093,306.00 $2,268,093,306.00
==== ================= =================
</TABLE>
<PAGE>
EXHIBIT B
---------
<TABLE>
<CAPTION>
Partnership Property
--------------------
<S> <C>
Receivables Totaling $2,268,093,306.00
</TABLE>
<PAGE>
EXHIBIT C
---------
<TABLE>
<CAPTION>
Agreed Market Value
-------------------
<S> <C>
Receivables Totaling $2,268,093,306.00
</TABLE>
<PAGE>
Exhibit 4.1
===============================================================================
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
and
THE CHASE MANHATTAN BANK
Trustee
Deutsche Floorplan Receivables Master Trust
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1993,
Amended and Restated as of March 1, 1994,
Amended as of January 24, 1996, and
Amended and Restated as of October 1, 1996
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I Definitions..................................... 1
SECTION 1.1. Definitions................................ 1
SECTION 1.2. Other Definitional Provisions.............. 30
SECTION 1.3. Provisions Relating to Rating Agencies..... 31
ARTICLE II Conveyance of Receivables....................... 31
SECTION 2.1. Conveyance of Receivables.................. 31
SECTION 2.2. Acceptance by Trustee...................... 34
SECTION 2.3. Representations and Warranties of the
Seller Relating to the Seller and
the Agreement............................ 34
SECTION 2.4. Representations and Warranties of the
Seller Relating to the Receivables....... 37
SECTION 2.5. Addition of Accounts....................... 40
SECTION 2.6. Covenants of the Seller.................... 43
SECTION 2.7. Removal of Eligible Accounts............... 46
SECTION 2.8. Removal of Ineligible Accounts............. 47
SECTION 2.9. Sale of Ineligible Receivables............. 49
ARTICLE III Administration and Servicing of Receivables..... 49
SECTION 3.1. Acceptance of Appointment and Other
Matters Relating to the Servicer......... 49
SECTION 3.2. Servicing Compensation..................... 51
SECTION 3.3. Representations, Warranties and
Covenants of the Servicer................. 52
SECTION 3.4. Reports and Records for the Trustee........ 55
SECTION 3.5. Annual Servicer's Certificate.............. 55
SECTION 3.6. Annual Independent Public
Accountants' Servicing Report............. 56
SECTION 3.7. Tax Treatment.............................. 57
SECTION 3.8. Notices to DFS............................. 57
SECTION 3.9. Adjustments................................ 57
ARTICLE IV Rights of Certificateholders and Allocation
and Application of Collections................ 58
SECTION 4.1. Rights of Certificateholders............... 58
SECTION 4.2. Establishment of the Collection Account.... 58
SECTION 4.3. Allocations and Applications of
Collections and Other Funds.............. 59
SECTION 4.4. Unallocated Principal Collections.......... 61
ARTICLE V Distributions and Reports to Certificateholders. 62
ARTICLE VI The Certificates................................ 62
SECTION 6.1. The Certificates........................... 62
SECTION 6.2. Authentication of Certificates............. 63
SECTION 6.3. New Issuances.............................. 63
SECTION 6.4. Registration of Transfer and Exchange
of Certificates.......................... 65
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 6.5. Mutilated, Destroyed, Lost or
Stolen Certificates...................... 68
SECTION 6.6. Persons Deemed Owners...................... 69
SECTION 6.7. Access to List of Registered
Certificateholders' Names and Addresses.. 69
SECTION 6.8. Book-Entry Certificates.................... 70
SECTION 6.9. Notices to Depository...................... 71
SECTION 6.10. Definitive Certificates.................... 71
SECTION 6.11. Global Certificate; Exchange Date.......... 72
SECTION 6.12. Meetings of Certificateholders............. 74
ARTICLE VII Other Matters Relating to the Seller............ 76
SECTION 7.1. Liability of the Seller.................... 76
SECTION 7.2. Limitation on Liability of the Seller...... 76
SECTION 7.3. Seller Indemnification of the Trust
and the Trustee 77
SECTION 7.4. Liabilities................................ 78
ARTICLE VIII Other Matters Relating to the Servicer.......... 78
SECTION 8.1. Liability of the Servicer.................. 78
SECTION 8.2. Merger or Consolidation of, or Assumption
of, the Obligations of the Servicer...... 78
SECTION 8.3. Limitation on Liability of the
Servicer and Others...................... 79
SECTION 8.4. Servicer Indemnification of the Trust
and the Trustee.......................... 79
SECTION 8.5. The Servicer Not to Resign................. 80
SECTION 8.6. Access to Certain Documentation and
Information Regarding the Receivables.... 80
SECTION 8.7. Delegation of Duties....................... 80
SECTION 8.8. Examination of Records..................... 81
SECTION 8.9. Custodial Arrangements..................... 81
ARTICLE IX Early Amortization Events....................... 81
SECTION 9.1. Early Amortization Events.................. 81
SECTION 9.2. Additional Rights Upon the Occurrence
of Certain Events........................ 84
ARTICLE X Servicer Defaults............................... 85
SECTION 10.1. Servicer Defaults.......................... 85
SECTION 10.2. Trustee to Act; Appointment of Successor... 88
ARTICLE XI The Trustee..................................... 90
SECTION 11.1. Duties of Trustee.......................... 90
SECTION 11.2. Certain Matters Affecting the Trustee...... 93
SECTION 11.3. Trustee Not Liable for Recitals
in Certificates 94
SECTION 11.4. Trustee May Own Certificates............... 94
SECTION 11.5. The Servicer to Pay Trustee's Fees
and Expenses............................. 95
SECTION 11.6. Eligibility Requirements for Trustee....... 95
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 11.7. Resignation or Removal of Trustee.......... 96
SECTION 11.8. Successor Trustee.......................... 96
SECTION 11.9. Merger or Consolidation of Trustee......... 97
SECTION 11.10. Appointment of Co-Trustee or
Separate Trustee......................... 97
SECTION 11.11. Tax Returns................................ 98
SECTION 11.12. Trustee May Enforce Claims Without
Possession of Certificates............... 99
SECTION 11.13. Suits for Enforcement...................... 99
SECTION 11.14. Representations and Warranties
of Trustee............................... 99
SECTION 11.15. Maintenance of Office or Agency............ 100
ARTICLE XII Termination..................................... 100
SECTION 12.1. Termination of Trust....................... 100
SECTION 12.2. Final Distribution......................... 100
SECTION 12.3. Seller's Termination Rights................ 102
ARTICLE XIII Miscellaneous Provisions........................ 103
SECTION 13.1. Amendment.................................. 103
SECTION 13.2. Protection of Right, Title and
Interest to Trust........................ 105
SECTION 13.3. Limitation on Rights of
Certificateholders....................... 106
SECTION 13.4. No Petition................................ 107
SECTION 13.5. GOVERNING LAW.............................. 108
SECTION 13.6. Notices.................................... 108
SECTION 13.7. Severability of Provisions................. 108
SECTION 13.8. Assignment................................. 109
SECTION 13.9. Certificates Nonassessable and
Fully Paid............................... 109
SECTION 13.10. Further Assurances......................... 109
SECTION 13.11. No Waiver, Cumulative Remedies............. 109
SECTION 13.12. Counterparts............................... 109
SECTION 13.13. Third-Party Beneficiaries.................. 109
SECTION 13.14. Actions by Certificateholders.............. 109
SECTION 13.15. Rule 144A Information...................... 110
SECTION 13.16. Action by Trustee.......................... 110
SECTION 13.17. Merger and Integration..................... 110
SECTION 13.18. Headings................................... 110
SECTION 13.19. Continued Effectiveness of the Pooling
and Servicing Agreement.................. 110
SECTION 13.20. Submission to Jurisdiction................. ___
</TABLE>
iii
<PAGE>
EXHIBITS
- --------
Exhibit A Form of Deutsche FRLP Certificate
Exhibit B Form of Assignment of Receivables
in Additional Accounts
Exhibit C Form of Annual Servicer's Certificate
Exhibit D Form of Legends
Exhibit E Form of Letter of Representations
Exhibit F Forms of Certificates for European Transfer
Exhibit G Forms of Opinions of Counsel
Exhibit H Form of Reassignment of Receivables
in Removed Accounts
Exhibit I Form of Receivables Contribution and Sale Agreement
Schedule 1 List of Accounts
Schedule 2 Designation of Collection Account
iv
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of December 1, 1993, amended
and restated as of March 1, 1994, amended as of January 24, 1996 and amended and
restated as of October 1, 1996, among DEUTSCHE FLOORPLAN RECEIVABLES, L.P., a
Delaware limited partnership, formerly known as ITT Floorplan Receivables, L.P.,
as Seller, DEUTSCHE FINANCIAL SERVICES CORPORATION, a Nevada corporation,
formerly known as ITT Commercial Finance Corp., as Servicer, and THE CHASE
MANHATTAN BANK, a New York banking corporation, formerly known as Chemical Bank,
as Trustee.
WHEREAS, each party hereto executed a Pooling and Servicing Agreement
dated as of December 1, 1993, an amended and restated Pooling and Servicing
Agreement dated as of March 1, 1994 and an amendment, dated as of January 24,
1996 to the Pooling and Servicing Agreement and now wishes to amend and restate
such Pooling and Servicing Agreement, which is amended and restated hereby and
shall remain in full force and effect in accordance with the terms hereof;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, each party agrees as follows for the benefit of the other parties and
for the benefit of the Certificateholders and the other Beneficiaries to the
extent provided herein:
ARTICLE I
Definitions
-----------
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Account" shall mean each Initial Account and, from and after the
related Addition Date, each Additional Account. The term "Account" shall not
apply to any Removed Accounts reassigned or assigned to the Seller or the
Servicer in accordance with the terms of this Agreement.
"Accounts Receivable" shall mean, with respect to any Dealer, all
amounts shown on such Dealer's records as amounts payable by a customer in
respect of goods or services sold by such Dealer to such customer.
"Accounts Receivable Business" shall mean the extensions of credit
made by DFS or an Approved Affiliate to Dealers in order to finance the Accounts
Receivable of such Dealers.
<PAGE>
"Accounts Receivable Financing Agreement" shall mean an accounts
receivable financing agreement entered into by DFS or an Approved Affiliate with
a Dealer in connection with the Accounts Receivable Business with such Dealer,
as amended or modified from time to time.
"Act" shall mean the Securities Act of 1933, as amended.
"Addition Date" shall have the meaning specified in Section 2.5(c).
"Addition Notice" shall have the meaning specified in Section 2.5(c).
"Additional Accounts" shall mean each individual revolving credit
arrangement established by DFS or an Approved Affiliate with a Dealer in
connection with the Floorplan Business, the Accounts Receivable Business, the
Asset Based Lending Business or the Unsecured Receivable Business, which account
is designated pursuant to Section 2.5(a) or (b) to be included as an Account and
is identified in the computer file or microfiche or written list delivered to
the Trustee by the Seller pursuant to Sections 2.1 and 2.5(d).
"Additional Cut-Off Date" shall mean, with respect to Additional
Accounts, the day specified in the Addition Notice delivered with respect to
such Additional Accounts pursuant to Section 2.5(c).
"Adjustment Payment" shall have the meaning specified in Section 3.9.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" shall mean, with respect to any Series, the Person so
designated in the related Supplement.
"Agreement" shall mean this Pooling and Servicing Agreement, as the
same may from time to time be amended, modified or otherwise supplemented,
including, with respect to any Series or Class, the related Supplement.
2
<PAGE>
"Allocable Miscellaneous Payments" shall mean, with respect to any
Series and for any Collection Period, the product of the amount of Miscellaneous
Payments for such Collection Period and a fraction, the numerator of which is
the Invested Amount for such Series immediately prior to the following
Distribution Date and the denominator of which is the Trust Invested Amount as
of such time.
"Applicants" shall have the meaning specified in Section 6.7.
"Appointment Date" shall have the meaning specified in Section 9.2.
"Approved Affiliate" shall mean (i) Deutsche BSC, but only so long as
Deutsche BSC is applying, or causing to be applied, DFS's underwriting
guidelines in originating those receivables that it intends to transfer to the
Seller pursuant to the Receivables Contribution and Sale Agreement or (ii) any
other Affiliate of DFS as to which the Rating Agency Condition has been
satisfied for including as Accounts and Receivables under this Agreement
revolving credit arrangements established by such Affiliate and the receivables
arising therefrom.
"A/R Receivable Overconcentration" on any Determination Date shall
mean the excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts created pursuant to Accounts Receivable Financing Agreements on the
last day of the Collection Period immediately preceding such Determination Date
over (b) 20% of the Pool Balance on the last day of such immediately preceding
Collection Period or, if the Rating Agency Condition is satisfied, such larger
percentage of such Pool Balance as is stated in the notice from each Rating
Agency in connection with the satisfaction of such Rating Agency Condition.
"A/R Receivables" shall mean Receivables arising from the Accounts
Receivable Business.
"Asset Based Lending Business" shall mean the extensions of credit
made by DFS or an Approved Affiliate to Dealers in order to provide loans based
on the value of certain assets of such Dealer and secured by a first priority
security interest in such assets.
"Asset Based Lending Financing Agreement" shall mean an asset based
lending financing agreement entered into by DFS or an Approved Affiliate and a
Dealer in connection with the Asset Based Lending Business with such Dealer, as
amended or modified from time to time.
3
<PAGE>
"Asset Based Receivable Overconcentration" on any Determination Date
shall mean the excess of (a) the aggregate of all amounts of Principal
Receivables in Accounts created pursuant to Asset Based Lending Financing
Agreements on the last day of the Collection Period immediately preceding such
Determination Date over (b) 15% of the Pool Balance on the last day of such
immediately preceding Collection Period or, if the Rating Agency Condition is
satisfied, such larger percentage of such Pool Balance as is stated in the
notice from each Rating Agency in connection with the satisfaction of such
Rating Agency Condition.
"Asset Based Receivables" shall mean Receivables arising from Asset
Based Lending Business.
"Assignment" shall have the meaning specified in Section 2.5(d).
"Authorized Newspaper" shall mean any newspaper or newspapers of
general circulation in New York City customarily published on each Business Day,
whether or not published on Saturdays, Sundays and holidays.
"Automatic Addition Condition" shall mean, with respect to the
addition of Accounts pursuant to Section 2.5(c), that, as of the related Notice
Date, (i) during the calendar quarter in which such addition occurs, the number
of new Accounts for Dealers that are financing products of the type already
being financed by DFS and purchasing such products from Existing Manufacturers
does not exceed 5% of the number of all Accounts at the end of the preceding
calendar quarter, (ii) during the twelve months ending at the beginning of such
calendar quarter, the number of such new Accounts does not exceed 20% of the
number of all Accounts at the beginning of such twelve month period, (iii) the
average for the three months preceding the month of such addition of the
aggregate balance of Receivables that have been SAU or NSF for more than 30 days
does not exceed 1.25% of the Pool Balance at the end of the month preceding the
month of such addition, and (iv) the annualized average for such three month
period of the net losses incurred in respect of the Receivables does not exceed
1.75% of the Pool Balance at the end of the month preceding the month of such
addition. An Account that is removed from the Trust pursuant to Section 2.7 for
the purpose of permitting DFS or the related Approved Affiliate to convey a
Participation Interest in the receivables arising in such Account and, after
such Participation Interest is created, is designated as an Additional Account
pursuant to Section 2.5 and has an Addition Date that is no more than 45 days
after its Removal Date, shall not be a "new Account" for purposes of this
definition.
4
<PAGE>
"Available Subordinated Amount" shall mean, with respect to any Series
at any time of determination, an amount equal to the available subordinated
amount specified in the related Supplement at such time.
"Bearer Certificates" shall have the meaning specified in Section 6.1.
"Beneficiary" shall mean any of the Holders of the Investor
Certificates and any Enhancement Provider.
"Benefit Plan" shall have the meaning specified in Section 6.4(c).
"Book-Entry Certificates" shall mean beneficial interests in the
Investor Certificates, ownership and transfers of which shall be made through
book entries by a Depository as described in Section 6.8.
"Business Day" shall mean any day other than (a) a Saturday or a
Sunday or (b) another day on which banking institutions in the state in which
the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.
"Cedel" shall mean Centrale de Livraison de Valeurs Mobilieres S.A.
"Certificate" shall mean any of the Investor Certificates or the
Seller's Certificates.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of a Book-Entry Certificate.
"Certificate Rate" shall mean, with respect to any Series or Class,
the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in Section
6.4.
"Certificateholder" or "Holder" shall mean an Investor
Certificateholder or a Person in whose name any one of the Seller's Certificates
is registered.
"Certificateholders' Interest" shall have the meaning specified in
Section 4.1.
"Class" shall mean, with respect to any Series, any one of the classes
of Investor Certificates of that Series.
5
<PAGE>
"Closing Date" shall mean, with respect to any Series, the Closing
Date specified in the related Supplement.
"Collateral Security" shall mean, with respect to any Receivable, (i)
the security interest, if any, granted by or on behalf of the related Dealer
with respect thereto, including, except in the case of an Unsecured Receivable,
a first priority perfected security interest in the related Products, Accounts
Receivable or assets, (ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the agreement giving rise to such Receivable or
otherwise, together with all financing statements signed by a Dealer describing
any collateral securing such Receivable, (iii) all guarantees, insurance and
other agreements (including Floorplan Agreements and subordination agreements
with other lenders) or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant to the
agreement giving rise to such Receivable or otherwise, and (iv) all Records in
respect of such Receivable.
"Collection Account" shall have the meaning specified in Section 4.2.
"Collection Period" shall mean, with respect to any Distribution Date,
the calendar month preceding the month in which such Distribution Date occurs.
"Collections" shall mean, without duplication, all payments by or on
behalf of Dealers received by the Servicer in respect of the Receivables
(including proceeds from the realization upon any Collateral Security), in the
form of cash, checks, wire transfers or any other form of payment. Collections
of Non-Principal Receivables shall include all Recoveries.
"Common Depositary" shall mean the Person specified as such in the
applicable Supplement, in its capacity as common depositary for the respective
accounts of any Foreign Clearing Agencies.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Structured Finance Relationship Management.
"Coupon" shall have the meaning specified in Section 6.1.
"Cut-Off Date" shall mean October 31, 1993.
6
<PAGE>
"Date of Processing" shall mean, with respect to any transaction, the
date on which such transaction is first recorded on the Servicer's computer file
of accounts (without regard to the effective date of such recordation).
"Dealer" shall mean a Person engaged generally in the business of
purchasing consumer or commercial products from a manufacturer or distributor
thereof and holding such Products for sale or lease in the ordinary course of
business or a Person engaged generally in the business of manufacturing or
distributing Products for sale to Dealers in the ordinary course of business.
"Dealer Overconcentration" on any Determination Date shall mean, (i)
with respect to any Account with a Dealer other than a Specified Dealer, the
excess of (a) the aggregate of all amounts of Principal Receivables in such
Account on the last day of the Collection Period immediately preceding such
Determination Date over (b) 2% of the Pool Balance on the last day of such
immediately preceding Collection Period and (ii) with respect to any Account
with a Specified Dealer, the excess of (a) the aggregate amount of Principal
Receivables in such Account on the last day of the Collection Period immediately
preceding such Determination Date over (b) 3% of the Pool Balance on the last
day of such immediately preceding Collection Period; provided that if the Rating
Agency Condition is satisfied, then the percentage in clause (i)(b) or (ii)(b)
of this paragraph shall equal a percentage of such Pool Balance that is larger
than the applicable percentage set forth above as is stated in the notice from
each Rating Agency in connection with the satisfaction of such Rating Agency
Condition. As used in this paragraph, "Specified Dealer" means, with respect to
a Dealer, that on the last day of such immediately preceding Collection Period
any Account with such Dealer is among one of the fifteen Accounts having the
largest amount of all Principal Receivables in all of the Accounts as of such
last day.
"Defaulted Amount" on any Determination Date shall mean an amount
(which shall not be less than zero) equal to (a) the sum for all the Accounts of
the amount of Principal Receivables which became Defaulted Receivables during
the immediately preceding Collection Period minus (b) the full amount of any
such Defaulted Receivables which are subject to reassignment or assignment to
the Seller or the Servicer in accordance with the terms of this Agreement;
provided, however, that, if an Insolvency Event occurs with respect to the
Seller, the amounts of such Defaulted Receivables which are subject to
reassignment to the Seller shall not be included in clause (b) and, if an
Insolvency Event occurs with respect to the Servicer, the amount of such
Defaulted Receivables which are subject to assignment to the Servicer shall not
be included in clause (b).
7
<PAGE>
"Defaulted Receivables" on any Determination Date shall mean (a) all
Receivables (other than all of the Ineligible Receivables) in an Account which
are charged off as uncollectible in respect of the immediately preceding
Collection Period in accordance with the Servicer's customary and usual
servicing procedures for servicing Dealer receivables comparable to the
Receivables which have not been sold to third parties and (b) all Receivables
which were Eligible Receivables when transferred to the Trust on the initial
Closing Date or the related Addition Date or on their respective Transfer Date,
which arose in an Account that thereafter became an Ineligible Account and which
remained outstanding for any six consecutive Determination Dates (inclusive of
the Determination Date on which such determination is being made) after such
Account became an Ineligible Account.
"Definitive Certificates" shall have the meaning specified in Section
6.8.
"Definitive Euro-Certificates" shall have the meaning specified in
Section 6.11.
"Delayed Funding Receivable" shall mean a Receivable in respect of
which the related Floorplan Agreement permits DFS or an Approved Affiliate to
delay payment of the purchase price of the related Product to the Manufacturer
for a specified period after the invoice date for such Product; provided that
such Receivable shall be a Delayed Funding Receivable only until DFS or such
Approved Affiliate funds the payment of such purchase price. Notwithstanding
anything herein to the contrary, if the Rating Agency Condition is satisfied,
then the Receivables referred to in the preceding sentence shall not be Delayed
Funding Receivables and the provisions herein relating to Delayed Funding
Receivables shall no longer be of any force or effect.
"Deposit Date" shall mean each day on which the Servicer deposits
Collections in the Collection Account pursuant to Section 4.3 hereof.
"Depository" shall mean The Depository Trust Company, as initial
Depository, the nominee of which is CEDE & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the Uniform Commercial
Code of the State of New York.
"Depository Agreement" shall mean, with respect to any Series or
Class, the agreement among the Seller, the Trustee and the initial Depository,
dated as of the related Closing Date substantially in the form attached to the
related Supplement.
8
<PAGE>
"Depository Participant" shall mean a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Designated Account" shall have the meaning specified in Section
2.8(b).
"Designated Balance" shall have the meaning specified in Section
2.8(b).
"Determination Date" with respect to any Distribution Date shall mean
the day that is two Business Days prior to such Distribution Date.
"Deutsche BSC" shall mean Deutsche Business Services Corporation, a
Missouri corporation, and its successors in interest.
"Deutsche FRI" shall mean Deutsche Floorplan Receivables, Inc., a
Nevada corporation, and its successors in interest.
"Deutsche FRLP" shall mean Deutsche Floorplan Receivables, L.P., a
Delaware limited partnership, and its successors in interest.
"Deutsche FRLP Certificate" shall mean the certificate executed by the
Seller and authenticated by the Trustee, substantially in the form of Exhibit A.
"Deutsche North America" shall mean Deutsche Bank North America
Holding Corporation, a Delaware corporation, and its successors in interest.
"DFS" shall mean Deutsche Financial Services Corporation, a Nevada
corporation, and its successors in interest.
"Discount Factor" shall initially mean 0.40% and shall be adjusted as
provided in this definition. If on any Distribution Date the Net Receivables
Rate for such Distribution Date less (i) the weighted average of the Certificate
Rates (as determined in accordance with this definition) for all outstanding
Series of Investor Certificates for such Distribution Date less (ii) the
annualized Net Loss Rate for the preceding twelve Collection Periods is less
than 1%, then the Discount Factor for such Distribution Date shall be adjusted
upwards, rounded up to the nearest 0.1% (but in no event to exceed 1%), so that
the Net Receivables Rate less the rate in clause (i) less the rate in clause
(ii) shall be equal to 1%; and the Discount
9
<PAGE>
Factor shall remain at such adjusted percentage amount until it is further
adjusted by the terms of this sentence or either of the following two sentences.
Notwithstanding the foregoing, the Seller, at its discretion, may increase or
decrease the Discount Factor, but, subject to the requirement in the following
sentence, in no event shall the Discount Factor exceed 1% or be less than the
percentage amount required by the immediately preceding sentence.
Notwithstanding the foregoing, if the application of the Discount Factor would
cause the Pool Balance to be less than the Required Participation Amount, then
the Discount Factor shall be the percentage (which shall in no event be less
than 0%), rounded down to the nearest 0.1%, which, when applied, will cause the
Pool Balance to at least equal the Required Participation Amount. For purposes
of this definition, (i) if a Certificate Rate is calculated as the lesser of (x)
a fixed rate or a formula rate and (y) the Net Receivables Rate, then such
Certificate Rate shall be the rate in clause (x) and (ii) if an interest rate
swap agreement provides the interest distributable on a Series or Class of
Investor Certificates, then the Certificate Rate for such Series or Class of
Investor Certificates shall be the interest rate payable by the Trust to the
related swap counterparty.
"Discount Portion" shall mean, with respect to a Receivable, the
portion thereof equal to the product of the Discount Factor and the balance of
such Receivable.
"Distribution Date" shall mean the fifteenth day of each month or, if
such day is not a Business Day, the next succeeding Business Day.
"Distribution Date Statement" shall mean, with respect to any Series,
a report prepared by the Servicer on each Determination Date for the immediately
preceding Collection Period in substantially the form set forth in the related
Supplement.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co. or its
successor.
"Early Amortization Event" shall have the meaning specified in Section
9.1 and, with respect to any Series, shall also mean any Early Amortization
Event specified in the related Supplement.
"Early Amortization Period" shall mean, with respect to any Series,
the period beginning at the close of business on the Business Day immediately
preceding the day on which the Early Amortization Event is deemed to have
occurred and ending upon the earlier to occur of (a) the payment in full to the
Investor Certificateholders of such Series of the Invested Amount with
10
<PAGE>
respect to such Series, (b) the Termination Date with respect to such Series and
(c) if such Early Amortization Period has resulted from the occurrence of an
Early Amortization Event described in Section 9.1(a), the end of the first
Collection Period during which an Early Amortization Event would no longer be
deemed to exist pursuant to Section 9.1(a), so long as no other Early
Amortization Event with respect to such Series shall have occurred and the
scheduled termination of the Revolving Period with respect to such Series shall
not have occurred.
"Eligible Account" shall mean each individual revolving credit
arrangement payable in U.S. dollars and established by DFS or an Approved
Affiliate with a Dealer in the ordinary course of business pursuant to a
Financing Agreement, which arrangement, as of the date of determination with
respect thereto: (a) is in favor of a Dealer (i) which is doing business in the
United States of America (including its territories and possessions), (ii) which
has not been identified by the Servicer as being the subject of any voluntary or
involuntary bankruptcy proceeding or being in a voluntary or involuntary
liquidation, and (iii) in which Deutsche North America or any Affiliate thereof
does not have an equity investment, (b) is in existence and maintained and
serviced by DFS or an Approved Affiliate and (c) is an Account in respect of
which no amounts have been charged off as uncollectible.
"Eligible Deposit Account" shall mean either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution or trust company
organized under the laws of the United States of America or any one of the
states thereof, including the District of Columbia (or any domestic branch of a
foreign bank), having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of such depository
institution or trust company shall have a credit rating from each Rating Agency
in one of its rating categories which signifies investment grade.
"Eligible Institution" shall mean (a) the corporate trust department
of the Trustee or (b) a depository institution or trust company organized under
the laws of the United States of America or any one of the states thereof, or
the District of Columbia (or any domestic branch of a foreign bank), which at
all times (i) has either (A) a long-term unsecured debt rating of A2 or better
by Moody's, AAA by Standard & Poor's and, if Fitch has rated such debt, AA- or
better by Fitch or such other rating that is acceptable to each Rating Agency,
as evidenced by a letter from such Rating Agency to the Trustee or (B) a
certificate of deposit rating of P-1 by Moody's, A-1+ by Standard & Poor's and,
if Fitch has rated such certificate of deposit, F-1+ by Fitch or such other
rating that is acceptable to each Rating Agency, as
11
<PAGE>
evidenced by a letter from such Rating Agency to the Trustee and (ii) whose
deposits are insured by the FDIC. If so qualified, the Trustee may be considered
an Eligible Institution for the purposes of clause (b) this definition.
"Eligible Investments" shall mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form having original or remaining maturities of 30 days or less, but in no event
occurring later than the Distribution Date next succeeding the Trustee's
acquisition thereof, which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities; provided, however,
that at the time of the Trust's investment or contractual commitment to
invest therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a person or entity other than such depository institution or
trust company) thereof shall have a credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby or
otherwise approved in writing thereby;
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with (i) a depository
12
<PAGE>
institution or trust company (acting as principal) described in clause (b)
or (ii) a depository institution or trust company the deposits of which are
insured by FDIC; and
(g) any other investment as may be permitted by each Rating Agency
without reducing or withdrawing the rating of the Certificates of any
Series.
"Eligible Receivable" shall mean each Receivable:
(a) which was originated or acquired by DFS or the related Approved
Affiliate in the ordinary course of business;
(b) which arose under an Eligible Account;
(c) which is owned by DFS or the related Approved Affiliate at the
time of sale or contribution by DFS or the related Approved Affiliate to
the Seller;
(d) which represents the obligation of a Dealer to repay an advance
made or to be made to or on behalf of such Dealer (i) to finance the
acquisition of Products or (ii) in connection with the Accounts Receivable
Business, the Asset Based Lending Business or the Unsecured Receivable
Business;
(e) which at the time of creation and, except at the Closing Date for
the initial Series in the case of Receivables in respect of which the
related financed Product has been sold, at the time of transfer to the
Trust is, except in the case of an Unsecured Receivable, secured by, inter
alia, a first priority perfected security interest in the related Product,
Accounts Receivable or assets (except that such security interest need not
be a first priority security interest in the case of a Receivable arising
in an Account for which the payment terms are on a scheduled payment plan
basis and the maximum credit line is $250,000 or less and which was
included as an Account hereunder on or before the Closing Date for Series
1994-1); and the perfection of such security interest is governed by the
laws of one or more of the states of the United States, the District of
Columbia or, if the Rating Agency Condition is satisfied, a territory or
possession of the United States;
(f) which was created in compliance in all respects with all
Requirements of Law applicable thereto and pursuant to a Financing
Agreement which complies in all respects with all Requirements of Law
applicable thereto;
(g) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or
13
<PAGE>
declarations with, any Governmental Authority required to be obtained,
effected or given by DFS, the related Approved Affiliate or the Seller in
connection with the creation of such Receivable or the transfer thereof to
the Trust or the execution, delivery and performance by DFS or the related
Approved Affiliate of the Financing Agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and are
in full force and effect;
(h) as to which at all times following the transfer of such Receivable
to the Trust, the Trust will have good and marketable title thereto free
and clear of all Liens arising prior to the transfer or arising at any time
other than Liens permitted by this Agreement, or the grant of a first
priority perfected security interest therein and in the related Collateral
Security (and in the proceeds thereof), securing all of the obligations of
the Seller and the Servicer hereunder effective until the termination of
the Trust;
(i) which has been the subject of a valid transfer and assignment from
the Seller to the Trust of all the Seller's right, title and interest
therein and the related Collateral Security (including any proceeds
thereof);
(j) which will at all times be the legal, valid, binding and
assignable payment obligation of the Dealer relating thereto, enforceable
against such Dealer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in
effect, affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity);
(k) which at the time of transfer to the Trust is not subject to any
valid claim of a right of rescission, setoff, counterclaim or any other
defense (including defenses arising out of violations of usury laws) of the
Dealer;
(l) as to which, at the time of transfer of such Receivable to the
Trust, DFS, the related Approved Affiliate and the Seller have satisfied
all their respective obligations with respect to such Receivable required
to be satisfied at such time (whether pursuant to the related Financing
Agreement, the related Floorplan Agreement or otherwise);
(m) as to which, at the time of transfer of such Receivable to the
Trust, neither DFS, the related Approved
14
<PAGE>
Affiliate nor the Seller has taken or failed to take any action which would
impair the rights of the Trust or the Certificateholders therein;
(n) which constitutes "chattel paper", an "account" or a "general
intangible", and is not represented by an "instrument," each as defined in
Article 9 of the UCC as then in effect in the State of Missouri;
(o) with respect to which the representations set forth in Sections
2.4(a)(i) and (ii) were correct as of the Transfer Date with respect
thereto; and
(p) if such Receivable is originated under a Wholesale Financing
Agreement, the related Floorplan Agreement provides that the related
Manufacturer is obligated, subject to the specific terms of such Floorplan
Agreement (which may vary among Floorplan Agreements), to repurchase
Products that the Servicer repossesses upon a default by the related
Dealer.
"Eligible Servicer" shall mean the Trustee or an entity which, at the
time of its appointment as Servicer, (a) is legally qualified and has the
capacity to service the Accounts, (b) has demonstrated the ability to
professionally and competently service a portfolio of similar accounts in
accordance with high standards of skill and care and (c) is qualified to use the
software that is then currently being used to service the Accounts or obtains
the right to use or has its own software which is adequate to perform its duties
under this Agreement.
"Enhancement" shall mean the rights and benefits provided to the
Investor Certificateholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, tax protection agreement, interest rate
swap agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Seller's Interest to any Series or
Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument or
document governing the terms of any Series Enhancement or pursuant to which any
Series Enhancement is issued or outstanding, as may be amended or modified from
time to time.
"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Certificateholders (including any holders of the
Seller's Certificates) the Certificates of which are subordinated to any Series
or Class.
15
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear System.
"Exchange Date" shall mean any date that is after the Series Issuance
Date, in the case of Definitive Euro-Certificates in registered form, or upon
presentation of certification of non-United States beneficial ownership (as
described in Section 6.11), in the case of Definitive Euro-Certificates in
bearer form.
"Existing Manufacturer" shall mean (i) each Manufacturer with which
DFS has entered into a business arrangement, either through a Floorplan
Agreement or any other arrangement, on or prior to the Closing Date for Series
1994-1, (ii) each Manufacturer with which DFS enters into such a business
arrangement after the Closing Date for Series 1994-1 so long as the aggregate
balances of the Receivables subject to such Floorplan Agreement do not exceed
lesser of (a) 1% of the Pool Balance at the beginning of the Collection Period
in which the addition of the related Additional Account occurs and (b) $25
million and (iii) each Manufacturer with which DFS enters into such a business
arrangement after the Closing Date for Series 1994-1 and as to which the Rating
Agency Condition is satisfied.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor entity thereto.
"Final Maturity Date" shall have the meaning specified in Section
12.1.
"Financing Agreement" shall mean any Wholesale Financing Agreement,
Accounts Receivable Financing Agreement, Asset Based Lending Financing Agreement
or Unsecured Receivable Financing Agreement.
"Financing Guidelines" shall mean DFS's written policies and
procedures, as such policies and procedures may be amended from time to time,
(a) relating to the operation of its Floorplan Business, Accounts Receivable
Business, Asset Based Lending Business and Unsecured Receivable Business,
including the written policies and procedures for determining the interest rate,
if any, charged to Dealers, the other terms and conditions relating to DFS's
wholesale financing accounts, the creditworthiness of Dealers and the extension
of credit to Dealers, and (b) relating to the maintenance of accounts and
collection of receivables.
16
<PAGE>
"Fitch" shall mean Fitch Investors Service L.P. or its successor.
"Floorplan Agreement" shall mean an agreement, entered into by DFS or
the related Approved Affiliate and a Manufacturer, as amended or modified from
time to time, pursuant to which such Manufacturer agrees, among other matters,
to repurchase from DFS or such Approved Affiliate, as applicable, Products sold
by such Manufacturer to any of its Dealers and financed by DFS or such Approved
Affiliate under a Wholesale Financing Agreement if DFS or such Approved
Affiliate acquires possession of such Products because of a default by such
Dealer under such Wholesale Financing Agreement, voluntary surrender or other
circumstances.
"Floorplan Business" shall mean the extensions of credit made by DFS
or the related Approved Affiliate to Dealers in order to finance Products
purchased by Dealers from Manufacturers.
"Floorplan Receivables" shall mean Receivables arising from the
Floorplan Business.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear Operator.
"Global Certificate" shall have the meaning specified in Section 6.11.
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Incremental Default Amount" on any Determination Date shall mean (a)
the Overconcentration Default Amount on such Determination Date minus (b) the
full amount of any such Defaulted Receivables which are subject to a
reassignment or assignment to the Seller or the Servicer in accordance with the
terms of this Agreement (but not less than zero); provided, however, that, if an
Insolvency Event occurs with respect to the Seller, the amount of such Defaulted
Receivables which are subject to reassignment to the Seller shall not be so
subtracted and, if an Insolvency Event occurs with respect to the Servicer, the
amount of such Defaulted Receivables which are subject to assignment to the
Servicer shall not be so subtracted; provided further that the Incremental
Default Amount for any Determination Date shall not exceed the Overconcentration
Amount on such Determination Date.
17
<PAGE>
"Individual Unsecured Receivable Overconcentration" on any
Determination Date, shall mean, with respect to any Account subject to an
Unsecured Receivable Financing Agreement with a Dealer, the excess of (i) the
aggregate of all amounts of Principal Receivables in such Account on the last
day of the Collection Period immediately preceding such Determination Date over
(ii) (a) in the case of a Dealer whose unsecured long-term debt is rated at
least A- or its equivalent by each Rating Agency that rates such debt, l% of the
Pool Balance on the last day of such immediately preceding Collection Period and
(b) in the case of a Dealer whose unsecured long-term debt is rated less than A-
or its equivalent by any Rating Agency that rates such debt or is not rated,
0.5% of such Pool Balance or, in the case of clause (a) or (b), if the Rating
Agency Condition is satisfied, such larger percentage of such Pool Balance as is
stated in the notice from each Rating Agency in connection with the satisfaction
of such Rating Agency Condition.
"Ineligible Account" shall mean an Account that at the time of
determination is not an Eligible Account.
"Ineligible Amount" on any Determination Date shall mean the amount of
Ineligible Receivables included in the Trust on such Determination Date.
"Ineligible Receivable" shall mean, without duplication, (i) any
Receivable that arises in an Eligible Account, was not an Eligible Receivable at
the time of its transfer to the Trust and was transferred to the Trust in
accordance with Section 2.9, (ii) any Receivable that, at the time of its
transfer to the Trust, has been SAU or NSF for more than 30 days and (iii) the
aggregate of Receivables that, at the time of transfer of each such Receivable
to the Trust, have been SAU or NSF for a period of one to 30 days but only to
the extent that such aggregate amount exceeds 0.75% of the Pool Balance at the
end of such Collection Period.
"Initial Account" shall mean each individual revolving credit
arrangement established by DFS or an Approved Affiliate with a Dealer in
connection with the Floorplan Business, Accounts Receivable Business, Asset
Based Lending Business or the Unsecured Receivable Business which is identified
in the computer file or microfiche or written list delivered to the Trustee on
the first Closing Date by the Seller pursuant to Section 2.1.
"Initial Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the initial invested amount specified in the
related Supplement. The Initial Invested Amount for any Series may be increased
or decreased from time to time as specified in the related Supplement.
18
<PAGE>
"Insolvency Event" shall mean any event specified in Section 9.1(b) or
9.1(c).
"Insolvency Proceeds" shall have the meaning specified in Section
9.2(b).
"Insurance Proceeds" with respect to an Account shall mean any amounts
received by the Servicer pursuant to any policy of insurance which are required
to be paid to DFS pursuant to a Wholesale Financing Agreement, Accounts
Receivable Financing Agreement, Asset Based Lending Financing Agreement or
Unsecured Receivable Financing Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Invested Amount" shall mean, with respect to any Series and at the
time of determination thereof, an amount equal to the invested amount specified
in the related Supplement at such time.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Investor Certificateholder" shall mean the Person in whose name a
Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or the Global Certificate, as the case may be) or
Coupon.
"Investor Certificates" shall mean any one of the certificates
(including the Bearer Certificates, the Registered Certificates or any Global
Certificate) executed by the Seller and authenticated by or on behalf of the
Trustee, substantially in the form attached to the related Supplement, other
than the Seller's Certificates.
"Investors' Servicing Fee" shall mean the portion of the Servicing Fee
allocable to the Investor Certificateholders pursuant to the terms of the
Supplements.
"ITT Financial" shall mean ITT Financial Corporation, a Delaware
corporation, and its successors in interest.
"Lien" shall mean any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement
19
<PAGE>
under the UCC or comparable law of any jurisdiction to evidence any of the
foregoing; provided, however, that (i) any assignment permitted by Section 8.2,
(ii) any Lien created by this Agreement, any Supplement or any Participation
Agreement, (iii) any security interests in Products or Accounts Receivable that
are subordinate to the security interests securing the related Receivables and
(iv) any inchoate lien that arises by operation of law, is not delinquent or due
and affects collateral securing a Receivable (but does not encumber any
Receivable) shall not be deemed to constitute a Lien.
"Manager" shall mean the lead manager, manager or co-manager or person
performing a similar function with respect to an offering of Definitive Euro-
Certificates.
"Manufacturer" shall mean a Person engaged generally in the business
of manufacturing or distributing Products for sale or lease to Dealers in the
ordinary course of business.
"Manufacturer Overconcentration" on any Determination Date shall mean,
with respect to all Accounts covered by a Floorplan Agreement with the same
Manufacturer as obligor, the excess of (a) the aggregate of all amounts of
Principal Receivables in such Accounts on the last day of the Collection Period
immediately preceding such Determination Date that are covered by a Floorplan
Agreement with such Manufacturer over (b) 15% of the Pool Balance on the last
day of such immediately preceding Collection Period or, if the Rating Agency
Condition is satisfied, such larger percentage of such Pool Balance as is stated
in the notice from each Rating Agency in connection with the satisfaction of
such Rating Agency Condition.
"Miscellaneous Payments" shall mean, with respect to any Collection
Period, the sum of (a) Adjustment Payments and Transfer Deposit Amounts on
deposit in the Collection Account on the related Distribution Date and (b)
Unallocated Principal Collections available to be treated as Miscellaneous
Payments pursuant to Section 4.4 on such Distribution Date.
"Monthly Payment Rate" shall mean, unless otherwise specified for a
Series in the related Supplement, for any Collection Period, the percentage
derived from dividing the Principal Collections (without excluding therefrom the
Discount Portions) collected during such Collection Period by the average daily
aggregate balance of the Principal Receivables (without deducting therefrom the
Discount Portions) for such Collection Period.
"Monthly Servicing Fee" shall mean, with respect to any Series, the
amount specified therefor in the related Supplement.
20
<PAGE>
"Moody's" shall mean Moody's Investors Service, Inc., or its
successor.
"Net Loss Rate" shall mean, with respect to a Collection Period, the
percentage derived from a fraction, the numerator of which is the aggregate of
the net losses on Receivables (exclusive of the Ineligible Receivables) that
were charged off during such Collection Period (i.e., gross losses less any
recoveries (including recoveries from Collateral Security) received in such
Collection Period in respect of charged off Receivables, whether such charge off
occurred in such Collection Period or a prior Collection Period) and the
denominator of which is the aggregate of the Principal Receivables (without
deducting therefrom the Discount Portions) in the Trust at the beginning of such
Collection Period.
"Net Receivables Rate" shall mean, with respect to a Distribution Date
and unless otherwise specified for a Series in the related Supplement, (i) the
weighted average of the interest rates borne by the Receivables during the
second preceding Collection Period (interest payments on the Receivables at such
rates being due and payable in the Collection Period preceding such Distribution
Date) plus (ii) the product of (x) the Monthly Payment Rate for the Collection
Period preceding such Distribution Date, (y) the Discount Factor for such
Distribution Date and (z) twelve less (iii) 2% per annum, unless the Servicing
Fee has been waived for such Collection Period.
"Non-Principal Collections" shall mean Collections of interest, all
other non-principal charges (including insurance service fees and handling fees)
and Discount Portions under the Receivables; provided that all be Non-Principal
Collections.
"Non-Principal Receivables" with respect to any Account shall mean all
amounts billed to the related Dealer in respect of interest and all other non-
principal charges.
"Notice Date" shall have the meaning specified in Section 2.5(c).
"NSF" shall mean, with respect to a Receivable, that a check in
payment of such Receivable has been returned because of insufficient funds and
has not thereafter been paid.
"Officers' Certificate" with respect to any corporation (in the case
of the Seller, the Officers' Certificate shall be with respect to Deutsche FRI)
shall mean, unless otherwise specified in this Agreement, a certificate signed
by (a) the Chairman of the Board, Vice Chairman of the Board, President or
21
<PAGE>
any Vice President and (b) a Treasurer, Associate or Assistant Treasurer,
Secretary or Assistant Secretary of such corporation.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be counsel of the Seller or DFS and who shall be acceptable to the Trustee.
"Overconcentration Amount" on any Determination Date shall mean the
sum of the Asset Based Receivable Overconcentration, the A/R Receivable
Overconcentration, the Dealer Overconcentrations, the Manufacturer
Overconcentrations, the Product Line Overconcentrations and the Unsecured
Receivable Overconcentration on such Determination Date.
"Overconcentration Default Amount" on any Determination Date shall
mean the lesser of (a) the aggregate amount of Receivables which became
Defaulted Receivables during such Collection Period and which arose in an
Account that is included in the calculation of the Overconcentration Amount and
(b) the Overconcentration Amount on such Determination Date.
"Participation Agreement" shall mean an agreement between DFS or an
Approved Affiliate and a lender (i) pursuant to which DFS or such Approved
Affiliate, as applicable, conveys to such lender an undivided interest in
certain receivables that is pari passu in all respects (other than
nonsubordinated interest strips and fees) with the undivided interest retained
by DFS or such Approved Affiliate, as applicable, and (ii) that satisfies the
applicable requirements of the Receivables Contribution and Sale Agreement.
"Participation Interest" shall mean the undivided interest, created
pursuant to a Participation Agreement, in a receivable in which a Receivable
represents the remaining undivided interest.
"Permitted Transactions" shall have the meaning specified in Section
2.6(f).
"Person" shall mean any legal person, including any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, governmental entity or other entity of similar
nature.
"Pool Balance" shall mean, as of the time of determination thereof,
(a) the aggregate of Principal Receivables (without deducting therefrom the
Discount Portion) in the Trust at such time (other than all Ineligible
Receivables), multiplied by (b) 1 minus the Discount Factor.
22
<PAGE>
"Principal Collections" shall mean Collections under the Receivables
other than Non-Principal Collections.
"Principal Receivables" with respect to an Account shall mean amounts
shown on the Servicer's records as Receivables (other than such amounts which
represent Non-Principal Receivables and Discount Portions) payable by the
related Dealer.
"Principal Terms" shall mean, with respect to any Series: (a) the name
or designation; (b) the initial principal amount (or method for calculating such
amount); (c) the Certificate Rate (or method for the determination thereof); (d)
the payment date or dates and the date or dates from which interest shall
accrue; (e) the method for allocating Collections to Investor
Certificateholders; (f) the designation of any Series Accounts and the terms
governing the operation of any such Series Accounts; (g) the Monthly Servicing
Fee and the Investors' Servicing Fee; (h) the Enhancement Provider for and terms
of any form of Enhancement with respect thereto; (i) the terms on which the
Investor Certificates of such Series may be exchanged for Investor Certificates
of another Series, repurchased by the Seller or remarketed to other investors;
(j) the Termination Date; (k) the number of Classes of Investor Certificates of
such Series and, if more than one Class, the rights and priorities of each such
Class; (l) the extent to which the Investor Certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such Global Certificate or certificates, the terms and
conditions, if any, upon which such Global Certificate may be exchanged, in
whole or in part, for Definitive Certificates, and the manner in which any
interest payable on a temporary or Global Certificate will be paid); (m) whether
the Investor Certificates of such Series may be issued in bearer form and any
limitations imposed thereon; (n) the priority of such Series with respect to any
other Series; (o) whether such Series will be part of a group; and (p) any other
terms of such Series.
"Product Line Overconcentration" on any Determination Date shall mean,
with respect to Accounts created pursuant to Wholesale Financing Agreements, the
excess of (a) the aggregate of all amounts of Principal Receivables in such
Accounts that represent financing for a single Product line (according to DFS's
classification system) on the last day of the Collection Period immediately
preceding such Determination Date over (b) (i) 25% of the Pool Balance on the
last day of such immediately preceding Collection Period if such Product line is
not computers and related equipment and (ii) 40% of such Pool Balance if such
Product line is computers and related equipment or, in the case of clause (i) or
(ii), if the Rating Agency Condition is satisfied, such larger percentage of
such Pool Balance as is
23
<PAGE>
stated in the notice from each Rating Agency in connection with the satisfaction
of such Rating Agency Condition.
"Products" shall mean the commercial and consumer goods financed by
DFS or the related Approved Affiliate for Dealers pursuant to a Wholesale
Financing Agreement.
"Purchase Price" shall mean, with respect to any Receivable for any
date on which such Receivable is to be purchased pursuant to Section 3.3, (a) an
amount equal to the amount payable by the Dealer in respect thereof as reflected
in the records of the Servicer as of the date of purchase plus (b) interest
accrued (to the extent interest accrues on such Receivable) from the end of the
last Collection Period in respect of which interest on such Receivable was
billed by the Servicer, at a per annum rate equal to the rate being charged to
the Dealer under the Wholesale Financing Agreement, Accounts Receivable
Financing Agreement, Asset Based Lending Financing Agreement or Unsecured
Receivable Financing Agreement, as the case may be, based on the actual number
of days elapsed over a year of 360 days.
"Rating Agency" shall mean, with respect to any outstanding Series or
Class, each statistical rating agency selected by the Seller to rate the
Investor Certificates of such Series or Class.
"Rating Agency Condition" shall mean, with respect to any action, that
each Rating Agency shall have notified the Seller, the Servicer and the Trustee
in writing that such action will not result in a reduction or withdrawal of the
rating of any outstanding Series or Class with respect to which it is a Rating
Agency.
"Reassignment" shall have the meaning specified in Section 2.7(c).
"Receivables" shall mean, with respect to an Account, all amounts
payable (including interest, finance charges and other charges), and the
obligation to pay such amounts, by the related Dealer from time to time in
respect of advances made by DFS or the related Approved Affiliate to or on
behalf of such Dealer in connection with the Floorplan Business, the Accounts
Receivable Business, the Asset Based Lending Business or the Unsecured
Receivables Business, as the case may be, together with the group of writings
evidencing such amounts and the security interest created in connection
therewith and all of the rights, remedies, powers and privileges thereunder
(including under the related Financing Agreement); provided that if a
Participation Interest has been created in respect of such Account, the amounts
so payable by the related Dealer that are allocable to such
24
<PAGE>
Participation Interest shall not be part of the "Receivables" in respect of such
Account. A Receivable that, prior to its transfer to the Seller, was subject to
a participation from Deutsche BSC in favor of DFS shall be considered a
Receivable hereunder. Receivables which become Defaulted Receivables will cease
to be included as Receivables on the day on which they become Defaulted
Receivables. Delayed Funding Receivables will cease to be included as
Receivables on the day on which an Insolvency Event in respect of DFS occurs,
whether or not such Delayed Funding Receivables are funded after the occurrence
of such Insolvency Event. Receivables which DFS or the related Approved
Affiliate is unable to transfer to the Seller pursuant to the Receivables
Contribution and Sale Agreement or which the Seller is unable to transfer to the
Trust as provided in Section 2.6(b) and Receivables which arise in Designated
Accounts from and after the related Removal Commencement Date shall not be
included in calculating the amount of Receivables.
"Receivables Contribution and Sale Agreement" shall mean the agreement
between DFS, Deutsche BSC and the Seller, in substantially the form attached
hereto as Exhibit I, governing the terms and conditions upon which the Seller is
acquiring the initial Receivables transferred to the Trust on the Closing Date
and all Receivables acquired thereafter, as the same may from time to time be
amended, modified or otherwise supplemented.
"Record Date" shall mean, with respect to any Distribution Date, the
close of business on the day preceding such Distribution Date; provided that
with respect to any Distribution Date for a Series for which Definitive
Certificates have been issued pursuant to Section 6.10, subsequent to the
issuance of such Definitive Certificates the Record Date for such Distribution
Date shall be the last day of the month preceding the month in which such
Distribution Date occurs.
"Records" shall mean, with respect to any Receivable, all documents,
books, records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) relating to such Receivable and the related Dealer.
"Recoveries" on any Determination Date shall mean all amounts
received, including Insurance Proceeds, by the Servicer during the Collection
Period immediately preceding such Determination Date with respect to Receivables
which have previously become Defaulted Receivables.
"Reference Rate" shall mean the per annum rate of interest, if any,
designated from time to time by DFS or the related Approved Affiliate, as
applicable, to a Wholesale
25
<PAGE>
Financing Agreement, A/R Financing Agreement, Asset Based Lending Financing
Agreement or Unsecured Receivable Financing Agreement.
"Registered Certificateholder" shall mean the Holder of a Registered
Certificate.
"Registered Certificates" shall have the meaning specified in Section
6.1.
"Related Documents" shall mean, collectively, the Receivables
Contribution and Sale Agreement and, with respect to any Series, any applicable
Enhancement Agreement.
"Removal Commencement Date" shall have the meaning specified in
Section 2.8(a).
"Removal Date" shall have the meaning specified in Section 2.7(b).
"Removal Notice" shall have the meaning specified in Section 2.7(b).
"Removed Account" shall have the meaning specified in Section 2.7(b).
"Required Participation Amount" shall mean, at any time of
determination, an amount equal to (a) the sum of the amounts for each Series
obtained by multiplying the Required Participation Percentage for such Series by
the Initial Invested Amount for such Series at such time plus (b) the Trust
Available Subordinated Amount on the immediately preceding Determination Date
(after giving effect to the allocations, distributions, withdrawals and deposits
to be made on the Distribution Date following such Determination Date).
"Required Participation Percentage" shall mean, with respect to any
Series, the percentage specified therefor in the related Supplement.
"Requirements of Law" for any Person shall mean the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or to which such Person is subject, whether Federal, state or local
(including usury laws and the Federal Truth in Lending Act).
"Responsible Officer" shall mean any officer of the Trustee with
direct responsibility for the administration of this Agreement and also, with
respect to a particular matter, any
26
<PAGE>
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with that relevant subject.
"Revolving Period" shall mean with respect to any Series, the period
specified as such in the related Supplement.
"SAU" shall mean, with respect to a Receivable, that if such
Receivable was originally secured by a security interest in a Product, such
Product has been sold and such Receivable is not paid in full.
"Seller" shall mean Deutsche FRLP.
"Seller's Certificates" shall mean, collectively, the Deutsche FRLP
Certificate and any outstanding Supplemental Certificates.
"Seller's Interest" shall have the meaning specified in Section 4.1.
"Seller's Participation Amount" shall mean, at any time of
determination, an amount equal to the Pool Balance at such time minus the
aggregate Invested Amounts for all outstanding Series at such time.
"Series" shall mean any series of Investor Certificates.
"Series Account" shall mean any deposit, trust, escrow, reserve or
similar account maintained for the benefit of the Investor Certificateholders of
any Series or Class, as specified in any Supplement.
"Series Cut-Off Date" shall mean, with respect to any Series, the date
specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series, the
date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.3 and the related Supplement.
"Series 1994-1" shall mean the series of Investor Certificates to be
issued and to be designated as "Series 1994-1".
"Servicer" shall initially mean DFS, in its capacity as Servicer under
this Agreement, and after any Service Transfer, the Successor Servicer.
27
<PAGE>
"Servicer Default" shall have the meaning specified in Section 10.1.
"Service Transfer" shall have the meaning specified in Section 10.1.
"Servicing Fee" shall have the meaning specified in Section 3.2.
"Servicing Officer" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee by
the Servicer as such list may from time to time be amended.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
Division of The McGraw Hill Companies Inc., or its successor.
"Successor Servicer" shall have the meaning specified in Section
10.2(a).
"Supplement" shall mean, with respect to any Series, a supplement to
this Agreement, executed and delivered in connection with the original issuance
of the Investor Certificates of such Series pursuant to Section 6.3, and all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in Section
6.3.
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, for Federal income and Missouri state income and
franchise tax purposes, (a) such action will not adversely affect the
characterization of the Investor Certificates of any outstanding Series or Class
as debt or as partnership interests, (b) such action will not cause or
constitute a taxable event with respect to any Investor Certificateholders or
the Trust and (c) in the case of Section 6.3(b), each Class of the Investor
Certificates of the new Series will be characterized as debt or as partnership
interests.
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"Termination Notice" shall have the meaning specified in Section 10.1.
"Termination Proceeds" shall have the meaning specified in Section
12.2(c).
28
<PAGE>
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.4.
"Transfer Date" shall have the meaning specified in Section 2.1.
"Transfer Deposit Amount" shall mean, with respect to any Receivable
reassigned or assigned to the Seller or the Servicer, as applicable, pursuant to
Section 2.4(c) or Section 3.3, the amounts specified in such Sections.
"Trust" shall mean the Deutsche Floorplan Receivables Master Trust
created by this Agreement, formerly known as the ITT Floorplan Receivables
Master Trust, the corpus of which shall consist of the Trust Assets.
"Trust Assets" shall have the meaning specified in Section 2.1.
"Trust Available Subordinated Amount" shall mean, at any time of
determination, the sum of the Available Subordinated Amounts, if any, for all
outstanding Series at such time.
"Trustee" shall mean The Chase Manhattan Bank, or its successor in
interest, or any successor trustee appointed as herein provided.
"Trust Incremental Subordinated Amount" on any Determination Date
shall mean the excess, if any, of (a) the Overconcentration Amount on such
Determination Date over (b) the Incremental Default Amount for such
Determination Date.
"Trust Invested Amount" shall mean, at any time of determination, the
sum of the Invested Amounts for all outstanding Series at such time.
"Trust Termination Date" shall have the meaning specified in Section
12.1.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
"Unallocated Principal Collections" shall have the meaning specified
in Section 4.4.
"Unsecured Receivable Business" shall mean the unsecured extensions of
credit made by DFS or the related Approved Affiliate to Dealers.
29
<PAGE>
"Unsecured Receivable Financing Agreement" shall mean an unsecured
financing agreement entered into by DFS or the related Approved Affiliate with a
Dealer in connection with its Unsecured Receivable Business with such Dealer, as
amended or modified from time to time.
"Unsecured Receivable Overconcentration" on any Determination Date
shall mean, without duplication, the sum of (i) the excess of (a) the aggregate
of all amounts of Principal Receivables in Accounts created pursuant to
Unsecured Receivable Financing Agreements on the last day of the Collection
Period immediately preceding such Determination Date over (b) 3% of the Pool
Balance on the last day of such immediately preceding Collection Period or, if
the Rating Agency Condition is satisfied, such larger percentage of such Pool
Balance as is stated in the notice from each Rating Agency in connection with
the satisfaction of such Rating Agency Condition and (ii) the aggregate of the
Individual Unsecured Receivable Overconcentrations for such Determination Date.
"Unsecured Receivables" shall mean Receivables arising from the
Unsecured Receivable Business.
"Vice President" when used with respect to the Seller and Servicer
shall mean any vice president (in the case of the Seller, a vice president of
Deutsche FRI) whether or not designated by a number or word or words added
before or after the title "vice president".
"Wholesale Financing Agreement" shall mean a wholesale financing
agreement entered into by DFS or the related Approved Affiliate and a Dealer in
order to finance Products purchased by such Dealer from a Manufacturer, as
amended or modified from time to time.
SECTION 1.2. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other
30
<PAGE>
document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3. Provisions Relating to Rating Agencies. Provisions in
this Agreement relating to Standard & Poor's, Moody's, Fitch, Duff & Phelps or a
Rating Agency shall be effective only so long as there is a Series of Investor
Certificates outstanding that has been rated by such Rating Agency at the
request of the Seller. By way of illustration and not limitation of the
foregoing, if no Series of Investor Certificates then outstanding has been rated
at the request of the Seller by Fitch, a notice required hereunder to be given
to a Rating Agency need not be given to Fitch and an Eligible Institution need
not have its debt or certificates of deposit rated by Fitch.
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.1. Conveyance of Receivables. By execution of this
Agreement, the Seller does hereby sell, transfer, assign, set over and otherwise
convey, without recourse (except as expressly provided herein), to the Trust for
the benefit of the Certificateholders and the other Beneficiaries on the first
Closing Date, in the case of the Initial Accounts, and on the applicable
Addition Date, in the case of Additional Accounts, (a) all of its right, title
and interest in, to and under the Receivables in each Account and all Collateral
Security with respect thereto owned by the Seller at the close of business on
the Cut-Off Date, in the case of the Initial Accounts, and on the applicable
Additional Cut-Off Date, in the case of Additional Accounts, and all monies due
or to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in
31
<PAGE>
the State of Missouri and Recoveries) thereof, (b) all of the Seller's rights,
remedies, powers and privileges with respect to such Receivables, and the
Receivables conveyed to the Trust in the next sentence, under the related
Floorplan Agreements, if any, and (c) all of the Seller's rights, remedies,
powers and privileges with respect to such Receivables under the Receivables
Contribution and Sale Agreement. As of each Business Day prior to the earlier of
(i) the occurrence of an Early Amortization Event specified in Section 9.1(b),
(c), (d) or (e) and (ii) the Trust Termination Date, on which Receivables are
created in the Accounts (a "Transfer Date"), the Seller does hereby sell,
transfer, assign, set over and otherwise convey, without recourse (except as
expressly provided herein), to the Trust for the benefit of the
Certificateholders and the other Beneficiaries, all of its right, title and
interest in, to and under the Receivables in each Account (other than any
Receivables created in any Designated Account from and after the applicable
Removal Date) and all Collateral Security with respect thereto owned by the
Seller at the close of business on such Transfer Date and not theretofore
conveyed to the Trust, all monies due or to become due and all amounts received
with respect thereto and all proceeds (including "proceeds" as defined in
Section 9-306 of the UCC as in effect in the State of Missouri and Recoveries)
thereof. Such property, together with all monies on deposit in, and Eligible
Investments credited to, the Collection Account or any Series Account, any
Enhancements and the Collateral Security with respect to the Receivables shall
collectively constitute the assets of the Trust (the "Trust Assets"). The
foregoing sale, transfer, assignment, set-over and conveyance and any subsequent
sales, transfers, assignments, set-overs and conveyances do not constitute, and
are not intended to result in, the creation or an assumption by the Trust, the
Trustee, any Agent or any Beneficiary of any obligation of the Servicer, DFS,
the Seller, or any other Person in connection with the Accounts, the Receivables
or any Participation Interest or under any agreement or instrument relating
thereto (including any Participation Agreement), including any obligation to any
Dealers, Manufacturers, or owners of a Participation Interest and DFS and
Deutsche BSC (and not any of the other foregoing Persons) shall continue to
perform and be responsible for their respective obligations under the Financing
Agreements, Floorplan Agreements, Participation Agreements and any related
agreements and arrangements. The foregoing transfer, assignment, setover and
conveyance to the Trust, and any subsequent transfer, assignment, setover and
conveyance to the Trust, shall be made to the Trustee, on behalf of the Trust,
and each reference in this Agreement or any Supplement to any such transfer,
assignment, setover and conveyance shall be construed accordingly.
In connection with such sales, the Seller agrees to record and
file, at its own expense, a financing statement on
32
<PAGE>
form UCC-1 (and continuation statements when applicable) with respect to the
Receivables now existing and hereafter created for the sale of chattel paper,
accounts and general intangibles (as defined in Section 9-105 of the UCC as in
effect in any state where the Seller's or DFS's chief executive offices or books
and records relating to the Receivables are located) meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect the sale and assignment of the Receivables and the other Trust Assets
to the Trust, and to deliver a file-stamped copy of such financing statements or
other evidence of such filing to the Trustee on or prior to the first Closing
Date, in the case of the Initial Accounts, and (if any additional filing is so
necessary) the applicable Addition Date, in the case of Additional Accounts. The
Trustee shall be under no obligation whatsoever to file such financing
statement, or a continuation statement to such financing statement, or to make
any other filing under the UCC in connection with such sales.
In connection with such sales, the Seller further agrees, at its
own expense, on or prior to the first Closing Date, in the case of the Initial
Accounts, the applicable Addition Date, in the case of Additional Accounts, and
the applicable Removal Commencement Date, in the case of Removed Accounts, (a)
to cause DFS to indicate in its books and records, which may include computer
files, as required by the Receivables Contribution and Sale Agreement, that the
Receivables created in connection with the Accounts (other than Removed
Accounts) have been sold, and the Collateral Security assigned, to the Seller in
accordance with the Receivables Contribution and Sale Agreement and sold to the
Trust pursuant to this Agreement for the benefit of the Certificateholders and
the other Beneficiaries and (b) to deliver to the Trustee (or cause DFS to do
so) a computer file or microfiche or written list containing a true and complete
list of all such Accounts (other than Removed Accounts) specifying for each such
Account, as of the Cut-Off Date, in the case of the Initial Accounts, and the
applicable Additional Cut-Off Date, in the case of Additional Accounts, (i) its
account number and (ii) the aggregate amount of Principal Receivables in such
Account. Such file or list, as supplemented from time to time to reflect
Additional Accounts and Removed Accounts, shall be marked as Schedule 1 to this
Agreement and is hereby incorporated into and made a part of this Agreement. The
Trustee shall be under no obligation whatsoever to verify the accuracy or
completeness of the information contained in Schedule 1 from time to time.
In the event that such sale and assignment is deemed to constitute a
pledge of security for a loan, it is the intent of this Agreement that the
Seller shall be deemed to have granted to the Trustee a first priority perfected
security interest in all of the Seller's right, title and interest to and under
the
33
<PAGE>
Receivables and the Collateral Security and all proceeds thereof, the Floorplan
Agreements and the Receivables Contribution and Sale Agreement, and that this
Agreement shall constitute a security agreement under applicable law.
SECTION 2.2. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its acceptance, on behalf of the Trust, of all right, title and
interest previously held by the Seller to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.1 and declares
that, subject to the terms and conditions hereof and of any Supplement, it shall
maintain such right, title and interest, upon the trust herein set forth, for
the benefit of the Certificateholders and the other Beneficiaries. The Trustee
further acknowledges that, prior to or simultaneously with the execution and
delivery of this Agreement, the Seller delivered to the Trustee the computer
file or microfiche or written list which the Seller represented as being the
computer file or list relating to the Initial Accounts described in the last
paragraph of Section 2.1.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
SECTION 2.3. Representations and Warranties of the Seller Relating to
the Seller and the Agreement. The Seller hereby represents and warrants to the
Trust and to the Trustee as of each Closing Date that:
(a) Organization and Good Standing. The Seller is a limited
partnership duly organized and validly existing and in good standing under the
law of the State of Delaware and has, in all material respects, full power,
authority and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement and to execute
and deliver to the Trustee pursuant hereto the Certificates.
(b) Due Qualification. The Seller is duly qualified to do business
and, where necessary, is in good standing as a foreign partnership (or is exempt
from such requirement) and has obtained all necessary licenses and approvals in
each jurisdiction in which the conduct of its business requires such
qualification except where the failure to so qualify or obtain licenses or
approvals would not have a material adverse effect on its ability to perform its
obligations hereunder.
(c) Due Authorization. The execution and delivery of this Agreement
and the applicable Supplement and the Related Documents and the execution and
delivery to the Trustee of the
34
<PAGE>
Certificates by the Seller and the consummation of the transactions provided for
or contemplated by this Agreement and the applicable Supplement and the Related
Documents, have been duly authorized by the Seller by all necessary partnership
action on the part of the Seller.
(d) No Conflict. The execution and delivery of this Agreement, the
applicable Supplement, the Related Documents and the Certificates, the
performance of the transactions contemplated by this Agreement and the
applicable Supplement and the Related Documents and the fulfillment of the terms
hereof and thereof, will not conflict with, result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or lapse
of time or both) a material default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party or
by which it or its properties are bound.
(e) No Violation. The execution and delivery of this Agreement, the
applicable Supplement, the Related Documents and the Certificates, the
performance of the transactions contemplated by this Agreement and the
applicable Supplement and the Related Documents and the fulfillment of the terms
hereof and thereof applicable to the Seller, will not conflict with or violate
any material Requirements of Law applicable to the Seller.
(f) No Proceedings. There are no proceedings or, to the best
knowledge of the Seller, investigations pending or threatened against the Seller
before any Governmental Authority (i) asserting the invalidity of this
Agreement, the applicable Supplement, any of the Related Documents or the
Certificates, (ii) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this Agreement and the
applicable Supplement or the Related Documents, (iii) seeking any determination
or ruling that, in the reasonable judgment of the Seller, would materially and
adversely affect the performance by the Seller of its obligations under this
Agreement and the applicable Supplement or the Related Documents, (iv) seeking
any determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement and the applicable Supplement, the
Related Documents or the Certificates or (v) seeking to affect adversely the
income tax attributes of the Trust under the United States Federal or any State
income, single business or franchise tax systems.
(g) All Consents Required. All appraisals, authorizations, consents,
orders, approvals or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Agreement, the applicable Supplement, the Related Documents and the
35
<PAGE>
Certificates, the performance of the transactions contemplated by this
Agreement, the applicable Supplement and any of the Related Documents, and the
fulfillment of the terms hereof and thereof, have been obtained, except where
the failure to so obtain such item will not have a material adverse effect on
its ability to render such performance.
(h) Enforceability. This Agreement and the applicable Supplement and
the Related Documents each constitutes a legal, valid and binding obligation of
the Seller enforceable against the Seller in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(i) Record of Accounts. As of the first Closing Date, in the case of
the Initial Accounts, as of the applicable Addition Date, in the case of the
Additional Accounts, and, as of the applicable Removal Date, in the case of
Removed Accounts, Schedule 1 to this Agreement is an accurate and complete
listing in all material respects of all the Accounts as of the Cut-Off Date, the
applicable Additional Cut-Off Date or the applicable Removal Date, as the case
may be, and the information contained therein with respect to the identity of
such Accounts and the Receivables existing thereunder is true and correct in all
material respects as of the Cut-Off Date, such applicable Additional Cut-Off
Date or such Removal Date, as the case may be.
(j) Valid Transfer. This Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of the Seller in the
Receivables and the Collateral Security and the proceeds thereof and all of the
Seller's rights, remedies, powers and privileges with respect to the Receivables
under the Receivables Contribution and Sale Agreement and the related Financing
Agreements and Floorplan Agreements, if any, and, upon the filing of the
financing statements described in Section 2.1 with the Secretary of State of the
State of Missouri and, in the case of the Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Trust shall have a perfected
ownership interest in such property, free of the Liens of any other Person,
except for Liens permitted under Section 2.6(a). Except as otherwise provided in
this Agreement, neither the Seller nor any Person claiming through or under the
Seller has any claim to or interest in the Trust Assets.
The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the
36
<PAGE>
Receivables to the Trust and the issuance of the Certificates. Upon discovery by
the Seller, the Servicer, any Agent or any Responsible Officer of the Trustee of
a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other parties,
any Agent and to any Enhancement Providers.
In the event of any breach of any of the representations and
warranties set forth in this Section 2.3 having a material adverse effect on the
interests of the Investor Certificateholders, then either the Trustee or the
Holders of Investor Certificates evidencing not less than a majority in
aggregate unpaid principal amount of all outstanding Investor Certificates, by
notice then given in writing to the Seller (and to the Trustee, any Enhancement
Providers and the Servicer if given by the Investor Certificateholders), may
direct the Seller to purchase the Certificateholders' Interest within 60 days of
such notice (or within such longer period as may be specified in such notice),
and the Seller shall be obligated to make such purchase on a Distribution Date
occurring within such 60-day period on the terms and conditions set forth below;
provided, however, that no such purchase shall be required to be made if, by the
end of such 60-day period (or such longer period as may be specified), the
representations and warranties set forth in this Section 2.3 shall be true and
correct in all material respects, and any material adverse effect on the
Certificateholders' Interest caused thereby shall have been cured.
The Seller shall deposit in the Collection Account in immediately
available funds on the Business Day preceding such Distribution Date, in payment
for such purchase, an amount equal to the sum of the amounts specified therefor
with respect to each outstanding Series in the related Supplement.
Notwithstanding anything to the contrary in this Agreement, such amounts shall
be distributed to the Investor Certificateholders on such Distribution Date in
accordance with Article IV and the terms of each Supplement. If the Trustee or
the Investor Certificateholders give notice directing the Seller to purchase the
Certificateholders' Interest as provided above, the obligation of the Seller to
purchase the Certificateholders' Interest pursuant to this Section 2.3 shall
constitute the sole remedy respecting an event of the type specified in the
first sentence of this Section 2.3 available to the Investor Certificateholders
(or the Trustee on behalf of the Investor Certificateholders).
SECTION 2.4. Representations and Warranties of the Seller Relating to
the Receivables. (a) Representations and Warranties. The Seller hereby
represents and warrants to the Trustee and the Trust that:
37
<PAGE>
(i) Each Receivable and all other Trust Assets existing on the
first Closing Date or, in the case of Additional Accounts, on the
applicable Addition Date, and on each Transfer Date, has been conveyed
to the Trust free and clear of any Lien.
(ii) With respect to each Receivable and all other Trust Assets
existing on the first Closing Date or, in the case of Additional
Accounts, on the applicable Addition Date, and on each Transfer Date,
all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by the Seller in connection with the
conveyance of such Receivable or other Trust Assets to the Trust have
been duly obtained, effected or given and are in full force and
effect.
(iii) On the Cut-Off Date and each Closing Date, each Initial
Account is an Eligible Account and, in the case of Additional
Accounts, on the applicable Additional Cut-Off Date and each
subsequent Closing Date, each such Additional Account is an Eligible
Account.
(iv) On the first Closing Date, in the case of the Initial
Accounts, and, in the case of the Additional Accounts, on the
applicable Additional Cut-Off Date, and on each Transfer Date, each
Receivable conveyed to the Trust on such date is an Eligible
Receivable or, if such Receivable is not an Eligible Receivable, such
Receivable is conveyed to the Trust in accordance with Section 2.9.
(b) Notice of Breach. The representations and warranties set forth in
this Section 2.4 shall survive the transfer and assignment of the Receivables to
the Trust and the issuance of the Certificates. Upon discovery by the Seller,
the Servicer, any Agent or a Responsible Officer of the Trustee of a breach of
any of the representations and warranties set forth in this Section 2.4, the
party discovering such breach shall give prompt written notice to the other
parties and to any Enhancement Providers.
(c) Reassignment. In the event any representation or warranty under
Section 2.4(a) is not true and correct as of the date specified therein with
respect to any Receivable or Account and such breach has a material adverse
effect on the Certificateholders' Interest in any such Receivable or Account,
then, within 30 days (or such longer period as may be agreed to by the Trustee)
of the earlier to occur of the discovery of any
38
<PAGE>
such event by the Seller or the Servicer, or receipt by the Seller or the
Servicer of written notice of any such event given by the Trustee, any Agent or
any Enhancement Provider, the Seller shall accept a reassignment of such
Receivable or, in the case of such an untrue representation or warranty with
respect to an Account, all Receivables in such Account, on the Determination
Date immediately succeeding the day of such discovery or notice on the terms and
conditions set forth in the next succeeding paragraph; provided, however, that
no such reassignment shall be required to be made with respect to such
Receivable if, by the end of such 30-day period (or such longer period as may be
agreed to by the Trustee), the breached representation or warranty shall then be
true and correct in all material respects and any material adverse effect caused
thereby shall have been cured.
The Seller shall accept a reassignment of each such Receivable by
directing the Servicer to deduct, subject to the next sentence, the principal
amount of such Receivables (exclusive of their Discount Portions) from the Pool
Balance on or prior to the end of the Collection Period in which such
reassignment obligation arises. If, following such deduction, the Pool Balance
would be less than the Required Participation Amount on the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
following such Determination Date), then not later than 12:00 noon New York City
time on the day on which such reassignment occurs, the Seller shall deposit in
the Collection Account in immediately available funds the amount (the "Transfer
Deposit Amount") by which the Pool Balance would be less than the Required
Participation Amount (up to the principal amount of such Receivables exclusive
of the Discount Portions thereof); provided that if the Transfer Deposit Amount
is not deposited as required by this sentence, then the amounts to be deducted
in respect of such Receivables shall only be deducted from the Pool Balance to
the extent that the Pool Balance is not reduced below the Required Participation
Amount and the Receivables, the amounts to be deducted in respect of which have
not been so deducted, shall not be reassigned to the Seller and shall remain
part of the Trust. Upon reassignment of any such Receivable, but only after
payment by the Seller of the Transfer Deposit Amount, if any, the Trust shall
automatically and without further action be deemed to sell, transfer, assign,
set over and otherwise convey to the Seller, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to such
Receivable, all Collateral Security and all moneys due or to become due with
respect thereto and all proceeds thereof. The Trustee shall execute such
documents and instruments of transfer or assignment as shall be furnished by the
Seller and shall take such other actions as shall reasonably be requested by the
Seller, to effect
39
<PAGE>
the conveyance of such Receivables pursuant to this Section. The obligation of
the Seller to accept a reassignment of any such Receivable and to pay any
related Transfer Deposit Amount shall constitute the sole remedy respecting the
event giving rise to such obligation available to Certificateholders (or the
Trustee on behalf of Certificateholders).
SECTION 2.5. Addition of Accounts. (a) If, as of the close of
business on the last day of any Collection Period, (i) the Pool Balance (for
purposes of this paragraph, determined by excluding from the calculation thereof
all Delayed Funding Receivables) on such day is less than the Required
Participation Amount as of the following Distribution Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on such
Distribution Date), or (ii) the result obtained by multiplying (x) the Seller's
Participation Amount (for purposes of this paragraph, determined by using the
Pool Balance as determined in accordance with this paragraph) as of the
following Distribution Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution Date),
by (y) the percentage equivalent of the portion of the Seller's Interest
represented by the Deutsche FRLP Certificate, is less than 5% of the Pool
Balance on such last day, then the Seller shall, within 10 Business Days
following the end of such Collection Period, designate and transfer to the Trust
the Receivables (and the related Collateral Security) of additional Eligible
Accounts of the Seller to be included as Accounts in a sufficient amount such
that after giving effect to such addition (i) the Pool Balance (determined in
accordance with this paragraph) as of the close of business on the Addition Date
is at least equal to such Required Participation Amount and (ii) the result
obtained by multiplying (x) such Seller's Participation Amount (determined in
accordance with this paragraph) by (y) the percentage equivalent of the portion
of the Seller's Interest represented by the Deutsche FRLP Certificate, is at
least equal to 5% of such Pool Balance, as the case may be. The Seller shall
satisfy the conditions specified in Section 2.5(d) in designating such
Additional Accounts and conveying the related Receivables to the Trust. The
failure of the Seller to transfer Receivables to the Trust as provided in this
paragraph solely as a result of the unavailability of a sufficient amount of
Eligible Receivables shall not constitute a breach of this Agreement; provided,
however, that any such failure will nevertheless result in the occurrence of an
Early Amortization Event described in Section 9.1(a).
(b) The Seller may from time to time, at its sole discretion, subject
to the conditions specified in paragraph (d) below, voluntarily designate
additional Eligible Accounts to be included as Accounts and transfer to the
Trust the Receivables
40
<PAGE>
(and the related Collateral Security) of such Additional Accounts.
(c) Receivables and Collateral Security from such Additional Accounts
shall be sold to the Trust effective on a date (each an "Addition Date")
specified in a written notice provided by the Seller (or the Servicer on its
behalf) to the Trustee, the Rating Agencies, any Agent and any Enhancement
Providers specifying the Additional Cut-Off Date and the Addition Date for such
Additional Accounts (each an "Addition Notice") on or before the fifth Business
Day but not more than the 30th day prior to the related Addition Date or, if the
Automatic Addition Condition is satisfied, on the Determination Date following
the Collection Period in which such Addition Dates occur (the "Notice Date"). An
Addition Notice may relate to one or more Accounts added on one or more Addition
Dates.
(d) The Seller shall be permitted to convey to the Trust the
Receivables and all Collateral Security related thereto in any Additional
Accounts designated by the Seller as such pursuant to Section 2.5(a) or (b) only
upon satisfaction of each of the following conditions on or prior to the related
Notice Date (except for the condition in clause (vii), if applicable, which
shall be satisfied on or before the tenth Business Day after such Notice Date):
(i) the Seller shall have provided the Trustee, any Agent, the
Rating Agencies and any Enhancement Providers with a timely Addition
Notice;
(ii) such Additional Accounts shall all be Eligible Accounts;
(iii) the Seller shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee)
in substantially the form of Exhibit B (the "Assignment") covering the
Receivables in the Accounts specified in the Addition Notice and the
computer file or microfiche or written list required to be delivered
pursuant to Section 2.1;
(iv) the Seller shall, to the extent required by Section 4.3,
have deposited in the Collection Account all Collections with respect
to such Additional Accounts since the Additional Cut-Off Date;
(v) (A) no selection procedures reasonably believed by the
Seller to be adverse to the interests of the Beneficiaries shall have
been used in selecting such Additional Accounts; (B) the list of
Additional Accounts delivered pursuant to clause (iii) above shall
41
<PAGE>
be true and correct in all material respects as of the Additional Cut-
Off Date and (C) as of each of the Notice Date and the Addition Date,
neither DFS nor the Seller shall have been insolvent nor shall any of
them have been made insolvent by such transfer nor shall any of them
be aware of any pending insolvency;
(vi) if the Automatic Addition Condition is not satisfied with
respect to such addition, the Rating Agency Condition shall have been
satisfied with respect to such addition;
(vii) If (A) one or more of the Additional Accounts specified
in such Addition Notice will contain Receivables secured by a security
interest in a type of Product that has not been previously financed in
the Floorplan Business or (B) one or more of the Additional Accounts
is supported by a Floorplan Agreement with a Manufacturer that, as of
the related Addition Date, is not an Existing Manufacturer, then,
whether or not the Automatic Condition is satisfied, the Rating Agency
Condition shall have been satisfied in respect of the addition of each
Additional Account specified in clauses (A) and (B) on or prior to the
related Addition Date;
(viii) the addition of the Receivables arising in such
Additional Accounts shall not result in the occurrence of an Early
Amortization Event;
(ix) the Seller shall have delivered to the Trustee and any
Enhancement Providers a certificate of a Vice President or more senior
officer confirming (A) the items set forth in paragraphs (ii) through
(viii) above and (B) that the Seller reasonably believes that the
addition of the Receivables arising in such Additional Accounts will
not result in the occurrence of an Early Amortization Event; and
(x) on or before each Notice Date, the Seller shall have
delivered to the Trustee and any Enhancement Providers (A) an Opinion
of Counsel with respect to the Receivables in the Additional Accounts
added since the last delivery of such Opinion substantially in the
form of Exhibit G-2 and (B) except in the case of an addition required
by Section 2.5(a), a Tax Opinion with respect to such addition;
provided that if such Opinion of Counsel and Tax Opinion are required
to be delivered, they shall be from outside counsel no less frequently
than quarterly; provided further that, unless the Rating Agency
Condition is satisfied, such
42
<PAGE>
Opinion of Counsel and Tax Opinion shall be from outside counsel if
the rating of the unsecured long-term debt of the parent of DFS or, if
DFS does not have a parent, DFS is below investment grade.
(e) The Seller hereby represents and warrants as of the applicable
Addition Date as to the matters set forth in Section 2.5(d)(v). Upon discovery
by the Seller, the Servicer, any Agent, a Responsible Officer of the Trustee or
any Enhancement Providers of a breach of the foregoing representations and
warranties, the party discovering the breach shall give prompt written notice to
the other parties, to any Agent and to any Enhancement Providers.
(f) Notwithstanding anything in this Section 2.5 to the contrary, the
additions of Additional Accounts pursuant to Section 2.5(b) on or prior to the
Closing Date for Series 1994-1 need not satisfy clause (i), (vi), (vii) or (x)
of Section 2.5(d).
SECTION 2.6. Covenants of the Seller. The Seller hereby covenants
that:
(a) No Liens. Except for the conveyances hereunder or as provided in
Section 6.3(c), the Seller will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on,
any Receivable or any other Trust Asset, whether now existing or hereafter
created, or any interest therein, or the Seller's interest or the Seller's
Certificates and the Seller shall defend the right, title and interest of the
Trust in, to and under the Receivables and the other Trust Assets, whether now
existing or hereafter created, and such rights, remedies, powers and privileges,
against all claims of third parties claiming through or under the Seller.
(b) Account Allocations. In the event that the Seller is unable for
any reason to transfer Receivables to the Trust, then the Seller agrees that it
shall allocate, after the occurrence of such event, payments on each Account
with respect to the principal balance of such Account first to the oldest
principal balance of such Account and to have such payments applied as
Collections in accordance with the terms of this Agreement. The parties hereto
agree that Non-Principal Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Trust shall continue to be
a part of the Trust notwithstanding any cessation of the transfer of additional
Principal Receivables to the Trust and Collections with respect thereto shall
continue to be allocated and paid in accordance with the terms of this
Agreement.
43
<PAGE>
(c) Delivery of Collections. In the event that the Seller, DFS or any
Affiliate thereof receives payments in respect of Receivables, the Seller and
DFS agree to pay or cause to be paid to the Servicer or any Successor Servicer
all payments received thereby in respect of the Receivables as soon as
practicable after receipt thereof, but in no event later than two Business Days
after the receipt by the Seller, DFS or any Affiliate thereof.
(d) Notice of Liens. The Seller shall notify the Trustee promptly
after becoming aware of any Lien on any Receivable other than the conveyances
hereunder and Participation Interests.
(e) Compliance with Law. The Seller hereby agrees to comply in all
material respects with all Requirements of Law applicable to the Seller.
(f) Activities of the Seller. The Seller will not engage in any
business or activity of any kind or enter into any transaction other than (i)
the businesses, activities and transactions contemplated and authorized by this
Agreement or the Related Documents, (ii) acquiring, selling, financing, holding,
assigning, pledging and otherwise dealing with receivables arising out of the
financing of commercial and consumer products, accounts receivable and other
assets and related activities and transactions or out of unsecured loans, (iii)
transferring such receivables to trusts pursuant to a pooling and servicing
agreement or similar agreement or arrangement, (iv) authorizing, selling and
delivering any class of certificates or other securities of any such trust, (v)
issuing, selling, authorizing and delivering one or more series and classes of
bonds, notes or other evidences of indebtedness secured or collateralized by one
or more pools of receivables or by certificates of any class issued by one or
more trusts (collectively, the "Notes"), provided that the Seller shall have no
liability under any Notes except to the extent of the one or more pools of
receivables or the certificates securing or collateralizing such Notes, (vi)
holding and enjoying all of the rights and privileges of any certificates issued
by the trusts to the Seller under the related agreements and holding and
enjoying all of the rights and privileges of any class of any series of Notes,
including any class of Notes or certificates which may be subordinate to any
other class of Notes or certificates, respectively, (vii) performing its
obligations under the agreements and any indenture or other agreement (each, an
"Indenture") pursuant to which any Notes are issued, (viii) engaging in any
activity and exercising any powers permitted to limited partnerships under the
laws of the State of Delaware that are related or incidental to the foregoing
and necessary, convenient or advisable to accomplish the foregoing, and (ix) any
other activity in
44
<PAGE>
connection with which the Rating Agency Condition has been satisfied (such
businesses, activities and transactions, collectively, "Permitted
Transactions").
(g) Indebtedness. The Seller will not create, incur or assume any
indebtedness or issue any securities or sell or transfer any receivables to a
trust or other Person which issues securities in respect of any such
receivables, unless (i) any such indebtedness or securities have no recourse to
any assets of the Seller other than the specified assets to which such
indebtedness or securities relate and (ii) the Rating Agency Condition shall
have been satisfied in connection therewith prior to the incurrence or issuance
thereof.
(h) Guarantees. The Seller will not become or remain liable,
directly or contingently, in connection with any indebtedness or other liability
of any other Person, whether by guarantee, endorsement (other than endorsements
of negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or purchase, agreement to supply or advance
funds, or otherwise, except in connection with Permitted Transactions and unless
the Rating Agency Condition shall have been satisfied with respect thereto.
(i) Investments. The Seller will not make or suffer to exist any
loans or advances to, or extend any credit to, or make any investments (by way
of transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or assets,
or otherwise) in, any Affiliate, unless prior thereto the Rating Agency
Condition shall have been satisfied with respect thereto; provided, however,
that the Seller shall not be prohibited under this Section 2.6(i) from making
distributions to its partners.
(j) Stock; Merger. The Seller will not (i) sell any general
partner's interests in the Seller to any Person (other than Deutsche FRI), or
enter into any transaction of merger or consolidation unless (A) the surviving
Person of such merger or consolidation assumes all of the Seller's obligations
under this Agreement, (B) the Seller shall have given the Rating Agencies and
the Trustee at least 10 days' prior notice and the Rating Agency Condition shall
have been satisfied with respect to such transaction and (C) such merger or
consolidation does not conflict with any provisions of the partnership agreement
of the Seller, or (ii) terminate, liquidate or dissolve itself (or suffer any
termination, liquidation or dissolution), or (iii) acquire or be acquired by any
Person, or (iv) otherwise make (or suffer) any material change in the
organization of or method of conducting its business.
45
<PAGE>
(k) Agreements. The Seller will not become a party to, or permit any
of its properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except this Agreement, the Related
Documents and any document relating to a Permitted Transaction, or amend or
modify its partnership agreement or cancel, terminate, amend, supplement, modify
or waive any of the provisions of the Receivables Contribution and Sale
Agreement or any of the other Related Documents or request, consent or agree to
or suffer to exist or permit any such cancellation, termination, amendment,
supplement, modification or waiver unless, in any such case, the Rating Agency
Condition shall have been satisfied with respect thereto.
SECTION 2.7. Removal of Eligible Accounts. (a) On each
Determination Date the Seller shall have the right to remove Accounts, including
all amounts then held by the Trust or thereafter received by the Trust in
respect of the Accounts being removed from the Trust in the manner prescribed
in Section 2.7(b). The termination of an Account by a Dealer upon such Dealer's
payment in full of the related Account shall not be a removal of such Account
under this Section 2.7.
(b) To remove Accounts, including all amounts then held by the Trust
or thereafter received by the Trust in respect of the Accounts being removed,
the Seller (or the Servicer on its behalf) shall take the following actions and
make the following determinations:
(i) not less than five Business Days prior to the Removal Date,
furnish to the Trustee, any Agent, any Enhancement Providers and the
Rating Agencies a written notice (the "Removal Notice") specifying the
Determination Date (which may be the Determination Date on which such
notice is given) on which removal of the Receivables of one or more
Accounts (the "Removed Accounts") will occur (a "Removal Date");
(ii) from and after such Removal Date, cease to transfer to the
Trust any and all Receivables arising in such Removed Accounts;
(iii) represent and warrant that the removal of any such
Eligible Account on any Removal Date shall not, in the reasonable
belief of the Seller, cause an Early Amortization Event to occur or
cause the Pool Balance to be less than the Required Participation
Amount;
(iv) represent and warrant that no selection procedures
reasonably believed by the Seller to be
46
<PAGE>
adverse to the interests of the Beneficiaries were utilized in
selecting the Accounts to be removed;
(v) satisfy the Rating Agency Condition with respect to such
removal;
(vi) deliver to the Trustee, each Rating Agency, any Agent and
any Enhancement Providers a Tax Opinion, dated the Removal Date, with
respect to such removal;
(vii) on or before the related Removal Date, deliver to the
Trustee, any Agent and any Enhancement Providers an Officers'
Certificate confirming the items set forth in clauses (iii) through
(v) above and confirming that the Seller reasonably believes that the
removal of the Removed Accounts will not result in the occurrence of
an Early Amortization Event; the Trustee may conclusively rely on such
Officers' Certificate and shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability
in so relying; and
(viii) on or before the fifth Business Day after the Removal
Date, furnish to the Trustee a computer file, microfiche list or other
list of the Removed Accounts that were removed on the Removal Date,
specifying for each Removed Account as of the date of the Removal
Notice its number, the aggregate amount outstanding in such Removed
Account and the aggregate amount of Principal Receivables therein and
represent that such computer file, microfiche list or other list of
the Removed Accounts is true and complete in all material respects.
No Accounts shall be so removed if such removal will result in a reduction or
withdrawal of the rating of any outstanding Series or Class by the applicable
Rating Agency.
(c) Subject to Section 2.7(b), on the Removal Date with respect to
any such Removed Account, such Removed Account shall be deemed removed from the
Trust for all purposes. After the Removal Date and upon the written request of
the Servicer, the Trustee shall deliver to the Seller a reassignment in
substantially the form of Exhibit H (the "Reassignment").
SECTION 2.8. Removal of Ineligible Accounts. (a) On or prior to the
tenth Business Day following the date on which an Account becomes an Ineligible
Account (which date shall be deemed to be the "Removal Commencement Date"), the
Seller shall commence removal of the Receivable of such Ineligible Account in
the manner prescribed in Section 2.8(b).
47
<PAGE>
(b) With respect to each Account that becomes an Ineligible Account,
the Seller (or the Servicer on its behalf) shall take the following actions and
make the following determinations:
(i) furnish to the Trustee, any Agent and any Enhancement
Providers a Removal Notice specifying the Removal Commencement Date
and the Ineligible Accounts to be removed (the "Designated Accounts");
(ii) determine on the Removal Commencement Date with respect to
such Designated Accounts the aggregate balance of Principal
Receivables in respect of each Designated Account (the "Designated
Balance") and amend Schedule 1 by delivering to the Trustee a computer
file or microfiche or written list containing a true and complete list
of the Removed Accounts specifying for each such Account, as of the
Removal Commencement Date, its account number, the aggregate amount of
Receivables outstanding in such Account and the Designated Balance;
(iii) from and after such Removal Commencement Date, cease to
transfer to the Trust any and all Receivables arising in such
Designated Accounts;
(iv) from and after such Removal Commencement Date, allocate
Collections of Principal Receivables in respect of each Designated
Account, first to the oldest outstanding principal balance of such
Designated Account, until the Removal Date with respect thereto; and
(v) on each Business Day from and after such Removal
Commencement Date to and until the related Removal Date, allocate (A)
to the Trust (to be further allocated pursuant to the terms of this
Agreement), Defaulted Receivables and Collection of Non-Principal
Receivables in respect of each Designated Account, based on the ratio
of the aggregate amount of Principal Receivables in all Designated
Accounts owned by the Trust on such Business Day to the total
aggregate amount of Principal Receivables in all such Designated
Accounts on such Business Day and (B) to the Seller, the remainder of
the Defaulted Receivables and Collections of Non-Principal Receivables
in all such Designated Accounts on such Business Day.
(c) On the Removal Date with respect to any such Account to be
removed, the Seller shall cease to allocate any Collections therefrom in
accordance herewith and such Account shall be deemed a Removed Account. After
the Removal Date and
48
<PAGE>
upon the written request of the Servicer, the Trustee shall deliver to the
Seller a Reassignment.
SECTION 2.9. Sale of Ineligible Receivables. The Seller shall sell
to the Trust on each Transfer Date any and all Receivables arising in any
Eligible Accounts that are Ineligible Receivables, provided that on the Cut-Off
Date or, in the case of Receivables arising in Additional Accounts, on the
related Additional Cut-Off Date, and on the applicable Transfer Date, the
Account in which such Receivables arise is an Eligible Account.
ARTICLE III
Administration and Servicing
----------------------------
of Receivables
--------------
SECTION 3.1. Acceptance of Appointment and Other Matters Relating to
the Servicer. (a) The Servicer shall service and administer the Receivables,
shall collect payments due under the Receivables and shall charge-off as
uncollectible Receivables, all in accordance with its customary and usual
servicing procedures in effect from time to time for servicing wholesale
receivables comparable to the Receivables which the Servicer services for its
own account and in accordance with the Financing Guidelines; provided, however,
that (i) the Servicer shall change its policy for charging off wholesale
receivables as totally uncollectible only upon satisfaction of the Rating Agency
Condition and (ii) in respect of a Floorplan Agreement, the obligation of the
related Manufacturer to repurchase repossessed Products may be modified and
subject to various terms, but shall not be deleted; and provided, further, that
if a Successor Servicer shall succeed to the duties of the Servicer, the
Successor Servicer shall service the Receivables in accordance with standards
that would be employed by a prudent lender in servicing comparable receivables
for its own account. The Servicer shall have full power and authority, acting
alone or through any party properly designated by it hereunder, to do any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing
and subject to Section 10.1, the Servicer is hereby authorized and empowered,
unless such power and authority is revoked by the Trustee on account of the
occurrence of a Servicer Default pursuant to Section 10.1, (i) to instruct the
Trustee to make withdrawals and payments from the Collection Account and any
Series Account as set forth in this Agreement or any Supplement, (ii) to
instruct the Trustee to take any action required or permitted under any
Enhancement, (iii) to execute and deliver, on behalf of the Trust for the
benefit of the Certificateholders and the other Beneficiaries, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all
49
<PAGE>
other comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable Requirements of Law, to commence enforcement
proceedings (which, to the extent permitted by applicable law, may be in the
name of the Servicer) with respect to such Receivables, (iv) to make any
filings, reports, notices, applications, registrations with, and seek any
consents or authorizations from, the Securities and Exchange Commission and any
State securities authority on behalf of the Trust as may be necessary or
advisable to comply with any Federal or State securities laws or reporting
requirement, and (v) to delegate certain of its servicing, collection,
enforcement and administrative duties hereunder with respect to the Accounts and
the Receivables to any Person who agrees to conduct such duties in accordance
with the Financing Guidelines (or such other standards required hereunder in the
case of a Successor Servicer) and this Agreement; provided, however, that the
Servicer shall notify the Trustee, the Rating Agencies, any Agent and any
Enhancement Providers in writing of any such delegation of its duties which is
not in the ordinary course of its business, that no delegation will relieve the
Servicer of its liability and responsibility with respect to such duties and
that the Rating Agency Condition shall have been satisfied with respect to any
such delegation. The Trustee shall execute and deliver to the Servicer any
powers of attorney and other documents prepared by the Servicer and certified by
a Servicing Officer as being reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
(b) In the event that the Seller is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement
(including by reason of the application of the provisions of Section 9.2 or any
court of competent jurisdiction ordering that the Seller not transfer any
additional Principal Receivables to the Trust) then, in any such event, the
Servicer agrees (i) to give prompt written notice thereof to the Trustee, any
Enhancement Providers, any Agent and each Rating Agency and (ii) that it shall
in any such event allocate after the occurrence of such event, payments on each
Account with respect to the principal balance of such Account first to the
oldest principal balance of such Account, and to have such payments applied as
Collections in accordance with Section 4.2. The parties hereto agree that Non-
Principal Receivables, whenever created, accrued in respect of Principal
Receivables which have been conveyed to the Trust shall continue to be a part of
the Trust notwithstanding any cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect thereto shall continue to
be allocated and paid in accordance with the terms of this Agreement.
50
<PAGE>
(c) The Servicer shall not, and any Successor Servicer shall not be
obligated to, use separate servicing procedures, offices, employees or accounts
for servicing the Receivables from the procedures, offices, employees and
accounts used by the Servicer or such Successor Servicer in connection with
servicing other wholesale receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Financing Agreements relating to the Accounts
and the Financing Guidelines (except as otherwise provided in Section 3.1(a)),
except insofar as any failure to so comply or perform would not materially and
adversely affect the rights of the Trust or any of the Beneficiaries. Subject to
compliance with all Requirements of Law and subject to Section 3.1(a), the
Servicer (or DFS) may change the terms and provisions of the Wholesale Financing
Agreements, the Floorplan Agreements, the Accounts Receivable Financing
Agreements, the Asset Based Lending Financing Agreements or the Unsecured
Receivable Financing Agreements or the Financing Guidelines in any respect
(including the calculation of the amount or the timing of charge-offs and the
rate of the finance charge assessed thereon), only if as a result of such
change, in the reasonable judgment of the Servicer, no Early Amortization Event
will occur.
SECTION 3.2. Servicing Compensation. As full compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in the immediately following paragraph, the Servicer shall be entitled to
receive the Servicing Fee on each Distribution Date on or prior to the Trust
Termination Date payable in arrears. The "Servicing Fee" shall be the aggregate
of the Monthly Servicing Fees specified in the Supplements. The Servicing Fee
shall be payable to the Servicer solely to the extent amounts are available for
payment in accordance with the terms of the Supplements.
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.5 and the reasonable fees and disbursements of
independent accountants and all other expenses (including costs of collection
and legal fees) incurred by the Servicer in connection with its activities
hereunder, and including all other fees and expenses of the Trust not expressly
stated herein to be for the account of the Certificateholders. The Servicer
shall be required to pay such expenses for its own account, and shall not be
entitled to any payment therefor other than the Servicing Fee. The Servicer will
be solely responsible for all fees and expenses incurred by or on behalf of the
Servicer in connection herewith and the Servicer will not be entitled to any fee
or other payment from, or claim on, any of the Trust Assets (other than the
Servicing Fee).
51
<PAGE>
SECTION 3.3. Representations, Warranties and Covenants of the
Servicer. (a) DFS, as Servicer, hereby makes, and any Successor Servicer by its
appointment hereunder shall make, on each Closing Date (and on the date of any
such appointment) the following representations, warranties and covenants:
(i) Organization and Good Standing. Such party is a corporation
duly organized, validly existing and in good standing under the
applicable laws of the state of its incorporation and has, in all
material respects, full corporate power, authority and legal rights to
own its properties and conduct its wholesale receivable servicing
business as such properties are presently owned and as such business
is presently conducted, and to execute, deliver and perform its
obligations under this Agreement and the applicable Supplement.
(ii) Due Qualification. Such party is duly qualified to do
business and is in good standing as a foreign corporation (or is
exempt from such requirements) and has obtained all necessary licenses
and approvals in each jurisdiction in which the servicing of the
Receivables as required by this Agreement requires such qualification
except where the failure to so qualify or obtain licenses or approvals
would not have a material adverse effect on its ability to perform its
obligations hereunder and under each Supplement.
(iii) Due Authorization. The execution, delivery, and
performance of this Agreement and the applicable Supplement has been
duly authorized by such party by all necessary corporate action on the
part thereof and are within its corporate powers.
(iv) Binding Obligation. This Agreement and each applicable
Supplement constitutes a legal, valid and binding obligation of such
party, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in
effect, affecting the enforcement of creditors' rights and except as
such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(v) No Violation. The execution and delivery of this Agreement
and the applicable Supplement by such party, the performance of the
transactions contemplated by this agreement and the applicable
Supplement and the fulfillment of the terms hereof and thereof
applicable
52
<PAGE>
to such party will not conflict with or violate any Requirements of
Law applicable to such party or conflict with, violate, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default
under any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which such party is a party or by which it is
bound.
(vi) No Proceedings. There are no proceedings or, to the best
knowledge of such party, investigations, pending or threatened against
such party before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement and the applicable
Supplement, seeking any determination or ruling that, in the
reasonable judgment of such party, would materially and adversely
affect the performance by such party of its obligations under this
Agreement and the applicable Supplement, or seeking any determination
or ruling that would materially and adversely affect the validity or
enforceability of this Agreement and the applicable Supplement.
(vii) No Consents. No authorizations, consents, orders or
approvals of or notices to or registrations or declarations or filings
with any Governmental Authority are required to be obtained, effected
or given by the Servicer in connection with the due execution and
delivery of this Agreement and each Supplement by the Servicer and the
performance of the transactions contemplated by this Agreement and
each Supplement by the Servicer, except for those that have been duly
obtained, effected or given and are in full force and effect.
(viii) Compliance with Requirements of Law. Such party shall
duly satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and the Accounts, will maintain in
effect all qualifications required under Requirements of Law in order
to service properly the Receivables and the Accounts and will comply
in all material respects with all Requirements of Law in connection
with servicing the Receivables and the Accounts the failure to comply
with which would have a material adverse effect on the interests of
Beneficiaries.
53
<PAGE>
(ix) No Rescission or Cancellation. Such party shall not permit
any rescission or cancellation of a Receivable except as ordered by a
court of competent jurisdiction or other Governmental Authority;
provided that this clause (ix) shall not prohibit a negotiated work-
out of defaulted Receivables that enhances the Trust's recovery in
respect of such Receivables.
(x) Protection of Beneficiaries Rights. Such party shall take
no action, nor omit to take any action, which would impair the rights
of Beneficiaries in the Receivables nor shall it reschedule, revise or
defer payments due on any Receivable except in accordance with the
Financing Guidelines (or other servicing standards required hereunder
in the case of a Successor Servicer).
(xi) Negative Pledge. Except for the conveyance hereunder to
the Trustee and the conveyances of Participation Interests permitted
by the Receivables Contribution and Sale Agreement, the Servicer will
not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on, any Receivable
sold and assigned to the Trust, whether now existing or hereafter
created, or any interest therein, and the Servicer shall defend the
rights, title and interest of the Trust in, to and under any
Receivable sold and assigned to the Trust, whether now existing or
hereafter created, against all claims of third parties claiming
through or under the Seller or the Servicer.
(b) Notice of Breach. The representations and warranties set forth in
this Section 3.3 shall survive the transfer and assignment of the Receivables to
the Trust and the issuance of the Certificates. Upon discovery by the Seller,
the Servicer or a Responsible Officer of the Trustee of a breach of any of the
representations and warranties set forth in this Section 3.3, the party
discovering such breach shall give prompt written notice to the other parties
and to any Enhancement Providers.
(c) Purchase. In the event any representation or warranty under
Section 3.3(a) (viii), (ix) or (x) is not true and correct in any material
respect as of the date specified therein with respect to any Receivable or
Account and such breach has a material adverse effect on the Certificateholders'
Interest in such Receivable, then, within 30 days (or such longer period as may
be agreed to by the Trustee) of the earlier to occur of the discovery of any
such event by the Seller or the Servicer, or receipt by the Seller or the
Servicer of written notice of any
54
<PAGE>
such event given by the Trustee or any Enhancement Providers, the Servicer shall
purchase such Receivable or, in the case of an untrue representation with
respect to an Account, all Receivables in such Account, on the Determination
Date immediately succeeding the expiration of such 30-day period on the terms
and conditions set forth in the next succeeding paragraph; provided, however,
that no such purchase shall be required to be made with respect to such
Receivable if, by the end of such 30-day period (or such longer period as may be
agreed to by the Trustee) the breached representation or warranty shall then be
true and correct in all material respects and any material adverse effect caused
thereby shall have been cured. The Servicer shall effect such purchase by
depositing in the Collection Account in immediately available funds an amount
equal to the Purchase Price of such Receivable. Any such deposit of such
Purchase Price into the Collection Account shall be considered a Transfer
Deposit Amount and shall be applied in accordance with the terms of this
Agreement.
Upon each such payment of such Purchase Price, the Trust shall
automatically and without further action be deemed to sell, transfer, assign,
set over and otherwise convey to the Servicer, without recourse, representation
or warranty (other than the representation that the Trustee has not sold,
transferred or assigned an interest in the Receivables), all right, title and
interest of the Trust in and to such Receivables, all monies due or to become
due with respect thereto and all proceeds thereof and the related Collateral
Security. The Trustee shall execute such documents and instruments of transfer
or assignment and take such other actions as shall be reasonably requested and
prepared by the Servicer to effect the conveyance of any such Receivables
pursuant to this Section. The obligation of the Servicer to purchase such
Receivables, and to make the deposits required to be made to the Collection
Account as provided in the preceding paragraph, shall constitute the sole remedy
respecting the event giving rise to such obligation available to
Certificateholders or the Trustee on behalf of Certificateholders.
SECTION 3.4. Reports and Records for the Trustee. On or before each
Distribution Date, with respect to each outstanding Series, the Servicer shall
deliver to any Enhancement Providers, the Rating Agencies, the Trustee and each
Investor Certificateholder a Distribution Date Statement for such Distribution
Date substantially in the form set forth in the related Supplement.
SECTION 3.5. Annual Servicer's Certificate. The Servicer will
deliver to the Rating Agencies, the Trustee, any Agent and any Enhancement
Providers on or before April 30 of each calendar year, beginning with April 30,
1994, an Officer's Certificate substantially in the form of Exhibit C stating
that
55
<PAGE>
(a) a review of the activities of the Servicer during the preceding calendar
year (or part of the preceding calendar year in the case of the first Officers'
Certificate) and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to the best of such
officer's knowledge, based on such review, the Servicer has performed in all
material respects its obligations under this Agreement and each Supplement
throughout such year (or part of such year, as applicable), or, if there has
been a material default in the performance of any such obligation, specifying
each such default known to such officer and the nature and status thereof.
SECTION 3.6. Annual Independent Public Accountants' Servicing Report.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants, who may also render other services to
the Servicer or to the Seller, to deliver to the Trustee, the Rating Agencies,
each Agent and each Enhancement Provider on or before April 30 of each year,
beginning April 30, 1995, a report addressed to the Trustee, to the effect that
they have examined certain documents and records relating to the servicing of
Receivables under this Agreement and each Supplement, compared the information
contained in the Servicer's certificates delivered pursuant to Section 3.4 for
the preceding calendar year with such documents and records and that, on the
basis of such examination, such accountants state that the servicing has been
conducted in compliance with the terms and conditions as set forth in Article
III and Article IV of this Agreement and the applicable provisions of each
Supplement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement.
(b) On or before March 31 of each calendar year, beginning with March
31, 1995, the Servicer shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer or
Seller) to furnish a report (addressed to the Trustee) to the Trustee, each
Agent, the Servicer, each Rating Agency and each Enhancement Provider to the
effect that they have compared the mathematical calculations of each amount set
forth in the Distribution Date Statements delivered pursuant to Section 3.4 for
the preceding calendar year with the Servicer's computer reports which were the
source of such amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in such statement.
(c) A copy of each report provided pursuant to Section 3.4, 3.5 or 3.6
may be obtained by any Investor
56
<PAGE>
Certificateholder by a request to the Trustee addressed to the Corporate Trust
Office.
SECTION 3.7. Tax Treatment. The Seller has entered into this
Agreement and the Investor Certificates have been (or will be) issued with the
intention that the Investor Certificates will qualify under applicable tax law
as indebtedness secured by the Receivables. The Seller, each Beneficiary and
each Certificateholder and Certificate Owner, by the acceptance of its
Certificate or Book-Entry Certificate, as applicable, agrees to treat the
Investor Certificates as indebtedness secured by the Receivables for Federal
income taxes, state and local income and franchise taxes (if such franchise
taxes are imposed on or measured by income), and any other taxes imposed on or
measured by income.
SECTION 3.8. Notices to DFS. In the event DFS is no longer acting as
Servicer, any Successor Servicer appointed pursuant to Section 10.2 shall
deliver or make available to DFS, as the case may be, each certificate and
report required to be prepared, forwarded or delivered thereafter pursuant to
Sections 3.4, 3.5 or 3.6.
SECTION 3.9. Adjustments. (a) If the Servicer adjusts downward the
amount of any Principal Receivable because of a rebate, refund, credit
adjustment or billing error to a Dealer, or because such Receivable was created
in respect of a Product which was refused or returned by a Dealer, then, in any
such case, the Seller's Participation Amount will be automatically reduced by
the amount of the adjustment. Furthermore, if following such a reduction the
Pool Balance would be less than the Required Participation Amount on the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date), then the Seller shall be
required to pay an amount equal to such deficiency (up to the amount of such
adjustment) into the Collection Account on the Business Day on which such
adjustment or reduction occurs (each such payment an "Adjustment Payment").
(b) If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of a Receivable and such Collection was received by the
Servicer in the form of a check which is not honored for any reason or (ii) the
Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid.
57
<PAGE>
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.1. Rights of Certificateholders. The Investor Certificates
shall represent fractional undivided interests in the Trust, which, with respect
to each Series, shall consist of the right to receive, to the extent necessary
to make the required payments with respect to the Investor Certificates of such
Series at the times and in the amounts specified in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and such Supplement, funds on deposit in the
Collection Account allocable to Certificateholders of such Series pursuant to
this Agreement and such Supplement, funds on deposit in any related Series
Account and funds available pursuant to any related Enhancement (collectively,
with respect to all Series, the "Certificateholders' Interest"), it being
understood that the Investor Certificates of any Series or Class shall not
represent any interest in any Series Account or Enhancement for the benefit of
any other Series or Class. The Seller's Certificate shall represent the
ownership interest in the remainder of the Trust Assets not allocated pursuant
to this Agreement or any Supplement to the Certificateholders' Interest,
including the right to receive Collections with respect to the Receivables and
other amounts at the times and in the amounts specified in this Agreement or in
any Supplement to be paid to the Seller on behalf of all holders of the Seller's
Certificates (the "Seller's Interest"); provided, however, that the Seller's
Certificates shall not represent any interest in the Collection Account, any
Series Account or any Enhancement, except as specifically provided in this
Agreement or any Supplement.
SECTION 4.2. Establishment of the Collection Account. The Servicer,
for the benefit of the Certificateholders and the other Beneficiaries, shall
cause to be established and maintained in the name of the Trust an Eligible
Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders and the
other Beneficiaries (the "Collection Account"). The Trustee shall possess all
right, title and interest in all funds from time to time on deposit in, and all
Eligible Investments credited to, the Collection Account and in all proceeds
thereof. The Collection Account shall be under the sole dominion and control of
the Trustee for the benefit of the Certificateholders and the other
Beneficiaries. If, at any time, the Collection Account ceases to be an Eligible
Deposit Account, the Servicer shall, within 10 days after such occurrence,
establish a substitute Eligible Deposit Account as the Collection Account,
instruct the Trustee to transfer any cash and/or any Eligible Investments to
such new
58
<PAGE>
Collection Account and, from the date any such substitute account is
established, such account shall be the Collection Account. Neither the Seller
nor the Servicer, nor any Person claiming by, through or under the Seller or
Servicer, shall have any right, title or interest in, or any right to withdraw
any amount from, the Collection Account. Pursuant to the authority granted to
the Servicer in Section 3.1, the Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee to make withdrawals and payments from the
Collection Account for the purposes of carrying out the Servicer's or Trustee's
duties specified in this Agreement.
All Eligible Investments shall be held by the Trustee for the benefit
of the Certificateholders and the other Beneficiaries. Funds on deposit in the
Collection Account shall at the direction of the Servicer be invested by the
Trustee solely in Eligible Investments that will mature so that such funds will
be available at the close of business on or before the Business Day next
preceding the following Distribution Date (or on or before 10:00 a.m. on such
following Distribution Date in the case of Eligible Investments in respect of
which the Trustee is the obligor). Any request by the Servicer to invest funds
in the Collection Account shall be in writing and shall certify that the
requested investment is an Eligible Investment that matures at or prior to the
time required hereby. As of each Determination Date, all interest and other
investment earnings (net of losses and investment expenses) on funds on deposit
in the Collection Account received on such Determination Date shall be credited
to the Collection Account. Schedule 2, which is hereby incorporated into and
made part of this Agreement, identifies the Collection Account by setting forth
the account number of such account, the account designation of such account and
the name of the Eligible Institution with which such account has been
established. If a substitute Collection Account is established pursuant to this
Section 4.2, the Servicer shall provide to the Trustee an amended Schedule 2,
setting forth the relevant information for such substitute Collection Account.
SECTION 4.3. Allocations and Applications of Collections and Other
Funds. (a) Except as otherwise provided in Sections 4.3(b) and (c), the Servicer
shall deposit Collections into the Collection Account as promptly as possible
after the Date of Processing of such Collections, but in no event later than the
second Business Day after such Date of Processing.
(b) Notwithstanding anything in this Agreement to the contrary, for so
long as (i) DFS remains the Servicer hereunder, (ii) no Servicer Default has
occurred and is continuing and (iii) (x) DFS
59
<PAGE>
arranges for and maintains a letter of credit or other form of Enhancement in
respect of the Servicer's obligations to make deposits of collections on the
Receivables in the Collection Account that is acceptable in form and substance
to each Rating Agency and any Agents or (y) DFS otherwise obtains the Rating
Agency confirmations described below, then, subject to any limitations in the
confirmations described below, the Servicer need not make the daily deposits of
Collections into the Collection Account as provided in Section 4.3(a), but may
make a single deposit into the Collection Account in same-day funds not later
than 12:00 noon, New York City time, on the Business Day immediately preceding
the Distribution Date in a net amount equal to the amount which would have been
on deposit with respect to the immediately preceding Collection Period in the
Collection Account; provided, however, that prior to ceasing daily deposits as
described above the Seller shall have delivered to the Trustee written
confirmation from each of the Rating Agencies that the failure by DFS to make
daily deposits will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class.
(c) Subject to Section 4.4, but notwithstanding anything else in this
Agreement to the contrary, with respect to any Collection Period, whether the
Servicer is required to make deposits of Collections pursuant to paragraph (a)
or (b) above, (i) the Servicer will only be required to deposit Collections into
the Collection Account up to the aggregate amount of Collections required to be
deposited into all Series Accounts or, without duplication, distributed on the
related Distribution Date to all Investor Certificateholders, to each Agent or
to each Enhancement Provider pursuant to the terms of any Supplement or
Enhancement Agreement and (ii) if at any time prior to such Distribution Date
the amount of Collections deposited in the Collection Account exceeds the amount
required to be deposited pursuant to clause (i) above, the Servicer will be
permitted to withdraw the excess from the Collection Account.
The Servicer may make any deposits, distributions or payments under
this Agreement net of any amounts to be distributed or paid to the Servicer
under this Agreement; provided that the Servicer shall account for such
deposits, distributions and payments as if such amounts were deposited,
distributed or paid separately without such netting.
(d) Collections of Non-Principal Receivables and Principal
Receivables, Defaulted Receivables and Miscellaneous Payments will be allocated
to each Series from and after the related Series Cut-Off Date as specified in
the related Supplement, and amounts so allocated to any Series will not, except
as specified in the related Supplement, be available to the Investor
Certificateholders of any other Series. Allocations
60
<PAGE>
thereof between the Certificateholders' Interest and the Seller's Interest,
among the Series in any group and among the Classes in any Series shall be set
forth in the related Supplement or Supplements.
(e) With respect to a receivable in which a Receivable and a
Participation Interest are undivided interests, the Servicer shall instruct the
Trustee in writing to distribute the portion of a collection allocable to such
Participation Interest from the Collection Account (to the extent it has been
deposited into the Collection Account) to the Servicer not later than one month
after the deposit of such portion into the Collection Account.
SECTION 4.4. Unallocated Principal Collections. On each Distribution
Date, (a) the Servicer shall allocate Excess Principal Collections (as described
below) to each Series as set forth in the related Supplement and (b) the
Servicer shall instruct the Trustee in the Distribution Date Statement for such
Distribution Date to withdraw from the Collection Account and pay to the Seller
(i) an amount equal to the excess, if any, of (x) the aggregate amount for all
outstanding Series of Collections of Principal Receivables which the related
Supplements specify are to be treated as "Excess Principal Collections" with
respect to such Distribution Date over (y) the aggregate amount for all
outstanding Series which the related Supplements specify are "Principal
Shortfalls" with respect to such Distribution Date and, without duplication and
(ii) the aggregate amount for all outstanding Series of that portion of
Principal Collections which the related Supplements specify are to be allocated
and paid to the Seller with respect to such Distribution Date; provided,
however, that, in the case of clauses (i) and (ii), such amounts shall be paid
to the Seller only if the Pool Balance for such Distribution Date (determined
after giving effect to any Principal Receivables transferred to the Trust on
such date) exceeds the Required Participation Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution Date).
The amount held in the Collection Account as a result of the proviso in the
preceding sentence ("Unallocated Principal Collections") shall be paid to the
Seller at the time the Pool Balance exceeds the Required Participation Amount
for the immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date); provided,
however, that any Unallocated Principal Collections on deposit in the Collection
Account at any time during which any Series is in its amortization period,
accumulation period or Early Amortization Period shall be deemed to be
"Miscellaneous
61
<PAGE>
Payments" and shall be allocated and distributed in accordance with Section 4.3
and the terms of each Supplement.
ARTICLE V
Distributions and Reports to
----------------------------
Certificateholders
------------------
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
The Certificates
----------------
SECTION 6.1. The Certificates. The Investor Certificates of any
Series or Class may be issued in bearer form ("Bearer Certificates") with
attached interest coupons and one or more special coupons (collectively, the
"Coupons") pursuant to Section 6.11, or in fully registered form ("Registered
Certificates") and shall be substantially in the form of the exhibits with
respect thereto attached to the applicable Supplement. The Deutsche FRLP
Certificate will be issued in registered form, substantially in the form of
Exhibit A, and shall upon issue, be executed and delivered by the Seller to the
Trustee for authentication and redelivery as provided in Section 6.2. Except as
otherwise provided in any Supplement, Bearer Certificates shall be issued in
minimum denominations of $5,000, $50,000 and $100,000 and Registered
Certificates shall be issued in minimum denominations of $1,000 and in integral
multiples of $1,000 in excess thereof. If specified in any Supplement, the
Investor Certificates of any Series or Class shall be issued upon initial
issuance as a single certificate evidencing the aggregate original principal
amount of such Series or Class as described in Section 6.11. The Deutsche FRLP
Certificate shall be a single certificate and shall initially represent the
entire Seller's Interest. Each Certificate shall be executed by manual or
facsimile signature on behalf of the Seller by its President or any Vice
President. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Seller shall not be rendered invalid, notwithstanding that
such individual ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of such
Certificates. No Certificates shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory,
62
<PAGE>
and such certificate upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder. Bearer Certificates shall be dated the Series Issuance Date. All
Registered Certificates and Seller's Certificates shall be dated the date of
their authentication.
SECTION 6.2. Authentication of Certificates. The Trustee shall
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Seller, which
order may be given under normal or facsimile signature. The Trustee shall
authenticate and deliver the Deutsche FRLP Certificate to the Seller
simultaneously with its delivery of the Investor Certificates of the first
Series to be issued hereunder. If specified in the related Supplement for any
Series or Class, the Trustee shall authenticate and deliver outside the United
States the Global Certificate that is issued upon original issuance thereof .
SECTION 6.3. New Issuances. (a) The Seller may from time to time
direct the Trustee, on behalf of the Trust, to issue one or more new Series of
Investor Certificates pursuant to a Supplement. The Investor Certificates of all
outstanding Series shall be equally and ratably entitled as provided herein to
the benefits of this Agreement without preference, priority or distinction, all
in accordance with the terms and provisions of this Agreement and the applicable
Supplement except, with respect to any Series or Class, as provided in the
related Supplement.
(b) On or before the Series Issuance Date relating to any new Series,
the parties hereto will execute and deliver a Supplement which will specify the
Principal Terms of such new Series. The terms of such Supplement may modify or
amend the terms of this Agreement solely as applied to such new Series. The
obligation of the Trustee to issue the Investor Certificates of such new Series
and to execute and deliver the related Supplement is subject to the satisfaction
of the following conditions:
(i) on or before the fifth Business Day immediately preceding
the Series Issuance Date (in the case of Series 1994-1, on or before
its Series Issuance Date), the Seller shall have given the Trustee,
the Servicer, each Rating Agency, any Agent and any Enhancement
Provider written notice of such issuance and the Series Issuance Date;
(ii) the Seller shall have delivered to the Trustee the related
Supplement, in form satisfactory to
63
<PAGE>
the Trustee, executed by each party hereto other than the Trustee;
(iii) the Seller shall have delivered to the Trustee any related
Enhancement Agreement executed by each of the parties thereto, other
than the Trustee;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such issuance;
(v) such issuance will not result in the occurrence of an Early
Amortization Event and the Seller shall have delivered to the Trustee,
any Agent and any Enhancement Provider a certificate of a Vice
President or more senior officer, dated the Series Issuance Date, to
the effect that the Seller reasonably believes that such issuance will
not result in the occurrence of an Early Amortization Event and is not
reasonably expected to result in the occurrence of an Early
Amortization Event at any time in the future;
(vi) the Seller shall have delivered to the Trustee and any
Enhancement Provider a Tax Opinion, dated the Series Issuance Date,
with respect to such issuance;
(vii) the result obtained by multiplying (x) the Seller's
Participation Amount by (y) the percentage equivalent of the portion
of the Seller's Interest represented by the Deutsche FRLP Certificate,
shall not be less than 2% of the Pool Balance, in each case as of the
Series Issuance Date, and after giving effect to such issuance;
(viii) if there are any Delayed Funding Receivables in the Pool
Balance, the conditions in clauses (v) and (vii) shall also be
satisfied after excluding from the Pool Balance all Principal
Receivables that are Delayed Funding Receivables; and
(ix) the Seller shall have delivered to the Trustee an Officer's
Certificate to the effect that the conditions precedent in this
Section 6.3(b) have been satisfied; and
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and issue to the Seller the Investor Certificates of such Series for
execution and redelivery to the Trustee for authentication.
64
<PAGE>
(c) The Seller may surrender the Deutsche FRLP Certificate to the
Trustee in exchange for a newly issued Deutsche FRLP Certificate and a second
certificate (a "Supplemental Certificate"), the terms of which shall be defined
in a supplement to this Agreement (which Supplement shall be subject to Section
13.1 hereof to the extent that it amends any of the terms of this Agreement), to
be delivered to or upon the order of the Seller (or the holder of a Supplemental
Certificate, in the case of the transfer or exchange thereof, as provided
below), upon satisfaction of the following conditions:
(i) the result obtained by multiplying (x) the Seller's
Participation Amount (determined in accordance with Section 2.5(a)) by
(y) the percentage equivalent of the portion of the Seller's Interest
represented by the Deutsche FRLP Certificate, shall not be less than
2% of the Pool Balance (determined in accordance with Section 2.5(a)),
in each case as of the date of, and after giving effect to, such
exchange;
(ii) the Rating Agency Condition shall have been satisfied with
respect to such exchange (or transfer or exchange as provided below);
(iii) the Seller shall have delivered to the Trustee, any Agent
and any Enhancement Provider a Tax Opinion, dated the date of such
exchange (or transfer or exchange as provided below), with respect
thereto; and
(iv) the Seller shall have delivered to the Trustee an Officer's
Certificate to the effect that the conditions precedent in this
Section 6.3(c) shall have been satisfied.
The Deutsche FRLP Certificate will at all times be beneficially owned by the
Seller. Any Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clauses (ii) and (iii) above.
SECTION 6.4. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency to be maintained
in accordance with the provisions of Section 11.15 a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may prescribe,
a transfer agent and registrar (the "Transfer Agent and Registrar") shall
provide for the registration of the Registered Certificates and of transfers and
exchanges of the Registered Certificates as herein provided. The Transfer Agent
and Registrar shall initially be the Trustee and any co-transfer agent and co-
registrar chosen by the Seller and acceptable to the
65
<PAGE>
Trustee. Any reference in this Agreement to the Transfer Agent and Registrar
shall include any co-transfer agent and co-registrar unless the context requires
otherwise.
Subject to paragraph (c) below, upon surrender for registration of
transfer of any Registered Certificate at any office or agency of the Transfer
Agent and Registrar maintained for such purpose, one or more new Registered
Certificates (of the same Series and Class) in authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest
shall be executed, authenticated and delivered, in the name of the designated
transferee or transferees.
At the option of a Registered Certificateholder, Registered
Certificates (of the same Series and Class) may be exchanged for other
Registered Certificates of authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest, upon surrender of the
Registered Certificates to be exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received in exchange for Bearer
Certificates, may not be exchanged for Bearer Certificates. At the option of the
Holder of a Bearer Certificate, subject to applicable laws and regulations,
Bearer Certificates may be exchanged for other Bearer Certificates or Registered
Certificates (of the same Series and Class) of authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Bearer Certificates to be exchanged at an office or agency
of the Transfer Agent and Registrar located outside the United States. Each
Bearer Certificate surrendered pursuant to this Section shall have attached
thereto all unmatured Coupons; provided that any Bearer Certificate so
surrendered after the close of business on the Record Date preceding the
relevant payment date or distribution date after the expected final payment date
need not have attached the Coupon relating to such payment date or distribution
date (in each case, as specified in the applicable Supplement).
The preceding provisions of this Section notwithstanding, the Trustee
or the Transfer Agent and Registrar, as the case may be, shall not be required
to register the transfer of or exchange any Certificate for a period of 15 days
preceding the due date for any payment with respect to the Certificate.
Whenever any Investor Certificates are so surrendered for exchange,
the Seller shall execute, the Trustee shall authenticate, and the Transfer Agent
and Registrar shall deliver (in the case of Bearer Certificates, outside the
United States) the Investor Certificates which the Investor Certificateholder
66
<PAGE>
making the exchange is entitled to receive. Every Investor Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee or the Transfer Agent and Registrar duly executed by the Investor
Certificateholder or the attorney-in-fact thereof duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee. The Trustee shall cancel
and destroy any Global Certificate upon its exchange in full for Definitive
Euro-Certificates and shall deliver a certificate of destruction to the Seller.
Such certificate shall also state that a certificate or certificates of a
Foreign Clearing Agency to the effect referred to in Section 6.11 was received
with respect to each portion of the Global Certificate exchanged for Definitive
Euro-Certificates.
The Seller shall execute and deliver to the Trustee Bearer
Certificates and Registered Certificates in such amounts and at such times as
are necessary to enable the Trustee to fulfill its responsibilities under this
Agreement and the Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, The City of New York, an office or agency where
Investor Certificates may be surrendered for registration of transfer or
exchange (except that Bearer Certificates may not be surrendered for exchange at
any such office or agency in the United States).
(c) (i) Registration of transfer of Investor Certificates containing
a legend to the effect set forth on Exhibit D-1 shall be effected only if such
transfer is made pursuant to an effective registration statement under the Act,
or is exempt from the registration requirements under the Act. In the event that
registration of a transfer is to be made in reliance upon an exemption from the
registration requirements under the Act, the transferor or the transferee shall
deliver, at its expense, to the Seller, the Servicer and the Trustee, an
investment letter from the transferee, substantially in the form attached to the
applicable Supplement, and no registration of transfer shall be made until such
letter is so delivered.
67
<PAGE>
Investor Certificates issued upon registration or transfer of, or
Investor Certificates issued in exchange for, Investor Certificates bearing the
legend referred to above shall also bear such legend unless the Seller, the
Servicer, the Trustee and the Transfer Agent and Registrar receive an opinion of
counsel, satisfactory to each of them, to the effect that such legend may be
removed.
Whenever an Investor Certificate containing the legend referred to
above is presented to the Transfer Agent and Registrar for registration of
transfer, the Transfer Agent and Registrar shall promptly seek instructions from
the Servicer regarding such transfer and shall be entitled to receive and
conclusively rely upon instructions signed by a Servicing Officer prior to
registering any such transfer. The Seller hereby agrees to indemnify the
Transfer Agent and Registrar and the Trustee and to hold each of them harmless
against any loss, liability or expense incurred without negligence or bad faith
on their part arising out of or in connection with actions taken or omitted by
them in relation to any such instructions furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates containing a
legend to the effect set forth on Exhibit D-2 shall be effected only if such
transfer is made to a Person which is not an employee benefit plan, trust or
account, including an individual retirement account, that is subject to ERISA or
that is described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment in such
entity (a "Benefit Plan"). By accepting and holding any such Investor
Certificate, an Investor Certificateholder shall be deemed to have represented
and warranted that it is not a Benefit Plan. By acquiring any interest in a
Book-Entry Certificate, a Certificate Owner shall be deemed to have represented
and warranted that it is not a Benefit Plan.
SECTION 6.5. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons (if any) appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Seller shall
execute, the Trustee shall authenticate and the Transfer Agent and Registrar
shall deliver (in the case of Bearer Certificates, outside the United States),
in exchange for or in lieu of any such mutilated,
68
<PAGE>
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate fractional undivided interest. In connection with the issuance of any
new Certificate under this Section, the Trustee or the Transfer Agent and
Registrar may require the payment by the Certificateholder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and Transfer Agent and Registrar) connected therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.6. Persons Deemed Owners. The Trustee, the Transfer Agent
and Registrar and any agent of any of them may (a) prior to due presentation of
a Registered Certificate for registration of transfer, treat the Person or
Persons in whose name any Registered Certificate is registered as the owner of
such Registered Certificate for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever,
and (b) treat the bearer of a Bearer Certificate or Coupon as the owner of such
Bearer Certificate or Coupon for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever;
and, in any such case, neither the Trustee, the Transfer Agent and Registrar nor
any agent of any of them shall be affected by any notice to the contrary.
Notwithstanding the foregoing, in determining whether the Holders of the
requisite Investor Certificates have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Certificates owned by the
Seller, the Servicer, any other holder of a Seller's Certificate or any
Affiliate thereof, shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee knows to be so owned
shall be so disregarded. Certificates so owned which have been pledged in good
faith shall not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is not the Seller, the
Servicer, any other holder of a Seller's Certificate or any Affiliate thereof.
SECTION 6.7. Access to List of Registered Certificateholders' Names
and Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer, within five Business Days after receipt by
the Trustee of a request therefor, a list in such form
69
<PAGE>
as the Servicer may reasonably require, of the names and addresses of the
Registered Certificateholders. If three or more holders of Investor Certificates
(the "Applicants") apply to the Trustee, and such application states that the
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Agreement or any Supplement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
indemnified to its reasonable satisfaction by such Applicants for its costs and
expenses, shall afford or shall cause the Transfer Agent and Registrar to afford
such Applicants access during normal business hours to the most recent list of
Registered Certificateholders of such Series or all outstanding Series, as
applicable, held by the Trustee, within five Business Days after the receipt of
such application. Such list shall be as of a date no more than 45 days prior to
the date of receipt of such Applicants' request.
Every Registered Certificateholder, by receiving and holding a
Registered Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Registered Certificateholders hereunder, regardless of the
sources from which such information was derived.
SECTION 6.8. Book-Entry Certificates. Unless otherwise specified in
the related Supplement for any Series or Class, the Investor Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Investor Certificates representing the Book-Entry Certificates, to be delivered
to the Depository, by, or on behalf of, the Seller. The Investor Certificates
shall initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Investor
Certificates, except as provided in Section 6.10. Unless and until definitive,
fully registered Investor Certificates ("Definitive Certificates") have been
issued to the applicable Certificate Owners pursuant to Section 6.10 or as
otherwise specified in any such Supplement:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Seller, the Servicer and the Trustee may deal with the
Depository and the Depository Participants for all purposes (including
the making of distributions) as the authorized representatives of the
respective Certificate Owners;
70
<PAGE>
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control; and
(d) the rights of the respective Certificate Owners shall be
exercised only through the Depository and the Depository Participants
and shall be limited to those established by law and agreements
between such Certificate Owners and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Certificates are issued pursuant to Section 6.10,
the Depository will make book-entry transfers among the Depository
Participants and receive and transmit distributions of principal and
interest on the related Investor Certificates to such Depository
Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Investor
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Investor Certificates evidencing the requisite percentage
of principal amount of Investor Certificates.
SECTION 6.9. Notices to Depository. Whenever any notice or other
communication is required to be given to Investor Certificateholders of any
Series or Class with respect to which Book-Entry Certificates have been issued,
unless and until Definitive Certificates shall have been issued to the related
Certificate Owners, the Trustee shall give all such notices and communications
to the applicable Depository.
SECTION 6.10. Definitive Certificates. If Book-Entry Certificates
have been issued with respect to any Series or Class and (a) the Seller advises
the Trustee that the Depository is no longer willing or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Series or Class and the Trustee or the Seller is unable to locate a
qualified successor, (b) the Seller, at its option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Series or Class
through the Depository or (c) after the occurrence of a Servicer Default,
Certificate owners of such Series or Class evidencing more than 50% of the
aggregate unpaid principal amount of such Series or Class advise the Trustee and
the Depository through the Depository Participants that the continuation of a
book-entry system with respect to the Investor Certificates of such Series or
Class through the
71
<PAGE>
Depository is no longer in the best interests of the Certificate Owners with
respect to such Certificates, then the Trustee shall notify all Certificate
Owners of such Certificates, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of any such
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall authenticate and deliver such
Definitive Certificates. Neither the Seller nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Investor Certificateholders hereunder.
SECTION 6.11. Global Certificate; Exchange Date. (a) If specified in
the related Supplement for any Series or Class, the Investor Certificates will
initially be issued in the form of a single temporary global Certificate (the
"Global Certificate") in bearer form, without interest coupons, in the
denomination of the entire aggregate principal amount of such Series or Class
and substantially in the form set forth in the exhibit with respect thereto
attached to the related Supplement. The Global Certificate will be authenticated
by the Trustee upon the same conditions, in substantially the same manner and
with the same effect as the Definitive Certificates. The Global Certificate may
be exchanged as described below for Bearer or Registered Certificates in
definitive form (the "Definitive Euro-Certificates").
(b) The Manager shall, upon its determination of the date of
completion of the distribution of the Investor Certificates of such Series or
Class, so advise the Trustee, the Seller, the Common Depositary, and each
Foreign Clearing Agency forthwith. Without unnecessary delay, but in any event
not prior to the Exchange Date, the Seller will execute and deliver to the
Trustee at its London office or its designated agent outside the United States
definitive Bearer Certificates in an aggregate principal amount equal to the
entire aggregate principal amount of such Series or Class. All Bearer
Certificates so issued and delivered will have Coupons attached. The Global
Certificate may be exchanged for an equal aggregate principal amount of
Definitive Euro-Certificates only on or after the Exchange Date. A United States
institutional investor may exchange the portion of the Global Certificate
beneficially owned by it only for an equal aggregate principal amount of
Registered Certificates
72
<PAGE>
bearing the applicable legend set forth in the form of Registered Certificate
attached to the related Supplement and having a minimum denomination of
$500,000, which may be in temporary form if the Seller so elects. The Seller may
waive the $500,000 minimum denomination requirement if it so elects, by delivery
of an Officer's Certificate to the Trustee to such effect. Upon any demand for
exchange for Definitive Euro-Certificates in accordance with this paragraph, the
Seller shall cause the Trustee to authenticate and deliver the Definitive Euro-
Certificates to the Holder (x) outside the United States, in the case of Bearer
Certificates, and (y) according to the instructions of the Holder, in the case
of Registered Certificates, but in either case only upon presentation to the
Trustee of a written statement substantially in the form of Exhibit F-1 with
respect to the Global Certificate or portion thereof being exchanged, signed by
a Foreign Clearing Agency and dated on the Exchange Date or a subsequent date,
to the effect that it has received in writing or by tested telex a certification
substantially in the form of (i) in the case of beneficial ownership of the
Global Certificate or a portion thereof being exchanged by a United States
institutional investor pursuant to the second preceding sentence, the
certificate in the form of Exhibit F-2 signed by the Manager which sold the
relevant Certificates or (ii) in all other cases, the certificate in the form of
Exhibit F-3, the certificate referred to in this clause (ii) being dated on the
earlier of the first actual payment of interest in respect of such Certificates
and the date of the delivery of such Certificate in definitive form. Upon
receipt of such certification, the Trustee shall cause the Global Certificate to
be endorsed in accordance with paragraph (d) below. Any exchange as provided in
this Section shall be made free of charge to the holders and the beneficial
owners of the Global Certificate and to the beneficial owners of the Definitive
Euro-Certificates issued in exchange, except that a Person receiving Definitive
Euro-Certificates must bear the cost of insurance, postage, transportation and
the like in the event that such Person does not receive such Definitive Euro-
Certificates in person at the offices of a Foreign Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency of any
written statement referred to above may be relied upon by the Seller and the
Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its principal amount by an amount equal to the aggregate principal
amount of
73
<PAGE>
such Definitive Euro-Certificate or Certificates. Until so exchanged in full,
such Global Certificate shall in all respects be entitled to the same benefits
under this Agreement as Definitive Euro-Certificates authenticated and delivered
hereunder except that the beneficial owners of such Global Certificate shall not
be entitled to receive payments of interest on the Certificates until they have
exchanged their beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
SECTION 6.12. Meetings of Certificateholders. (a) If at the time any
Bearer Certificates are issued and outstanding with respect to any Series or
Class to which any meeting described below relates, the Servicer or the Trustee
may at any time call a meeting of Investor Certificateholders of any Series or
Class or of all Series, to be held at such time and at such place as the
Servicer or the Trustee, as the case may be, shall determine, for the purpose of
approving a modification of or amendment to, or obtaining a waiver of any
covenant or condition set forth in, this Agreement, any Supplement or the
Investor Certificates or of taking any other action permitted to be taken by
Investor Certificateholders hereunder or under any Supplement. Notice of any
meeting of Investor Certificateholders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given in accordance with Section 13.5, the first mailing and
publication to be not less than 20 nor more than 180 days prior to the date
fixed for the meeting. To be entitled to vote at any meeting of Investor
Certificateholders a Person shall be (i) a Holder of one or more Investor
Certificates of the applicable Series or Class or (ii) a Person appointed by an
instrument in writing as proxy by the Holder of one or more such Investor
Certificates. The only Persons who shall be entitled to be present or to speak
at any meeting of Investor Certificateholders shall be the Persons entitled to
vote at such meeting and their counsel and any representatives of the Seller,
the Servicer and the Trustee and their respective counsel.
(b) At a meeting of Investor Certificateholders, Persons entitled to
vote Investor Certificates evidencing a majority of the aggregate unpaid
principal amount of the applicable Series or Class or all outstanding Series, as
the case may be, shall constitute a quorum. No business shall be transacted in
the absence of a quorum, unless a quorum is present when the meeting is called
to order. In the absence of a quorum at any such meeting, the meeting may be
adjourned for a period of not less than 10 days; in the absence of a quorum at
any such adjourned meeting, such adjourned meeting may be further adjourned for
a period of not less than 10 days; at the reconvening of any meeting further
adjourned for lack of a quorum, the Persons entitled to vote Investor
Certificates
74
<PAGE>
evidencing at least 25% of the aggregate unpaid principal amount of the
applicable Series or Class or all outstanding Series, as the case may be, shall
constitute a quorum for the taking of any action set forth in the notice of the
original meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided above except that such notice must be given not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the aggregate principal amount of the outstanding applicable
Investor Certificates which shall constitute a quorum.
(c) Any Investor Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that such
Investor Certificateholder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Subject to the
provisions of Section 13.1, any resolution passed or decision taken at any
meeting of Investor Certificateholders duly held in accordance with this Section
shall be binding on all Investor Certificateholders whether or not present or
represented at the meeting.
(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to the
Servicer, executed by any bank, trust company or recognized securities dealer,
wherever situated, satisfactory to the Servicer. Each such certificate shall be
dated and shall state that on the date thereof a Bearer Certificate bearing a
specified serial number was deposited with or exhibited to such bank, trust
company or recognized securities dealer by the Person named in such certificate.
Any such certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the Person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
Person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by having
the signature of the Person executing the proxy guaranteed by any bank, trust
company or recognized securities dealer satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Holders of Investor
75
<PAGE>
Certificates evidencing a majority of the aggregate unpaid principal amount of
Investor Certificates of the applicable Series or Class or all outstanding
Series, as the case may be, represented at the meeting. No vote shall be cast
or counted at any meeting in respect of any Investors Certificate challenged as
not outstanding and ruled by the chairman of the meeting to be not outstanding.
The chairman of the meeting shall have no right to vote except as an Investor
Certificateholder or proxy. Any meeting of Investor Certificateholders duly
called at which a quorum is present may be adjourned from time to time, and the
meeting may be held as so adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number or numbers of the Investor Certificates held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE VII
Other Matters Relating
----------------------
to the Seller
-------------
SECTION 7.1. Liability of the Seller. The Seller shall be liable for
all obligations, covenants, representations and warranties of the Seller arising
under or related to this Agreement. Except as provided in the preceding
sentence, the Seller shall be liable only to the extent of the obligations
specifically undertaken by it in its capacity as Seller hereunder.
SECTION 7.2. Limitation on Liability of the Seller. Subject to
Sections 7.1, 7.3 and 7.4, neither the Seller, any of
76
<PAGE>
its partners, employees or agents, nor any of the shareholders, directors,
officers, employees or agents of such partners in its capacity as Seller shall
be under any liability to the Trust, the Trustee, the Certificateholders or any
other Person for any action taken or for refraining from the taking of any
action in the capacity as Seller pursuant to this Agreement whether arising from
express or implied duties under this Agreement; provided, however, that this
provision shall not protect the Seller or any such Person against any liability
which would otherwise be imposed by reason of wilful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Seller and any of its partners and any
director or officer or employee or agent of the Seller or any of its partners
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
SECTION 7.3. Seller Indemnification of the Trust and the Trustee. The
Seller shall indemnify and hold harmless the Trust, for the benefit of the
Certificateholders and the other Beneficiaries, and the Trustee, from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of any acts, omissions or alleged acts or omissions arising out of
activities of the Trust or the Trustee pursuant to this Agreement, including any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided, however, that the Seller shall not
indemnify the Trust or the Trustee if such acts, omissions or alleged acts or
omissions constitute fraud, gross negligence, breach of fiduciary duty or wilful
misconduct by the Trustee; and provided further that the Seller shall not
indemnify the Trust, Trustee or the Certificateholders or any other
Beneficiaries for any liabilities, cost or expense of the Trust with respect to
any action taken by the Trustee at the request of any Certificateholders or
other Beneficiaries to the extent the Trustee is fully indemnified by such
Certificateholders or other Beneficiaries with respect to such action and such
action is inconsistent with their rights hereunder or with respect to any
Federal, state or local income or franchise taxes (or any interest or penalties
with respect thereto) required to be paid by the Trust or any Certificateholder
or other Beneficiary in connection herewith to any taxing authority. Subject to
Section 7.1, any indemnification pursuant to this Section shall only be from (i)
the excess of the Seller's Interest for any date of determination over the
Required Participation Amount as of such date and (ii) any other assets of the
Seller not pledged to third parties or otherwise encumbered in a manner
permitted by the Seller's agreement of limited partnership and shall only be
made after payment in full of any amounts that the Seller is obligated to
deposit in the Collection Account pursuant to this
77
<PAGE>
Agreement. Any indemnification under this Article VII shall survive the
resignation or removal of the Trustee and the termination of this Agreement.
SECTION 7.4. Liabilities. Notwithstanding anything to the contrary in
this Agreement, the Seller by entering into this Agreement, and any holder of
any interest in the Seller's Certificate by its acceptance thereof, agree to be
liable, directly to the injured party, for the entire amount of any losses,
claims, damages or liabilities (other than those incurred by an Investor
Certificateholder in its capacity as an Investor Certificateholder) arising out
of or based on the arrangement created by this Agreement or the actions of
Servicer taken pursuant hereto (to the extent Trust Assets remaining after the
Investor Certificateholders and Enhancement Providers, if any, have been paid in
full are insufficient to pay any such losses, claims, damages or liabilities) as
though this Agreement created a partnership under the Delaware Revised Uniform
Partnership Act in which Seller and such holder of the Seller's Certificate were
general partners.
ARTICLE VIII
Other Matters Relating to the Servicer
--------------------------------------
SECTION 8.1. Liability of the Servicer. The Servicer shall be liable
under this Article VIII only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
SECTION 8.2. Merger or Consolidation of, or Assumption of, the
Obligations of the Servicer. The Servicer shall not consolidate with or merge
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) the Person formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be a Person organized and existing under the laws of
the United States of America or any State or the District of Columbia
and, if the Servicer is not the surviving entity, such Person shall
assume, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, the performance of every
covenant and obligation of the Servicer hereunder; and
78
<PAGE>
(b) the Servicer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer comply with this Section
8.2 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
SECTION 8.3. Limitation on Liability of the Servicer and Others.
Except as provided in Sections 8.1 and 8.4, neither the Servicer nor any of the
directors or officers or employees or agents of the Servicer, shall be under any
liability to the Trust, the Trustee, the Certificateholders or any other Person
for any action taken or for refraining from the taking of any action in its
capacity as Servicer pursuant to this Agreement; provided, however, that this
provision shall not protect the Servicer or any such person against any
liability which would otherwise be imposed by reason of wilful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Receivables in accordance with this
Agreement which in its reasonable opinion may involve it in any expense or
liability.
SECTION 8.4. Servicer Indemnification of the Trust and the Trustee.
The Servicer shall indemnify and hold harmless the Trust, for the benefit of the
Certificateholders and the other Beneficiaries, and the Trustee, from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of any acts, omissions or alleged acts or omissions arising out of
activities of the Servicer, the Trust or the Trustee pursuant to this Agreement,
including any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that the Servicer
shall not indemnify the Trust or the Trustee if such acts, omissions or alleged
acts or omissions constitute fraud, gross negligence, breach of fiduciary duty
or wilful misconduct by the Trustee; and provided further that the Servicer
shall not indemnify the Trust, the Trustee or the Certificateholders or the
other Beneficiaries for any liabilities, cost or expense of the Trust with
respect to any action taken by the Trustee at the request of the
Certificateholders or any other Beneficiaries to the extent the Trustee is fully
indemnified by such Certificateholders or other Beneficiaries with respect to
such action or with respect to any Federal, state or local income or franchise
taxes (or any interest or penalties with respect
79
<PAGE>
thereto) required to be paid by the Trust or the Certificateholders or the other
Beneficiaries in connection herewith to any taxing authority. Any
indemnification under this Article VIII shall survive the termination of this
Agreement and the resignation and removal of the Trustee.
SECTION 8.5. The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (a) the performance of its duties hereunder is no longer
permissible under applicable law and (b) there is no reasonable action which the
Servicer could take to make the performance of its duties hereunder permissible
under applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (a) above by an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 10.2
hereof. If the Trustee is unable within 120 days of the date of such
determination to appoint a Successor Servicer, the Trustee shall serve as
Successor Servicer hereunder.
SECTION 8.6. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of the
Certificateholders, or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at offices
designated by the Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of the Seller, the Trustee or the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Dealers and the failure
of the Servicer to provide access as provided in this Section 8.6 as a result of
such obligation shall not constitute a breach of this Section 8.6.
SECTION 8.7. Delegation of Duties. Subject to Section 3.1, in the
ordinary course of business, the Servicer may at any time delegate any duties
hereunder to any Person who agrees to conduct such duties in accordance with the
Financing Guidelines (or, in the case of a Successor Servicer, the servicing
standards required hereunder) and this Agreement. The Servicer shall give prompt
written notice of any such delegation of a material function to the Rating
Agencies, any Agent and any Enhancement Providers. Such delegation shall not
relieve the Servicer of its liability and responsibility with respect to such
duties, and shall not constitute a resignation within the meaning
80
<PAGE>
of Section 8.5 and the Rating Agency Condition shall have been satisfied with
respect to such delegation prior to such delegation.
SECTION 8.8. Examination of Records. The Seller and the Servicer
shall indicate generally in its computer files or other records that the
Receivables arising in the Accounts have been conveyed to the Trust pursuant to
this Agreement for the benefit of the Certificateholders and the other
Beneficiaries. The Seller and the Servicer shall, prior to the sale or transfer
to a third party of any receivable held in its custody, examine its computer and
other records to determine that such receivable is not a Receivable.
SECTION 8.9. Custodial Arrangements. (a) The Servicer shall maintain
custody of all documents, instruments or records that evidence or relate to
Receivables as custodian for the benefit of the Trustee and the Investor
Certificateholders. The Trustee shall have no responsibility or liability for
any acts or omissions or any negligence or wilful misconduct of the Servicer as
such custodian.
(b) In performing its duties under this Section 8.9, the Servicer
agrees to act with that degree of skill and care that it exercises with respect
to similar documents, instruments or records that evidence or relate to
receivables owned or serviced by it.
ARTICLE IX
Early Amortization Events
-------------------------
SECTION 9.1. Early Amortization Events. If any one of the following
events shall occur:
(a) a failure by the Seller to convey Receivables in Additional
Accounts to the Trust within five Business Days after the day on which
it is required to convey such Receivables pursuant to this Agreement;
(b) the Seller, the Servicer (or DFS, if it is not the Servicer)
or Deutsche North America shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or the Seller,
the Servicer (or DFS, as aforesaid) or Deutsche North America shall
file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or the Seller, the
81
<PAGE>
Servicer (or DFS, as aforesaid) or Deutsche North America shall
appoint, or consent to the appointment of, a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other similar official
in bankruptcy or insolvency of it or of any substantial part of its
property; or the Seller, the Servicer (or DFS, as aforesaid) or
Deutsche North America shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due;
(c) any order for relief against the Seller, the Servicer (or
DFS, if it is not the Servicer) or Deutsche North America (so long as
DFS is an Affiliate of Deutsche North America) shall have been entered
by a court having jurisdiction in the premises under any chapter of
the Federal bankruptcy laws, and such order shall have continued
undischarged or unstayed for a period of 60 days; or a decree or order
by a court having jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of the Seller, the Servicer
(or DFS, as aforesaid) or Deutsche North America under any other
similar applicable Federal law, and such decree or order shall have
continued undischarged or unstayed for a period of 120 days; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator, or other similar official in bankruptcy or insolvency of
the Seller, the Servicer (or DFS, as aforesaid) or Deutsche North
America or of any substantial part of its property or for the winding
up or liquidation of its affairs, shall have been entered, and such
decree or order shall have remained in force undischarged or unstayed
for a period of 120 days;
(d) failure on the part of the Seller, the Servicer or DFS, as
applicable, (i) to make any payment or deposit (including any Transfer
Deposit Amount or Adjustment Payment) required by the terms of this
Agreement or the Receivables Contribution and Sale Agreement on or
before the date occurring five Business Days after the date such
payment or deposit is required to be made herein, or (ii) with respect
to any Series, to deliver a Distribution Date Statement within ten
Business Days after notice from the Trustee of such failure to deliver
such Distribution Date Statement, or (iii) duly to observe or perform
in any material respect the covenant of the Seller set forth in
Section 2.6(a) with respect to a Receivable, which
82
<PAGE>
failure, in the case of this clause (iii), has a material adverse
effect on the interests of the Holders of the Investor Certificates
and continues unremedied for a period of 60 days after the date on
which notice of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Trustee or any Enhancement
Provider; provided, however, that an Early Amortization Event shall
not be deemed to have occurred if the Seller shall have repurchased
the related Receivables or, if applicable, all of the Receivables
during such period in accordance with the provisions of this
Agreement; or (iv) duly to observe or perform in any material respect
any other covenants or agreements of the Seller or the Servicer or
DFS, as the case may be, set forth in this Agreement or the
Receivables Contribution and Sale Agreement, which failure in the case
of this clause (iv) has a material adverse effect on the interests of
the Holders of the Investor Certificates and continues unremedied for
a period of 45 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Seller by the Trustee or to the Seller and the Trustee by any
Enhancement Provider;
(e) any representation or warranty made by DFS in the Receivables
Contribution and Sale Agreement or the Seller in this Agreement or any
information contained in a computer file or microfiche or written list
required to be delivered by the Seller pursuant to Section 2.1, 2.5,
2.7 or 2.8, (i) shall prove to have been incorrect in any material
respect when made or when delivered, and shall continue to be
incorrect in any material respect for a period of 60 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Trustee and (ii)
as a result of such incorrectness the interests of the Holders of the
Investor Certificates are materially and adversely affected
(excluding, however, the representation and warranty made by the
Seller pursuant to Section 2.3(j) if the Agreement constitutes the
grant of a perfected security interest in the Receivables and the
Collateral Security and the proceeds thereof under the UCC as then in
effect in the State of Missouri transferred to the Trust hereunder);
provided, however, that an Early Amortization Event shall not be
deemed to have occurred under this paragraph if the Seller has
repurchased the related Receivable or all such Receivables, if
applicable, during such period in accordance with the provisions of
this Agreement; or
83
<PAGE>
(f) the Trust or the Seller shall become an "investment company"
within the meaning of the Investment Company Act;
then, subject to applicable law, and after the applicable grace
period, if any, an amortization event (an "Early Amortization Event")
shall occur without any notice or other action on the part of the
Trustee, any Agent, the Certificateholders or any other Beneficiary,
immediately upon the occurrence of such event.
SECTION 9.2. Additional Rights Upon the Occurrence of Certain Events.
(a) If an Insolvency Event occurs with respect to the Seller or the Seller
violates Section 2.6(a) for any reason, the Seller shall on the day such
Insolvency Event or violation occurs (the "Appointment Date") immediately cease
to transfer Receivables to the Trust and shall promptly give notice to the
Trustee of such Insolvency Event or violation and the Trust shall be deemed to
have terminated, subject to the liquidation, winding up and dissolution
procedures described below. Notwithstanding any cessation of the transfer to the
Trust of additional Receivables, Receivables transferred to the Trust prior to
the occurrence of such Insolvency Event or violation and Collections in respect
of such Receivables whenever created or accrued in respect of such Receivables,
shall continue to be a part of the Trust. Within 15 days of the date on which
the Trustee receives notice from the Seller of the Appointment Date, the Trustee
shall (i) publish a notice in an Authorized Newspaper that an Insolvency Event
or violation has occurred and that the Trustee intends to sell, dispose of or
otherwise liquidate the Receivables on commercially reasonable terms and in a
commercially reasonable manner and (ii) give notice to Investor
Certificateholders describing the provisions of this Section and requesting
instructions from such Holders. Unless the Trustee shall have received
instructions within 90 days from the date notice pursuant to clause (ii) above
is first given from (x) Holders of Investor Certificates evidencing more than
50% of the aggregate unpaid principal amount of each Series or, with respect to
any Series with two or more Classes, of each Class, to the effect that such
Investor Certificateholders disapprove of the liquidation of the Receivables and
wish to continue having Principal Receivables transferred to the Trust as before
such Insolvency Event or violation, and (y) each Holder of a Supplemental
Certificate to such effect, then the Trustee shall promptly sell, dispose of or
otherwise liquidate the Receivables, or cause to be sold, disposed of or
otherwise liquidated, in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids,
provided that if such sale, disposition or liquidation is being made solely on
account of the Seller's violation of Section 2.6(a), then the Trustee shall
effect such sale,
84
<PAGE>
disposition or liquidation, or cause such sale, disposition or liquidation to be
effected, only if the net proceeds of such sale, disposition or liquidation,
applied in accordance with Section 9.2(b), will be sufficient to pay accrued
interest on each Series of Certificates plus the excess of the outstanding
principal balance of each Series of Certificates over the unreimbursed Investor
Charge-Offs for such Series. The Trustee may obtain and conclusively rely upon a
prior determination from any applicable conservator, receiver or liquidator that
the terms and manner of any proposed sale, disposition or liquidation are
commercially reasonable. The provisions of Sections 9.1 and 9.2 shall not be
deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to paragraph (a), net of all reasonable expenses incurred
by the Trustee in connection with such sale, liquidation or other disposition,
which shall be paid to the Trustee from such proceeds ("Insolvency Proceeds")
shall be immediately deposited in the Collection Account. The Trustee shall
determine conclusively the amount of the Insolvency Proceeds which are deemed to
be Non-Principal Receivables and Principal Receivables. The Insolvency Proceeds
shall be allocated and distributed to Investor Certificateholders in accordance
with Article IV and the terms of each Supplement and the Trust shall terminate
immediately thereafter.
ARTICLE X
Servicer Defaults
-----------------
SECTION 10.1. Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing with respect to the
Servicer:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or to give notice to the Trustee to make such
payment, transfer or deposit or to give notice to the Trustee as to any action
to be taken under any Enhancement Agreement on or before the date such payment,
transfer or deposit or such instruction or notice is required to be made or
given, as the case may be, under the terms of this Agreement, which failure is
not cured within five Business Days after notice of such failure from the
Trustee to the Servicer.
(b) failure on the part of the Servicer duly to observe or perform
its covenant not to create any Lien on any Receivable which failure has a
material adverse effect on the Certificateholders and which continues unremedied
for a period of sixty (60) days after written notice to it of such failure;
provided, however, that a "Servicer Default" shall not be deemed
85
<PAGE>
to have occurred if the Seller or the Servicer shall have repurchased the
related Receivables or, if applicable, all of the Receivables during such period
in accordance with the provisions of this Agreement;
(c) failure on the part of the Servicer duly to observe or perform
any covenants or agreements of the Servicer set forth in this Agreement (other
than with respect to those specified in clause (b) above and with respect to
clauses (viii), (ix) and (ix) under Section 3.3(a) hereof, to the extent the
terms of Section 3.3(c) hereof have been complied with) which failure has a
material adverse effect on the Certificateholders and which continues unremedied
for a period of thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee;
(d) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the rights of the Investor Certificateholders of any Series
and which material adverse effect continues for a period of 60 days after the
date on which written notice thereof, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee; provided, however, that a
"Servicer Default" shall not be deemed to have occurred if the Seller or the
Servicer shall have repurchased the related Receivables or, if applicable, all
of such Receivables during such period in accordance with the provisions of this
Agreement;
(e) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator or other similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of sixty days; or the
Servicer shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
86
<PAGE>
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, the Trustee, by notice then given in writing to
the Servicer (a "Termination Notice"), may terminate all but not less than all
of the rights and obligations (other than its obligations that have accrued up
to the time of such termination) of the Servicer as Servicer under this
Agreement and in and to the Receivables and the proceeds thereof. After receipt
by the Servicer of a Termination Notice, and on the date that a Successor
Servicer shall have been appointed by the Trustee pursuant to Section 10.2, all
authority and power of the Servicer under this Agreement shall pass to and be
vested in a Successor Servicer (a "Service Transfer") and, without limitation,
the Trustee is hereby authorized and empowered (upon the failure of the Servicer
to cooperate) to execute and deliver, on behalf of the Servicer, as attorney-in-
fact or otherwise, all documents and other instruments upon the failure of the
Servicer to execute or deliver such documents or instruments, and to do and
accomplish all other acts or things necessary or appropriate to effect the
purposes of such Service Transfer; provided that in no event shall the Servicer
incur any liability for any such action by the Trustee. The Servicer agrees to
cooperate with the Trustee and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables provided for under this
Agreement, including all authority over all Collections which shall on the date
of transfer be held by the Servicer for deposit, or which have been deposited by
the Servicer, in the Collection Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer. The
Servicer shall promptly transfer its electronic records relating to the
Receivables to the Successor Servicer in such electronic form as the Successor
Servicer may reasonably request and shall promptly transfer to the Successor
Servicer all other records, correspondence and documents necessary for the
continued servicing of the Receivables in the manner and at such times as the
Successor Servicer shall reasonably request. To the extent that compliance with
this Section 10.1 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
necessary to protect its interest.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.1(a) for a period of 10 Business Days or under Section 10.1(b),
(c) or (d) for a period of 60 Business Days, shall not constitute a Servicer
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure
87
<PAGE>
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding sentence
shall not relieve the Servicer from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement,
and the Servicer shall provide the Trustee, any Agents, any Enhancement
Providers, the Seller and the Certificateholders with an Officers' Certificate
giving prompt notice of such failure or delay by it, together with a description
of its efforts so to perform its obligations. The Servicer shall immediately
notify the Trustee in writing of any Servicer Default.
SECTION 10.2. Trustee to Act; Appointment of Successor. (a) On and
after the receipt by the Servicer of a Termination Notice pursuant to Section
10.1, the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by the Trustee in writing or, if no such date is specified in such
Termination Notice, or as otherwise specified by the Trustee, until a date
mutually agreed upon by the Servicer and Trustee. The Trustee shall as promptly
as possible after the giving of a Termination Notice appoint an Eligible
Servicer as a successor servicer (the "Successor Servicer"), subject to the
consent of any Enhancement Providers and any Agents, which consent shall not be
unreasonably withheld, and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee. In the event that a
Successor Servicer has not been appointed or has not accepted its appointment at
the time when the Servicer ceases to act as Servicer, the Trustee without
further action shall automatically be appointed the Successor Servicer. The
Trustee may delegate any of its servicing obligations to an affiliate or agent
in accordance with Sections 3.1 and 8.7. Notwithstanding the above, the Trustee
shall, if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution having a net worth of not
less than $100,000,000 and whose regular business includes the servicing of
wholesale receivables as the Successor Servicer hereunder. The Trustee shall
promptly give notice to the Rating Agencies, any Enhancement Providers, any
Agents and the Certificateholders upon the appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof (except that the Successor Servicer shall not be liable for
any liabilities incurred by the predecessor Servicer), and all
88
<PAGE>
references in this Agreement to the Servicer shall be deemed to refer to the
Successor Servicer, except for references in Sections 3.3 (as it relates to the
Initial Servicer) and 8.4 (exclusive of indemnification for acts, omissions,
alleged acts and alleged omissions that constitute fraud, gross negligence,
breach of fiduciary duty or wilful misconduct by the Successor Servicer) and
11.5, which shall continue to refer to the Initial Servicer. Any Successor
Servicer, by its acceptance of its appointment, will automatically agree to be
bound by the terms and provisions of any Enhancement Agreement.
(c) In connection with any Termination Notice, the Trustee will
review any bids which it obtains from Eligible Servicers and shall be permitted
to appoint any Eligible Servicer submitting such a bid as a Successor Servicer
for servicing compensation not in excess of the Servicing Fee (provided that if
all such bids exceed the Servicing Fee the Seller at its own expense shall pay
when due the amount of any compensation in excess of the Servicing Fee);
provided, however, that the Seller shall be responsible for payment of the
Seller's portion of the Servicing Fee as determined pursuant to this Agreement
and all other amounts in excess of the Investors' Servicing Fee, and that no
such monthly compensation paid out of Collections shall be in excess of the
Investors' Servicing Fee permitted to the Servicer. The Holders of the Seller's
Certificates agree that if DFS (or any Successor Servicer) is terminated as
Servicer hereunder, the portion of Collections to be paid to the Seller shall be
reduced by an amount sufficient to pay Seller's share of the compensation of the
Successor Servicer.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1, and shall pass to and be vested in the Seller
and, without limitation, the Seller is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Seller in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer, at the expense of the Seller, shall transfer its electronic records
relating to the Receivables to the Seller in such electronic form as the Seller
may reasonably request and shall transfer all other records, correspondence and
documents to the Seller in the manner and at such times as the Seller shall
reasonably request. To the extent that compliance with this Section 10.2 shall
require the Successor Servicer to disclose to the Seller information of any kind
which the Successor Servicer deems to be confidential, the
89
<PAGE>
Seller shall be required to enter into such customary licensing and
confidentiality agreements as the Successor Servicer shall deem necessary to
protect its interests.
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Receivables and the other Trust Assets to
the Successor Servicer and amending this Agreement to reflect such succession as
Successor Servicer pursuant to this Article X shall be paid by the Servicer (or,
if the Trustee is the Successor Servicer, the initial Servicer) upon
presentation of reasonable documentation of such costs and expenses.
ARTICLE XI
The Trustee
-----------
SECTION 11.1. Duties of Trustee. (a) The Trustee, prior to the
occurrence of a Servicer Default of which a Responsible Officer of the Trustee
has knowledge and after the curing of all Servicer Defaults which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Default to the knowledge
of a Responsible Officer of the Trustee has occurred (which has not been cured
or waived), the Trustee shall exercise such of the rights and powers vested in
it by this Agreement and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
(c) Subject to Section 11.1(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own wilful misconduct; provided,
however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be charged with knowledge of any
Servicer Default or the failure by the
90
<PAGE>
Servicer to comply with the obligations of the Servicer referred to in
Section 10.1(a) and (b) unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure;
(iii) the Trustee shall not be charged with knowledge of an
Early Amortization Event (or the related Early Amortization Period)
unless a Responsible Officer of the Trustee obtains actual knowledge
thereof;
(iv) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Investor
Certificates relating to the time, method or place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement or any
Supplement; and
(v) prior to the occurrence of a Servicer Default of which a
Responsible Officer has knowledge, and after the curing or waiver of
such Servicer Defaults that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement and any Supplements, the Trustee shall
not be liable except for the performance of such duties and
obligations as shall be specifically set forth in this Agreement and
any Supplement, no implied covenants or obligations shall be read into
this Agreement or any Supplement against the Trustee and, in the
absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and, if specifically required to
be furnished pursuant to any provision of this Agreement or any
Supplement, conforming to the requirements of this Agreement or such
Supplement.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
91
<PAGE>
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement. Notwithstanding the prior sentence, the Trustee when acting as
Successor Servicer, is still entitled to indemnification under Sections 7.3 and
8.4.
(e) Except as expressly provided in this Agreement, the Trustee shall
have no power to vary the corpus of the Trust including the power to (i) accept
any substitute obligation for a Receivable initially assigned to the Trust under
Section 2.1 or 2.5, (ii) add any other investment, obligation or security to the
Trust or (iii) withdraw from the Trust any Receivables.
(f) In the event that the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day required
to be performed by the Transfer Agent and Registrar, as the case may be, under
this Agreement, the Trustee shall be obligated promptly upon a Responsible
Officer of the Trustee obtaining actual knowledge of such failure to perform
such obligation, duty or agreement in the manner so required.
(g) If the Seller has agreed to transfer any of its wholesale
receivables (other than the Receivables) to another Person, then upon the
written request of the Seller, the Trustee will enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights of the Trustee and the Trust, on the
one hand, and such other Person, on the other hand, in the Seller's wholesale
receivables; provided, however, that the Trustee shall not be required to enter
into any intercreditor agreement which could, in the sole opinion of the
Trustee, adversely affect the interests of the Investor Certificateholders or
the Trustee and, upon the request of the Trustee, the Seller will deliver an
Opinion of Counsel on any matters relating to such intercreditor agreement,
reasonably requested by the Trustee.
(h) Notwithstanding any other provision contained herein, the Trustee
is not acting as, and shall not be deemed to be, a fiduciary for any Enhancement
Provider in its capacity as such or as a Beneficiary, and the Trustee's sole
responsibility with respect to said parties shall be to perform those duties
with respect to said parties as are specifically set forth herein and no implied
duties or obligations shall be read into this Agreement against the Trustee with
respect to any such party.
SECTION 11.2. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accord with, any resolution, Officers' Certificate,
certificate of auditors or any
92
<PAGE>
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented to it pursuant to this Agreement by
the proper party or parties;
(b) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured or waived) of which a
Responsible Officer of the Trustee has knowledge, to exercise such of the rights
and powers vested in it by this Agreement or any Supplement, and to use the same
degree of care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document believed by it to be genuine, unless requested so to do by (i)
Holders of Investor Certificates evidencing more than 25% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect to any
such matters that do not relate to all Series, 25% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
matters relate); provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation shall be, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require
93
<PAGE>
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder;
(g) except as may be required by Section 11.1(a) hereof, the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the Seller
with its representations and warranties or for any other purpose; and
(h) the right of the Trustee to perform any discretionary act
enumerated in this Agreement or any Supplement shall not be construed as a duty,
and the Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 11.3. Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.14, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Receivable or related document or any security interest of the Trust
therein. The Trustee shall not be accountable for the use or application by the
Seller of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Seller in respect of the
Receivables or deposited in or withdrawn from the Collection Account or any
Series Account.
SECTION 11.4. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates and may deal with the Seller and Servicer in banking transactions
with the same rights as it would have if it were not the Trustee.
SECTION 11.5. The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee
94
<PAGE>
of an express trust) for all services rendered by it in the execution of the
trust hereby created and in the exercise and performance of any of the power and
duties hereunder of the Trustee, and, subject to Section 8.4, the Servicer will
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee accordance with any
of the provisions of this Agreement (including the reasonable fees and expenses
of its agents, any co-trustee and counsel) except any such expense, disbursement
or advance as may arise from its negligence or bad faith and except as provided
in the second following sentence. The Servicer's covenants to pay the expenses,
disbursements and advances provided for in the preceding sentence shall survive
the resignation removal of the Trustee and the termination of this Agreement. If
the Trustee is appointed Successor Servicer pursuant to Section 10.2, the
provisions of this Section 11.5 shall not apply to expenses, disbursements and
advances made or incurred by the Trustee in its capacity as Successor Servicer,
which shall be covered out of the Servicing Fee; provided, however, if such
expenses, disbursements and advances incurred by the Trustee are in amount in
excess of the Servicing Fee, such excess amount shall be paid in full to the
Trustee by DFS. To the extent, if any, that any Federal, state or local taxes
are payable by the Trust, such taxes shall be payable solely out of Trust Assets
an not out of the personal assets of the Trustee.
SECTION 11.6. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or any state thereof authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
Federal or state authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority then, for the purpose of this Section 11.6,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 11.6, the Trustee shall resign
immediately in the manner and with the effect specified in Section 11.7.
SECTION 11.7. Resignation or Removal of Trustee. (a) The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Seller and the Servicer. Upon receiving such
notice of resignation, the Seller shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one
95
<PAGE>
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to resign
after written request therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
if a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Servicer may remove the Trustee and promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 11.8 hereof.
SECTION 11.8. Successor Trustee. (a) Any successor trustee appointed
as provided in Section 11.7 hereof shall execute, acknowledge and deliver to the
Seller and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents or copies thereof, at the expense of the Servicer, and
statements held by it hereunder; and the Seller and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor trustee all such rights, power, duties and obligations. The Servicer
shall immediately give notice to each Rating Agency and the Certificateholders
upon the appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in this
Section 11.8 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.6 hereof.
96
<PAGE>
SECTION 11.9. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 11.6 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.6 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-
trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised
97
<PAGE>
and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.11. Tax Returns. In the event the Trust shall be required
to file tax returns, the Servicer shall prepare, or shall cause to be prepared,
and shall deliver, or shall cause to be delivered, to the Trustee no later than
five days immediately preceding any applicable due date; the Trustee shall
promptly execute, to the extent it is the appropriate person to so execute, file
any such tax returns to be filed by the Trust and deliver such executed returns
to the Servicer, and such returns shall be filed by the Servicer. The Servicer
in accordance with the terms of the Supplements shall also prepare or shall
cause to be prepared all tax information required by law to be distributed to
the Investor Certificateholders. The Trustee will distribute or cause to be
distributed such information to the Investor Certificateholders. The Trustee,
upon request, will furnish the Servicer with all such information
98
<PAGE>
known to the Trustee as may be reasonably required in connection with the
preparation of all tax returns of the Trust or in connection with the
distribution of tax information to the Investor Certificateholders.
SECTION 11.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 11.13. Suits for Enforcement. If a Servicer Default shall
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.1, proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders. Nothing herein contained shall be deemed
to authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
authorize the Trustee to vote in respect of the claim of any Certificateholder
in any such proceeding.
SECTION 11.14. Representations and Warranties of Trustee. The
Trustee represents and warrants that:
(i) the Trustee is a banking corporation organized, existing and
in good standing under the laws of the State of New York;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action
to authorize the execution, delivery and performance by it of this
Agreement; and
99
<PAGE>
(iii) this Agreement has been duly executed and delivered by the
Trustee.
SECTION 11.15. Maintenance of Office or Agency. The Trustee will
maintain at its expense in the Borough of Manhattan, The City of New York, an
office or offices or agency or agencies where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be served. The
Trustee initially designates its Corporate Trust Office as its office such
purposes in New York. The Trustee will give prompt written notice to the
Servicer and to Holders of the Certificates of a change in the location of the
Certificate Register or any such office or agency.
ARTICLE XII
Termination
-----------
SECTION 12.1. Termination of Trust. The Trust and the respective
obligations and responsibilities of the Seller, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Investor Certificateholders as hereafter set forth) shall terminate, except with
respect to the duties described in Sections 7.3, 8.4, 11.5 and 12.2(b), upon the
earlier of (i) December 31, 2014 (the "Final Maturity Date"), (ii) the day
following the Distribution Date on which the Invested Amount for all Series is
zero, but only if the Seller has notified the Trustee that it wishes the Trust
to terminate upon such event and (iii) the time provided in Section 9.2(b) (the
"Trust Termination Date"). The Servicer will give the Rating Agencies prompt
notice of the termination of the Trust.
SECTION 12.2. Final Distribution. (a) The Servicer shall give the
Trustee at least 30 days' prior notice of the Distribution Date on which the
Investor Certificateholders of any Series or Class may surrender their Investor
Certificates for payment of the final distribution on and cancellation of such
Investor Certificates (or, in the event of a final distribution resulting from
the application of Section 2.3 or 9.1, notice of such Distribution Date promptly
after the Servicer has determined that a final distribution will occur, if such
determination is made less than 30 days prior to such Distribution Date). Such
notice shall be accompanied by an Officer's Certificate setting forth the
information specified in Section 3.5 covering the period during the then-current
calendar year through the date of such notice. Upon at least 10 days' prior
written notice by the Servicer, not later than the fifth day of the month in
which the final distribution in respect of such Series or Class is payable to
Investor Certificateholders, the Trustee shall provide notice
100
<PAGE>
to Investor Certificateholders of such Series or Class specifying (i) the date
upon which final payment of such Series or Class will be made upon presentation
and surrender of Investor Certificates of such Series or Class at the office or
offices therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such payment date is not
applicable, payments being made only upon presentation and surrender of such
Investor Certificates at the office or office therein specified (which, in the
case of Bearer Certificates, shall be outside the United States). The Trustee
shall give such notice to the Transfer Agent and Registrar and the Rating
Agencies at the time such notice is given to Investor Certificateholders.
(b) Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Trustee shall pay such funds to such
Investor Certificateholders upon surrender of their Investor Certificates (and
any excess shall be paid in accordance with the terms of any Enhancement
Agreement). In the event that all such Investor Certificateholders shall not
surrender their Investor Certificates for cancellation within six months after
the date specified in the notice from the Trustee described in paragraph (a),
the Trustee shall give a second notice to the remaining such investor
Certificateholders to surrender their Investor Certificates for cancellation and
receive the final distribution with respect thereto (which surrender and
payment, in the case of Bearer Certificates, shall be outside the United
States). If within one year after the second notice all such Investor
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining such Investor Certificateholders concerning surrender of
their Investor Certificates, and the cost thereof shall be paid out of the funds
in the Collection Account or any Series Account held for the benefit of such
Investor Certificateholders. The Trustee shall pay to the Seller any monies held
by it for the payment of principal or interest that remain unclaimed for two
years. After payment to the Seller, Investor Certificateholders entitled to the
money must look to the Seller for payment as general creditors unless an
applicable abandoned property law designates another Person.
(c) In the event that the Invested Amount with respect to any Series
is greater than zero on its Termination Date (after giving effect to deposits
and distributions otherwise to be made on such Termination Date), the Trustee
will sell or cause to be
101
<PAGE>
sold on such Termination Date Receivables (or interests therein) in an amount
equal to the sum of (i) 110% of the Invested Amount with respect to such Series
on such Termination Date (after giving effect to such deposits and
distributions) and (ii) the Available Subordinated Amount with respect to such
Series on the preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date); provided, however, that in
no event shall such amount exceed such Series' Allocation Percentage (as defined
in the Series Supplements and for the Collection Period in which such
Termination Date occurs) of Receivables on such Termination Date. The proceeds,
net of all reasonable expenses incurred by the Trustee in connection with such
sale, liquidation or other disposition, which shall be paid to the Trustee from
such proceeds (the "Termination Proceeds") from such sale shall be immediately
deposited into the Collection Account for the benefit of the Investor
Certificateholders of such Series. The Termination Proceeds shall be allocated
and distributed to the Investor Certificateholders of such Series in accordance
with the terms of the applicable Supplement.
SECTION 12.3. Seller's Termination Rights. Upon the termination of
the Trust pursuant to Section 12.1 and the surrender of the Seller's
Certificates, the Trustee shall sell, assign and convey to the Seller or its
designee, without recourse, representation or warranty, all right, title and
interest of the Trust in the Receivables, whether then existing or thereafter
created, all Collateral Security with respect thereto, all monies due or to
become due and all amounts received with respect thereto and all proceeds
thereof, except for amounts held by the Trustee pursuant to Section 12.2(b), and
all of the Seller's rights, remedies, powers and privileges with respect to such
Receivables under the Receivables Contribution and Sale Agreement. The Trustee
shall execute and deliver such instruments of transfer and assignment, in each
case without recourse, representation or warranty, as shall be reasonably
requested by the Seller to vest in the Seller or its designee all right, title
and interest which the Trust had in all such property.
ARTICLE XIII
Miscellaneous Provisions
------------------------
SECTION 13.1. Amendment. (a) This Agreement or any Supplement may
be amended from time to time (including in connection with the issuance of a
Supplemental Certificate) by the Servicer, the Seller and the Trustee without
the consent of any of the Certificateholders, but with prior notice to each
102
<PAGE>
Rating Agency, provided that such action shall not, as evidenced by an Opinion
of Counsel for the Seller, addressed and delivered to the Trustee, adversely
affect in any material respect the interests of any Investor Certificateholder.
In addition, this Agreement and any Supplement may be amended by the Servicer
and the Trustee at the direction of the Seller without the consent of any of the
Certificateholders (1) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable the Seller or any of its Affiliates
(including Deutsche Bank AG) to minimize or avoid capital charges under any
applicable law, rule, regulation or guideline relating to regulatory or risk-
based capital, (2) to enable all or a portion of the Trust to qualify as a
partnership for federal income tax purposes under applicable regulations on the
classification of entities as partnerships or corporations under the Internal
Revenue Code adopted as final regulations after the date hereof, and to the
extent that such regulations eliminate or modify the need therefor, to modify or
eliminate existing provisions of this Agreement or any Supplement relating to
the intended availability of partnership treatment of the Trust for federal
income tax purposes, (3) to enable all or a portion of the Trust to qualify as,
and to permit an election to be made to cause the Trust to be treated as, a
"financial asset securitization investment trust," as described in the
provisions of the "Small Business Job Protection Act of 1996," H.R. 3448 (and,
in connection with any such election, to modify or eliminate existing provisions
of this Agreement or any Supplement relating to the intended Federal income tax
treatment of the Certificates and the Trust in the absence of such election,
which may include elimination of the sale of Receivables upon the occurrence of
an insolvency event with respect to Seller pursuant to the Agreement and certain
provisions of the Agreement relating to the liability of the Seller), or (4) to
enable the Seller or any of its Affiliates to comply with or obtain more
favorable treatment under any law or regulation or any accounting rule or
principle, so long as in each case the Rating Agency Condition has been
satisfied and, in the case of (2) or (3), the Seller and the Trustee have
received an Opinion of Counsel to the effect that such amendment will not
adversely affect the characterization of the Investor Certificates of any
outstanding Series or Class as debt or as interests in a partnership; provided,
however, that if any such amendment occurs while Series 1994-1 is outstanding,
an Opinion of Counsel for the Seller, addressed and delivered to the Trustee,
shall be required providing that such amendment shall not adversely affect in
any material respect the interests of any Investor Certificateholders of Series
1994-1; and provided, further, that if Series 1994-1 is no longer outstanding,
then the Opinion of Counsel described in the preceding proviso shall not be
required. Notwithstanding anything contained herein to the contrary, the
Trustee, with the consent of any Enhancement Providers, may at any time and from
time to time amend, modify or supplement the form of Distribution Date
Statement. Notwithstanding anything contained herein to the contrary, this
Agreement or any Supplement may be amended from
103
<PAGE>
time to time by the Servicer, the Seller and the Trustee without the consent of
any of the Certificateholders, but only upon satisfaction of the Rating Agency
Condition, to change in any manner the treatment of Delayed Funding Receivables
under this Agreement or any such Supplement.
(b) This Agreement or any Supplement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller and the Trustee, with the consent of the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series and with
prior notice to each Rating Agency, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or any Supplement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of or delay the timing of any distributions to be made
to Investor Certificateholders or deposits of amounts to be so distributed or
the amount available under any Enhancement without the consent of each affected
Investor Certificateholder, (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholder without the consent
of each affected Investor Certificateholder, (iii) reduce the aforesaid
percentage required to consent to any such amendment without the consent of each
Investor Certificateholder or (iv) adversely affect the rating of any Series or
Class by any Rating Agency without the consent of all of the Holders of the
Investor Certificates of such Series or Class. Any amendment to be effected
pursuant to this paragraph shall be deemed to adversely affect all outstanding
Series, other than any Series with respect to which such action shall not, as
evidenced by an Opinion of Counsel for the Seller, addressed and delivered to
the Trustee, adversely affect in any material respect the interests of any
Investor Certificateholder of such Series. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's rights,
duties or immunities under this Agreement or otherwise.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency, each Agent and each Enhancement
Provider.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
104
<PAGE>
The manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Investor Certificateholders shall be subject to such
reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this Section to the contrary, no
amendment may be made to this Agreement or any Supplement which would adversely
affect in any material respect the interests of any Enhancement Provider without
the consent of such Enhancement Provider.
(f) Any Supplement executed in accordance with the provisions of
Section 6.3 shall not be considered an amendment to this Agreement for the
purposes of this Section.
(g) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon (i) an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to such execution and delivery have
been satisfied and (ii) the Opinion of Counsel required by Section 13.2(d). The
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this Agreement.
SECTION 13.2. Protection of Right, Title and Interest to Trust. (a)
The Servicer shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the Certificateholders' and the Trustee's right, title and
interest in and to the Trust Assets to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Certificateholders and the Trustee
hereunder to all property comprising the Trust. The Servicer shall deliver to
the Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available following
such recording, registration or filing. The Seller shall cooperate fully with
the Servicer in connection with the obligations set forth above and will execute
any and all documents reasonably required to fulfill the intent of this Section
13.2(a).
(b) Within 30 days after the Seller or the Servicer makes any change
in its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with Section 13.2(a)
seriously misleading within the meaning of Section 9-402(7) of the UCC as in
effect in Missouri (including as a result of a Designated Affiliate Transfer),
the Seller shall give the Trustee and any
105
<PAGE>
Agent notice of any such change and shall file such financing statements or
amendments as may be necessary to continue the perfection of the Trust's
security interest in the Receivables and the proceeds thereof.
(c) The Seller and the Servicer will give the Trustee and any Agent
prompt written notice of any relocation of any office from which it services
Receivables or keeps Records concerning the Receivables or of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
file such financing statements or amendments as may be necessary to perfect or
to continue the perfection of the Trust's security interest in the Receivables
and the proceeds thereof. The Seller and the Servicer shall at all times
maintain each office from which it services Receivables and its principal
executive officer within the United States of America.
(d) The Servicer will deliver to the Trustee, any Agent and any
Enhancement Provider, upon the execution and delivery of each amendment of this
Agreement or any Supplement, an Opinion of Counsel to the effect specified in
Exhibit G-1.
SECTION 13.3. Limitation on Rights of Certificateholders. (a) The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholders' legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding-up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote (except
as expressly provided in this Agreement) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Investor Certificateholders
from time to time as partners or members of an association, nor shall any
Investor Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.
(c) No Investor Certificateholder shall have any right by virtue of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor
106
<PAGE>
Certificateholder previously shall have made, and unless the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates (or, with respect to any such action, suit or
proceeding that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made, a request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb or prejudice the rights of
the holders of any other of the Investor Certificates, or to obtain or seek to
obtain priority over or preference to any other such Investor Certificateholder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Investor
Certificateholders except as otherwise expressly provided in this Agreement. For
the protection and enforcement of the provisions of this Section, each and every
Investor Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
SECTION 13.4. No Petition. The Servicer, DFS (if it is no longer the
Servicer) and the Trustee (not in its individual capacity but solely as
Trustee), by entering into this Agreement, each Investor Certificateholder, by
accepting an Investor Certificate, each holder of a Supplemental Certificate by
accepting a Supplemental Certificate and any Successor Servicer and each other
Beneficiary, by accepting the benefits of this Agreement, hereby covenants and
agrees that they will not at any time institute against Deutsche FRLP any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law.
SECTION 13.5. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
107
<PAGE>
SECTION 13.6. Notices. (a) All demands, notices, instructions,
directions and communications (collectively, "Notices") under this Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (i) in
the case Deutsche FRLP, 655 Maryville Centre Drive, St. Louis, Missouri 63141,
Attention: Secretary, (ii) in the case of DFS, 655 Maryville Centre Drive, St.
Louis, Missouri 63141, Attention: Secretary, (iii) in the case of the Trustee,
450 West 33rd Street, New York, New York 10001, Attention: Structured Finance
Relationship Management, (iv) in the case of Standard & Poor's, 26 Broadway, New
York, New York 10004, Attention: Asset Backed Surveillance Department, (v) in
the case of Moody's, 99 Church Street, New York, New York 10007, Attention:
Structured Finance Surveillance, (vi) in the case of Fitch, One State Street
Plaza, New York, New York 10004, or, as to each party and Rating Agency, at such
other address as shall be designated by such party or Rating Agency in a written
notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. No Notice shall
be required to be mailed to a Holder of Bearer Certificates or Coupons but shall
be given as provided below. Any Notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Investor Certificateholder receives such Notice. In addition, in the
case of any Series or Class with respect to which any Bearer Certificates are
outstanding, any Notice required or permitted to be given to Investor
Certificateholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.
SECTION 13.7. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders.
SECTION 13.8. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.2, this Agreement may not be
assigned by the Servicer.
SECTION 13.9. Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Investor Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust
108
<PAGE>
represented by the Investor Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever and that Investor
Certificates upon authentication thereof by the Trustee are and shall be deemed
fully paid.
SECTION 13.10. Further Assurances. The Seller and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
SECTION 13.11. No Waiver, Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
SECTION 13.12. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
SECTION 13.13. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders
and the other Beneficiaries and their respective successors and permitted
assigns. Except as otherwise expressly provided in this Agreement, no other
Person will have any right or obligation hereunder.
SECTION 13.14. Actions by Certificateholders. Any request, demand,
authorization, direction, notice, consent, waiver or other act by a
Certificateholder shall bind such Certificateholder and every subsequent holder
of any Certificate issued upon the registration of transfer of the Certificates
of such Certificateholder or in exchange therefor or in lieu thereof in respect
of anything done or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action is made upon any such
Certificate.
109
<PAGE>
SECTION 13.15. Rule 144A Information. For so long as any of the
Investor Certificates of any Series or Class are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, each of the Seller, the Trustee,
the Servicer and any Enhancement Providers agree to cooperate with each other to
provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Investor Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
SECTION 13.16. Action by Trustee. Upon any application or request by
the Seller or Servicer to the Trustee to take any action under any provision
under this Agreement, the Seller or Servicer, as the case may be, shall furnish
to the Trustee an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Agreement relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
Counsel all such conditions precedent, if any, have been complied with. The
Trustee shall be entitled to conclusively rely on the Officer's Certificate or
the Opinion of Counsel, as the case may be, as authority for any action
undertaken in connection therewith.
SECTION 13.17. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 13.18. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation or
any provision hereof.
SECTION 13.19. Continued Effectiveness of the Pooling and Servicing
Agreement. As amended and restated hereby, the Pooling and Servicing Agreement
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.
SECTION 13.20. Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement or the other documents executed and delivered in
connection herewith or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address set forth under its name on the signature page hereof or at such other
address notified to the other party pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.
110
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
DEUTSCHE FLOORPLAN RECEIVABLES,
L.P., Seller
By: DEUTSCHE FLOORPLAN RECEIVABLES,
INC., General Partner
By
--------------------------------
Name:
Title:
By
--------------------------------
Name:
Title:
DEUTSCHE FINANCIAL SERVICES
CORPORATION, Servicer
By
--------------------------------
Name:
Title:
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
Trustee
By
--------------------------------
Name:
Title:
111
<PAGE>
EXHIBIT A
TO PSA
FORM OF FACE OF ITT FRLP CERTIFICATE
THIS ITT FRLP CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NEITHER THIS ITT FRLP CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS.
THIS ITT FRLP CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED,
ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
No. R- One Unit
ITT FLOORPLAN RECEIVABLES MASTER TRUST
ITT FRLP CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST IN CERTAIN
ASSETS OF THE ITT FLOORPLAN RECEIVABLES MASTER TRUST
Evidencing an interest in a trust, the corpus of which consists primarily of
wholesale (i.e., dealer floorplan), accounts receivable, asset based and
unsecured receivables (the "Receivables") generated from time to time in the
ordinary course of business in a portfolio of revolving financing arrangements
(the "Accounts") of ITT Commercial Financial Corp. ("ITT CMF") meeting certain
eligibility criteria. This certificate (the "ITT FRLP Certificate") does not
represent an interest in or obligation of ITT Floorplan Receivables, L.P. (the
"Seller" or "ITT FRLP"), ITT CMF or any affiliate thereof.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this ITT FRLP Certificate
shall not be entitled to any benefit under the Pooling and Servicing Agreement
referred to on the reverse side hereof, or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS.
A-1
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this ITT FRLP Certificate to
be duly executed.
ITT FLOORPLAN RECEIVABLES, L.P.
By: ITT FLOORPLAN RECEIVABLES CORP.
By:
--------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the ITT FRLP Certificate described in the within-mentioned
Pooling and Servicing Agreement.
- -------------------------------------,
as Trustee,
By:
-----------------------------------
Authorized Officer
A-2
<PAGE>
FORM OF REVERSE OF ITT FRLP CERTIFICATE
This certifies that ITT Floorplan Receivables, L.P. ("ITT FRLP") is
the registered owner of a fractional interest in the assets of the ITT Floorplan
Receivables Master Trust (the "Trust") not allocated to the Certificateholders'
Interest or the interest of any holder of a Supplemental Certificate, pursuant
to the Pooling and Servicing Agreement amended and restated as of March 1, 1994
(as amended and supplemented, the "Agreement"), by and among ITT FRLP, as
seller, (the "Seller"), ITT Commercial Finance Corp., as servicer, and Chemical
Bank, as trustee (the "Trustee"). The corpus of the Trust will include (a) all
of the Seller's right, title and interest in, to and under the Receivables in
each Account and all Collateral Security with respect thereto owned by the
Seller at the close of business on the Cut-Off Date, in the case of the Initial
Accounts, and on the applicable Additional Cut-Off Date, in the case of
Additional Accounts, and all monies due or to become due and all amounts
received with respect thereto and all proceeds (including "proceeds" as defined
in Section 9-306 of the UCC as in effect in the State of Missouri and
Recoveries) thereof, (b) all of the Seller's rights, remedies, powers and
privileges with respect to such Receivables under the Receivables Contribution
and Sale Agreement and any Floorplan Agreement, (c) all of the Seller's right,
title and interest in, to and under the Receivables in each Account (other than
any newly created Receivables in any Removed Account) and all Collateral
Security with respect thereto owned by the Seller at the close of business of
each Transfer Date and not theretofore conveyed to the Trust, all monies due or
to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in the
State of Missouri and Recoveries) thereof, (d) all monies on deposit in, and
Eligible Investments credited to, the Collection Account or any Series Account,
(e) any Enhancements and (f) all other assets and interests constituting the
Trust. Although a summary of certain provisions of the Agreement is set forth
below, this Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement.
This ITT FRLP Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended and
supplemented from time to time, the Seller by virtue of the acceptance hereof
assents and is bound.
A-3
<PAGE>
It is the intent of the Seller and the Holder of the ITT FRLP
Certificate that, for Federal income taxes, state and local income, single
business and franchise taxes and any other taxes imposed on or measured by
income, the ITT FRLP Certificate will be treated as indebtedness of ITT FRLP
secured by the Receivables. The Servicer, by entering into the Agreement, the
Seller, the Holder of the ITT FRLP Certificate and each Holder of an Investor
Certificate for any Series, by acceptance of its Certificate, agrees to treat,
and to take no action inconsistent with the treatment of, the ITT FRLP
Certificate for purposes of Federal income taxes, state and local income, single
business and franchise taxes and any other taxes imposed on or measured by
income as indebtedness of ITT FRLP.
This Certificate is not permitted to be transferred, assigned,
exchanged or otherwise pledged or conveyed except in accordance with the
Agreement, including Section 6.3(c) of the Agreement.
The Receivables consist of advances made directly or indirectly by ITT
CMF or an Approved Affiliate to dealers in, and manufacturers of, commercial and
consumer products.
This Certificate is the ITT FRLP Certificate, which represents the
Seller's interest in certain assets of the Trust, including the right to receive
a portion of the Collections and other amounts at the times and in the amounts
specified in the Agreement. The aggregate interest represented by the ITT FRLP
Certificate at any time in the Receivables in the Trust shall not exceed the
Seller's Interest at such time. In addition to the ITT FRLP Certificate, (i)
Investor Certificates will be issued to investors pursuant to the Agreement,
which will represent the Certificateholders' Interest and (ii) Supplemental
Certificates may be issued pursuant to the Agreement, which will represent that
portion of the Seller's Interest not allocated to the Seller. This ITT FRLP
Certificate shall not represent any interest in the Collection Account, the
Series Accounts or any Enhancements, except as expressly provided in the
Agreement.
The obligations created by the Agreement and the Trust created thereby
shall terminate upon the Trust Termination Date.
Upon the termination of the Trust pursuant to Section 12.1 of the
Agreement and the surrender of the Seller's Certificates, the Trustee shall
sell, assign and convey to the Seller or its designee, without recourse,
representation or warranty, all right, title and interest of the Trust in the
Receivables, whether then existing or thereafter created, all Collateral
Security with respect thereto, all monies due or to become due and all amounts
received with respect thereto and all proceeds thereof, except for amounts held
by the Trustee pursuant
A-4
<PAGE>
to Section 12.2(b) of the Agreement, and all of the Seller's rights, remedies,
powers and privileges with respect to such Receivables under the Receivables
Contribution and Sale Agreement. The Trustee shall execute and deliver such
instruments of transfer and assignment, in each case without recourse,
representation or warranty, as shall be reasonably requested by the Seller to
vest in the Seller or its designee all right, title and interest which the Trust
had in all such property.
A-5
<PAGE>
EXHIBIT B
TO PSA
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.05
----------------------------
of the Pooling and Servicing Agreement)
---------------------------------------
ASSIGNMENT No. OF RECEIVABLES IN ADDITIONAL ACCOUNTS dated as of
, , among Deutsche Floorplan Receivables, L.P., as seller (the "Seller"),
Deutsche Financial Services Corporation ("DFS"), as servicer (the "Servicer"),
and The Chase Manhattan Bank, as trustee (the "Trustee"), pursuant to the
Pooling and Servicing Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS the Seller, the Servicer and the Trustee are parties to a
Pooling and Servicing Agreement amended and restated as of October 1, 1996 (as
amended or supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Seller wishes to designate
Additional Accounts to be included as Accounts and to convey the Receivables and
related Collateral Security of such Additional Accounts, whether now existing or
hereafter created, to the Trust as part of the corpus of the Trust (as each such
term is defined in the Agreement); and
WHEREAS the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Seller, the Servicer and the Trustee hereby agree
as follows:
1. Defined Terms. All capitalized terms used herein shall have the
meanings ascribed to them in the Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the
Additional Accounts designated hereby, __________, 19__.
2. Designation of Additional Accounts. The Seller hereby delivers
herewith a computer file or microfiche or written list containing a true and
complete list of all such Additional Accounts specifying for each such Account,
as of the Additional Cut-Off Date, its account number, the aggregate amount of
B-1
<PAGE>
Receivables outstanding in such Account and the aggregate amount of Principal
Receivables in such Account. Such file or list shall, as of the date of this
Assignment, supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Seller does hereby sell,
transfer, assign, set over and otherwise convey, without recourse (except as
expressly provided in the Agreement), to the Trust for the benefit of the
Certificateholders and the other Beneficiaries, all its right, title and
interest in, to and under the Receivables in such Additional Accounts and all
Collateral Security with respect thereto, owned by the Seller and existing at
the close of business on the Additional Cut-Off Date and thereafter created from
time to time until the termination of the Trust, all monies due or to become due
and all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State of
Missouri and Recoveries) thereof. The foregoing sale, transfer, assignment,
set-over and conveyance does not constitute and is not intended to result in the
creation or an assumption by the Trust, the Trustee, any Agent or any
Beneficiary of any obligation of the Servicer, the Seller or any other Person in
connection with the Accounts, the Receivables or under any agreement or
instrument relating thereto, including any obligation to any Dealers.
(b) In connection with such sale, the Seller agrees to record and
file, at its own expense, a financing statement on form UCC-1 (and continuation
statements when applicable) with respect to the Receivables now existing and
hereafter created for the sale of chattel paper (as defined in Section 9-105 of
the UCC as in effect in any state where the Seller's or the Servicer's chief
executive offices or books and records relating to the Receivables are located)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the sale and assignment of the
Receivables and the Collateral Security to the Trust, and to deliver a file-
stamped copy of such financing statements or other evidence of such filing to
the Trustee on or prior to the Addition Date. The Trustee shall be under no
obligation whatsoever to file such financing statement, or a continuation
statement to such financing statement, or to make any other filing under the UCC
in connection with such sales.
(c) In connection with such sale, the Seller further agrees, at its
own expense, on or prior to the Addition Date, to indicate in its computer files
that the Receivables created in connection with the Additional Accounts
designated hereby have been sold and the Collateral Security assigned to the
Trust pursuant to this Assignment for the benefit of the Certificateholders and
the other Beneficiaries.
B-2
<PAGE>
4. Acceptance by Trustee. Subject to the satisfaction of the
conditions set forth in Section 6 of this Assignment, the Trustee hereby
acknowledges its acceptance, on behalf of the Trust, of all right, title and
interest previously held by the Seller to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 3(a) of this
Assignment, and declares that it shall maintain such right, title and interest,
upon the trust set forth in the Agreement for the benefit of the
Certificateholders and other Beneficiaries. The Trustee further acknowledges
that, prior to or simultaneously with the execution and delivery of this
Assignment, the Seller delivered to the Trustee the computer file or microfiche
or written list relating to the Additional Accounts described in Section 2 of
this Assignment. The Trustee shall be under no obligation whatsoever to verify
the accuracy or completeness of the information contained in such file or list.
5. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Trustee, on behalf of the Trust, as of the date
of this Assignment and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This Assignment constitutes
a legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting creditors,
rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity);
(b) Organization and Good Standing. The Seller is a limited
partnership duly organized and validly existing and in good standing under
the law of the State of Delaware and has, in all material respects, full
power, authority and legal right to own its properties and conduct its
business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations
under this Assignment.
(c) Due Qualification. The Seller is duly qualified to do business
and, where necessary, is in good standing as a foreign partnership (or is
exempt from such requirement) and has obtained all necessary licenses and
approvals in each jurisdiction in which the conduct of its business
requires such qualification except where the failure to so qualify or
obtain licenses or approvals would not have a material adverse effect on
its ability to perform its obligations hereunder;
B-3
<PAGE>
(d) Eligible Accounts. Each Additional Account designated hereby is
an Eligible Account;
(e) Selection Procedures. No selection procedures believed by the
Seller to be adverse to the interests of the Beneficiaries were utilized in
selecting the Additional Accounts designated hereby;
(f) Insolvency. As of the Notice Date and the Addition Date, neither
DFS nor the Seller are insolvent nor, after giving effect to the conveyance
set forth in Section 3 of this Assignment, will any of them have been made
insolvent, nor are any of them aware of any pending insolvency;
(g) Valid Transfer. This Assignment constitutes a valid sale,
transfer and assignment to the Trust of all right, title and interest of
the Seller in the Receivables and the Collateral Security and the proceeds
thereof and upon the filing of the financing statements described in
Section 3 of this Assignment with the Secretary of State of the State of
Missouri and other applicable states and, in the case of the Receivables
and the Collateral Security hereafter created and the proceeds thereof,
upon the creation thereof, the Trust shall have a first priority perfected
ownership interest in such property, except for Liens permitted under
Section 2.6(a) of the Agreement. Except as otherwise provided in the
Pooling and Servicing Agreement, neither the Seller nor any Person claiming
through or under the Seller has any claim to or interest in the Trust
Assets;
(h) Due Authorization. The execution and delivery of this Assignment
and the consummation of the transactions provided for or contemplated by
this Assignment have been duly authorized by the Seller by all necessary
partnership action on the part of the Seller.
(i) No Conflict. The execution and delivery of this Assignment, the
performance of the transactions contemplated by this Assignment and the
fulfillment of the terms hereof, will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute (with
or without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Seller is a party or by which it or its properties
are bound;
(j) No Violation. The execution and delivery of this Assignment by
the Seller, the performance of the transactions contemplated by this
Assignment and the
B-4
<PAGE>
fulfillment of the terms hereof applicable to the Seller will not conflict
with or violate any material Requirements of Law applicable to the Seller;
(k) No Proceedings. There are no proceedings or, to the best knowledge
of the Seller, investigations pending or threatened against the Seller
before any Governmental Authority (i) asserting the invalidity of this
Assignment, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Assignment, (iii) seeking any
determination or ruling that, in the reasonable judgment of the Seller,
would materially and adversely affect the performance by the Seller of its
obligations under this Assignment, (iv) seeking any determination or ruling
that would materially and adversely affect the validity or enforceability
of this Assignment or (v) seeking to affect adversely the income tax
attributes of the Trust under the United States Federal or any State
income, single business or franchise tax systems;
(l) Record of Accounts. As of the Addition Date, Schedule 1 to this
Assignment is an accurate and complete listing in all material respects of
all the Additional Accounts as of the Additional Cut-Off Date and the
information contained therein with respect to the identity of such Accounts
and the Receivables existing thereunder is true and correct in all material
respects as of the Additional Cut-Off Date;
(m) No Liens. Each Receivable and all Collateral Security existing on
the Addition Date has been conveyed to the Trust free and clear of any
Lien, except for Liens permitted under Section 2.6(a) of the Agreement;
(n) All Consents Required. With respect to each Receivable and all
Collateral Security existing on the Addition Date, all consents, licenses,
approvals or authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by the
Seller in connection with the conveyance of such Receivable or Collateral
Security to the Trust, the execution and delivery of this Assignment and
the performance of the transactions contemplated hereby have been duly
obtained, effected or given and are in full force and effect; and
(o) Eligible Receivables. On the Additional Cut-Off Date each
Receivable conveyed to the Trust as of such date is an Eligible Receivable
or, if such Receivable is not an Eligible Receivable, such Receivable is
conveyed to the Trust in accordance with Section 2.9 of the Agreement.
B-5
<PAGE>
6. Conditions Precedent. The acceptance of the Trustee set forth in
Section 4 of this Assignment is subject to the satisfaction, on or prior to the
Addition Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Seller in Section 5 of this Assignment shall be true
and correct as of the date of this Assignment and as of the Addition Date;
(b) Agreement. Each of the conditions set forth in Section 2.5(d) of
the Agreement applicable to the designation of the Additional Accounts to
be designated hereby shall have been satisfied; and
(c) Officer's Certificate. The Seller shall have delivered to the
Trustee an Officer's Certificate, dated the date of this Assignment, in
which an officer of the Seller shall state that the representations and
warranties of the Seller under Section 5 hereof are true and correct. The
Trustee may conclusively rely on such Officers' Certificate, shall have no
duty to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying.
7. Ratification of Agreement. As supplemented by this Assignment, the
Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Assignment shall be read, taken and construed as one and
the same instrument.
8. Counterparts. This Assignment may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-6
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Assignment to be duly executed and delivered by their respective
duly authorized officers as of the day and the year first above written.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.,
Seller,
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC.,
General Partner
By:
_______________________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES
CORPORATION, as Servicer,
By:
_______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee,
By:
_______________________________________
Name:
Title:
B-7
<PAGE>
EXHIBIT C
TO PSA
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before April 30 of each
calendar year beginning with April 30, 1994, pursuant to
Section 3.5 of the Pooling and Servicing Agreement)
Deutsche Financial Services Corporation
---------------------------------------------
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
---------------------------------------------
The undersigned, duly authorized representatives of Deutsche Financial
Services Corporation ("DFS"), as Servicer, pursuant to the Pooling and Servicing
Agreement amended and restated as of October 1, 1996 (as amended and
supplemented, the "Agreement"), by and among Deutsche Floorplan Receivables,
L.P., as seller, DFS, as servicer, and The Chase Manhattan Bank, as trustee, do
hereby certify that:
1. DFS is, as of the date hereof, the Servicer under the Agreement.
2. The undersigned are Servicing Officers and are duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the
Trustee, any Agent and any Enhancement Providers.
3. A review of the activities of the Servicer during the calendar year
ended December 31,____, and of its performance under the Agreement was
conducted under our supervision.
4. Based on such review, the Servicer has, to the best of our
knowledge, performed in all material respects all of its obligations under
the Agreement throughout such year and no default in the performance of
such obligations has occurred or is continuing except as set forth in
paragraph 5 below.
5. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Agreement known
to us to have been made by
C-1
<PAGE>
the Servicer during the year ended December 31, _____, which sets forth in
detail the (a) nature of each such default, (b) the action taken by the
Servicer, if any, to remedy each such default and (c) the current status of
each such default: [If applicable, insert "None."]
Capitalized terms used but not defined herein are used as defined in the
Agreement.
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Certificate this _____day of , ____________, __________.
_________________________________________
Name:
Title:
_________________________________________
Name:
Title:
C-2
<PAGE>
EXHIBIT D-1
TO PSA
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY
BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
D-1-1
<PAGE>
EXHIBIT D-2
TO PSA
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT PLAN (AS
DEFINED BELOW). */
--
- ---------------------------------------
*/ The following should be inserted in any Certificate bearing Such legend:
- --
The [Certificates] may not be acquired by or for the account of any
employee benefit plan, trust or account, including an individual retirement
account, that is subject to the Employee Retirement Income Security Act of 1974,
as amended, or that is described in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended, or an entity whose underlying assets include plan
assets by reason of a plan's investment in such entity (a "Benefit Plan"). By
accepting and holding this Certificate or any interest in this Certificate, the
Holder hereof shall be deemed to have represented and warranted that it is not
funding its acquisition with the assets of any Benefit Plan.
D-2-1
<PAGE>
EXHIBIT E
FORM OF LETTER OF REPRESENTATIONS
E-1
<PAGE>
EXHIBIT F-1
TO PSA
[FORM OF CLEARANCE SYSTEM CERTIFICATE
TO BE GIVEN TO THE TRUSTEE BY
EUROCLEAR OR CEDEL FOR
DELIVERY OF DEFINITIVE CERTIFICATES
IN EXCHANGE FOR A PORTION OF A
TEMPORARY GLOBAL SECURITY]
DEUTSCHE FLOORPLAN RECEIVABLES
[ %] [Floating Rate] Asset Backed Certificates, Series [ ]
-----------------------------------------------------------------
[Insert title or sufficient description
of Certificates to be delivered]
We refer to that portion of the temporary Global Certificate in respect of
the above-captioned issue which is herewith submitted to be exchanged for
definitive Certificates (the "submitted Portion") as provided in the Pooling and
Servicing Agreement amended and restated as of October 1, 1996 (as amended and
supplemented, the "Agreement"), in respect of such issue. This is to certify
that (i) we have received a certificate or certificates, in writing or by tested
telex, with respect to each of the persons appearing in our records as being
entitled to a beneficial interest in the Submitted Portion and with respect to
such persons beneficial interest either (a) from such person, substantially in
the form of Exhibit F-2 to the Agreement, or (b) from [ ], substan-
tially in the form of Exhibit F-3 to the Agreement, and (ii) the Submitted
Portion__________ includes no part of the temporary Global Certificate excepted
in such certificates.
We further certify that as of the date hereof we have not received any
notification from any of the persons giving such certificates to the effect that
the statements made by them with respect to any part of the Submitted Portion
are no longer true and cannot be relied on as of the date hereof.
We understand that this certificate is required in connection with certain
securities and tax laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
F-1-1
<PAGE>
this certificate or a copy thereof to any interested party in such proceedings.
Dated: 1/
-
[Morgan Guaranty Trust
Company of New York,
Brussels office, as
operator of the
Euroclear System]2/
-
[Centrale de Livraison de
Valeurs Mobiliere S.A.]2/
-
By:
_______________________
___________________________________
1/ To be dated on the Exchange Date.
- -
2/ Delete the inappropriate reference.
- -
F-1-2
<PAGE>
EXHIBIT F-2
TO PSA
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL
BY [ ]
WITH RESPECT TO REGISTERED CERTIFICATES SOLD TO
QUALIFIED INSTITUTIONAL BUYERS]
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST,
[ %] [Floating Rate] Asset Backed Certificates, Series [ ]
--------------------------------------------------------------
In connection with the initial issuance and placement of the above
referenced Asset Backed Certificates (the "Certificates"), an institutional
investor in the United States ("institutional investor") is purchasing U.S. $
aggregate principal amount of the Certificates held in our account at [Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System] [Cedel S.A.] on behalf of such investor.
We reasonably believe that such institutional investor is a qualified
institutional buyer as such term is defined under Rule 144A of the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
[We understand that this certificate is required in connection with United
States laws. We irrevocably authorize you to produce this certificate or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered by this certificate.]
The Definitive Certificates in respect of this certificate are to be issued
in registered form in the minimum denomination of U.S. $__00,000 and such
Definitive Certificates (and, unless the Pooling and Servicing Agreement or
Supplement relating to the Certificates otherwise provides, any Certificates
issued in exchange or substitution for or on registration of transfer of
Certificates) shall bear the following legend:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933. NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY
BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S.
PERSONS (EACH AS DEFINED HEREIN), EXCEPT IN COMPLIANCE WITH THE
REGISTRATION
F-2-1
<PAGE>
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO
CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. THIS CERTIFICATE CANNOT BE EXCHANGED FOR A BEARER
CERTIFICATE."
Dated:
[ ]
By:
_______________________
Authorized Officer
F-2-2
<PAGE>
EXHIBIT F-3
TO PSA
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL BY A BENEFICIAL OWNER
OF CERTIFICATES, OTHER THAN A QUALIFIED INSTITUTIONAL BUYER]
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
[ %] [Floating Rate] Asset Backed Certificates, Series [ ]
--------------------------------------------------------------
This is to certify that as of the date hereof and except as provided in the
third paragraph hereof, the above-captioned Certificates held by you for our
account (i) are not owned by a person that is a United States person, (ii) are
owned by a United States person that is (A) the foreign branch of a United
States financial institution (as defined in U.S. Treasury Regulations Section
1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own account or
for resale, or (B) a United States person who acquired the Certificates through
the foreign branch of a financial institution and who holds the Certificates
through the financial institution on the date hereof (and in either case (A) or
(B), the financial institution hereby agrees to comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by a financial
institution for purposes of resale during the Restricted Period (as defined in
U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)) . In addition,
financial institutions described in clause (iii) of the preceding sentence
(whether or not also described in clause (i) or (ii)) certify that they have not
acquired the Certificates for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.
We undertake to advise you by tested telex if the above statement as to
beneficial ownership is not correct on the date of delivery of the above-
captioned Certificates in bearer form with respect to such of said Certificates
as then appear in your books as being held for our account.
This certificate excepts and does not relate to U.S. $ principal amount
of Certificates held by you for our account, as to which we are not yet able to
certify beneficial ownership. We understand that delivery of Definitive
Certificates in such principal amount cannot be made until we are able to so
certify.
F-3-1
<PAGE>
We understand that this certificate is required in connection with certain
securities and tax laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
As used herein, "United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction; and "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
subject to United States federal income taxation regardless of its source.
Dated: 1/ By
-------------------------------------------
As, or as agent for, the beneficial owner(s)
of the interest in the Certificates to which
this certificate relates.
- --------------------------------------------------------------------------------
1/ This Certificate must be dated on the earlier of the date of the first
actual payment of interest in respect of the Certificates and the date of the
delivery of the Certificates in definitive form.
F-3-2
<PAGE>
EXHIBIT G-1
TO PSA
FORM OF OPINION OF COUNSEL
Provisions to be Included in
----------------------------
Opinion of Counsel Delivered Pursuant
-------------------------------------
to Section 13.2(d)(i)
---------------------
(a) The Amendment to the [Pooling and Servicing Agreement] [Supplement],
attached hereto as Schedule 1 (the "Amendment"), has been duly authorized,
executed and delivered by the Seller and constitutes the legal, valid and
binding agreement of the Seller, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally from time to time in effect. The enforceability of the
Seller's obligations is also subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(b) The Amendment has been entered into in accordance with the terms and
provisions of Section 13.1 of the Pooling and Servicing Agreement.
(c) The Amendment will not adversely affect in any material respect the
interests of the Investor Certificateholders. [Include this clause (iii) only in
the case of amendments effected pursuant to Section 13.1(a) of the Pooling and
Servicing Agreement.]
G-1-1
<PAGE>
EXHIBIT G-2
TO PSA
FORM OF OPINION OF COUNSEL
Provisions to be Included in Opinion of Counsel to be
------------------------------------------------------
Delivered Pursuant to Sections 2.5 and 13.2(d)(i) and (ii)*
----------------------------------------------------------
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinion of counsel
to Deutsche Floorplan Receivables, L.P. (the "seller") delivered on any Closing
Date. Capitalized terms used but not defined herein are used as defined in the
Pooling and Servicing Agreement, amended and restated as of October 1, 1996 (as
amended and supplemented, the "Agreement"), among the Seller, as seller,
Deutsche Financial Services Corporation, as servicer, and The Chase Manhattan
Bank, as trustee.
[(a) The Assignment has been duly authorized, executed and delivered by the
Seller, and constitutes the valid and legally binding obligation of the Seller,
enforceable against the Seller in accordance with its terms.]
(b) Assuming the Receivables [in the Additional Accounts] are created
under, and are evidenced solely by, Wholesale Financing Agreements, Accounts
Receivable Financing Agreements, Asset Based Financing Agreements or Unsecured
Receivable Financing Agreements, such Receivables will constitute "chattel
paper", "accounts" or "general intangibles" as defined under Section 9-105 of
the UCC. We note that the Seller has given us an Officer's Certificate to the
effect that the Receivables are created under Wholesale Financing Agreements,
Accounts Receivable Financing Agreements, Asset Based Financing Agreements or
Unsecured Receivable Financing Agreements.
(c) If the transfer of the Receivables [in the Additional Accounts] and
all [of the related] Collateral Security to the Trust pursuant to the Pooling
and Servicing Agreement constitutes a true sale of such Receivables and
Collateral Security to the Trust:
(i) with respect to such Receivables and Collateral Security in
existence on the date hereof, such sale transfers all of the right, title
and interest of the Seller in
- -----------------
* Include bracketed language only in the case of additions of Accounts effected
pursuant to Section 2.05 of the Pooling and Servicing Agreement.
G-2-1
<PAGE>
and to such Receivables and Collateral Security to the Trust, free and
clear of any liens now existing or hereafter created, but subject to the
rights of the holder of the Deutsche FRLP Certificate and except for Liens
permitted under Section 2.6(a) of the Agreement;
(ii) with respect to such Receivables and Collateral Security which
come into existence after the date hereof, upon the creation of such
Receivables and Collateral Security and the subsequent transfer of such
Receivables and Collateral Security to the Trust in accordance with the
Pooling and Servicing Agreement and receipt by the Seller of the
consideration therefor required pursuant to the Pooling and Servicing
Agreement, such sale will transfer all of the right, title and interest of
the Seller in and to such Receivables and Collateral Security to the Trust
free and clear of any liens but subject to the rights of the holder of the
Deutsche FRLP Certificate and except for Liens permitted under Section
2.6(a) of the Agreement;
and, in either case, no further action will thereafter be required under
Missouri, Georgia or federal law to protect the Trust's ownership interest
in the Receivables and the Collateral Security against creditors of, or
subsequent purchasers from, the Seller.
(d) If the transfer of the Receivables and Collateral Security to the Trust
pursuant to the Pooling and Servicing Agreement does not constitute a true sale
of the Receivables and the Collateral Security to the Trust, then the Pooling
and Servicing Agreement as amended and supplemented by the Assignment creates a
valid security interest in favor of the Trustee, for the benefit of the
Certificateholders, in the Seller's right, title and interest in and to the
Receivables and the Collateral Security and the proceeds thereof securing the
obligations of the Seller thereunder. Financing statements on Form UCC-1 having
been filed in the Offices of the Secretaries of State of the State of Missouri
and [other applicable states] (and counties) and accordingly, such security
interest constitutes a perfected security interest in such Receivables and
Collateral Security and the proceeds thereof subject to no prior liens (but
subject to the Liens permitted by Section 2.6(a) of the Agreement), enforceable
as such against creditors of, and subsequent purchasers from, the Seller,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors' rights generally
and to general equity principles.
G-2-2
<PAGE>
EXHIBIT H
TO PSA
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.7 of the Pooling and
Servicing Agreement referred to below)
REASSIGNMENT NO. OF RECEIVABLES,
dated as of , 19__, by and between
DEUTSCHE FLOORPLAN RECEIVABLES, L.P., a limited
partnership organized under the laws of the State
of Delaware (the "Seller"), and The Chase
Manhattan Bank, a New York banking corporation, as
trustee (the "Trustee") pursuant to the Pooling
and Servicing Agreement referred to below.
WITNESSETH
WHEREAS the Seller, Deutsche Financial Services Corporation, as servicer
(the "Servicer"), and the Trustee are parties to the Pooling and Servicing
Agreement amended and restated as of October 1, 1996 (as amended or
supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Seller wishes to remove all
Receivables from certain Accounts and the Collateral Security thereof (the
"Removed Accounts") and to cause the Trustee to reconvey the Receivables of such
Removed Accounts and such Collateral Security, whether now existing or hereafter
created, and all amounts currently held by the Trust or thereafter received by
the Trust in respect of such Removed Accounts, from the Trust to the Seller (as
each such term is defined in the Agreement); and
WHEREAS the Trustee is willing to accept such removal and to reconvey the
Receivables in the Removed Accounts, such Collateral Security and any related
amounts held or received by the Trust subject to the terms and conditions
hereof.
NOW, THEREFORE, the Seller and the Trustee hereby agree as follows;
1. Defined Terms. All terms defined in the Agreement and used herein
shall have such defined meanings when used herein, unless otherwise defined
herein.
G-2-1
<PAGE>
"Removal Date" shall mean, with respect to the Removed Accounts designated
hereby,
2. Notice of Removed Accounts. (a) Not less than five Business Days prior
to the Removal Date, the Seller shall furnish to the Trustee, any Agent, any
Enhancement Providers and the Rating Agencies a written notice specifying the
Determination Date (which may be the Determination Date on which such notice is
given) on which removal of the Receivables of one or more Accounts will occur,
such date being a Removal Date.
(b) On or before the fifth Business Day after the Removal Date, the Seller
shall furnish to the Trustee a computer file, microfiche list or other list of
the Removed Accounts that were removed on the Removal Date, specifying for each
Removed Account as of the date of the Removal Notice its number, the aggregate
amount outstanding in such Removed Account and the aggregate amount of Principal
Receivables therein and represent that such computer file, microfiche list or
other list of the Removed Accounts is true and complete in all material
respects.
3. Conveyance of Receivables and Accounts. (a) The Trustee does hereby
transfer, assign, set over and otherwise convey to the Seller, without recourse,
representation or warranty on and after the Removal Date, all right, title and
interest of the Trust in, to and under all Receivables now existing at the close
of business on the Removal Date and thereafter created from time to time until
the termination of the Trust in Removed Accounts designated hereby, all
Collateral Security thereof, all monies due or to become due and all amounts
received with respect thereto (including all Non-Principal Receivables), all
proceeds (as defined in Section 9-306 of the UCC as in effect in the State of
Missouri) and Recoveries thereof relating thereto.
(b) If requested by the Seller, in connection with such transfer, the
Trustee agrees to execute and deliver to the Seller on or prior to the date of
this Reassignment, a termination statement under the UCC of each applicable
jurisdiction with respect to the Receivables existing at the close of business
on the Removal Date and thereafter created from time to time and Collateral
Security thereof in the Removed Accounts reassigned hereby (which may be a
single termination statement with respect to all such Receivables and Collateral
Security) evidencing the release by the Trust of its lien on the Receivables in
the Removed Accounts and the Collateral Security, and meeting the requirements
of applicable state law, in such manner and such jurisdictions as are necessary
to remove such lien.
4. Acceptance by Trustee. The Trustee hereby acknowledges that, prior to
or simultaneously with the execution and delivery
H-2
<PAGE>
of this Reassignment, the Seller delivered to the Trustee the computer file or
such microfiche or written list described in Section 2(b) of this Reassignment.
5. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Trustee, on behalf of the Trust, as of the date
of this Reassignment and as of the Removal Date:
(a) Legal, Valid and Binding Obligation. This Reassignment
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(b) No Early Amortization Event. The removal of the Accounts hereby
removed shall not, in the reasonable belief of the Seller, cause an Early
Amortization Event to occur or cause the Pool Balance to be less than the
Required Participation Amount;
(c) Selection Procedures. No selection procedures believed by the
Seller to be adverse to the interests of the Beneficiaries were utilized in
selecting the Accounts to be removed,
(d) True and Complete List. The list of Removed Accounts described
in Section 2 of this Assignment is, as of the Removal Commencement Date,
true and complete in all material respects; and
(e) Rating of Certificates. The removal of such Accounts will not
result in a reduction or withdrawal of the rating of any outstanding series
or Class by the applicable Rating Agency;
provided, however, that in the event that the removal on such Removal Date
relates solely to Ineligible Accounts, the Seller shall be deemed to make
only the representations and warranties contained in paragraph 5(a) above.
6. Conditions Precedent. In addition to the conditions precedent set
forth in Section 2.7 of the Agreement, the obligation of the Trustee to execute
and deliver this Reassignment is subject to the satisfaction, on or prior to the
Removal Date, of the following additional conditions precedent:
H-3
<PAGE>
(a) Officers' Certificate. The Seller shall have delivered to the
Trustee, any Agent, and any Enhancement Providers an Officers' Certificate
certifying that (i) as of the Removal Date, all requirements set forth in
Section 2.7 of the Agreement for removing such Accounts and reconveying the
Receivables of such Removed Accounts and the Collateral Security, whether
existing at the close of business on the Removal Date or thereafter created from
time to time until the termination of the Trust, have been satisfied, and (ii)
each of the representations and warranties made by the Seller in Section 5
hereof is true and correct as of the date of this Reassignment and as of the
Removal Date. The Trustee may conclusively rely on such Officers' Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying.
(b) The Seller shall have delivered to the Trustee, any Agent, any
Enhancement Providers and each Rating Agency a Tax Opinion, dated the Removal
Date, with respect to the removal of Accounts.
7. Ratification of Agreement. As supplemented by this Reassignment, the
Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Reassignment shall be read, taken and construed as one and
the same instrument.
8. Counterparts. This Reassignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
9. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
H-4
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Reassignment to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.,
Seller,
By: DEUTSCHE FLOORPLAN RECEIVABLES,
INC., General Partner
By: _____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, Trustee
By: _____________________________________
Name:
Title:
H-5
<PAGE>
EXHIBIT I
FORM OF RECEIVABLES CONTRIBUTION
AND SALE AGREEMENT
[Filed as Exhibit 10.1 to the
Registration Statement]
I-1
<PAGE>
Schedule 1
List of Accounts
<PAGE>
Schedule 2
The Collection Account for the Deutsche Floorplan Receivables Master Trust
has been established with The Chase Manhattan Bank, Account # .
<PAGE>
EXHIBIT 4.2
================================================================================
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
and
THE CHASE MANHATTAN BANK
Trustee
---------------------------------------
SERIES 1996-1 SUPPLEMENT
Dated as of October 1, 1996
to
POOLING AND SERVICING AGREEMENT
Amended and Restated as of October 1, 1996
---------------------------------------
$1,064,203,000
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
SERIES 1996-1
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Creation of the Series 1996-1 Certificates
SECTION 1.1. Designation ............................................. -1-
ARTICLE II
Definitions
SECTION 2.1. Definitions ............................................. -1-
ARTICLE III
Servicing Fee
SECTION 3.1. Servicing Compensation .................................. -17-
ARTICLE IV
Rights of Series 1996-1 Certificateholders and
Allocation and Application of Collections
SECTION 4.1. Allocations; Payments to Seller ......................... -18-
SECTION 4.2. Monthly Interest; Determination of Certificate Rate ..... -19-
SECTION 4.3. Determination of Monthly Principal ...................... -21-
SECTION 4.4. Establishment of Reserve Fund and Funding Accounts ...... -21-
SECTION 4.5. Deficiency Amount ....................................... -24-
SECTION 4.6. Application of Investor Non-Principal
Collections, Investment Proceeds and Available
Investor Principal Collections ........................ -25
SECTION 4.7. Distributions to Series 1996-1 Certificateholders ....... -28-
SECTION 4.8. Application of Reserve Fund and Available
Subordinated Amount ................................... -29-
SECTION 4.9. Investor Charge-Offs .................................... -31-
SECTION 4.10. Excess Servicing ........................................ -31-
SECTION 4.11. Excess Principal Collections ............................ -32-
SECTION 4.12. Excess Funding Account .................................. -32-
</TABLE>
ARTICLE V
Distribution and Reports to
i
<PAGE>
Series 1996-1 Certificateholders
<TABLE>
<CAPTION>
<C> <S> <C>
SECTION 5.1. Distributions ........................................... -34-
SECTION 5.2. Reports and Statements to Series 1996-1
Certificateholders .................................... -35-
ARTICLE VI
Early Amortization Events
SECTION 6.1. Additional Early Amortization Events .................... -35-
ARTICLE VII
Optional Repurchase
SECTION 7.1. Optional Repurchase ..................................... -36-
ARTICLE VIII
Final Distributions
SECTION 8.1. Sale of Certificateholders' Interest
Pursuant to Section 2.3 of the Agreement;
Distributions Pursuant to Section 7.1 of this
Series Supplement or Section 2.3 or 12.2(c) of the
Agreement ............................................. -37-
ARTICLE IX
Miscellaneous Provisions
SECTION 9.1. Registration of the Series 1996-1
Certificates under the Securities Exchange Act of
1934 .................................................. -39-
SECTION 9.2. Ratification of Agreement ............................... -40-
SECTION 9.3. Counterparts ............................................ -40-
SECTION 9.4. Governing Law ........................................... -40-
SECTION 9.5. Limitation of Class C Certificates ...................... -40-
SECTION 9.6. The Trustee ............................................. -41-
SECTION 9.7. Instructions in Writing ................................. -41-
SECTION 9.8. Initial Funding of Reserve Fund ......................... -42-
</TABLE>
ii
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Class C Certificate
</TABLE>
SCHEDULES
<TABLE>
<CAPTION>
<C> <S>
Schedule 1 Accounts
Schedule 2 Initial Principal Amounts of Certificates
</TABLE>
iii
<PAGE>
SERIES 1996-1 SUPPLEMENT dated as of October 1, 1996 (this "Series
Supplement"), among DEUTSCHE FLOORPLAN RECEIVABLES, L.P., a Delaware limited
partnership, formerly known as ITT Floorplan Receivables, L.P., as Seller,
DEUTSCHE FINANCIAL SERVICES CORPORATION, a Nevada corporation, formerly known as
ITT Commercial Finance Corp., as Servicer, and THE CHASE MANHATTAN BANK, a New
York banking corporation, formerly known as Chemical Bank, as Trustee.
Pursuant to Section 6.3 of the Pooling and Servicing Agreement, dated
as of December 1, 1993, amended and restated as of March 1, 1994, further
amended as of January 24, 1996 and amended and restated as of October 1, 1996
(as amended and supplemented, the "Agreement"), among the Seller, the Servicer
and the Trustee, the Seller may from time to time direct the Trustee to issue,
on behalf of the Trust, one or more new Series of Investor Certificates. The
Principal Terms of any new Series are to be set forth in a Supplement to the
Agreement.
Pursuant to this Series Supplement, the Seller and the Trustee shall
create a new Series of Investor Certificates and specify the Principal Terms
thereof.
ARTICLE I
Creation of the Series 1996-1 Certificates
------------------------------------------
SECTION 1.1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued pursuant to the Agreement and this Series
Supplement to be known as the "Floating Rate Asset Backed Certificates, Series
1996-1," which shall consist of three Classes to be known, respectively, as the
"Floating Rate Asset Backed Certificates, Series 1996-1, Class A," "Floating
Rate Asset Backed Certificates, Series 1996-1, Class B" and "Floating Rate Asset
Backed Certificates, Series 1996-1, Class C."
(b) In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern.
ARTICLE II
Definitions
-----------
SECTION 2.1. Definitions. (a) Whenever used in this Series
Supplement the following words and phrases shall have the following meanings:
"Accumulation Period" shall mean, unless an Early Amortization Event
shall have occurred prior thereto (other than an Early
-1-
<PAGE>
Amortization Event which has resulted in an Early Amortization Period which has
ended as described in clause (c) of the definition of Early Amortization Period
in the Agreement), the period commencing on the Accumulation Period Commencement
Date and ending upon the first to occur of (a) the commencement of an Early
Amortization Period or (b) the Expected Final Payment Date.
"Accumulation Period Commencement Date" shall mean the date which is
the first day of the June 1999 Collection Period; provided, however, that upon
written notice to the Trustee, the Servicer may elect to postpone the
Accumulation Period Commencement Date such that the number of months included in
the Accumulation Period shall equal or exceed the Accumulation Period Length;
provided further, however, that such election shall only be permitted if the
Accumulation Period Length is less than four months; provided further, however,
that the Accumulation Period Commencement Date shall not be postponed beyond the
first day of the September 1999 Collection Period.
"Accumulation Period Length" shall mean, as determined by the Servicer
on each Determination Date, beginning with the Determination Date occurring in
the May 1999 Collection Period, the number of calendar months that the Servicer
expects to be required such that sufficient funds are on deposit in the
Principal Funding Account no later than the Expected Final Payment Date to pay
the outstanding principal balances of the Certificates, based on (a) the
expected monthly collections of Principal Receivables expected to be
distributable to the Series 1996-1 Certificateholders assuming a principal
payment rate no greater than the lowest Monthly Payment Rate on the Receivables
for the preceding three months and (b) the amount of principal expected to be
distributable to Investor Certificateholders of Series which are not expected to
be in their revolving periods during the Accumulation Period.
"Additional Early Amortization Event" shall have the meaning specified
in Section 6.1.
"Additional Interest" shall mean the sum of the Class A Additional
Interest, the Class B Additional Interest and the Class C Additional Interest.
"Adjustment Date" shall mean, with respect to any Interest Period, the
second London Business Day prior to the Interest Payment Date preceding such
Interest Period (and with respect to an Interest Period commencing on an
Interest Payment Date, the second London Business Day preceding such Interest
Payment Date); provided that with respect to the first Interest Period and each
other Interest Period prior to the first Interest Payment Date, the Adjustment
Date shall be October ___, 1996.
"Allocable Miscellaneous Payments" shall mean, with respect to any
Distribution Date, the product of (a) the Series 1996-1 Allocation Percentage
for the related Collection Period and (b) Miscellaneous Payments with respect to
the related Collection Period.
-2-
<PAGE>
"Available Investor Principal Collections" shall mean, with respect to
any Distribution Date, the sum of (a) an amount equal to Investor Principal
Collections for such Distribution Date, (b) Allocable Miscellaneous Payments
with respect to such Distribution Date and (c) on the Termination Date, any
funds in the Reserve Fund after giving effect to Section 4.8.
"Available Seller's Collections" shall mean, with respect to any
Deposit Date, the sum of (a) the Available Seller's Non-Principal Collections
for such Deposit Date and (b) the Available Seller's Principal Collections for
such Deposit Date; provided, however, that the Available Seller's Collections
shall be zero for any Collection Period with respect to which the Available
Subordinated Amount is zero on the Determination Date immediately following the
end of such Collection Period.
"Available Seller's Non-Principal Collections" shall mean, with
respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such Collection
Period by (b) Non-Principal Collections for such Deposit Date.
"Available Seller's Principal Collections" shall mean, with respect to
any Deposit Date, an amount equal to the result obtained by multiplying (a) the
excess of (i) the Seller's Percentage for the related Collection Period over
(ii) the Excess Seller's Percentage for such Collection Period by (b) Principal
Collections for such Deposit Date.
"Available Subordinated Amount" shall mean, for the first
Determination Date, an amount equal to the product of (a) a fraction, the
numerator of which is the Invested Amount on the Closing Date and the
denominator of which is the Pool Balance on the Closing Date multiplied by (b)
the Trust Incremental Subordinated Amount. The "Available Subordinated Amount"
for any subsequent Determination Date shall mean an amount equal to (i) the
product of (x) a fraction, the numerator of which is the Invested Amount on the
last day of the immediately preceding Collection Period and the denominator of
which is the Pool Balance on such last day multiplied by (y) the Trust
Incremental Subordinated Amount minus (ii) the aggregate of the Required
Subordination Draw Amounts for all preceding Distribution Dates to the extent
provided in Section 4.8.
"Carry-over Amount" shall mean the sum of the Class A Carry-over
Amount, the Class B Carry-over Amount and the Class C Carry-over Amount.
-3-
<PAGE>
"Certificateholders" shall mean, collectively, the Class A
Certificateholders, the Class B Certificateholders and the Class C
Certificateholders.
"Certificateholders' Monthly Servicing Fee" shall have the meaning
specified in Section 3.1.
"Certificates" shall mean, collectively, the Class A Certificates, the
Class B Certificates and the Class C Certificates.
"Class A Additional Interest" shall have the meaning specified in
Section 4.2(a).
"Class A Carry-over Amount" shall mean, with respect to a Distribution
Date for which the Class A Certificate Rate is equal to the per annum rate in
clause (ii) of the definition of Class A Certificate Rate, an amount equal to
the excess of (a) the amount equal to the Class A Monthly Interest for such
Distribution Date calculated as if the Class A Certificate Rate for such
Distribution Date were equal to the per annum rate in clause (i) of the
definition of Class A Certificate Rate over (b) the Class A Monthly Interest for
such Distribution Date.
"Class A Certificate Rate" shall mean, for an Interest Period and the
Distribution Date immediately following such Interest Period, a rate per annum
equal to the lesser of (i) LIBOR plus _____% per annum and (ii) the related Net
Receivables Rate.
"Class A Certificateholders" shall mean the Holders of Class A
Certificates.
"Class A Certificates" shall mean any one of the "Floating Rate Asset
Backed Certificates, Series 1996-1, Class A" executed by the Seller and
authenticated by the Trustee, substantially in the form of Exhibit A.
"Class A Initial Invested Amount" shall mean, for any date, the
initial principal amount of the Class A Certificates, which is set forth in
Schedule 2, plus (x) the product of (i) the Class A Percentage multiplied by
(ii) the amount of any withdrawals from the Excess Funding Account in connection
with an increase in Pool Balance since the Closing Date, minus (y) the product
of (i) the Class A Percentage multiplied by (ii) the amount of any additions to
the Excess Funding Account in connection with a reduction in the Pool Balance
since the Closing Date.
"Class A Interest Shortfall" shall have the meaning specified in
Section 4.2(a).
-4-
<PAGE>
"Class A Invested Amount" shall mean, for any date, an amount equal to
the sum of (a)(i) the Class A Initial Invested Amount, minus (ii) the aggregate
amount of principal payments made to Class A Certificateholders prior to such
date, minus (iii) the aggregate amount of all unreimbursed Class A Investor
Charge-Offs.
"Class A Investor Charge-Off" shall have the meaning specified in
Section 4.9.
"Class A Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class A Certificate Rate, (ii) a fraction the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, and (iii) (A) the outstanding principal
balance of the Class A Certificates as of the close of business on the preceding
Distribution Date (after giving effect to all repayments of principal made to
Class A Certificateholders on such preceding Distribution Date, if any) or (B)
in the case of the first Distribution Date with respect to Series 1996-1, the
initial principal amount of the Class A Certificates as set forth in Schedule 2.
"Class A Percentage" shall mean the percentage equivalent of a
fraction, the numerator of which is the outstanding principal balance of the
Class A Certificates and the denominator of which is the outstanding principal
balance of all Certificates.
"Class A Pool Factor" shall mean, with respect to any Determination
Date, a number carried out to eleven decimals representing the ratio of the
outstanding principal amount of the Class A Certificates as of such
Determination Date (determined after taking into account any increases or
decreases in the Class A Invested Amount which will occur on the following
Distribution Date) to the initial principal amount of the Class A Certificates.
"Class B Additional Interest" shall have the meaning specified in
Section 4.2(a).
"Class B Carry-over Amount" shall mean, with respect to a Distribution
Date for which the Class B Certificate Rate is equal to the per annum rate in
clause (ii) of the definition of Class B Certificate Rate, an amount equal to
the excess of (a) the amount equal to the Class B Monthly Interest for such
Distribution Date calculated as if the Class B Certificate Rate for such
Distribution Date were equal to the per annum rate in clause (i) of the
-5-
<PAGE>
definition of Class B Certificate Rate over (b) the Class B Monthly Interest for
such Distribution Date.
"Class B Certificate Rate" shall mean, for an Interest Period and the
Distribution Date immediately following such Interest Period, a rate per annum
equal to the lesser of (i) LIBOR plus _____% per annum and (ii) the related Net
Receivables Rate .
"Class B Certificateholders" shall mean the Holders of Class B
Certificates.
"Class B Certificates" shall mean any one of the "Floating Rate Asset
Backed Certificates, Series 1996-1, Class B" executed by the Seller and
authenticated by the Trustee, substantially in the form of Exhibit B.
"Class B Initial Invested Amount" shall mean, for any date, the
initial principal amount of the Class B Certificates, which is set forth in
Schedule 2, plus (x) the product of (i) the Class B Percentage multiplied by
(ii) the amount of any withdrawals from the Excess Funding Account in connection
with an increase in Pool Balance since the Closing Date, minus (y) the product
of (i) the Class B Percentage multiplied by (ii) the amount of any additions to
the Excess Funding Account in connection with a reduction in the Pool Balance
since the Closing Date.
"Class B Interest Shortfall" shall have the meaning specified in
Section 4.2(a).
"Class B Invested Amount" shall mean, for any date, an amount equal to
the sum of (a)(i) the Class B Initial Invested Amount, minus (ii) the aggregate
amount of principal payments made to Class B Certificateholders prior to such
date, minus (iii) the aggregate amount of all unreimbursed Class B Investor
Charge-Offs.
"Class B Investor Charge-Off" shall have the meaning specified in
Section 4.9.
"Class B Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class B Certificate Rate, (ii) a fraction the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, and (iii) (A) the outstanding principal
balance of the Class B Certificates as of the close of business on the preceding
-6-
<PAGE>
Distribution Date (after giving effect to all repayments of principal made to
Class B Certificateholders on such preceding Distribution Date, if any) or (B)
in the case of the first Distribution Date with respect to Series 1996-1, the
initial principal amount of the Class B Certificates as set forth in Schedule 2.
"Class B Percentage" shall mean the percentage equivalent of a
fraction, the numerator of which is the outstanding principal balance of the
Class B Certificates and the denominator of which is the outstanding principal
balance of all Certificates.
"Class B Pool Factor" shall mean, with respect to any Determination
Date, a number carried out to eleven decimals representing the ratio of the
outstanding principal amount of the Class B Certificates as of such
Determination Date (determined after taking into account any increases or
decreases in the Class B Invested Amount which will occur on the following
Distribution Date) to the initial principal amount of the Class B Certificates.
"Class C Additional Interest" shall have the meaning specified in
Section 4.2(a).
"Class C Carry-over Amount" shall mean, with respect to a Distribution
Date for which the Class C Certificate Rate is equal to the per annum rate in
clause (ii) of the definition of Class C Certificate Rate, an amount equal to
the excess of (a) the amount equal to the Class C Monthly Interest for such
Distribution Date calculated as if the Class C Certificate Rate for such
Distribution Date were equal to the per annum rate in clause (i) of the
definition of Class C Certificate Rate over (b) the Class C Monthly Interest for
such Distribution Date.
"Class C Certificate Rate" shall mean, for an Interest Period and the
Distribution Date immediately following such Interest Period, a rate per annum
equal to the lesser of (i) LIBOR plus _____% per annum and (ii) the related Net
Receivables Rate.
"Class C Certificateholders" shall mean the Holders of Class C
Certificates.
"Class C Certificates" shall mean any one of the "Floating Rate Asset
Backed Certificates, Series 1996-1, Class C" executed by the Seller and
authenticated by the Trustee, substantially in the form of Exhibit C.
"Class C Initial Invested Amount" shall mean, for any date, the
initial principal amount of the Class C Certificates, which is set forth in
Schedule 2, plus (x) the product of (i) the Class C Percentage multiplied by
(ii) the amount of any withdrawals from
-7-
<PAGE>
the Excess Funding Account in connection with an increase in Pool Balance since
the Closing Date, minus (y) the product of (i) the Class C Percentage multiplied
by (ii) the amount of any additions to the Excess Funding Account in connection
with a reduction in the Pool Balance since the Closing Date.
"Class C Interest Shortfall" shall have the meaning specified in
Section 4.2(a).
"Class C Invested Amount" shall mean, for any date, an amount equal to
the sum of (a) (i) the Class C Initial Invested Amount, minus (ii) the aggregate
amount of principal payments made to Class C Certificateholders prior to such
date, minus (iii) the aggregate amount of all unreimbursed Class C Investor
Charge-Offs.
"Class C Investor Charge-Off" shall have the meaning specified in
Section 4.9.
"Class C Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class C Certificate Rate, (ii) a fraction the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, and (iii) (A) the outstanding principal
balance of the Class C Certificates as of the close of business on the preceding
Distribution Date (after giving effect to all repayments of principal made to
Class C Certificateholders on such preceding Distribution Date, if any) or (B)
in the case of the first Distribution Date with respect to Series 1996-1, the
initial principal amount of the Class C Certificates as set forth in Schedule 2.
"Class C Percentage" shall mean the percentage equivalent of a
fraction, the numerator of which is the outstanding principal balance of the
Class C Certificates and the denominator of which is the outstanding principal
balance of all Certificates.
"Class C Pool Factor" shall mean, with respect to any Determination
Date, a number carried out to eleven decimals representing the ratio of the
outstanding principal amount of the Class C Certificates as of such
Determination Date (determined after taking into account any increases or
decreases in the Class C Invested Amount which will occur on the following
Distribution Date) to the initial principal amount of the Class C Certificates.
"Closing Date" shall mean October [___], 1996.
-8-
<PAGE>
"Controlled Amortization Amount" shall mean the quotient obtained by
dividing the Invested Amount as of the Determination Date on which the
Accumulation Period Length is determined (after giving effect to any changes
therein on such date) by the number of months comprising the Accumulation Period
Length.
"Controlled Distribution Amount" shall mean, for any Distribution Date
with respect to the Accumulation Period, the excess, if any, of (i) the product
of the Controlled Amortization Amount and the number of Distribution Dates from
and including the first Distribution Date during the Accumulation Period through
and including such Distribution Date over (ii) the sum of amounts on deposit in
the Excess Funding Account and the Principal Funding Account, in each case
before giving effect to any withdrawals from or deposits to such accounts on
such Distribution Date.
"Deficiency Amount" shall have the meaning specified in Section 4.5.
"Distribution Date Statement" shall have the meaning specified in
Section 5.2(a).
"Early Amortization Event" shall mean any Early Amortization Event
specified in Section 9.1 of the Agreement, together with any Additional Early
Amortization Event specified in Section 6.1 of this Series Supplement.
"Early Amortization Period" shall mean an Early Amortization Period
(as defined in the Agreement) with respect to Series 1996-1.
"Excess Funding Account" shall have the meaning specified in Section
4.4(d).
"Excess Principal Collections" shall mean the amounts equal to the
balances referred to as such in Sections 4.6(b)(ii) and 4.6(c)(ii).
"Excess Seller's Percentage" shall mean, with respect to any
Collection Period, a percentage (which percentage shall never be less than 0%
nor more than 100%) equal to (a) when used with respect to Non-Principal
Collections and Defaulted Receivables, 100% minus the sum of (i) the Floating
Allocation Percentage with respect to such Collection Period plus the sum of the
floating allocation percentages for all other outstanding Series of Investor
Certificates for such Collection Period and (ii) the percentage equivalent of a
fraction, the numerator of which is the sum of the Available Subordinated Amount
as of the Determination Date occurring in such Collection Period plus the sum of
the aggregate available subordinated amounts for all other outstanding Series of
Investor Certificates as of such Determination Date (in each case, after giving
effect to the allocations, distributions, withdrawals
-9-
<PAGE>
and deposits to be made on the Distribution Date immediately following such
Determination Date), and the denominator of which is the Pool Balance as of the
last day of the immediately preceding Collection Period or (b) when used with
respect to Principal Collections, 100% minus the sum of (i) the floating
allocation percentages for all outstanding Series that are in their revolving
periods with respect to such Collection Period plus the sum of the principal
allocation percentages for all outstanding Series of Investor Certificates that
are not in their revolving periods with respect to such Collection Period and
(ii) the percentage equivalent of a fraction, the numerator of which is the sum
of the Available Subordinated Amount as of the Determination Date occurring in
such Collection Period plus the sum of the aggregate available subordinate
amounts for all other Series of Investor Certificates as of such Determination
Date (in each case, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date immediately
following such Determination Date), and the denominator of which is the Pool
Balance as of the last day of such immediately preceding Collection Period.
"Excess Servicing", shall mean, with respect to any Distribution Date,
the amount, if any, specified pursuant to Section 4.6(a)(ix), with respect to
such Distribution Date.
"Expected Final Payment Date" shall mean the October, 1999
Distribution Date.
"Floating Allocation Percentage" shall mean, with respect to any
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Invested Amount as of
the last day of the immediately preceding Collection Period and the denominator
of which is the Pool Balance as of such last day; provided, however, that, with
respect to the first Collection Period, the Floating Allocation Percentage shall
mean the percentage equivalent of a fraction, the numerator of which is the sum
of the initial principal balances of the Certificates and the denominator of
which is the Pool Balance on the Series 1996-1 Cut-Off Date.
"Initial Invested Amount" shall equal the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount.
"Interest Funding Account" shall have the meaning specified in Section
4.4(b).
"Interest Payment Date" shall mean the Distribution Date in each
January, April, July and October or, if such day is not a Business Day, the next
Business Day; provided, however, that during an Early Amortization Period,
"Interest Payment Date" shall have
-10-
<PAGE>
the meaning assigned to the term "Distribution Date" in the Agreement; provided
further, however, that unless an Early Amortization Period shall have occurred
prior to the Distribution Date in December 1996, the first Interest Payment Date
shall be January 15, 1997.
"Interest Period" shall mean, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
"Invested Amount" shall mean, for any date, the sum of the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount.
"Investment Proceeds" shall mean, with respect to any Distribution
Date, all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Series 1996-1 Accounts, together with an
amount equal to the Series 1996-1 Allocation Percentage of the interest and
other investment earnings on funds held in the Collection Account credited as of
the related Determination Date to the Collection Account pursuant to Section 4.2
of the Agreement.
"Investor Default Amount" shall mean, with respect to any Distribution
Date, an amount equal to the product of (a) the Defaulted Amount for the related
Collection Period and (b) the Floating Allocation Percentage for the related
Collection Period.
"Investor Non-Principal Collections" shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) the Floating Allocation
Percentage for the related Collection Period and (ii) Non-Principal Collections
deposited in the Collection Account for the related Collection Period.
"Investor Principal Collections" shall mean, with respect to any
Distribution Date, the sum of (a) the product of (i) the Floating Allocation
Percentage, with respect to the Revolving Period, or the Principal Allocation
Percentage, with respect to the Accumulation Period or an Early Amortization
Period, for the related Collection Period (or any partial Collection Period
which occurs as the first Collection Period during an Early Amortization
Period), and (ii) Principal Collections for the related Collection Period (or
any partial Collection Period which occurs as the first Collection Period during
an Early Amortization Period) and (b) the amount, if any, of Non-Principal
Collections, funds in the Reserve Fund Excess Servicing and Available Seller's
Collections to be allocated in each case to cover the Investor Default Amount or
reimburse Class A, Class B or Class C Investor Charge-offs pursuant to Section
4.6(a)(vi), 4.6(a)(vii) or 4.8(b) (to the extent Section 4.8(b) relates to a
shortfall in distributions pursuant to Section 4.6(a)(vi) on such Distribution
Date) provided that in the case of clause (a), if for any Distribution Date the
sum of the Floating
-11-
<PAGE>
Allocation Percentage (if the Revolving Period is in effect), the Principal
Allocation Percentage (if the Early Amortization Period or the Accumulation
Period is in effect), the floating allocation percentages for all other
outstanding Series of Investor Certificates in their revolving periods and the
principal allocation percentages for all other outstanding Series of Investor
Certificates in their early amortization or accumulation periods exceeds 100%,
then Principal Collections shall be allocated among all Series (including Series
1996-1) pro rata on the basis of such floating allocation percentages and
principal allocation percentages.
"LIBOR" shall mean, with respect to any Interest Period, the offered
rates for deposits in United States dollars having a maturity of three months
(the "Index Maturity") commencing on the related Adjustment Date which appears
on the Telerate Page 3750 as of approximately 11:00 A.M., London time, on such
date of calculation. If at least two such offered rates appear on the Telerate
Page 3750, LIBOR will be the arithmetic mean (rounded upwards, if necessary, to
the nearest one-sixteenth of a percent) of such offered rates. If fewer than
two such quotations appear, LIBOR with respect to such Interest Period will be
determined at approximately 11:00 A.M., London time, on such Adjustment Date on
the basis of the rate at which deposits in United States dollars having the
Index Maturity are offered to prime banks in the London interbank market by four
major banks in the London interbank market selected by the Trustee and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time. The
Trustee will request the principal London office of each of such banks to
provide a quotation of its rate. If at least two such quotations are provided,
LIBOR will be the arithmetic mean (rounded upwards as aforesaid) of such
quotations. If fewer than two quotations are provided, LIBOR with respect to
such Interest Period will be the arithmetic mean (rounded upwards as aforesaid)
of the rates quoted at approximately 11:00 A.M., New York City time, on such
Adjustment Date by three major banks in New York, New York selected by the
Trustee for loans in United States dollars to leading European banks having the
Index Maturity and in a principal amount equal to an amount of not less than
U.S. $1,000,000 and that is representative for a single transaction in such
market at such time; provided, however, that if the banks selected as aforesaid
are not quoting as mentioned in this sentence, LIBOR in effect for the
applicable period will be LIBOR in effect for the previous period; provided,
further, however, that on any Adjustment Date during the Early Amortization
Period, the "Index Maturity" shall equal one month.
"London Business Day" shall mean any business day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
-12-
<PAGE>
"Monthly Interest" shall have the meaning specified in
Section 4.2.
"Monthly Principal" shall have the meaning specified in Section 4.3.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.1.
"Net Receivables Rate" shall mean, with respect to each Distribution
Date immediately following an Interest Period, (i) the weighted average of the
interest rates borne by the Receivables during the second Collection Period
preceding such Distribution Date (interest payments on the Receivables at such
rates being due and payable in the Collection Period preceding such Distribution
Date) plus (ii) the product of (x) the Monthly Payment Rate for the Collection
Period preceding such Distribution Date, (y) the Discount Factor for such
Distribution Date and (z) twelve less (iii) 2% per annum, unless the Servicing
Fee has been waived for such Collection Period.
"Principal Allocation Percentage" shall mean, with respect to any
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Invested Amount as of
the last day of the Revolving Period and the denominator of which is the Pool
Balance as of the last day of the immediately preceding Collection Period;
provided, however, that with respect to that portion of any Collection Period
that falls after the date on which any Early Amortization Event occurs (other
than an Early Amortization Event which has resulted in an Early Amortization
Period which has ended as described in clause (c) of the definition of Early
Amortization Period in the Agreement), the Principal Allocation Percentage shall
be reset using the Pool Balance as of the close of business on the date on which
such Early Amortization Event shall have occurred and Principal Collections
shall be allocated for such portion of such Collection Period using such reset
Principal Allocation Percentage.
"Principal Funding Account" shall have the meaning specified in
Section 4.4(c).
"Private Holder" shall mean each holder of a right to receive interest
or principal in respect of any direct or indirect interest in the Trust,
including any financial instrument or contract the value of which is determined
in whole or part by reference to the Trust (including the Trust's assets, income
of the Trust or distributions made by the Trust), excluding any interest in the
Trust represented by any Series or Class of Certificates or any other interests
as to which the Trustee has received an Opinion of Counsel to the effect that
such Series, Class or other interest will be treated as debt or otherwise not as
an equity interest in either the Trust or the Receivables for federal income tax
purposes (unless such interest is convertible or exchangeable into an interest
in the Trust or the Trust's income or such interest provides for payment of
equivalent value). Notwithstanding the immediately preceding sentence, "Private
Holder" shall also include any other Person that the Seller determines is a
"partner" within the meaning of Section 1.7704-1(h)(1)(ii) of the U.S. Treasury
Regulations (including by reason of Section 1.7704-1(h)(3)) or any successor
provision of law. Any Person holding more than one interest in the Trust, each
of which separately would cause such Person to be a Private Holder, shall be
treated as a single Private Holder. Each holder of an interest in a Private
Holder which is a
-13-
<PAGE>
partnership, S corporation or a grantor trust under the Internal Revenue Code
shall be treated as a Private Holder unless excepted with the consent of the
Seller (which consent shall be based on an Opinion of Counsel generally to the
effect that the action taken pursuant to the consent will not cause the Trust to
become a publicly traded partnership treated as a corporation). Notwithstanding
anything to the contrary herein, each Class C Certificateholder shall be
considered to be a Private Holder.
"Reassignment Amount" shall mean, with respect to any Distribution
Date, after giving effect to any deposits and distributions otherwise to be made
on such Distribution Date, the sum of (i) the Invested Amount on such
Distribution Date, (ii) accrued and unpaid interest on the unpaid principal
balance of the Series 1996-1 Certificates and (iii) the amount of Additional
Interest, if any, for such Distribution Date and any Additional Interest
previously due but not distributed to the Series 1996-1 Certificateholders on a
prior Distribution Date.
"Required Participation Percentage" shall mean, with respect to Series
1996-1, 105%; provided, however, that the Seller may, upon 10 days' prior notice
to the Trustee, each Rating Agency and any Enhancement Provider, reduce the
Required Participation Percentage to a percentage which shall not be less than
100%; provided that the Rating Agency Condition is satisfied.
"Required Subordination Draw Amount" shall mean, for a Distribution
Date, the lesser of (x) the Deficiency Amount and (y) the Available Subordinated
Amount for the related Determination Date.
"Reserve Fund" shall have the meaning specified in Section 4.4(a).
"Reserve Fund Deposit Amount" shall mean, with respect to any
Distribution Date, the amount, if any, by which (i) the Reserve Fund Required
Amount for such Distribution Date exceeds (ii) the amount of funds in the
Reserve Fund after giving effect to any withdrawals therefrom on such
Distribution Date.
"Reserve Fund Required Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) two percent (2%) and
(b) the aggregate outstanding principal balance of the Certificates as of such
Distribution Date (after giving effect to any changes therein on such
Distribution Date).
"Revolving Period" shall mean the period beginning at the close of
business on the Business Day immediately preceding the Closing Date and ending
on the earlier of (a) the close of business on the day immediately preceding the
Accumulation Period Commencement Date, and (b) the close of business on the day
an
-14-
<PAGE>
Early Amortization Period commences; provided, however, that, if any Early
Amortization Period ends as described in clause (c) of the definition of Early
Amortization Period in the Agreement, the Revolving Period will recommence as of
the close of business on the day such Early Amortization Period ends.
"Seller's Collections" shall mean, with respect to any Collection
Period, the sum of (a) the Seller's Percentage of Non-Principal Collections for
the related Collection Period, plus (b) the Seller's Percentage of Principal
Collections for the related Collection Period.
"Seller's Percentage" for any Collection Period shall mean (i) with
respect to Non-Principal Collections and Defaulted Receivables, 100% minus the
aggregate of the floating allocation percentages for each outstanding Series and
(ii) with respect to Principal Collections, 100% minus the sum of (a) the
aggregate of the floating allocating percentages for all Series in their
revolving periods and (b) the aggregate of the principal allocation percentages
for all Series that are not in their revolving periods, but in any case shall
not be less than 0%.
"Series 1996-1" shall mean the Series of Investor Certificates, the
terms of which are specified in this Series Supplement.
"Series 1996-1 Accounts" shall have the meaning specified in
Section 4.4(e).
"Series 1996-1 Allocation Percentage" for a Collection Period shall
mean the percentage equivalent of a fraction, the numerator of which is the
Invested Amount on the last Business Day preceding such Collection Period and
the denominator of which is the Trust Invested Amount on the last Business Day
preceding such Collection Period.
"Series 1996-1 Certificateholders" shall mean, collectively, the
Class A Certificateholders, the Class B Certificateholders and the Class C
Certificateholders.
"Series 1996-1 Certificateholders' Interest" shall mean that portion
of the Certificateholders' Interest evidenced by the Series 1996-1 Certificates.
"Series 1996-1 Certificates" shall mean, collectively, the Class A
Certificates, the Class B Certificates and the Class C Certificates.
"Series 1996-1 Cut-Off Date" shall mean July 31, 1996.
-15-
<PAGE>
"Series 1996-1 Excess Principal Collection" shall mean that portion of
Excess Principal Collections allocated to Series 1996-1 pursuant to Section
4.11.
"Series 1996-1 Principal Shortfall" with respect to any Distribution
Date, shall equal the excess of (i) (x) for any Distribution Date with respect
to the Accumulation Period, the Controlled Distribution Amount or (y) for any
Distribution Date with respect to an Early Amortization Period, the Invested
Amount, over (ii) Available Investor Principal Collections for such Distribution
Date (excluding any portion thereof attributable to Excess Principal
Collections).
"Servicing Fee Rate" shall mean, with respect to Series 1996-1, 2.00% or,
for any Distribution Date in respect of which the Monthly Servicing Fee has been
waived, 0%.
"Special Payment Date" shall mean each Distribution Date with respect
to an Early Amortization Period (other than an Early Amortization Period that
has ended as described in clause (c) of the definition of Early Amortization
Period in the Agreement).
"Telerate Page 3750" shall mean the display designated as page 3750 on
Telerate (or such other page as may replace such page on that service for the
purpose of displaying London interbank offered rates of major banks).
"Termination Date" shall mean the October, 2001 Distribution Date.
"Termination Proceeds" shall mean any proceeds arising out of a sale of
Receivables (or interests therein) pursuant to Section 12.2(c) of the Agreement
with respect to Series 1996-1.
(b) Notwithstanding anything to the contrary in this Series Supplement or
the Agreement, the term "Rating Agency" shall mean, whenever used in this Series
Supplement or the Agreement with respect to Series 1996-1, Standard & Poor's,
Moody's and Fitch's. As used in this Series Supplement and in the Agreement with
respect to Series 1996-1, "highest investment category" shall mean (i) in the
case of Standard & Poor's, AAA and A-1+, as applicable, (ii) in the case of
Moody's, Aaa and P-1, as applicable, and (iii) in the case of Fitch's, AAA and
F-1, as applicable.
(c) All capitalized terms used herein and not otherwise defined herein
have the meanings ascribed to them in the Agreement. The definitions in Section
2.1 are applicable to the singular as well as the plural forms of such terms and
to the masculine as well as to the feminine and neuter genders of such terms.
-16-
<PAGE>
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Series Supplement shall refer to this Series Supplement
as a whole and not to any particular provision of this Series Supplement;
references to any Article, Section or Exhibit are references to Articles,
Sections and Exhibits in or to this Series Supplement unless otherwise
specified; and the term "including" means "including without limitation".
ARTICLE III
Servicing Fee
-------------
SECTION 3.1. Servicing Compensation. The monthly servicing fee (the
"Monthly Servicing Fee") shall be payable to the Servicer, in arrears, on each
Distribution Date in respect of any Collection Period (or portion thereof)
occurring prior to the earlier of the first Distribution Date following the
Termination Date and the first Distribution Date on which the Invested Amount is
zero, in an amount equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the Series 1996-1 Allocation Percentage of the Pool Balance as of
the last day of the second Collection Period preceding such Distribution Date
(or with respect to the first Distribution Date for Series 1996-1, as of the
Closing Date). The share of the Servicing Fee allocable to the Series 1996-1
Certificateholders with respect to any Distribution Date (the
"Certificateholders' Monthly Servicing Fee") shall be equal to one-twelfth of
the product of (a) the Servicing Fee Rate and (b) the Invested Amount as of the
last day of the Collection Period second preceding such Distribution Date;
provided, however, that with respect to the first Distribution Date for Series
1996-1, clause (b) of this sentence shall be deemed to refer only to the sum of
the initial principal amounts of the Certificates. Notwithstanding the
foregoing, with respect to the first Distribution Date for Series 1996-1, each
reference in the preceding sentences of this Section to one-twelfth will be
deemed to be replaced by a fraction, the numerator of which is the number of
days from but excluding the Closing Date to and including the last day of the
month in which the Closing Date occurs and the denominator of which is 360.
The remainder of the Monthly Servicing Fee shall be paid by the Seller and
in no event shall the Trust, the Trustee or the Series 1996-1 Certificateholders
be liable for the share of the Monthly Servicing Fee to be paid by the Seller;
and the remainder of the Servicing Fee shall be paid by the Seller and the
Investor Certificateholders of other Series and the Series 1996-1
Certificateholders shall in no event be liable for the share of the Servicing
Fee to be paid by the Seller or the Investor Certificateholders of other Series.
The Certificateholders' Monthly Servicing Fee shall be payable to the Servicer
solely to the extent amounts are available for distribution in accordance with
the terms of this Series Supplement.
The Servicer will be permitted, in its sole discretion, to waive the
Monthly Servicing Fee for any Distribution Date by notice to the Trustee on or
before the related Determination Date; provided that the Servicer believes that
sufficient Collections of Non-Principal Receivables will be available on any
future
-17-
<PAGE>
Distribution Date to pay the Certificateholders' Monthly Servicing Fee relating
to the waived Monthly Servicing Fee. If the Servicer so waives the Monthly
Servicing Fee for any Distribution Date, the Monthly Servicing Fee and the
Certificateholders' Monthly Servicing Fee for such Distribution Date shall be
deemed to be zero for all purposes of this Series Supplement and the Agreement;
provided, however, that such Certificateholders' Monthly Servicing Fee shall be
paid on a future Distribution Date solely to the extent amounts are available
therefor pursuant to Section 4.10(a); provided further, however, that, to the
extent any such waived Certificateholders' Monthly Servicing Fee is so paid, the
related portion of the Monthly Servicing Fee to be paid by the Seller shall be
paid by the Seller to the Servicer.
ARTICLE IV
Rights of Series 1996-1 Certificateholders and
----------------------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.1. Allocations; Payments to Seller. (a) Subject to Section
4.3(c) of the Agreement, Collections of Non-Principal Receivables and Principal
Receivables, Miscellaneous Payments and Defaulted Amounts, as they relate to
Series 1996-1, shall be allocated and distributed as set forth in this Article
IV.
(b) The Servicer shall instruct the Trustee to withdraw from the
Collection Account and pay to the Seller on the dates set forth below the
following amounts (to the extent, if any, that the Seller's Collections have
been deposited into the Collection Account):
(i) on each Deposit Date:
(A) an amount equal to the Excess Seller's Percentage for the related
Collection Period of Non-Principal Collections deposited in the Collection
Account for such Deposit Date; and
(B) an amount equal to the Excess Seller's Percentage for the related
Collection Period of Principal Collections deposited in the Collection
Account for such Deposit Date, if the Seller's Participation Amount
(determined after giving effect to any Principal Receivables transferred to
the Trust on such Deposit Date) exceeds the Trust Available Subordinated
Amount for the immediately preceding Determination Date (after giving
effect to the allocations, distributions, withdrawals and deposits to be
made on the Distribution Date immediately following such Determination
Date); and
(ii) on each Deposit Date with respect to the Revolving Period or the
revolving period for any other Series of Investor
-18-
<PAGE>
Certificates, an amount equal to the Available Seller's Principal Collections
for such Deposit Date, if the Seller's Participation Amount (determined after
giving effect to any Principal Receivables transferred to the Trust on such
Deposit Date) exceeds the Trust Available Subordinated Amount for the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals, and deposits to be made on the
Distribution Date immediately following such Deposit Date).
The withdrawals to be made from the Collection Account pursuant to this
Section 4.1(b) do not apply to deposits into the Collection Account that do not
represent Collections, including Miscellaneous Payments, payment of the purchase
price for the Certificateholders' Interest pursuant to Section 2.3 of the
Agreement, payment of the purchase price for the Series 1996-1
Certificateholders' Interest pursuant to Section 7.1 of this Series Supplement
and proceeds from the sale, disposition or liquidation of Receivables pursuant
to Section 9.2 or 12.2 of the Agreement.
SECTION 4.2. Monthly Interest; Determination of Certificate Rate.
(a) "Monthly Interest" with respect to the Series 1996-1 Certificates on any
Distribution Date shall be an amount equal to the sum of the Class A Monthly
Interest, the Class B Monthly Interest and the Class C Monthly Interest.
Interest on the respective outstanding principal balance of each Class of
Certificates will accrue at the Class A Certificate Rate, Class B Certificate
Rate or Class C Certificate Rate, as applicable, and will be payable to
Certificateholders on each Interest Payment Date.
On the Determination Date preceding each Interest Payment Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the sum of (i) the Class A Monthly Interest for the Interest Period
applicable to such Interest Payment Date plus (ii) the Class A Monthly Interest
for each Interest Period applicable to each other Distribution Date, if any,
occurring after the immediately preceding Interest Payment Date (or with respect
to the first Interest Payment Date, after the Closing Date) over (y) the
amount which will be available to be paid to the Class A Certificateholders from
the Interest Funding Account on such Interest Payment Date in respect thereof
pursuant to this Series Supplement. If, as of any Interest Payment Date, an
amount covering any Class A Interest Shortfall for any prior Interest Payment
Date shall not have been deposited into the Interest Funding Account, then an
additional amount ("Class A Additional Interest") equal to the product of (i)
the Class A Certificate Rate, (ii) a fraction the numerator of which is the
actual number of days in the period from and including such prior Interest
Payment Date to but excluding the current Interest Payment Date and the
denominator of which is 360, and (iii) such Class A Interest Shortfall (or the
portion thereof which has not been paid or deposited in the Interest Funding
Account), shall be payable as set forth in Section 4.7 with respect to the Class
A Certificates. Notwithstanding anything to the contrary herein, Class A
Additional Interest shall be payable to the Interest Funding Account or
distributed to Class A Certificateholders only to the extent permitted by
applicable law.
-19-
<PAGE>
On the Determination Date preceding each Interest Payment Date, the
Servicer shall determine the excess, if any (the "Class B Interest Shortfall"),
of (x) the sum of (i) the Class B Monthly Interest for the Interest Period
applicable to such Interest Payment Date plus (ii) the Class B Monthly Interest
for each Interest Period applicable to each other Distribution Date, if any,
occurring after the immediately preceding Interest Payment Date (or with respect
to the first Interest Payment Date, after the Closing Date) over (y) the amount
which will be available to be paid to the Class B Certificateholders from the
Interest Funding Account on such Interest Payment Date in respect thereof
pursuant to this Series Supplement. If, as of any Interest Payment Date, an
amount covering any Class B Interest Shortfall for any prior Interest Payment
Date shall not have been deposited into the Interest Funding Account, then an
additional amount ("Class B Additional Interest") equal to the product of (i)
the Class B Certificate Rate, (ii) a fraction the numerator of which is the
actual number of days in the period from and including such prior Interest
Payment Date to but excluding the current Interest Payment Date and the
denominator of which is 360, and (iii) such Class B Interest Shortfall (or the
portion thereof which has not been paid or deposited in the Interest Funding
Account), shall be payable as set forth in Section 4.7 with respect to the Class
B Certificates. Notwithstanding anything to the contrary herein, Class B
Additional Interest shall be payable to the Interest Funding Account or
distributed to Class B Certificateholders only to the extent permitted by
applicable law.
On the Determination Date preceding each Interest Payment Date, the
Servicer shall determine the excess, if any (the "Class C Interest Shortfall"),
of (x) the sum of (i) the Class C Monthly Interest for the Interest Period
applicable to such Interest Payment Date plus (ii) the Class C Monthly Interest
for each Interest Period applicable to each other Distribution Date, if any,
occurring after the immediately preceding Interest Payment Date (or with respect
to the first Interest Payment Date, after the Closing Date) over (y) the
amount which will be available to be paid to the Class C Certificateholders from
the Interest Funding Account on such Interest Payment Date in respect thereof
pursuant to this Series Supplement. If, as of any Interest Payment Date, an
amount covering any Class C Interest Shortfall for any prior Interest Payment
Date shall not have been deposited into the Interest Funding Account, then an
additional amount ("Class C Additional Interest") equal to the product of (i)
the Class C Certificate Rate, (ii) a fraction the numerator of which is the
actual number of days in the period from and including such prior Interest
Payment Date to but excluding the current Interest Payment Date and the
denominator of which is 360, and (iii) such Class C Interest Shortfall (or the
portion thereof which has not been paid or deposited in the Interest Funding
Account), shall be payable as set forth in Section 4.7 with respect to the Class
C Certificates. Notwithstanding anything to the contrary herein, Class C
Additional Interest shall be payable to the Interest Funding Account or
-20-
<PAGE>
distributed to Class C Certificateholders only to the extent permitted by
applicable law.
(b) The Distribution Date Statement will specify the applicable Net
Receivables Rate for the next Interest Period. Based on such Distribution Date
Statement (and on the Trustee's calculation of LIBOR) the Trustee shall
determine the Class A, Class B and Class C Certificate Rates for each Interest
Period on the Determination Date immediately preceding each Interest Period. The
Trustee shall notify the Servicer on each Adjustment Date (or in the case of the
date specified in the proviso to the definition of Adjustment Date, promptly
following such date) of the Trustee's determination of LIBOR. The establishment
of LIBOR on each Adjustment Date by the Trustee and the Trustee's calculation of
the Class A, Class B and Class C Certificate Rates will (in the absence of
manifest error) be final and binding.
SECTION 4.3. Determination of Monthly Principal. The amount of monthly
principal ("Monthly Principal") distributable with respect to the Series 1996-1
Certificates on each Distribution Date with respect to an Early Amortization
Period and the Accumulation Period shall be equal to the Available Investor
Principal Collections with respect to such Distribution Date; provided, however,
that for each Distribution Date with respect to the Accumulation Period, Monthly
Principal shall not exceed the Controlled Distribution Amount for such
Distribution Date; and provided further, however, that Monthly Principal shall
not exceed the outstanding principal balance of the Series 1996-1 Certificates.
SECTION 4.4. Establishment of Reserve Fund and Funding Accounts.
(a)(i) The Servicer, for the benefit of the Series 1996-1 Certificateholders,
shall cause to be established and maintained in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Reserve Fund") which
shall be identified as the "Reserve Fund for the Deutsche Floorplan Receivables
Master Trust, Series 1996-1" and shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series 1996-1
Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Reserve
Fund shall be invested by the Trustee in Eligible Investments selected by the
Servicer that will mature so that such funds will be available at the close of
business on or before the Business Day next preceding the following Distribution
Date. All Eligible Investments shall be held by the Trustee for the benefit of
the Series 1996-1 Certificateholders. On each Distribution Date, all interest
and other investment earnings (net of losses and investment expenses) on funds
on deposit in the Reserve Fund received prior to such Distribution Date shall be
applied as set forth in Section 4.6(a) of this Series Supplement. Funds
deposited in the Reserve Fund on the Business Day preceding a Distribution Date
are not required to be invested overnight.
-21-
<PAGE>
(b)(i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Interest Funding
Account"), which shall be identified as the "Interest Funding Account for the
Deutsche Floorplan Receivables Master Trust, Series 1996-1" and shall bear a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 1996-1 Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Interest
Funding Account shall be invested by the Trustee in Eligible Investments
selected by the Servicer that will mature so that such funds will be available
at the close of business on or before the Business Day next preceding the
following Distribution Date. All such Eligible Investments shall be held by the
Trustee for the benefit of the Series 1996-1 Certificateholders. On each
Distribution Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Interest Funding Account shall
be applied as set forth in Section 4.6(a) of this Series Supplement. Funds
deposited in the Interest Funding Account on any Distribution Date (which are
not distributed to Certificateholders pursuant to Section 4.7 on such
Distribution Date) shall be invested at the direction of the Servicer in
Eligible Investments that will mature so that such funds will be available on or
before the close of business on the Business Day preceding the next following
Distribution Date. Funds deposited in the Interest Funding Account on the
Business Day preceding a Distribution Date are not required to be invested
overnight.
(c)(i) The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account (the "Principal Funding Account"), which shall be
identified as the "Principal Funding Account for Deutsche Floorplan Receivables
Master Trust, Series 1996-1" and shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series 1996-1
Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Principal
Funding Account shall be invested by the Trustee in Eligible Investments
selected by the Servicer that will mature so that such funds will be available
at the close of business on or before the Business Day next preceding the
following Distribution Date. All such Eligible Investments shall be held by the
Trustee for the benefit of the Series 1996-1 Certificateholders. On each
Distribution Date all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit therein shall be applied as set forth
in Section 4.6(a) of this Series Supplement. Funds on deposit in the Principal
Funding Account (which are not distributed to Certificateholders pursuant to
Section 4.7 on such Distribution Date) shall be invested at the
-22-
<PAGE>
direction of the Servicer in Eligible Investments that will mature so that such
funds will be available on or before the close of business on the Business Day
next preceding the following Distribution Date. Funds deposited in the Principal
Funding Account on the Business Day preceding the Expected Final Payment Date
are not required to be invested overnight.
(d)(i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Excess Funding Account"),
which shall be identified as the "Excess Funding Account for Deutsche Floorplan
Receivables Master Trust, Series 1996-1" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1996-1 Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Excess
Funding Account shall be invested by the Trustee in Eligible Investments
selected by the Servicer. All such Eligible Investments shall be held by the
Trustee for the benefit of the Series 1996-1 Certificateholders. On each
Distribution Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Excess Funding Account shall be
applied as set forth in Section 4.6(a) of this Series Supplement. Funds
deposited in the Excess Funding Account on any Distribution Date shall be
invested in Eligible Investments that will mature so that such funds will be
available on or before the close of business on the Business Day next preceding
the following Distribution Date; provided that if, pursuant to Section 4.12,
deposits to and withdrawals from the Excess Funding Account are being made on a
weekly or daily basis, then such Eligible Investments shall mature on each
Business Day on a weekly or daily basis, as the case may be; provided further
that such Eligible Investments shall still mature so that funds will be
available on or before the close of business on the Business Day next preceding
the following Distribution Date. Funds deposited in the Excess Funding Account
on the Business Day preceding a Distribution Date are not required to be
invested overnight.
(e)(i) The Trustee shall possess all right, title and interest in and
to all funds on deposit from time to time in, and all Eligible Investments
credited to, the Reserve Fund, the Interest Funding Account, the Principal
Funding Account and the Excess Funding Account (collectively, the "Series 1996-1
Accounts") and in all proceeds thereof. The Series 1996-1 Accounts shall be
under the sole dominion and control of the Trustee for the benefit of the
Certificateholders. If, at any time, any of the Series 1996-1 Accounts ceases
to be an Eligible Deposit Account, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Series 1996-1
-23-
<PAGE>
Account meeting the conditions specified in paragraph (a)(i), (b)(i), (c)(i) or
(d)(i) above, as applicable, as an Eligible Deposit Account and shall transfer
any cash and/or investments to such new Series 1996-1 Account. Neither the
Seller, the Servicer nor any other Person or entity claiming by, through or
under the Seller, the Servicer or any such other Person or entity shall have any
right, title or interest in, or any right to withdraw any amount from, any
Series 1996-1 Account, except as expressly provided herein. Schedule 1, which is
hereby incorporated into and made part of this Series Supplement, identifies
each Series 1996-1 Account by setting forth the account number of each such
account, the account designation of each such account and the name of the
institution with which such account has been established. If a substitute Series
1996-1 Account is established pursuant to this Section, the Servicer shall
provide to the Trustee an amended Schedule 1, setting forth the relevant
information for such substitute Series 1996-1 Account.
(ii) Pursuant to the authority granted to the Servicer in Section 3.1(a)
of the Agreement, the Servicer shall have the power, revocable by the Trustee,
to make withdrawals and payments or to instruct the Trustee to take withdrawals
and payments from the Series 1996-1 Accounts for the purposes of carrying out
the Servicer's or the Trustee's duties hereunder.
(f) Unless otherwise agreed to by the Rating Agencies, at no time may
funds on deposit in any Series 1996-1 Account in an amount greater than 10% of
the outstanding principal balance of the Certificates be invested in Eligible
Investments (other than obligations of the United States government or
investments in a mutual fund that does not have credit concentrations greater
than 10%) of any single entity or its Affiliates.
SECTION 4.5. Deficiency Amount. With respect to each Distribution Date,
on the related Determination Date, the Servicer shall determine the amount (the
"Deficiency Amount"), if any, by which
(a) the sum of
(i) the Monthly Interest for such Distribution Date,
(ii) any Monthly Interest for any prior Distribution Dates
required to be but not deposited in the Interest Funding Account on
a prior Distribution Date,
(iii) Additional Interest, if any, for such Distribution Date
and any Additional Interest for any prior Distribution Dates required
to be but not deposited into the Interest Funding Account on a prior
Distribution Date (to the extent permitted by applicable law),
-24-
<PAGE>
(iv) the Certificateholders' Monthly Servicing Fee for such
Distribution Date,
(v) the Investor Default Amount, if any, for such
Distribution Date, and
(vi) the Series 1996-1 Allocation Percentage of the amounts of
any Adjustment Payment required to be deposited in the Collection
Account pursuant to Section 3.9(a) of the Agreement with respect to
the related Collection Period that has not been so deposited as of
such Determination Date
exceeds
(b) the sum of Investor Non-Principal Collections for such
Distribution Date plus any Investment Proceeds, if any, with
respect to such Distribution Date.
SECTION 4.6. Application of Investor Non-Principal Collections, Investment
Proceeds and Available Investor Principal Collections. The Servicer shall cause
the Trustee (by setting forth the following amounts in the related Distribution
Date Statement) to make the following distributions on each Distribution Date:
(a) On each Distribution Date, an amount equal to the sum of Investor Non-
Principal Collections and any Investment Proceeds with respect to such
Distribution Date will be distributed in the following priority:
(i) first, an amount equal to the Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest for any
prior Distribution Dates not deposited in the Interest Funding Account or
distributed to the Class A Certificateholders on such prior Distribution
Dates plus (but only to the extent permitted under applicable law) the
amount of any Class A Additional Interest for the immediately preceding
Interest Payment Date that has not been deposited in the Interest Funding
Account and, without duplication, any Class A Additional Interest
previously due but not deposited in the Interest Funding Account or
distributed to the Class A Certificateholders on prior
-25-
<PAGE>
Distribution Dates, shall be deposited to the Interest Funding
Account;
(ii) second, an amount equal to the Class B Monthly Interest for
such Distribution Date, plus the amount of any Class B Monthly
Interest for any prior Distribution Dates not deposited in the
Interest Funding Account or distributed to the Class B
Certificateholders on such prior Distribution Dates plus (but only to
the extent permitted under applicable law) the amount of any Class B
Additional Interest for the immediately preceding Interest Payment
Date that has not been deposited in the Interest Funding Account and,
without duplication, any Class B Additional Interest previously due
but not deposited in the Interest Funding Account or distributed to
the Class B Certificateholders on prior Distribution Dates, shall be
deposited to the Interest Funding Account;
(iii) third, an amount equal to the Class C Monthly Interest for
such Distribution Date, plus the amount of any Class C Monthly
Interest for any prior Distribution Dates not deposited in the
Interest Funding Account or distributed to the Class C
Certificateholders on such prior Distribution Dates plus (but only to
the extent permitted under applicable law) the amount of any Class C
Additional Interest for the immediately preceding Interest Payment
Date that has not been deposited in the Interest Funding Account and,
without duplication any Class C Additional Interest previously due but
not deposited in the Interest Funding Account or distributed to the
Class C Certificateholders on prior Distribution Dates, shall be
deposited to the Interest Funding Account;
(iv) fourth, an amount equal to the Certificateholders' Monthly
Servicing Fee for such Distribution Date shall be distributed to the
Servicer (unless such amount has been netted against deposits to the
Collection Account or waived);
(v) fifth, an amount equal to the Reserve Fund Deposit Amount,
if any, for such Distribution Date shall be deposited in the Reserve
Fund;
(vi) sixth, an amount equal to the Investor Default Amount, if
any, for such Distribution Date shall be treated as a portion of
Investor Principal Collections for such Distribution Date;
(vii) seventh, an amount required to reimburse unreimbursed
Class A Investor Charge-Offs, Class B Investor Charge-Offs and Class C
Investor Charge-Offs pursuant to Section 4.9 shall be treated as a
portion of Investor Principal Collections for such Distribution
Date;
-26-
<PAGE>
(viii) eighth, any previously undistributed Carry-over Amount
shall be deposited in the Interest Funding Account; and
(ix) ninth, the balance, if any, shall constitute "Excess
Servicing" and shall be allocated and distributed as set forth in
Section 4.10.
(b) On each Distribution Date with respect to the Revolving Period,
an amount equal to the Available Investor Principal Collections deposited in the
Collection Account for the related Collection Period shall be applied in the
following priority:
(i) first, if (A) the Pool Balance at the end of the preceding
Collection Period is less than the Pool Balance at the end of the
second preceding Collection Period and (B) the Pool Balance at the end
of the preceding Collection Period is less than the Required
Participation Amount for such Distribution Date (calculated before
giving effect to any deposits to the Excess Funding Account and any
excess funding account for any other Series in their revolving periods
to be made on such Distribution Date), then the Servicer shall cause
to be deposited into the Excess Funding Account an amount which will
reduce the Invested Amount such that, together with the deposits to
the excess funding accounts (and the resulting reductions in the
invested amounts) for other outstanding Series in their revolving
periods for such Distribution Date, the Pool Balance is equal to the
Required Participation Amount, and
(ii) second, an amount equal to the balance (such balance being
part of "Excess Principal Collections"), if any, of such Available
Investor Principal Collections shall be applied in accordance with
Section 4.4 of the Agreement.
For purposes of determining the amount to be applied pursuant to subparagraph
(i) above, allocations of the amounts to be deposited in the Excess Funding
Account and the excess funding account for other outstanding Series shall be
made pro rata on the basis of the invested amounts (including the Invested
Amount for Series 1996-1).
If the Servicer has elected in respect of a Collection Period to make
withdrawals from the Excess Funding Account on a daily or weekly basis pursuant
to Section 4.12(b), then deposits into the Excess Funding Account required by
this Section 4.6(b) shall be made on each Business Day in such Collection Period
(if daily withdrawals and deposits have been elected) or on each Wednesday (or
the next succeeding Business Day if such Wednesday is not a Business Day) in
such Collection Period (if weekly withdrawals and deposits have been elected).
In the case of such election, the Pool Balance referred to in clause (B) above
shall be the Pool Balance on the preceding Business Day, in the case of an
election
-27-
<PAGE>
to make daily deposits and withdrawals, and on the Monday next preceding the
related Wednesday, in the case of an election to make weekly deposits and
withdrawals.
(c) On each Distribution Date (x) with respect to the Accumulation
tion Period or (y) an Early Amortization Period (if a Responsible Officer
of the Trustee has actual knowledge of such Early Amortization Period), an
amount equal to the Available Investor Principal Collections will be
distributed in the following priority:
(i) first, an amount equal to Monthly Principal for such Distribution
Date shall be deposited by the Servicer or the Trustee into the Principal
Funding Account; and
(ii) second, for each Distribution Date with respect to the
Accumulation Period (unless an Early Amortization Event has occurred), an
amount equal to the balance (such balance being part of "Excess Principal
Collections"), if any, of such Available Investor Principal Collections
shall be applied in accordance with Section 4.4 of the Agreement.
SECTION 4.7. Distributions to Series 1996-1 Certificateholders. (a)
The Servicer shall direct the Trustee to make the following distributions at the
following times from the Interest Funding Account, the Principal Funding Account
and the Excess Funding Account:
(i) on each Distribution Date which is an Interest Payment Date,
all amounts on deposit in the Interest Funding Account shall be
distributed to the Series 1996-1 Certificateholders in the following
order of priority:
(A) first, to the Class A Certificateholders, an amount
equal to (i) the sum of Class A Monthly Interest for such
Distribution Date, plus the Class A Monthly Interest for any
prior Distribution Date, if any, occurring after the immediately
preceding Interest Payment Date (or with respect to the first
Interest Payment Date, after the Closing Date), plus (ii) any
amount determined on any prior Interest Payment Date pursuant to
clause (i) of this paragraph (A) that was not distributed on any
Interest Payment Date prior to the current Interest Payment Date,
plus (iii) to the extent permitted under applicable law, the
amount of any Class A Additional Interest for the current
Interest Payment Date and, without duplication, any Class A
Additional Interest previously due but not distributed;
-28-
<PAGE>
(B) second, to the Class B Certificateholders, and amount
equal to (i) the sum of Class B Monthly Interest for such
Distribution Date,if any, occurring after the immediately
preceding Interest Payment Date (or with respect to the first
Interest Payment Date, after the Closing Date), plus (ii) any
amount determined on any prior Interest Payment Date pursuant to
clause (i) of this paragraph (B) that was not distributed on any
Interest Payment Date prior to the current Interest Payment Date,
plus (iii) to the extent permitted under applicable law,
the amount of any Class B Additional Interest for the current
Interest Payment Date and, without duplication, any Class B
Additional Interest previously due but not distributed;
(C) third, to the Class C Certificateholders, an amount
equal to (i) the sum of Class C Monthly Interest for such
Distribution Date plus the Class C Monthly Interest for any prior
Distribution Dates, if any, occurring after the immediately
preceding Interest Payment Date (or with respect to the first
Interest Payment Date, after the Closing Date), plus (ii) any
amount determined on any prior Interest Payment Date pursuant to
clause (i) of this paragraph (C) that was not distributed on any
Interest Payment Date prior to the current Interest Payment Date,
plus (iii) to the extent permitted under applicable law, the
amount of any Class C Additional Interest for the current
Interest Payment Date and, without duplication, any Class C
Additional Interest previously due but not distributed;
(D) fourth, to the Class A Certificateholders, the sum of
any Class A Carry-over Amount for such Distribution Date plus any
Class A Carry-over Amount for each other Distribution Date, if
any, occurring after the immediately preceding Interest Payment
Date (or with respect to the first Interest Payment Date, after
the Closing Date);
(E) fifth, to the Class B Certificateholders, the sum of any
Class B Carry-over Amount for such Distribution Date plus any
Class B Carry-over Amount for each other Distribution Date, if
any, occurring after the immediately preceding Interest Payment
Date (or with respect to the first Interest Payment Date, after
the Closing Date); and
(F) sixth, to the Class C Certificateholders, the sum of any
Class C Carry-over Amount for such Distribution Date plus any
Class C Carry-over Amount for each other Distribution Date, if
any, occurring after the immediately preceding Interest Payment
Date (or with respect to the first Interest Payment Date, after
the Closing Date).
(ii) on each Special Payment Date (if a Responsible Officer of
the Trustee has actual knowledge of the Early Amortization Period) and
on the Expected Final Payment Date, all amounts on deposit in the
Principal Funding Account, the Excess Funding Account and (after
giving effect to the application pursuant to Section 4.7(a)(i)) the
Interest Funding Account, shall be distributed to the Series 1996-1
Certificateholders in the following order of priority: (A) first, to
the Class A Certificateholders until the outstanding principal balance
of the Class A Certificates has
-29-
<PAGE>
been reduced to zero; (B) second, to the Class B Certificateholders
until the outstanding principal balance of the Class B Certificates
has been reduced to zero; and (C) to the Class C Certificateholders
until the outstanding principal balance of the Class C Certificates
has been reduced to zero; provided, however, that the maximum amount
distributed pursuant to this clause (ii) on any such day shall not
exceed the excess of (x) the sum of the outstanding principal balance
of the Class A, Class B and Class C Certificates, as applicable, over
(y) the sum of the unreimbursed Class A, Class B and Class C Investor
Charge-Offs, each on such day.
(b) The distributions to be made pursuant to this Section are
subject to the provisions of Sections 2.3, 9.2, 10.1 and 12.2 of the Agreement
and Section 8.1 and 8.2 of this Series Supplement.
SECTION 4.8. Application of Reserve Fund and Available Subordinated
Amount. (a) If Investor Non-Principal Collections and Investment Proceeds
allocated to Series 1996-1 Certificateholders on any Distribution Date pursuant
to Section 4.6(a) are not sufficient to make the entire distributions required
on such Distribution Date by Section 4.6(a)(i), (ii), (iii), (iv) and (vi), the
Servicer shall direct the Trustee to withdraw funds from the Reserve Fund to the
extent available therein, and apply such funds to complete the distributions
pursuant to Section 4.6(a)(i), (ii), (iii), (iv) and (vi) in the numerical
order thereof.
(b) If there is a Required Subordination Draw Amount for such
Distribution Date, the Servicer shall, subject to the following paragraph, apply
or direct the Trustee to apply the Available Seller's Collections on deposit in
the Collection Account on such Distribution Date, but only up to the amount of
the Required Subordination Draw Amount, to make up the shortfall in the
distributions required by Sections 4.6(a)(i), (ii), (iii), (iv) and (vi) and
that have not been made through application of funds from the Reserve Fund
pursuant to Section 4.8(a). Any such Available Seller's Collections remaining
after the application thereof pursuant to the preceding sentence shall be
treated as a portion of Available Investor Principal Collections for such
Distribution Date, but only up to the amount of unpaid Adjustment Payments
allocated to Series 1996-1 as described in Section 4.5(a)(vi). If the Required
Subordination Draw Amount exceeds Available Seller's Collections for such
Distribution Date, the Available Subordinated Amount shall be reduced in
accordance with clause (ii) of the definition of Available Subordinated Amount
in an amount equal to such Available Seller's Collections.
If for such Distribution Date the sum of the Required Subordination Draw
Amount and the aggregate of the required subordination draw amounts for all
other Series outstanding exceeds the Available Seller's Collections on deposit
in the Collection Account on such Distribution Date, then such Available
Seller's Collections shall be allocated to such Series (including Series 1996-1)
pro rata on the basis of such required subordination draw amounts (including the
Required Subordination Draw Amount).
-30-
<PAGE>
(c) On the Termination Date, any funds in the Reserve Fund will be
treated as Available Investor Principal Collections. Upon payment in full of
the outstanding principal balance of the Series 1996-1 Certificates, any funds
remaining on deposit in the Reserve Fund shall be paid to the Seller.
(d) The balance of Available Seller's Collections on any Distribution
Date, after giving effect to any distributions thereof pursuant to Section
4.8(b) and the distributions in respect of other Series shall be distributed to
the Seller on such Distribution Date.
SECTION 4.9. Investor Charge-Offs. If, on any Distribution Date on
which (after giving effect to the allocations, distributions, withdrawals and
deposits to be made on such Distribution Date) (i) the Available Subordinated
Amount for the related Determination Date is zero, (ii) the balance of the
Reserve Fund on such Distribution Date is zero and (iii) the Deficiency Amount
for such Distribution Date is greater than zero, then the Class C Invested
Amount will be reduced by the amount of the excess of such Deficiency Amount
over any remaining Available Subordinated Amount on such Determination Date, but
not by more than the Investor Default Amount for the related Collection Period
(a "Class C Investor Charge-Off"). In the event that any such reduction of the
Class C Invested Amount would cause the Class C Invested Amount to be a negative
number, the Class C Invested Amount will be maintained at or reduced to zero,
and the Class B Invested Amount will be reduced by the aggregate amount of such
excess, but not more than the remaining Investor Default Amount for such
Collection Period (a "Class B Investor Charge-Off"). In the event that any such
reduction of the Class B Invested Amount would cause the Class B Invested Amount
to be a negative number, the Class B Invested Amount will be maintained at or
reduced to zero, and the Class A Invested Amount will be reduced by the
aggregate amount of such excess, but not more than the remaining Investor
Default Amount for such Collection Period (a "Class A Investor Charge-Off").
Class A Investor Charge-Offs, Class B Investor Charge-Offs and Class C Investor
Charge-Offs will thereafter be reimbursed (in that order) and the Class A
-31-
<PAGE>
Invested Amount and Class C Invested Amount increased (in that order) (but not
by an amount in excess of the aggregate unreimbursed Class A Investor Charge-
Offs, Class B Investor Charge-Offs and Class C Investor Charge-Offs, as the case
may be) on any Distribution Date by the sum of (a) Allocable Miscellaneous
Payments with respect to such Distribution Date and (b) the amount allocated and
available for that purpose pursuant to Section 4.6(a)(vii).
SECTION 4.10. Excess Servicing. The Servicer shall cause the Trustee
to apply, on each Distribution Date, Excess Servicing with respect to the
Collection Period immediately preceding such Distribution Date, to make the
following distributions in the following priority:
(a) an amount equal to the aggregate outstanding amounts of the
Certificateholders' Monthly Servicing Fee which have been previously
waived pursuant to Section 3.1 shall be distributed to the Servicer;
and
(b) the balance, if any, shall be distributed to the Seller.
SECTION 4.11. Excess Principal Collections.
"Series 1996-1 Excess Principal Collections", with respect to any
Distribution Date, shall mean an amount equal to the lesser of (a) the Series
1996-1 Principal Shortfall, if any, for such Distribution Date and (b) an amount
equal to the product of (x) excess principal collections for all Series for such
Distribution Date and (y) a fraction, the numerator of which is the Series 1996-
1 Principal Shortfall for such Distribution Date and the denominator of which is
the aggregate amount of principal shortfalls for all Series for such
Distribution Date.
SECTION 4.12. Excess Funding Account. (a) Any funds on deposit in
the Excess Funding Account at the beginning of the Accumulation Period or upon
the occurrence of an Early Amortization Event will be deposited in the Principal
Funding Account. In addition, no funds will be deposited in the Excess Funding
Account during the Accumulation Period or any Early Amortization Period.
(b) If (i) on any Determination Date during the Revolving Period
there are any funds in the Excess Funding Account and (ii) the Pool Balance at
the end of the preceding Collection Period is greater than the Pool Balance at
the end of the second preceding Collection Period, then, subject to the other
provisions of this Section 4.12(b) and to Sections 4.12(c) and (d), the Invested
Amount and the invested amounts (but, in each case, not in excess of the initial
principal amount of such Series) for all other outstanding Series that provide
for an excess funding account or
-32-
<PAGE>
similar arrangement and are in their revolving periods shall be increased such
that, after giving effect to such increases, the Required Participation Amount
is at least equal to the Pool Balance. On such Determination Date, the Servicer
shall notify the Trustee of the amount, if any, of such increase in the Invested
Amount and the Trustee shall withdraw from the Excess Funding Account and pay to
the Seller or allocate to one or more other Series, on the immediately
succeeding Distribution Date, an amount equal to the amount of such increase in
the Invested Amount. To the extent that the Invested Amount is increased by any
payment to the Seller or any allocation to one or more other Series, the
Seller's Interest or such other Series' invested amount, as applicable, shall be
reduced by the amount of such payment. In addition, any increase in the Invested
Amount is subject to the condition that after giving effect to such increase the
Pool Balance equals or exceeds the sum of (A) the Required Participation Amount
(exclusive of the amount in clause (b) of the definition thereof), (B) the sum
of the Available Subordinated Amount and the sum of the required subordinated
amounts for all other Series (or, if such other Series shall have no required
subordinated amounts, the available subordinated amounts with respect to such
Series) and (C) the sum of any subordinated amounts supporting any Enhancement
for all other Series. In connection with the foregoing, the Seller shall
endeavor (taking into account any seasonality experienced in the Accounts in the
Trust) to minimize the amounts on deposit, from time to time, in the Excess
Funding Account.
The Seller may elect to make such withdrawals from the Excess Funding
Account and the excess funding accounts or similar arrangements for other Series
on a daily or weekly basis during a Collection Period by giving the Trustee
notice of such election at least two Business Days and no more than five
Business Days prior to the commencement of such daily or weekly withdrawals. If
such election is made, then deposits into the Excess Funding Account and excess
funding accounts or similar arrangements for other Series shall be made on a
similar basis for the related Collection Period. If such election is for
withdrawals on a daily basis, then such withdrawals shall be made on each
Business Day and the Pool Balance to be referenced shall be the Pool Balance on
the next preceding Business Day. If such election is for withdrawals on a weekly
basis, then such withdrawals shall be made on each Wednesday (or if such
Wednesday is not a Business Day, then on the Business Day next succeeding such
Wednesday) and the Pool Balance to be referenced shall be the Pool Balance on
the preceding Monday.
(c) In the event that other Series issued by the Trust provide for
excess funding accounts or other arrangements similar
-33-
<PAGE>
to the Excess Funding Account involving fluctuating levels of investments in
Principal Receivables, (i) the allocation of additional Principal Receivables to
increase the Invested Amount and the invested amounts of such other Series (and
the related withdrawals from the Excess Funding Account and the other excess
funding or similar accounts) will be based on the proportion that the amount on
deposit in the Excess Funding Account bears to amounts on deposit in the excess
funding accounts (including the Excess Funding Account) of all Series providing
for excess funding accounts or such similar arrangements or to amounts otherwise
similarly available and (ii) the deposit of amounts into the Excess Funding
Account and the excess funding accounts of such other Series will be pro rata
based on the proportion that the Invested Amount bears to the invested amounts
(including the Invested Amount) of all Series providing for excess funding
accounts or such similar arrangements.
(d) In the event that any other Series is in an amortization period,
early amortization period or accumulation period, the amounts of any withdrawals
from the Excess Funding Account shall be applied first to satisfy in full any
then applicable funding or payment requirements of such Series and second to
make a payment to the Seller. In the event that more than one other Series is in
an amortization period, early amortization period or accumulation period, the
amounts of any withdrawals from the Excess Funding Account shall be allocated
(and, if necessary, reallocated) among such Series as specified in the related
Supplements for such Series, to meet the funding or payment requirements of each
such Series first to satisfy in full all then applicable funding or payment
requirements of each such Series and second to make a payment to the Seller.
ARTICLE V
Distribution and Reports to
---------------------------
Series 1996-1 Certificateholders
--------------------------------
SECTION 5.1. Distributions. (a) On each Distribution Date, the
Trustee shall distribute to each Series 1996-1 Certificateholder of record on
the preceding Record Date (other than as provided in Section 12.2 of the
Agreement respecting a final distribution) such Certificateholder's pro rata
share (based on the aggregate fractional undivided interests represented by the
Series 1996-1 Certificates held by such Certificateholder) of the amounts on
deposit in the Series 1996-1 Accounts as is payable to and Series 1996-1
Certificateholder on such Distribution Date pursuant to the priorities set forth
in Section 4.7.
(b) Except as provided in Section 12.2 of the Agreement with respect
to a final distribution, distributions to Series 1996-1
-34-
<PAGE>
Certificateholders hereunder shall be made by check mailed to each Series 1996-1
Certificateholder at such Certificateholder's address appearing in the
Certificate Register without presentation or surrender of any Series 1996-1
Certificate or the making of any notation thereon; provided, however, that with
respect to Series 1996-1 Certificates registered in the name of a Depository,
such distributions shall be made to such Depository in immediately available
funds.
SECTION 5.2. Reports and Statements to Series 1996-1
Certificateholders. (a) At least two Business Days prior to each Distribution
Date, the Servicer will provide to the Trustee a statement substantially in the
form of Exhibit D (a "Distribution Date Statement"), and on each Distribution
Date the Trustee shall forward to each Series 1996-1 Certificateholder such
statement prepared by the Servicer setting forth certain information relating to
the Trust and the Series 1996-1 Certificates.
(b) A copy of each statement provided pursuant to paragraph (a) and a
copy of the Pooling and Servicing Agreement (without exhibits) and this Series
Supplement will be made available to Series 1996-1 Certificateholders of record
for inspection at the Corporate Trust Office during the Trustee's normal
business hours.
(c) On or before January 31 of each calendar year, beginning with
calendar year 1997, the Trustee shall furnish or cause to be furnished to each
Person who at any time during the preceding calendar year was a Series 1996-1
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to Series 1996-1
Certificateholders as set forth in paragraph (a) above, aggregated for such
calendar year or the applicable portion thereof during which such Person was a
Series 1996-1 Certificateholder, together with other information as is required
to be provided by an issuer of indebtedness under the Internal Revenue Code and
such other customary information as is necessary to enable the Series 1996-1
Certificateholders (or Certificate Owners) to prepare their tax returns. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
ARTICLE VI
Early Amortization Events
-------------------------
SECTION 6.1. Additional Early Amortization Events. The occurrence of
any of the following events shall, immediately upon the occurrence thereof
without notice or other action on the part
-35-
<PAGE>
of the Trustee or the Series 1996-1 Certificateholders, be deemed to be an Early
Amortization Event solely with respect to Series 1996-1 (each, an "Additional
Early Amortization Event"):
(a) on any Distribution Date, the balance of the Reserve Fund is
less than two percent (2%) of the aggregate outstanding principal
balance of the Certificates, in each case after giving effect to all
deposits and distributions on such Distribution Date;
(b) any Servicer Default occurs;
(c) a Carry-over Amount is outstanding on six consecutive
Distribution Dates (after giving effect to the distribution on each
such Distribution Date);
(d) on any Determination Date, the average of the Monthly
Payment Rates for the three preceding Collection Periods is less than
twenty-seven and one-half percent (27.5%);
(e) the outstanding principal amount of the Certificates is not
repaid by the Expected Final Payment Date;
(f) the ratio (expressed as a percentage) of (i) the average for
each month of the net losses on the Receivables (exclusive of the
Ineligible Receivables) owned by the Trust (i.e., gross losses less
recoveries on any Receivables) (including recoveries from collateral
security, recoveries from the products, recoveries from Manufacturers
and insurance proceeds) during any three consecutive calendar months
to (ii) the average of the month-end aggregate balances of the
Receivables (without deducting therefrom the discount portion) for
such three-month period, exceeds 5% on an annualized basis; provided,
that this clause (f) may be amended or waived with the consent of the
Seller and each Rating Agency; or
(g) the sum of all Eligible Investments and amounts on deposit
in the Excess Funding Account and any excess funding accounts for any
other Series represents more than 50% of the total assets of the Trust
on each of six or more consecutive Determination Dates, after giving
effect to all payments made or to be made on the Distribution Date
next succeeding each such respective Determination Date.
-36-
<PAGE>
ARTICLE VII
Optional Repurchase
-------------------
SECTION 7.1. Optional Repurchase. (a) On any Distribution Date
occurring after the date on which the Invested Amount is reduced to 10% of the
principal amount of the Certificates on the Closing Date or less, the Seller
shall have the option, subject to the condition set forth in paragraph (c), to
purchase the entire, but not less than the entire, Series 1996-1
Certificateholders' Interest, at a purchase price equal to the Reassignment
Amount for such Distribution Date.
(b) The Seller shall give the Servicer and the Trustee at least 10
Business Days' prior written notice of the Distribution Date on which the Seller
intends to exercise such purchase option. Not later than 12:00 noon, New York
City time, on such Distribution Date the Seller shall deposit the Reassignment
Amount into the Collection Account in immediately available funds. Such purchase
option is subject to payment in full of the Reassignment Amount and if for any
reason the Seller fails to deposit the Reassignment Amount, payments will
continue to be made to Certificateholders as provided herein. The Reassignment
Amount shall be distributed as set forth in Section 8.1(b).
(c) If at the time the Seller exercises its purchase option hereunder
the Seller's unsecured debt is unrated or has a rating lower than the lowest
investment grade rating of any Rating Agency, the Seller shall deliver to the
Trustee on such Distribution Date an Opinion of Counsel (which must be an
independent outside counsel) to the effect that, in reliance on certain
certificates to the effect that the Series 1996-1 Certificateholders' Interest
purchased by the Seller constitutes fair value for the consideration paid
therefor and as to the Seller is solvent, the purchase of the Series 1996-1
Certificateholders' Interest would not be considered a fraudulent conveyance
under applicable law.
ARTICLE VIII
Final Distributions
-------------------
SECTION 8.1. Sale of Certificateholders' Interest Pursuant to Section
2.3 of the Agreement; Distributions Pursuant to Section 7.1 of this Series
Supplement or Section 2.3 or 12.2(c) of the Agreement. (a) The amount to be paid
by the Seller to the Collection Account with respect to Series 1996-1 in
connection with a purchase of the Certificateholders' Interest pursuant to
Section 2.3 of the Agreement shall equal the Reassignment Amount for the
Distribution Date on which such repurchase occurs.
-37-
<PAGE>
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.1 or 8.1 of this Series Supplement or
Section 2.3 of the Agreement or any Termination Proceeds deposited into the
Collection Account pursuant to Section 12.2(c) of the Agreement, the Trustee
shall, not later than 12:00 noon, New York time, on the Distribution Date on
which such amounts are deposited (or, if such date is not a Distribution Date,
on the immediately following Distribution Date) (in the priority set forth
below): (i) first, (x) deposit the sum of (A) the Class A Monthly Interest for
such Distribution Date plus the Class A Monthly Interest for each Distribution
Date, if any, occurring after the immediately preceding Interest Payment Date,
plus (B) the amount of Class A Additional Interest, if any, for such
Distribution Date and without duplication any Class A Additional Interest
previously due but not deposited into the Interest Funding Account or paid to
Class A Certificateholders on any prior Distribution Date, into the Interest
Funding Account and (y) deposit the Class A Invested Amount on such date into
the Principal Funding Account; (ii) second, (x) deposit the sum of (A) the Class
B Monthly Interest for such Distribution Date plus the Class B Monthly Interest
for each Distribution Date, if any, occurring after the immediately preceding
Interest Payment Date, plus (B) the amount of Class B Additional Interest, if
any, for such Distribution Date and without duplication any Class B Additional
Interest previously due but not deposited into the Interest Funding Account or
paid to Class B Certificateholders on any prior Distribution Date, into the
Interest Funding Account and (y) deposit the Class B Invested Amount on such
date into the Principal Funding Account; (iii) third, (x) deposit the sum of (A)
the Class C Monthly Interest for such Distribution Date plus the Class C Monthly
Interest for each Distribution Date, if any, occurring after the immediately
preceding Interest Payment Date, plus (B) the amount of Class C Additional
Interest, if any, for such Distribution Date and without duplication any Class C
Additional Interest previously due but not deposited into the Interest Funding
Account or paid to the Class C Certificateholders on any prior Distribution
Date, into the Interest Funding Account and (y) deposit the Class C Invested
Amount on such date into the Principal Funding Account, and (iv) fourth, pay the
remainder of any Termination Proceeds to the Seller; provided, however, that the
sum of the amounts allocated pursuant to clauses (i) through (iii) shall not
exceed the Reassignment Amount for Series 1996-1.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account and the Interest Funding Account pursuant to Section 7.1 or 8.1
of this Series Supplement and all other amounts on deposit therein shall be
distributed in full to the Series 1996-1 Certificateholders on such date in the
order of priority set forth in Section 4.7 of this Series Supplement and any
distribution made pursuant to paragraph (b) above and Section 4.7
-38-
<PAGE>
of this Series Supplement shall be deemed to be a final distribution pursuant to
Section 12.2 of the Agreement with respect to Series 1996-1.
SECTION 8.2. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to Section 9.2 of the Agreement. (a) Not
later than 12:00 noon, New York City time, on the Distribution Date following
the date on which the Insolvency Proceeds are deposited into the Collection
Account pursuant to Section 9.2(b) of the Agreement, the Trustee shall first (in
each case, after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date) deduct an amount equal to the Invested Amount on
such Distribution Date from the portion of the Insolvency Proceeds allocated to
the Series 1996-1 Allocation Percentage of Principal Collections and deposit
such amount in the Principal Funding Account, provided that the amount of such
deposit shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to the Series 1996-1 Allocation Percentage of Principal
Collections and (y) 100% minus the Excess Seller's Percentage with respect to
the related Collection Period. The remainder of the portion of the Insolvency
Proceeds allocated to the Series 1996-1 Allocation Percentage of Principal
Collections shall be allocated to the Seller's Interest and shall be released to
the Seller on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall first (in each case, after giving effect to
any deposits and distributions otherwise to be made on such Distribution Date)
deduct an amount equal to the sum of (i) Monthly Interest for such Distribution
Date, (ii) any Monthly Interest previously due but not deposited into the
Interest Funding Account on any prior Distribution Date, (iii) the amount of
Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not deposited into the Interest Funding Account on a
prior Distribution Date, from the portion of the Insolvency Proceeds allocated
to the Series 1996-1 Allocation Percentage of Non-Principal Collections and
deposit such amount in the Interest Funding Account, provided that the amount of
such distribution shall not exceed (x) the product of (A) the portion of the
Insolvency Proceeds allocated to the Series 1996-1 Allocation Percentage of Non-
Principal Collections and (B) 100% minus the Excess Seller's Percentage. The
remainder of the portion of the Insolvency Proceeds allocated to Non-Principal
Collections shall be allocated to the Seller's Interest and shall be released to
the Seller on such Distribution Date.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account and the Interest Funding Account pursuant to this Section and
all other amounts on deposit therein shall be distributed in full to the Series
1996-1 Certificateholders in the
-39-
<PAGE>
order of priority set forth in Section 4.7 on the Distribution Date on which
funds are deposited pursuant to this Section 8.2 (or, if not so deposited on a
Distribution Date, on the immediately following Distribution Date) and any
distribution made pursuant to this Section 8.2 shall be deemed to be a final
distribution pursuant to Section 12.2 of the Agreement with respect to Series
1996-1.
ARTICLE IX
Miscellaneous Provisions
------------------------
SECTION 9.1. Registration of the Series 1996-1 Certificates under the
Securities Exchange Act of 1934. The Seller shall cause the Class A and Class B
Certificates to be registered under the Securities Exchange Act of 1934, as
amended, on or before [OCTOBER ____], 1996 and thereafter maintain such
registration until the Series 1996-1 Certificates are no longer outstanding.
SECTION 9.2. Ratification of Agreement. As supplemented by this
Series Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Series Supplement shall be read, taken
and construed as one and the same instrument.
SECTION 9.3. Counterparts. This Series Supplement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
SECTION 9.4. Governing Law. This Series Supplement shall be
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
SECTION 9.5. Limitation of Class C Certificates.
(a) Each Class C Certificateholder (other than the Seller) represents
and warrants to the Seller and the Trustee that such Class C Certificateholder
(i) is properly classified as a "corporation" as described in Section 7701(a)(3)
of the Internal Revenue Code, (ii) is not an S corporation as described in
Section 1361 of the Internal Revenue Code and (iii) will not knowingly take any
action which will cause it not to be so classified.
(b) Each Class C Certificateholder (other than the Seller) confirms
that is has neither acquired nor will it sell, trade or transfer any interest in
the Class C Certificates or cause an interest in the Class C Certificates to be
marketed on or through
-40-
<PAGE>
(i) an "established securities market" within the meaning of Section 7704(b)(1)
of the Internal Revenue Code and any proposed, temporary or final treasury
regulation thereunder, including, without limitation, an over-the-counter market
or an interdealer quotation system that regularly disseminates firm buy or sell
quotations or (ii) "secondary market" or "substantial equivalent thereof" within
the meaning of Section 7704(b)(2) of the Internal Revenue Code and any proposed,
temporary or final treasury regulation thereunder, including a market wherein
interests in the Class C Certificates are regularly quoted by any Person making
a market in such interests and a market wherein any Person regularly makes
available bid or offer quotes with respect to interests in the Class C
Certificates and stands ready to effect buy or sell transactions at the quoted
prices for itself or on behalf of others. Any purported transfer, assignment or
other conveyance of the Class C Certificates in contravention of the foregoing
covenant shall be null and void ab initio and the purported transferor shall
continue to be treated as the holder of such Class C Certificates and the
purported transferee shall not be recognized as a Class C Certificateholder by
the Seller. If the Seller determines, based on an Opinion of Counsel, that there
is an exception to Section 7704 of the Internal Revenue Code that applies to
transfers of interests in the Trust by Private Holders, the Seller will notify
the Trustee, and the parties hereto in good faith will proceed to amend this
Agreement to eliminate or modify the covenants of the Class C Certificateholders
contained in this Section 9.5(b) and Section 9.5(c) to comply with such
exception.
(c) Notwithstanding the foregoing provisions of this Section 9.5, at
no time shall the aggregate number of Private Holders exceed 100. Any purported
transfer, assignment or other conveyance (including any participation) of the
Class C Certificates in contravention of the foregoing restriction shall be null
and void ab initio and the purported transferor shall continue to be treated as
the holder of such Class C Certificates and the purported transferee shall not
be recognized as a Class C Certificateholder by the Seller, the Servicer or the
Trustee. The Seller shall provide prior notice to the Rating Agencies of any
transfer of any Class C Certificates held by the Seller.
SECTION 9.6. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Series Supplement or for or in respect of the recitals contained herein, all of
which recitals are made solely by the Seller.
SECTION 9.7. Instructions in Writing. All instructions given by the
Servicer to the Trustee pursuant to this Series Supplement shall be in writing,
and may be included in a Distribution Date Statement.
SECTION 9.8. Initial Funding of Reserve Fund. On the Closing Date the
Seller shall cause to be deposited with the Trustee, and
-41-
<PAGE>
the Trustee shall deposit in the Reserve Fund, available funds in an amount
equal to two percent (2%) of the aggregate initial principal balance of the
Certificates.
-42-
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Series Supplement to be duly executed as of the day and year first
above written.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.,
as Seller
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC.,
its general partner
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
DEUTSCHE FINANCIAL SERVICES CORPORATION,
as Servicer
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
Name:
Title:
-43-
<PAGE>
EXHIBIT A
FORM OF FACE OF CLASS A CERTIFICATE
Initial
REGISTERED Principal Balance: *
$______________________
Certificate No. R-[ ]
CUSIP NO.
Unless this Class A Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
$___________ FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS A
evidencing a fractional undivided interest in certain
assets of the
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
the corpus of which consists primarily of wholesale (i.e., dealer floorplan) and
other receivables (the "Receivables") generated from time to time in the
ordinary course of business in a portfolio of revolving financing arrangements
(the "Accounts") of Deutsche Financial Services Corporation ("DFS") or an
Approved Affiliate meeting certain eligibility criteria. This certificate (a
"Class A Certificate") does not represent any interest in, or obligation of,
Deutsche Floorplan Receivables, L.P. ("Deutsche FRLP" or the "Seller"), DFS,
Deutsche Bank AG or any affiliate thereof.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate shall
not be entitled to any benefit under the
- -------------------
* Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
Pooling and Servicing Agreement referred to on the reverse side hereof or be
valid for any purpose.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller has caused this Class A Certificate to
be duly executed.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
By: DEUTSCHE FLOORPLAN RECEIVABLES,
INC., its general partner
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee,
By:
------------------------------
Authorized Officer
-2-
<PAGE>
FORM OF THE REVERSE OF CLASS A CERTIFICATE
This certifies that [Cede & Co.] (the "Series 1996-1 Class A
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST (the
"Trust") created pursuant to a Pooling and Servicing Agreement (the "P&S") dated
as of December 1, 1993, amended and restated as of March 1, 1994, further
amended as of January 24, 1996, and amended and restated as of October 1, 1996,
as supplemented by the Series 1996-1 Series Supplement dated as of October 1,
1996 (the "Series Supplement"), among Deutsche Floorplan Receivables, L.P.
("Deutsche FRLP"), formerly known as ITT Floorplan Receivables, L.P., as Seller
(the "Seller"), Deutsche Financial Services Corporation ("DFS"), formerly known
as ITT Commercial Finance Corp., as servicer (the "Servicer"), and The Chase
Manhattan Bank, formerly known as Chemical Bank, as trustee (the "Trustee"),
that are allocated to the Series 1996-1 Certificateholders' Interest pursuant to
the P&S and the Series Supplement. The P&S and the Series Supplement are
hereinafter collectively referred to as the "Pooling and Servicing Agreement."
The corpus of the Trust will include (a) all of the Seller's right, title and
interest in, to and under the Receivables in each Account and all Collateral
Security with respect thereto owned by the Seller at the close of business on
the Cut-Off Date, in the case of the Initial Accounts, and on the applicable
Additional Cut-Off Date, in the case of Additional Accounts, and all monies due
or to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in the
State of Missouri and Recoveries) thereof, (b) all of the Seller's rights,
remedies, powers and privileges with respect to such Receivables under the
Receivables Contribution and Sale Agreement, (c) all of the Seller's right,
title and interest in, to and under the Receivables in each Account and all
Collateral Security with respect thereto owned by the Seller at the close of
business on each Transfer Date and not theretofore conveyed to the Trust, all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Missouri and Recoveries) thereof, (d) all monies on
deposit in, and Eligible Investments credited to, the Collection Account or any
Series 1996-1 Account, (e) any Enhancements and (f) all other assets and
interests constituting the Trust. In addition to the Class A Certificates, the
Class B Certificates and the Class C Certificates will be issued pursuant to the
Pooling and Servicing Agreement. The Seller's Certificate issued pursuant to the
Pooling and Servicing Agreement represents the Seller's Interest in the Trust
(i.e., the interest in the Trust Assets not represented by the Investor
Certificates). In addition, Series 1994-1 is currently outstanding.
-3-
<PAGE>
The Receivables consist of advances made directly or indirectly by DFS
or an Approved Affiliate to dealers in, and manufacturers of, commercial and
consumer products.
Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Seller may from time to time direct the Trustee, on behalf of the
Trust, to issue one or more new Series of Investor Certificates, which will
represent fractional undivided interests in certain of the Trust Assets.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series 1996-1 Class A
Certificateholder by virtue of the acceptance hereof assents and is bound.
Although a summary of certain provisions of the Pooling and Servicing Agreement
is set forth below, this Class A Certificate does not purport to summarize the
Pooling and Servicing Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any conflict or
inconsistency between this Class A Certificate and the Pooling and Servicing
Agreement, the Pooling and Servicing Agreement shall control in all respects. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Pooling and Servicing Agreement.
The Seller has entered into the Pooling and Servicing Agreement and
the Series 1996-1 Certificates have been (or will be) issued with the intention
that the Series 1996-1 Certificates will qualify under applicable tax law as
indebtedness of Deutsche FRLP secured by the Receivables. The Seller, each
Beneficiary and each Certificateholder and Certificate Owner, by the acceptance
of its Certificate or Book-Entry Certificate, as applicable, agrees to treat
such Series 1996-1 Certificate as indebtedness of the Seller secured by the
Receivables for Federal income taxes, state and local income, single business
and franchise taxes (imposed on or measured by income) and any other taxes
imposed on or measured by income.
On each applicable Distribution Date, the Trustee shall distribute to
each Series 1996-1 Certificateholder of record at the close of business [on the
day preceding such Distribution Date]** [the last day of the month preceding the
month in which such Distribution Date occurs]*** (each a "Record Date") such
- ---------------------
** Applicable to Book-Entry Certificates.
*** Applicable to Definitive Certificates.
-4-
<PAGE>
Certificateholder's pro rata share (based on the aggregate fractional undivided
interest represented by the Class A Certificates held by such Certificateholder,
except as otherwise provided in the Pooling and Servicing Agreement) of such
amounts on deposit in the Collection Account or the Series 1996-1 Accounts as
are payable in respect of the Class A Certificates pursuant to the Pooling and
Servicing Agreement. Distributions with respect to this Class A Certificate will
be made by the Trustee by check mailed to the address of the Series 1996-1 Class
A Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of a Depository, including Cede & Co., the nominee for The Depository Trust
Company, distributions will be made in immediately available funds. Final
payment of this Class A Certificate will be made only upon presentation and
surrender of this Class A Certificate at the office or agency specified in the
notice of final distribution delivered by the Trustee to the Series 1996-1 Class
A Certificateholder in accordance with the Pooling and Servicing Agreement.
On the Distribution Date occurring after the Invested Amount is
reduced to 10% of the original principal amount of the Certificates or less, the
Seller has the option, subject to the condition set forth in Section 7.1(c) of
the Series Supplement, to purchase the entire Series 1996-1 Certificateholders'
Interest in the Trust. The purchase price will be equal to the Reassignment
Amount (as defined in the Series Supplement).
This Class A Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer, Deutsche Bank AG or any affiliate of any
of them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class A
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by the
Servicer, the Seller and the Trustee, without consent of any of the Series 1996-
1 Certificateholders, so long as any such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
the Certificateholders of any outstanding Series. Notwithstanding the foregoing,
the Pooling and Servicing Agreement may be amended by the Servicer, the Seller
and the Trustee without the consent of any of the Series 1996-1
Certificateholders or any other Certificateholders to change in any
-5-
<PAGE>
manner the treatment of Delayed Funding Receivables under the Pooling and
Servicing Agreement, but only upon confirmation by each Rating Agency that such
amendment will not result in the reduction or withdrawal of their then current
rating of the certificates of any outstanding Series. The Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under the Pooling and Servicing Agreement or
otherwise. Notwithstanding anything contained therein to the contrary, the
Trustee, with the consent of any Enhancement Providers, may at any time and from
time to time amend, modify or supplement the form of Distribution Date
Statement.
In addition, notwithstanding the foregoing, the P&S and any Supplement
may be amended by the Servicer and the Trustee at the direction of the Seller
without the consent of any of the Certificateholders (1) to add, modify or
eliminate such provisions as may be necessary or advisable in order to enable
the Seller or any of its Affiliates (including Deutsche Bank AG) to minimize or
avoid capital charges under any applicable law, rule, regulation or guideline
relating to regulatory or risk-based capital, (2) to enable all or a portion of
the Trust to qualify as a partnership for federal income tax purposes under
applicable regulations on the classification of entities as partnerships or
corporations under the Internal Revenue Code adopted as final regulations after
the date hereof, and to the extent that such regulations eliminate or modify the
need therefor, to modify or eliminate existing provisions of the P&S or any
Supplement relating to the intended availability of partnership treatment of the
Trust for federal income tax purposes, (3) to enable all or a portion of the
Trust to qualify as, and to permit an election to be made to cause the Trust to
be treated as, a "financial asset securitization investment trust," as described
in the provisions of the "Small Business Job Protection Act of 1996," H.R. 3448
(and, in connection with any such election, to modify or eliminate existing
provisions of the P&S or any Supplement relating to the intended Federal income
tax treatment of the Certificates and the Trust in the absence of such election,
which may include elimination of the sale of Receivables upon the occurrence of
an insolvency event with respect to Seller pursuant to the P&S and certain
provisions of the P&S relating to the liability of the Seller), or (4) to enable
the Seller or any of its Affiliates to comply with or obtain more favorable
treatment under any law or regulation or any accounting rule or principle, so
long as in each case the Rating Agency Condition has been satisfied and, in the
case of (2) or (3), the Seller and the Trustee have received an Opinion of
Counsel to the effect that such amendment will not adversely affect the
characterization of the certificates of any outstanding Series or Class as debt
or as an interest in a partnership; provided, however, that if any such
amendment occurs while Series 1994-1 is outstanding, an Opinion of Counsel for
the Seller, addressed and delivered to the Trustee, shall be required providing
that such amendment shall not adversely affect in any material respect the
interests of any Investor Certificateholders of Series 1994-1.
The Pooling and Servicing Agreement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller and the
-6-
<PAGE>
Trustee with the consent of the Holders of Investor Certificates evidencing more
than 50% of the aggregate unpaid principal amount of the Investor Certificates
of all adversely affected Series, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the Investor
Certificateholders; provided, however, that no such amendment to the Pooling and
Servicing Agreement shall (i) reduce in any manner the amount of or delay the
timing of distributions to be made to Investor Certificateholders or deposits of
amounts to be so distributed without the consent of each such affected Investor
Certificateholder; (ii) change the definition or the manner of calculating any
certificateholders' interest without the consent of each affected Investor
Certificateholder; (iii) reduce the amount available under any Enhancement
without the consent of each affected Investor Certificateholder; (iv) adversely
affect the rating of any Series or Class by each Rating Agency without the
consent of the holders of certificates of such Series or class evidencing more
than 50% of the aggregate unpaid principal amount of the Investor Certificates
of such Series or Class; or (v) reduce the aforesaid percentage required to
consent to any such amendment without the consent of all Investor
Certificateholders. The Pooling and Servicing Agreement may not be amended in
any manner which adversely affects the interests of any Enhancement Provider
without its prior consent.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Class A Certificate
is registrable in the Certificate Register of the Trustee upon surrender of this
Class A Certificate for registration of transfer at the office or agency
maintained by the Trustee in New York, New York, accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by
the Holder hereof or such Holder's attorney duly authorized, and thereupon one
or more new Class A Certificates of authorized denominations evidencing the same
aggregate fractional undivided interest will be issued to the designated
transferee or transferees.
The Class A Certificates are issuable only as registered Class A
Certificates without coupons in denominations specified in the Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A Certificates are exchangeable for
new Class A Certificates evidencing like aggregate fractional undivided
interests as requested by the Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
-7-
<PAGE>
The Servicer, the Trustee, the Transfer Agent and Registrar, and any
agent of any of them, may treat the Person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer nor the Trustee, the Transfer Agent and Registrar, nor any agent of any
of them, shall be affected by notice to the contrary except in certain
circumstances described in the Pooling and Servicing Agreement.
-8-
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee
- ------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(name and address of
- -----------------------------------------------
assignee)
- --------------------------------------------------------------------------------
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints , attorney, to transfer said
------------------
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: *
----------------------- ------------------------------
Signature Guaranteed:
------------------------------
- ------------------------------
(*) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the reverse of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
FORM OF FACE OF CLASS B CERTIFICATE
Initial
REGISTERED Principal Balance: *
$______________________
Certificate No. R-[ ]
CUSIP NO.
Unless this Class B Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF ANY EMPLOYEE
BENEFIT PLAN, TRUST OR ACCOUNT, INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT, THAT
IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN SUCH ENTITY (A "BENEFIT PLAN"). BY ACCEPTING AND
HOLDING THIS CERTIFICATE OR ANY INTEREST IN THIS CERTIFICATE, THE HOLDER HEREOF
SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT FUNDING ITS
ACQUISITION WITH THE ASSETS OF ANY BENEFIT PLAN.
- ------------------
* Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
-1-
<PAGE>
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
$___________ FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS B
evidencing a fractional undivided interest in certain
assets of the
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
the corpus of which consists primarily of wholesale (i.e., dealer floorplan) and
other receivables (the "Receivables") generated from time to time in the
ordinary course of business in a portfolio of revolving financing arrangements
(the "Accounts") of Deutsche Financial Services Corporation ("DFS") or an
Approved Affiliate meeting certain eligibility criteria. This certificate (a
"Class B Certificate") does not represent any interest in, or obligation of,
Deutsche Floorplan Receivables, L.P. ("Deutsche FRLP" or the "Seller"), DFS,
Deutsche Bank AG or any affiliate thereof.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class B Certificate shall
not be entitled to any benefit under the Pooling and Servicing Agreement
referred to on the reverse side hereof or be valid for any purpose.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller has caused this Class B Certificate to
be duly executed.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC., its general
partner
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
Dated:
-2-
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee,
By: _______________________
Authorized Officer
-3-
<PAGE>
FORM OF THE REVERSE OF CLASS B CERTIFICATE
This certifies that [CEDE & CO.] (the "Series 1996-1 Class B
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST (the
"Trust") created pursuant to a Pooling and Servicing Agreement (the "P&S") dated
as of December 1, 1993, amended and restated as of March 1, 1994, further
amended as of January 24, 1996, and amended and restated as of October 1, 1996,
as supplemented by the Series 1996-1 Series Supplement dated as of October 1,
1996 (the "Series Supplement"), among Deutsche Floorplan Receivables, L.P.
("Deutsche FRLP"), formerly known as ITT Floorplan Receivables, L.P., as Seller
(the "Seller"), Deutsche Financial Services Corporation ("DFS"), formerly known
as ITT Commercial Finance Corp., as servicer (the "Servicer"), and The Chase
Manhattan Bank, formerly known as Chemical Bank, as trustee (the "Trustee"),
that are allocated to the Series 1996-1 Certificateholders' Interest pursuant to
the P&S and the Series Supplement. The P&S and the Series Supplement are
hereinafter collectively referred to as the "Pooling and Servicing Agreement."
The corpus of the Trust will include (a) all of the Seller's right, title and
interest in, to and under the Receivables in each Account and all Collateral
Security with respect thereto owned by the Seller at the close of business on
the Cut-Off Date, in the case of the Initial Accounts, and on the applicable
Additional Cut-Off Date, in the case of Additional Accounts, and all monies due
or to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in the
State of Missouri and Recoveries) thereof, (b) all of the Seller's rights,
remedies, powers and privileges with respect to such Receivables under the
Receivables Contribution and Sale Agreement, (c) all of the Seller's right,
title and interest in, to and under the Receivables in each Account and all
Collateral Security with respect thereto owned by the Seller at the close of
business on each Transfer Date and not theretofore conveyed to the Trust, all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Missouri and Recoveries) thereof, (d) all monies on
deposit in, and Eligible Investments credited to, the Collection Account or any
Series 1996-1 Account, (e) any Enhancements and (f) all other assets and
interests constituting the Trust. In addition to the Class B Certificates, the
Class A Certificates and the Class C Certificates will be issued pursuant to the
Pooling and Servicing Agreement.
The Class B Certificates will be subordinated to fund payments of
principal and interest on the Class A Certificates to the extent described in
the Series Supplement.
-4-
<PAGE>
The Seller's Certificate issued pursuant to the Pooling and Servicing
Agreement represents the Seller's Interest in the Trust (i.e., the interest in
the Trust Assets not represented by the Investor Certificates). In addition,
Series 1994-1 is currently outstanding.
The Receivables consist of advances made directly or indirectly by DFS
or an Approved Affiliate to dealers in, and manufacturers of, commercial and
consumer products.
Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Seller may from time to time direct the Trustee, on behalf of the
Trust, to issue one or more new Series of Investor Certificates, which will
represent fractional undivided interests in certain of the Trust Assets.
This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series 1996-1 Class B
Certificateholder by virtue of the acceptance hereof assents and is bound.
Although a summary of certain provisions of the Pooling and Servicing Agreement
is set forth below, this Class B Certificate does not purport to summarize the
Pooling and Servicing Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any conflict or
inconsistency between this Class B Certificate and the Pooling and Servicing
Agreement, the Pooling and Servicing Agreement shall control in all respects. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Pooling and Servicing Agreement.
The Seller has entered into the Pooling and Servicing Agreement and
the Series 1996-1 Certificates have been (or will be) issued with the intention
that the Series 1996-1 Certificates will qualify under applicable tax law as
indebtedness of Deutsche FRLP secured by the Receivables. The Seller, each
Beneficiary and each Certificateholder and Certificate Owner, by the acceptance
of its Certificate or Book-Entry Certificate, as applicable, agrees to treat
such Series 1996-1 Certificate as indebtedness of the Seller secured by the
Receivables for Federal income taxes, state and local income, single business
and franchise taxes (imposed on or measured by income) and any other taxes
imposed on or measured by income.
On each applicable Distribution Date, the Trustee shall distribute to
each Series 1996-1 Certificateholder of record at the
-5-
<PAGE>
close of business [on the day preceding such Distribution Date]** [the last day
of the month preceding the month in which such Distribution Date occurs]***
(each a "Record Date") such Certificateholder's pro rata share (based on the
aggregate fractional undivided interest represented by the Class B Certificates
held by such Certificateholder, except as otherwise provided in the Pooling and
Servicing Agreement) of such amounts on deposit in the Collection Account or the
Series 1996-1 Accounts as are payable in respect of the Class B Certificates
pursuant to the Pooling and Servicing Agreement. Distributions with respect to
this Class B Certificate will be made by the Trustee by check mailed to the
address of the Series 1996-1 Class B Certificateholder of record appearing in
the Certificate Register without the presentation or surrender of this Class B
Certificate or the making of any notation thereon (except for the final
distribution in respect of this Class B Certificate) except that with respect to
Class B Certificates registered in the name of a Depository, including Cede &
Co., the nominee for The Depository Trust Company, distributions will be made in
immediately available funds. Final payment of this Class B Certificate will be
made only upon presentation and surrender of this Class B Certificate at the
office or agency specified in the notice of final distribution delivered by the
Trustee to the Series 1996-1 Class B Certificateholder in accordance with the
Pooling and Servicing Agreement.
On the Distribution Date occurring after the Invested Amount is
reduced to 10% of the original principal amount of the Certificates or less, the
Seller has the option, subject to the condition set forth in Section 7.1(c) of
the Series Supplement, to purchase the entire Series 1996-1 Certificateholders'
Interest in the Trust. The purchase price will be equal to the Reassignment
Amount (as defined in the Series Supplement).
This Class B Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer, Deutsche Bank AG or any affiliate of any
of them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class B
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by the
Servicer, the Seller and the
- ---------------------
** Applicable to Book-Entry Certificates.
*** Applicable to Definitive Certificates.
-6-
<PAGE>
Trustee, without consent of any of the Series 1996-1 Certificateholders, so long
as any such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of the Certificateholders of any
outstanding Series. Notwithstanding the foregoing, the Pooling and Servicing
Agreement may be amended by the Servicer, the Seller and the Trustee without the
consent of any of the Series 1996-1 Certificateholders or any other
Certificateholders to change in any manner the treatment of Delayed Funding
Receivables under the Pooling and Servicing Agreement, but only upon
confirmation by each Rating Agency that such amendment will not result in the
reduction or withdrawal of their then current rating of the certificates of any
outstanding Series. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under the Pooling and Servicing Agreement or otherwise. Notwithstanding anything
contained therein to the contrary, the Trustee, with the consent of any
Enhancement Providers, may at any time and from time to time amend, modify or
supplement the form of Distribution Date Statement.
In addition, notwithstanding the foregoing, the P&S and any Supplement
may be amended by the Servicer and the Trustee at the direction of the Seller
without the consent of any of the Certificateholders (1) to add, modify or
eliminate such provisions as may be necessary or advisable in order to enable
the Seller or any of its Affiliates (including Deutsche Bank AG) to minimize or
avoid capital charges under any applicable law, rule, regulation or guideline
relating to regulatory or risk-based capital, (2) to enable all or a portion of
the Trust to qualify as a partnership for federal income tax purposes under
applicable regulations on the classification of entities as partnerships or
corporations under the Internal Revenue Code adopted as final regulations after
the date hereof, and to the extent that such regulations eliminate or modify the
need therefor, to modify or eliminate existing provisions of the P&S or any
Supplement relating to the intended availability of partnership treatment of the
Trust for federal income tax purposes, (3) to enable all or a portion of the
Trust to qualify as, and to permit an election to be made to cause the Trust to
be treated as, a "financial asset securitization investment trust," as described
in the provisions of the "Small Business Job Protection Act of 1996," H.R. 3448
(and, in connection with any such election, to modify or eliminate existing
provisions of the P&S or any Supplement relating to the intended Federal income
tax treatment of the Certificates and the Trust in the absence of such election,
which may include elimination of the sale of Receivables upon the occurrence of
an insolvency event with respect to Seller pursuant to the P&S and certain
provisions of the P&S relating to the liability of the Seller), or (4) to enable
the Seller or any of its Affiliates to comply with or obtain more favorable
treatment under any law or regulation or any accounting rule or principle, so
long as in each case the Rating Agency Condition has been satisfied and, in the
case of (2) or (3), the Seller and the Trustee have received an
-7-
<PAGE>
Opinion of Counsel to the effect that such amendment will not adversely affect
the characterization of the certificates of any outstanding Series or Class as
debt or as an interest in a partnership; provided, however, that if any such
amendment occurs while Series 1994-1 is outstanding, an Opinion of Counsel for
the Seller, addressed and delivered to the Trustee, shall be required providing
that such amendment shall not adversely affect in any material respect the
interest of any Investor Certificateholders of Series 1994-1.
The Pooling and Servicing Agreement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller and the Trustee with the consent of the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Pooling and Servicing Agreement or of modifying in any
manner the rights of the Investor Certificateholders; provided, however, that no
such amendment to the Pooling and Servicing Agreement shall (i) reduce in any
manner the amount of or delay the timing of distributions to be made to Investor
Certificateholders or deposits of amounts to be so distributed without the
consent of each such affected Investor Certificateholder; (ii) change the
definition or the manner of calculating any certificateholders' interest without
the consent of each affected Investor Certificateholder; (iii) reduce the amount
available under any Enhancement without the consent of each affected Investor
Certificateholder; (iv) adversely affect the rating of any Series or Class by
each Rating Agency without the consent of the holders of certificates of such
Series or class evidencing more than 50% of the aggregate unpaid principal
amount of the Investor Certificates of such Series or Class; or (v) reduce the
aforesaid percentage required to consent to any such amendment without the
consent of all Investor Certificateholders. The Pooling and Servicing Agreement
may not be amended in any manner which adversely affects the interests of any
Enhancement Provider without its prior consent.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Class B Certificate
is registrable in the Certificate Register of the Trustee upon surrender of this
Class B Certificate for registration of transfer at the office or agency
maintained by the Trustee in New York, New York, accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by
the Holder hereof or such Holder's attorney duly authorized, and thereupon one
or more new Class B Certificates of authorized denominations evidencing the same
aggregate fractional undivided interest will be issued to the designated
transferee or transferees.
The Class B Certificates are issuable only as registered Class B
Certificates without coupons in denominations specified in the Agreement.
-8-
<PAGE>
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class B Certificates are exchangeable for
new Class B Certificates evidencing like aggregate fractional undivided
interests as requested by the Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Servicer, the Trustee, the Transfer Agent and Registrar, and any
agent of any of them, may treat the Person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer nor the Trustee, the Transfer Agent and Registrar, nor any agent of any
of them, shall be affected by notice to the contrary except in certain
circumstances described in the Pooling and Servicing Agreement.
-9-
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee
- ------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
------------------------------------------------------------------
(name and address of assignee)
- --------------------------------------------------------------------------------
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints __________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
----------------------- ------------------------------*
Signature Guaranteed:
------------------------------
- -----------------------------------
(*) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the reverse of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
FORM OF FACE OF CLASS C CERTIFICATE
Initial
REGISTERED Principal Balance: *
$______________________
Certificate No. R-[ ]
CUSIP NO.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF ANY
EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT, INCLUDING AN INDIVIDUAL RETIREMENT
ACCOUNT, THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED, OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN SUCH ENTITY (A "BENEFIT PLAN"). BY
ACCEPTING AND HOLDING THIS CERTIFICATE OR ANY INTEREST IN THIS CERTIFICATE, THE
HOLDER HEREOF SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT
FUNDING ITS ACQUISITION WITH THE ASSETS OF ANY BENEFIT PLAN.
- -----------------
* Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
-1-
<PAGE>
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
$___________ FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES 1996-1, CLASS C
evidencing a fractional undivided interest in certain
assets of the
DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
the corpus of which consists primarily of wholesale (i.e., dealer floorplan) and
other receivables (the "Receivables") generated from time to time in the
ordinary course of business in a portfolio of revolving financing arrangements
(the "Accounts") of Deutsche Financial Services Corporation ("DFS") or an
Approved Affiliate meeting certain eligibility criteria. This certificate (a
"Class C Certificate") does not represent any interest in, or obligation of,
Deutsche Floorplan Receivables, L.P. ("Deutsche FRLP" or the "Seller"), DFS,
Deutsche Bank AG or any affiliate thereof.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class C Certificate shall
not be entitled to any benefit under the Pooling and Servicing Agreement
referred to on the reverse side hereof or be valid for any purpose.
THIS CLASS C CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller has caused this Class C Certificate to
be duly executed.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
By: DEUTSCHE FLOORPLAN RECEIVABLES,
INC., its general partner
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
Dated:
-2-
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee,
By:
-----------------------
Authorized Officer
-3-
<PAGE>
FORM OF THE REVERSE OF CLASS C CERTIFICATE
This certifies that [_______________________] (the "Series 1996-1
Class C Certificateholder"), is the registered owner of a fractional undivided
interest in certain assets of the DEUTSCHE FLOORPLAN RECEIVABLES MASTER TRUST
(the "Trust") created pursuant to a Pooling and Servicing Agreement (the "P&S")
dated as of December 1, 1993, amended and restated as of March 1, 1994, further
amended as of January 24, 1996, and amended and restated as of October 1, 1996,
as supplemented by the Series 1996-1 Series Supplement dated as of October 1,
1996 (the "Series Supplement"), among Deutsche Floorplan Receivables, L.P.
("Deutsche FRLP"), formerly known as ITT Floorplan Receivables, L.P., as Seller
(the "Seller"), Deutsche Financial Services Corporation ("DFS"), formerly known
as ITT Commercial Finance Corp., as servicer (the "Servicer"), and The Chase
Manhattan Bank, formerly known as Chemical Bank, as trustee (the "Trustee"),
that are allocated to the Series 1996-1 Certificateholders' Interest pursuant to
the P&S and the Series Supplement. The P&S and the Series Supplement are
hereinafter collectively referred to as the "Pooling and Servicing Agreement."
The corpus of the Trust will include (a) all of the Seller's right, title and
interest in, to and under the Receivables in each Account and all Collateral
Security with respect thereto owned by the Seller at the close of business on
the Cut-Off Date, in the case of the Initial Accounts, and on the applicable
Additional Cut-Off Date, in the case of Additional Accounts, and all monies due
or to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in the
State of Missouri and Recoveries) thereof, (b) all of the Seller's rights,
remedies, powers and privileges with respect to such Receivables under the
Receivables Contribution and Sale Agreement, (c) all of the Seller's right,
title and interest in, to and under the Receivables in each Account and all
Collateral Security with respect thereto owned by the Seller at the close of
business on each Transfer Date and not theretofore conveyed to the Trust, all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Missouri and Recoveries) thereof, (d) all monies on
deposit in, and Eligible Investments credited to, the Collection Account or any
Series 1996-1 Account, (e) any Enhancements and (f) all other assets and
interests constituting the Trust. In addition to the Class C Certificates, the
Class A Certificates and the Class B Certificates will be issued pursuant to the
Pooling and Servicing Agreement.
The Class C Certificates will be subordinated to fund payments of
principal and interest on the Class A Certificates and the Class B Certificates
to the extent described in the Series Supplement.
-4-
<PAGE>
The Seller's Certificate issued pursuant to the Pooling and Servicing
Agreement represents the Seller's Interest in the Trust (i.e., the interest in
the Trust Assets not represented by the Investor Certificates). In addition,
Series 1994-1 is currently outstanding.
The Receivables consist of advances made directly or indirectly by DFS
or an Approved Affiliate to dealers in, and manufacturers of, commercial and
consumer products.
Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Seller may from time to time direct the Trustee, on behalf of the
Trust, to issue one or more new Series of Investor Certificates, which will
represent fractional undivided interests in certain of the Trust Assets.
This Class C Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series 1996-1 Class C
Certificateholder by virtue of the acceptance hereof assents and is bound.
Although a summary of certain provisions of the Pooling and Servicing Agreement
is set forth below, this Class C Certificate does not purport to summarize the
Pooling and Servicing Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any conflict or
inconsistency between this Class C Certificate and the Pooling and Servicing
Agreement, the Pooling and Servicing Agreement shall control in all respects. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Pooling and Servicing Agreement.
The Seller, each Beneficiary and each Certificateholder and
Certificate Owner, by the acceptance of its Certificate or Book-Entry
Certificate, as applicable, agrees to treat such Series 1996-1 Certificate as
indebtedness of the Seller secured by the Receivables for Federal income taxes,
state and local income, single business and franchise taxes (imposed on or
measured by income) and any other taxes imposed on or measured by income.
On each applicable Distribution Date, the Trustee shall distribute to
each Series 1996-1 Certificateholder of record at the close of business [on the
day preceding such Distribution Date]** [the last day of the month preceding the
month in which
- -----------------------
** Applicable to Book-Entry Certificates.
-5-
<PAGE>
such Distribution Date occurs]*** (each a "Record Date") such
Certificateholder's pro rata share (based on the aggregate fractional undivided
interest represented by the Class C Certificates held by such Certificateholder,
except as otherwise provided in the Pooling and Servicing Agreement) of such
amounts on deposit in the Collection Account or the Series 1996-1 Accounts as
are payable in respect of the Class C Certificates pursuant to the Pooling and
Servicing Agreement. Distributions with respect to this Class C Certificate will
be made by the Trustee by check mailed to the address of the Series 1996-1 Class
C Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class C Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class C
Certificate) except that with respect to Class C Certificates registered in the
name of a Depository, including Cede & Co., the nominee for The Depository Trust
Company, distributions will be made in immediately available funds. Final
payment of this Class C Certificate will be made only upon presentation and
surrender of this Class C Certificate at the office or agency specified in the
notice of final distribution delivered by the Trustee to the Series 1996-1 Class
C Certificateholder in accordance with the Pooling and Servicing Agreement.
On the Distribution Date occurring after the Invested Amount is
reduced to 10% of the original principal amount of the Certificates or less, the
Seller has the option, subject to the condition set forth in Section 7.1(c) of
the Series Supplement, to purchase the entire Series 1996-1 Certificateholders'
Interest in the Trust. The purchase price will be equal to the Reassignment
Amount (as defined in the Series Supplement).
This Class C Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer, Deutsche Bank AG or any affiliate of any
of them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class C
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by the
Servicer, the Seller and the Trustee, without consent of any of the Series 1996-
1 Certificateholders, so long as any such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
the Certificateholders of any
- ------------------
*** Applicable to Definitive Certificates.
-6-
<PAGE>
outstanding Series. Notwithstanding the foregoing, the Pooling and Servicing
Agreement may be amended by the Servicer, the Seller and the Trustee without the
consent of any of the Series 1996-1 Certificateholders or any other
Certificateholders to change in any manner the treatment of Delayed Funding
Receivables under the Pooling and Servicing Agreement, but only upon
confirmation by each Rating Agency that such amendment will not result in the
reduction or withdrawal of their then current rating of the certificates of any
outstanding Series. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under the Pooling and Servicing Agreement or otherwise. Notwithstanding anything
contained therein to the contrary, the Trustee, with the consent of any
Enhancement Providers, may at any time and from time to time amend, modify or
supplement the form of Distribution Date Statement.
In addition, notwithstanding the foregoing, the P&S and any
Supplement may be amended by the Servicer and the Trustee at the direction of
the Seller without the consent of any of the Certificateholders (1) to add,
modify or eliminate such provisions as may be necessary or advisable in order to
enable the Seller or any of its Affiliates (including Deutsche Bank AG) to
minimize or avoid capital charges under any applicable law, rule, regulation or
guideline relating to regulatory or risk-based capital, (2) to enable all or a
portion of the Trust to qualify as a partnership for federal income tax purposes
under applicable regulations on the classification of entities as partnerships
or corporations under the Internal Revenue Code adopted as final regulations
after the date hereof, and to the extent that such regulations eliminate or
modify the need therefor, to modify or eliminate existing provisions of the P&S
or any Supplement relating to the intended availability of partnership
treatment of the Trust for federal income tax purposes, (3) to enable all or a
portion of the Trust to qualify as, and to permit an election to be made to
cause the Trust to be treated as, a "financial asset securitization investment
trust," as described in the provisions of the "Small Business Job Protection Act
of 1996," H.R. 3448 (and, in connection with any such election, to modify or
eliminate existing provisions of the P&S or any Supplement relating to
the intended Federal income tax treatment of the Certificates and the Trust in
the absence of such election, which may include elimination of the sale of
Receivables upon the occurrence of an insolvency event with respect to Seller
pursuant to the P&S and certain provisions of the P&S relating to the liability
of the Seller), or (4) to enable the Seller or any of its Affiliates to comply
with or obtain more favorable treatment under any law or regulation or any
accounting rule or principle, so long as in each case the Rating Agency
Condition has been satisfied and, in the case of (2) or (3), the Seller and the
Trustee have received an Opinion of Counsel to the effect that such amendment
will not adversely affect the characterization of the certificates of any
outstanding Series or Class as debt or as an interest in a partnership;
provided, however, that if any such amendment occurs while Series 1994-1 is
outstanding, an Opinion of Counsel for the Seller, addressed and delivered to
the Trustee, shall be required providing that such amendment shall not adversely
affect in any material respect the interests of any Investor Certificateholders
of Series 1994-1.
-7-
<PAGE>
The Pooling and Servicing Agreement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller and the Trustee with the consent of the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Pooling and Servicing Agreement or of modifying in any
manner the rights of the Investor Certificateholders; provided, however, that no
such amendment to the Pooling and Servicing Agreement shall (i) reduce in any
manner the amount of or delay the timing of distributions to be made to Investor
Certificateholders or deposits of amounts to be so distributed without the
consent of each such affected Investor Certificateholder; (ii) change the
definition or the manner of calculating any certificateholders' interest without
the consent of each affected Investor Certificateholder; (iii) reduce the amount
available under any Enhancement without the consent of each affected Investor
Certificateholder; (iv) adversely affect the rating of any Series or Class by
each Rating Agency without the consent of the holders of certificates of such
Series or class evidencing more than 50% of the aggregate unpaid principal
amount of the Investor Certificates of such Series or Class; or (v) reduce the
aforesaid percentage required to consent to any such amendment without the
consent of all Investor Certificateholders. The Pooling and Servicing Agreement
may not be amended in any manner which adversely affects the interests of any
Enhancement Provider without its prior consent.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Class C Certificate
is registrable in the Certificate Register of the Trustee upon surrender of this
Class C Certificate for registration of transfer at the office or agency
maintained by the Trustee in New York, New York, accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by
the Holder hereof or such Holder's attorney duly authorized, and thereupon one
or more new Class C Certificates of authorized denominations evidencing the same
aggregate fractional undivided interest will be issued to the designated
transferee or transferees.
The Class C Certificates are issuable only as registered Class C
Certificates without coupons in denominations specified in the Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class C Certificates are exchangeable for
new Class C Certificates evidencing like aggregate fractional undivided
interests as requested by the Certificateholder surrendering such Class C
Certificates. No
-8-
<PAGE>
service charge may be imposed for any such exchange but the Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith.
The Servicer, the Trustee, the Transfer Agent and Registrar, and any
agent of any of them, may treat the Person in whose name this Class C
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer nor the Trustee, the Transfer Agent and Registrar, nor any agent of any
of them, shall be affected by notice to the contrary except in certain
circumstances described in the Pooling and Servicing Agreement.
Each Series 1996-1 Class C Certificateholder (other than the Seller)
represents and warrants to the Seller and the Trustee that such Series 1996-1
Class C Certificateholder (i) is properly classified as a "corporation" as
described in Section 7701(a)(3) of the Internal Revenue Code, (ii) is not an S
corporation as described in Section 1361 of the Internal Revenue Code and (iii)
will not knowingly take any action which will cause it not to be so classified.
Each Series 1996-1 Class C Certificateholder (other than the Seller)
confirms that is has neither acquired nor will it sell, trade or transfer any
interest in the Class C Certificates or cause an interest in the Class C
Certificates to be marketed on or through (i) an "established securities market"
within the meaning of Section 7704(b)(1) of the Internal Revenue Code and any
proposed, temporary or final treasury regulation thereunder, including, without
limitation, an over-the-counter market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations or (ii) "secondary market" or
"substantial equivalent thereof" within the meaning of Section 7704(b)(2) of the
Internal Revenue Code and any proposed, temporary or final treasury regulation
thereunder, including a market wherein interests in the Class C Certificates are
regularly quoted by any Person making a market in such interests and a market
wherein any Person regularly makes available bid or offer quotes with respect to
interests in the Class C Certificates and stands ready to effect buy or sell
transactions at the quoted prices for itself or on behalf of others. Any
purported transfer, assignment or other conveyance of the Class C Certificates
in contravention of the foregoing covenant shall be null and void ab initio and
the purported transferor shall continue to be treated as the holder of such
Class C Certificates and the purported transferee shall not be recognized as a
Series 1996-1 Class C Certificateholder by the Seller, the Servicer or the
Trustee.
-9-
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee
- ------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
------------------------------------------------------------------
(name and address of assignee)
- --------------------------------------------------------------------------------
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints __________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
---------------------------- ----------------------------*
Signature Guaranteed:
----------------------------
- ----------------------------------
(*) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the reverse of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
<PAGE>
EXHIBIT D
DISTRIBUTION DATE STATEMENT
(a) The aggregate amount of Collections, the aggregate amount of Non-
Principal Collections and the aggregate amount of Principal Collections
processed during the immediately preceding Collection Period;
(b) The Floating Allocation Percentage, the Principal Allocation
Percentage and the Series 1996-1 Allocation Percentage for such Collection
Period;
(c) The total amount, if any, distributed on the Series 1996-1
Certificates;
(d) The amount of such distribution allocable to principal on the
Class A Certificates, the Class B Certificates and the Class C Certificates;
(e) The amount of such distribution allocable to interest on the
Class A Certificates, the Class B Certificates and the Class C Certificates;
(f) The Investor Default Amount for such Distribution Date;
(g) The Required Subordination Draw Amount, if any, for the preceding
Collection Period;
(h) The amount of the Class A, Class B and Class C Investor Charge-
Offs and the amounts of reimbursements thereof for the preceding Collection
Period;
(i) The amount of the Monthly Servicing Fee for the preceding
Collection Period;
(j) The Class A Invested Amount, the Class B Invested Amount, the
Class C Invested Amount, the Excess Funding Account balance and the outstanding
principal balance of the Class A, Class B and Class C Certificates for such
distribution (after giving effect to all distributions which will occur on such
Distribution Date);
(k) The Controlled Distribution Amount, if any;
(l) The Class A Pool Factor, Class B Pool Factor and Class C Pool
Factor;
(m) The Available Subordinated Amount for such Determination Date;
<PAGE>
(n) The applicable Net Receivables Rate for the next Interest Period;
(o) The Reserve Fund balance for such date; and
(p) The Principal Funding Account balance, the Interest Funding
Account balance and Collection Account balance with respect to such date.
-2-
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Name of Series Depository Institution
1996-1 Account and Account No.
- -------------- -----------------------
<S> <C>
Interest Funding Account
Principal Funding Account
Excess Funding Account
Reserve Fund
</TABLE>
-3-
<PAGE>
SCHEDULE 2
Initial Principal Amounts of Certificates
-----------------------------------------
<TABLE>
<CAPTION>
Class Initial Principal Amount
- ----- ------------------------
<S> <C>
Class A $1,000,000,000
Class B $ 31,747,000
Class C $ 26,456,000
</TABLE>
-4-
<PAGE>
EXHIBIT 5.1
[MAYER, BROWN & PLATT LETTERHEAD]
October 8, 1996
Deutsche Floorplan Receivables, L.P.
655 Maryville Centre Drive
St. Louis, Missouri 63141-5832
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, Missouri 63141-5832
Re: Deutsche Floorplan Receivables Master Trust
Registration Statement on Form S-3 (File No. 333-10943)
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Deutsche Floorplan Receivables, L.P., a
Delaware limited partnership, as seller (the "Seller"), and Deutsche Financial
Services Corporation, as servicer (the "Servicer"), in connection with the
Registration Statement on Form S-3 referenced above (together with the exhibits
and amendments thereto, the "Registration Statement") filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended,
relating to the registration of the $1,000,000,000 Floating Rate Asset Backed
Certificates, Series 1996-1, Class A and the $31,747,000 Floating Rate Asset
Backed Certificates, Series 1996-1, Class B (collectively, the "Certificates")
to be issued by Deutsche Floorplan Receivables Master Trust, (the "Trust")
pursuant to (i) a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), substantially in the form filed as Exhibit 4.1 to the Registration
Statement, among the Seller, the Servicer and Chase Manhattan Bank as trustee
(the "Trustee"), and (ii) the Series 1996-1 Supplement (the "Supplement") to the
Pooling and Servicing Agreement, substantially in the form filed with the
Registration Statement, among the Seller, the Servicer and the Trustee. All
capitalized terms not otherwise defined herein have the same meaning as in the
Registration Statement.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Certificates, and in order to express our
opinion hereinafter stated, we have examined and relied upon the Registration
Statement and, in each case as filed with the Registration Statement, the forms
of Pooling and Servicing Agreement, the Series 1996-1 Supplement and the
Certificates (the "Operative Documents"). We have also examined such statutes,
certificates, corporate records and other instruments as we have deemed
necessary for
<PAGE>
Deutsche Floorplan Receivables, L.P.
Deutsche Financial Services Corporation
October 8, 1996
Page 2
the purposes of this opinion. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to the original documents of all documents
submitted to us as copies and the authenticity of the originals of such latter
documents. As to any facts material to our opinion, we have, when relevant facts
were not independently established, relied upon the aforesaid records,
certificates and documents.
Based on and subject to the foregoing, we are of the opinion that, with
respect to the Certificates when: (a) the Registration Statement becomes
effective pursuant to the provisions of the Securities Act of 1933, as amended,
(b) the amount, price, interest rate and other principal terms of such
Certificates have been fixed by or pursuant to authorization of the general
partner of the Seller, (c) the Operative Documents have each been duly
completed, authorized, executed and delivered by the parties thereto
substantially in the form filed as an exhibit to the Registration Statement
reflecting the terms established as described above, (d) such Certificates have
been duly executed by the Seller, authenticated by the Trustee, and sold by the
Trust, at the direction of the Seller, and (e) payment of the agreed
consideration for such Certificates shall have been received by the Trust, all
in accordance with the terms and conditions of the Operative Documents and in
the manner described in the Registration Statement, such Certificates will have
been duly authorized by all necessary action of the Trust and will be legally
issued, fully paid and non-assessable.
Our opinions expressed herein are limited to the federal laws of the United
States of America and the laws of the State of Illinois.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name therein under the captions "Federal Income Tax Considerations" and
"Legal Matters."
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 8.2
[LETTERHEAD OF BRYAN CAVE LLP]
October 8, 1996
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, MO 63141
Deutsche Floorplan Receivables, L.P.
c/o Naran Burchinow
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, MO 63141
Re: Deutsche Floorplan Receivables Master Trust
Gentlemen:
We have acted as Special Missouri Tax Counsel to Deutsche Floorplan
Receivables, L.P. in connection with the issuance by the Deutsche Floorplan
Receivables Master Trust (the "Trust") of Floating Rate Asset Backed
Certificates, Series 1996-1, Class A and Floating Rate Asset Backed
Certificates, Series 1996-1, Class B (the "Certificates"). You have asked our
opinion with respect to certain Missouri tax matters contained in a prospectus
(the "Prospectus") which is included as an exhibit to an Amendment to the
Registration Statement (Registration No. 333-10943) prepared in connection with
the offering of the Certificates. We understand that the Amendment to the
Registration Statement will be filed with the Securities and Exchange Commission
on October 8, 1996.
In our opinion, the description of the Missouri tax aspects of the
offering contained in the Prospectus under the heading "State and Local Tax
Consequences" is an accurate description of certain Missouri tax consequences of
the Trust and the holders of the Certificates.
Our opinion is based on the Revised Statutes of Missouri, rules and
regulations promulgated thereunder, and interpretations thereof existing on this
date. Our opinion represents judgments concerning complex issues and is not
binding upon the Missouri Department of Revenue or any other taxing authority.
No assurance can be given that the
<PAGE>
BRYAN CAVE LLP
Deutsche Financial Services Corporation
Deutsche Floorplan Receivables, L.P.
c/o Naran Burchinow
October 8, 1996
Page 2
Missouri tax treatment described in the Prospectus will not be challenged, or
that any such challenge would not be successful.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to Bryan Cave in the Prospectus under the
heading "State and Local Tax Consequences."
Very truly yours,
/s/ Bryan Cave LLP
BRYAN CAVE LLP
<PAGE>
EXHIBIT 8.1
[MAYER, BROWN & PLATT LETTERHEAD]
October 8, 1996
Deutsche Floorplan Receivables, L.P.
655 Maryville Centre Drive
St. Louis, Missouri 63141-5832
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, Missouri 63141-5832
Re: Deutsche Floorplan Receivables Master Trust
Registration Statement on Form S-3 (No. 333-10943)
-------------------------------------------------
Ladies and Gentlemen:
We have acted as special tax counsel to Deutsche Floorplan Receivables,
L.P. (the "Seller") and Deutsche Financial Services Corporation (the "Servicer")
in connection with the above-referenced Registration Statement (together with
the exhibits and any amendments thereto, the "Registration Statement"), filed by
the Seller with the Securities and Exchange Commission in connection with the
registration by the Seller of the $1,000,000,000 Floating Rate Asset Backed
Certificates, Series 1996-1, Class A and the $31,747,000 Floating Rate Asset
Backed Certificates, Series 1996-1, Class B (collectively, the "Certificates")
to be issued by Deutsche Floorplan Receivables Master Trust (the "Trust") formed
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") among the Seller, the Servicer and Chase Manhattan Bank, as trustee
(the "Trustee") and the Series 1996-1 Supplement to the Pooling and Servicing
Agreement (the "Series 1996-1 Supplement") among the Seller, the Servicer and
the Trustee.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Certificates, and in order to express our
opinion hereinafter stated, (a) we have examined copies of the forms of the
Pooling and Servicing Agreement, the Series 1996-1 Supplement, and the
Certificates, in each case as filed as exhibits to the Registration Statement
(collectively the "Operative Documents") and (b) we have examined such other
records and documents and such matters of law, and we have satisfied ourselves
as to such matters of fact, as we have considered relevant for purposes of this
opinion.
<PAGE>
Deutsche Floorplan Receivables, L.P.
Deutsche Financial Services Corporation
October 8, 1996
Page 2
The opinion set forth in this letter is based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated and proposed thereunder, current positions of the
Internal Revenue Service (the "IRS") contained in published Revenue Rulings and
Revenue Procedures, current administrative positions of the IRS and existing
judicial decisions. No tax rulings will be sought from the IRS with respect to
any of the matters discussed herein.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form we have examined, we are of the
opinion that the statements set forth in the Prospectus under the headings
"Prospectus Summary -- Tax Matters," "Prospectus Summary -- ERISA
Considerations," "Federal Income Tax Considerations" and "ERISA Considerations"
are a fair and accurate summary of the material federal tax consequences of the
issuance and holding of the Certificates. There can be no assurance, however,
that the tax conclusions presented therein will not be successfully challenged
by the IRS, or significantly altered by new legislation, changes in IRS
positions or judicial decisions, any of which challenges or alterations may be
applied retroactively with respect to completed transactions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm therein under the
captions "Federal Income Tax Considerations" and "Legal Matters". In giving such
consent, we do not admit that we are "experts" within the meaning of the term
used in the Securities Act of 1933, as amended or the rules and regulations of
the Securities and Exchange Commission issued thereunder, with respect to any
part of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 10.1
================================================================================
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Buyer
with
DEUTSCHE FINANCIAL SERVICES CORPORATION
and
DEUTSCHE BUSINESS SERVICES CORPORATION
Sellers
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT
Dated as of December 1, 1993,
Amended and Restated as of March 1, 1994,
Amended as of January 24, 1996,
and
Amended and Restated as of October 1, 1996
================================================================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions
-----------
<S> <C>
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitional Provisions . . . . . . . . . . . . . . . . 1
ARTICLE II
Conveyance of Receivables
-------------------------
Section 2.1. Conveyance of Receivables . . . . . . . . . . . . . . . . . . 2
Section 2.2. Representations and Warranties of the Sellers
Relating to the Sellers and the Agreement . . . . . . . . 4
Section 2.3. Representations and Warranties of the Sellers
Relating to the Receivables . . . . . . . . . . . . . . . 7
Section 2.4. Addition of Accounts . . . . . . . . . . . . . . . . . . . . 9
Section 2.5. Covenants of the Sellers . . . . . . . . . . . . . . . . . . 11
Section 2.6. Removal of Eligible Accounts . . . . . . . . . . . . . . . . 13
Section 2.7. Removal of Ineligible Accounts . . . . . . . . . . . . . . . 14
Section 2.8. Sale of Ineligible Receivables . . . . . . . . . . . . . . . 15
ARTICLE III
Administration and Servicing of Receivables
-------------------------------------------
Section 3.1. Acceptance of Appointment and Other Matters
Relating to the Servicer . . . . . . . . . . . . . . . . . 16
Section 3.2. Servicing Compensation . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
Section 4.1. Allocations and Applications of Collections
and Other Funds . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
Other Matters Relating to the Sellers
-------------------------------------
Section 5.1. Merger or Consolidation of, or Assumption
of, the Obligations of the Sellers . . . . . . . . . . . . 16
Section 5.2. Sellers' Indemnification of the Buyer . . . . . . . . . . . . 17
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VI
Termination
-----------
ARTICLE VII
Miscellaneous Provisions
------------------------
<S> <C>
Section 7.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.2. Protection of Right, Title and Interest
to Receivables . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.3. Limited Recourse . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.4. No Petition . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.5. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.7. Severability of Provisions . . . . . . . . . . . . . . . . . 21
Section 7.8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.9. Further Assurances . . . . . . . . . . . . . . . . . . . . . 21
Section 7.10. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . 22
Section 7.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.12. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 22
Section 7.13. Merger and Integration . . . . . . . . . . . . . . . . . . . 22
Section 7.14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.15. Continued Effectiveness of the Receivables
Contribution and Sale Agreement . . . . . . . . . . . . . 22
EXHIBITS
- --------
Exhibit A Form of Assignment of Receivables in Additional Accounts
Exhibit B Form of Opinion of Counsel regarding Amendments
Exhibit C Form of Reassignment of Receivables in Removed Accounts
Schedule 1 List of Accounts
</TABLE>
-ii-
<PAGE>
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT, dated as of December 1,
1993, amended and restated as of March 1, 1994, amended as of January 24, 1996
and amended and restated as of October 1, 1996, among DEUTSCHE FLOORPLAN
RECEIVABLES, L.P., a Delaware limited partnership, formerly known as ITT
Floorplan Receivables, L.P., as Buyer, DEUTSCHE FINANCIAL SERVICES CORPORATION
("DFS"), a Nevada corporation, formerly known as ITT Commercial Finance Corp.,
and DEUTSCHE BUSINESS SERVICES CORPORATION ("Deutsche BSC"), a Missouri
corporation, formerly known as ITT Business Services Corporation, as Sellers.
W I T N E S S E T H:
WHEREAS the Sellers in the ordinary course of their businesses finance
the purchase of floorplan inventory, accounts receivable and other assets of
dealers in, and manufacturers of, commercial and consumer products, thereby
generating certain payment obligations;
WHEREAS the Sellers wish to sell or contribute certain of such
existing and future payment obligations from time to time to the Buyer; and
WHEREAS the Buyer desires to sell such payment obligations to the
Deutsche Floorplan Receivables Master Trust, pursuant to a Pooling and Servicing
Agreement dated as of December 1, 1993, amended and restated as of March 1,
1994, amended as of January 24, 1996, and amended and restated as of October 1,
1996 (as the same may from time to time be amended, supplemented or otherwise
modified, the "Pooling and Servicing Agreement"), among the Buyer, as seller,
DFS, as servicer, and The Chase Manhattan Bank, as trustee (the "Trustee").
WHEREAS the Sellers and the Buyer desire to amend and restate
this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
Section 1.1. Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The rules of construction in Sections 1.2 and 1.3 of the Pooling and
Servicing Agreement shall be applied to this Agreement. In addition, the term
"Agreement" means this Receivables Contribution and Sale Agreement, as the same
may from time to time be amended, supplemented or otherwise modified.
-1-
<PAGE>
Section 1.2. Other Definitional Provisions. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement; Article, Section, Schedule, and Exhibit references are
references to Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(b) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
-------------------------
Section 2.1. Conveyance of Receivables. By execution of this
Agreement, each Seller does hereby sell, transfer, assign, set over and
otherwise convey, without recourse (except as expressly provided herein), to the
Buyer on the first Closing Date, in the case of Initial Accounts, and on the
applicable Addition Date, in the case of Additional Accounts, all of its right,
title and interest in, to and under the Receivables in each Account and all
Collateral Security with respect thereto owned by such Seller at the close of
business on the Cut-Off Date, in the case of the Initial Accounts, and on the
applicable Additional Cut-Off Date, in the case of Additional Accounts, and all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Missouri and the State of Georgia, as applicable, and
Recoveries) thereof and all of such Seller's rights, remedies, powers and
privileges with respect to such Receivables under the related Floorplan
Agreements. Subject to Article VI, as of each Business Day prior to the earlier
of (x) the occurrence of an Early Amortization Event specified in Section
9.1(b), (c), (d), or (e) of the Pooling and Servicing Agreement and (y) the
Trust Termination Date, on which Receivables are created in the Accounts (a
"Transfer Date"), each Seller does hereby sell, transfer, assign, set over and
otherwise convey, without recourse (except as expressly provided herein), to the
Buyer, all of its right, title and interest in, to and under the Receivables in
each Account (other than any Receivables created in any Removed Account from and
after the applicable Removal Date) and all Collateral Security with respect
thereto owned by such Seller at the close of business on such Transfer Date and
not theretofore conveyed to the Buyer, all monies due or to become due and all
amounts received with respect thereto and all proceeds (including "proceeds" as
defined in Section 9-306 of the UCC as in effect in the State of
-2-
<PAGE>
Missouri and the State of Georgia, as applicable, and Recoveries) thereof and
all of such Seller's rights, remedies, powers and privileges with respect to
such Receivables under the related Floorplan Agreements. The foregoing sale,
transfer, assignment, set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not constitute, and are not
intended to result in, the creation or an assumption by the Buyer of any
obligation of the Servicer, either Seller or any other Person in connection with
the Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation under the Financing Agreements, the Floorplan
Agreements and any Participation Agreement and any other obligation to any
Dealer or Manufacturer.
To the extent, if any, that a Receivable and its Collateral Security
was subject to a participation arrangement under which DFS and Deutsche BSC
owned undivided interests in such Receivable and Collateral Security immediately
prior to its conveyance hereunder, DFS and Deutsche BSC are hereby selling,
transferring, assigning, setting over and conveying to the Buyer all of their
right, title and interest in their respective undivided interests in such
Receivable and Collateral Security, such that the Buyer owns the entire
Receivable and its Collateral Security free of any such participation
arrangement.
On the Closing Date, pursuant to the terms of this Section 2.1, (i)
DFS shall contribute as capital to the Buyer Receivables in the amount of
$2,245,412,372.69, together with the related Collateral Security and Floorplan
Rights (defined below) and (ii) Deutsche BSC shall sell to the Buyer Receivables
in the amount of $2,632,722.01, together with the related Collateral Security
and Floorplan Rights. Subject to Article VI, the purchase price for the
Receivables sold by (a) Deutsche BSC to the Buyer on the Closing Date and (b) by
each of the Sellers to the Buyer on each Addition Date and on each Transfer Date
thereafter shall be a price agreed to by the Buyer and each Seller at the time
of acquisition by the Buyer, which price shall not, in the opinion of the Buyer,
be materially less favorable to the Buyer than prices for transactions of a
generally similar character at the time of the acquisition taking into account
the quality of such Receivables and other pertinent factors, including, without
limitation, prevailing interest rates; provided that such consideration shall in
any event not be less than reasonably equivalent value therefor.
At its option from time to time, DFS may convey as a capital
contribution to the Buyer (or convey as a capital contribution to the general
partner of the Buyer which may then convey as a capital contribution to the
Buyer) Receivables together with the related Collateral Security and Floorplan
Rights.
In connection with such contributions and sales, each Seller agrees to
record and file, at its own expense, a financing statement on form UCC-1 (and
continuation statements when applicable) naming the applicable Seller as
"seller" and the Buyer as "Purchaser" thereon with respect to the Receivables
now existing and hereafter created for the sale of chattel paper, accounts or
general intangibles (as defined in Section 9-105 of the UCC as in
-3-
<PAGE>
effect in any state where such Seller's or the Servicer's chief executive
offices or books and records relating to the Receivables are located) meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the sale and assignment of the
Receivables, the Collateral Security and all of such Seller's rights, remedies,
powers and privileges with respect to such Receivables under the related
Floorplan Agreements (the "Floorplan Rights") to the Buyer, and to deliver a
file-stamped copy of such financing statements or other evidence of such filing
to the Buyer on or prior to the first Closing Date, in the case of Initial
Accounts, and (if any additional filing is so necessary) the applicable Addition
Date, in the case of Additional Accounts. In addition, each Seller shall cause
to be timely filed in the appropriate filing office any UCC-1 financing
statement and continuation statement necessary to perfect any sale of
Receivables to the Seller. The Buyer shall be under no obligation whatsoever to
file such financing statement, or a continuation statement to such financing
statement, or to make any other filing under the UCC in connection with such
contribution and sales. The parties hereto intend that the transfers of
Receivables effected by this Agreement be sales (or, in the case of
contributions, true contributions).
In connection with such contribution and sales, each Seller further
agrees, at its own expense, on or prior to the first Closing Date, in the case
of Initial Accounts, the applicable Addition Date, in the case of Additional
Accounts, and the applicable Removal Date, in the case of Removed Accounts, (a)
to indicate in its books and records, which may include computer files, that the
Receivables created in connection with the Accounts (other than Removed
Accounts) have been sold, and the Collateral Security and the Floorplan Rights
assigned, to the Buyer pursuant to this Agreement and sold to the Trust pursuant
to the Pooling and Servicing Agreement for the benefit of the Certificateholders
and the other Beneficiaries and (b) to deliver to the Buyer a computer file or
microfiche or written list containing a true and complete list of all such
Accounts (other than Removed Accounts) specifying for each such Account, as of
the Cut-Off Date, in the case of Initial Accounts, and the applicable Additional
Cut-Off Date, in the case of Additional Accounts, (i) its account number and
(ii) the aggregate amount of Principal Receivables in such Account. Such file or
list, as supplemented from time to time to reflect Additional Accounts and
Removed Accounts, shall be marked as Schedule 1 to this Agreement and is hereby
incorporated into and made a part of this Agreement.
In the event that such contributions, sales and assignments are deemed
to constitute a pledge of security for a loan, it is the intent of this
Agreement that each Seller shall be deemed to have granted to the Buyer a first
priority perfected security interest in all of such Seller's right, title and
interest to and under the Receivables, the Collateral Security and all proceeds
thereof and
-4-
<PAGE>
the Floorplan Agreements, and that this Agreement shall constitute a security
agreement under applicable law.
Section 2.2. Representations and Warranties of the Sellers Relating to
the Sellers and the Agreement. Each Seller hereby represents and warrants to the
Buyer, as to itself and the Receivables being transferred and sold by it
hereunder, as of each Closing Date that:
(a) Organization and Good Standing. Such Seller is a corporation
duly organized and validly existing and in good standing under the
laws of the state of its incorporation and has, in all material
respects, full corporate power, authority and legal right to own its
properties and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) Due Qualification. Such Seller is duly qualified to do
business and, where necessary, is in good standing as a foreign
corporation (or is exempt from such requirement) and has obtained all
necessary licenses and approvals in each jurisdiction in which the
conduct of its business requires such qualification except where the
failure to so qualify or obtain licenses or approvals would not have a
material adverse effect on its ability to perform its obligations
hereunder.
(c) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for or
contemplated by this Agreement have been duly authorized by such
Seller by all necessary corporate action on the part of the Seller and
are within its corporate powers.
(d) No Conflict. The execution and delivery of this Agreement,
the performance of the transactions contemplated by this Agreement and
the fulfillment of the terms hereof and thereof, will not conflict
with, result in any breach of any of the material terms and provisions
of, or constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which such Seller is a party or
by which it or its properties are bound.
(e) No Violation. The execution and delivery of this Agreement,
the performance of the transactions contemplated by this Agreement and
the fulfillment of the terms hereof and thereof applicable to such
Seller, will not conflict with or violate any material Requirements of
Law applicable to such Seller or conflict with, violate, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default
-5-
<PAGE>
under any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which either Seller is a party or by which such
Seller is bound.
(f) No Proceedings. There are no proceedings or, to the best
knowledge of such Seller, investigations, pending or threatened
against such Seller, before any Governmental Authority (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that, in the
reasonable judgment of such Seller, would materially and adversely
affect the performance by such Seller of its obligations under this
Agreement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement or (v) seeking to affect adversely the income tax attributes
of the Trust under the United States federal or any state income,
single business or franchise tax systems.
(g) All Consents Required. All appraisals, authorizations,
consents, orders, approvals or other actions of any Person or of any
governmental body or official required in connection with the
execution and delivery of this Agreement, the performance of the
transactions contemplated by this Agreement, and the fulfillment of
the terms hereof or thereof, have been obtained.
(h) Enforceability. This Agreement constitutes a legal, valid and
binding obligation of such Seller enforceable against such Seller in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(i) Record of Accounts. As of the first Closing Date, in the case
of Initial Accounts, as of the applicable Addition Date, in the case
of the Additional Accounts, and, as of the applicable Removal Date, in
the case of Removed Accounts, Schedule 1 to this Agreement is an
accurate and complete listing in all material respects of all the
Accounts as of the Cut-Off Date, the applicable Additional Cut-Off
Date or the applicable Removal Date, as the case may be, and the
information contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is true and correct
in all material respects as of the Cut-Off Date, such applicable
Additional Cut-Off Date or such Removal Date, as the case may be.
-6-
<PAGE>
(j) Valid Transfer. This Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale, transfer
and assignment to the Buyer of all right, title and interest of such
Seller in the Receivables and the Collateral Security and the proceeds
thereof. Upon the filing of the financing statements described in
Section 2.1 with the Secretary of State of the State of Missouri and
the County Recorder of St. Louis County in the State of Missouri with
respect to DFS and the County Recorder of Cobb County in the State of
Georgia, in the case of Deutsche BSC and, in the case of the
Receivables hereafter created and the proceeds thereof, upon the
creation thereof, the Buyer shall have a first priority perfected
ownership interest in such property. Except as otherwise provided in
the Pooling and Servicing Agreement, neither such Seller nor any
Person claiming through or under such Seller has any claim to or
interest in the Trust Assets.
The representations and warranties set forth in this Section 2.2 shall
survive the transfer and assignment of the Receivables to the Buyer. Upon
discovery by a Seller or the Buyer of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall
give prompt written notice to the other parties.
In the event of any breach of any of the representations and
warranties set forth in this Section 2.2 and if, in connection therewith,
the Buyer shall be obligated to purchase the Certificateholders' Interest
pursuant to Section 2.3 of the Pooling and Servicing Agreement, the Sellers
shall repurchase the Receivables, the Collateral Security and Floorplan
Rights respectively conveyed by them and shall pay to the Buyer on the
Business Day preceding the Distribution Date on which such purchase of the
Certificateholders' Interest is to be made an amount equal to the purchase
price for the Certificateholders' Interest as specified in the Pooling and
Servicing Agreement. The obligation of the Seller to purchase the
Receivables pursuant to this Section 2.2 shall constitute the sole remedy
against such Seller respecting an event of the type specified in the first
sentence of this paragraph available to the Buyer and to the Investor
Certificateholders (or the Trustee on behalf of the Investor
Certificateholders).
Section 2.3. Representations and Warranties of the Sellers
---------------------------------------------
Relating to the Receivables.
---------------------------
(a) Representations and Warranties. Each Seller hereby represents and
warrants to the Buyer, with respect to the Receivables conveyed by such
Seller, that:
-7-
<PAGE>
(i) Each Receivable and all Collateral Security existing on the
first Closing Date or, in the case of Additional Accounts, on the
applicable Addition Date, and on each Transfer Date, has been conveyed
to the Buyer free and clear of any Lien.
(ii) With respect to each Receivable and all Collateral Security
existing on the first Closing Date or, in the case of Additional
Accounts, on the applicable Addition Date, and on each Transfer Date,
all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by such Seller in connection with
the conveyance of such Receivable or Collateral Security to the Buyer
have been duly obtained, effected or given and are in full force and
effect.
(iii) On the Cut-Off Date and each Closing Date, each Initial
Account is an Eligible Account and, in the case of Additional
Accounts, on the applicable Additional Cut-Off Date and each
subsequent Closing Date, each such Additional Account is an Eligible
Account.
(iv) On the first Closing Date, in the case of the Initial
Accounts, and, in the case of the Additional Accounts, on the
applicable Additional Cut-Off Date, and on each Transfer Date, each
Receivable conveyed to the Buyer on such date is an Eligible
Receivable or, if such Receivable is not an Eligible Receivable, such
Receivable is conveyed to the Buyer in accordance with Section 2.8.
(v) Each Participation Agreement, if any, relating to Receivables
conveyed by such Seller permits the transfer of such Receivables to
the Buyer and the Trust and provides that the undivided interest of
such participant is pari passu in all respects (other than non-
subordinated interest strips and fees) with the remaining undivided
interest in the related Receivables. If such Participation Agreement
was created after December 1, 1993, such Participation Agreement
states that the related undivided interest of such Seller may be
transferred to a securitization vehicle and contains an agreement by
the participant that such participant shall have no rights against the
securitization vehicle or any successor servicer for such
securitization vehicle, other than in connection with funds allocable
to the participant that have been improperly withheld by the
securitization vehicle.
(b) Notice of Breach. The representations and warranties set forth in
this Section 2.3 shall survive the transfer and assignment of the Receivables to
the Buyer. Upon discovery by such Seller or the Buyer of a breach of any of the
representations and warranties
-8-
<PAGE>
set forth in this Section 2.3, the party discovering such breach shall give
prompt written notice to the other parties.
(c) Repurchase. In the event any representation or warranty under
Section 2.3(a) is not true and correct as of the date specified therein with
respect to any Receivable or Account and the Buyer is, in connection therewith,
required to purchase such Receivable or all Receivables in such Account pursuant
to Section 2.4(c) of the Pooling and Servicing Agreement, then, within 30 days
(or such longer period as may be agreed to by the Buyer) of the earlier to occur
of the discovery of any such event by a Seller or the Buyer, or receipt by
either Seller or the Buyer of written notice of any such event given by the
Trustee or any Enhancement Providers, the applicable Seller shall repurchase the
Receivable or Receivables of which the Buyer is required to accept reassignment
pursuant to the Pooling and Servicing Agreement on the Business Day preceding
the Determination Date on which such reassignment is to occur.
The applicable Seller shall purchase each such Receivable by making a
payment to the Buyer in immediately available funds on the Business Day
preceding the Distribution Date on which such reassignment is to occur in an
amount equal to the Purchase Price for such Receivable. Upon payment of the
Purchase Price, the Buyer shall automatically and without further action be
deemed to sell, transfer, assign, set over and otherwise convey to such Seller,
without recourse, representation or warranty, all the right, title and interest
of the Buyer in and to such Receivable, all Collateral Security, the related
Floorplan Rights and all monies due or to become due with respect thereto and
all proceeds thereof. The Buyer shall execute such documents and instruments of
transfer or assignment and take such other actions as shall reasonably be
requested by such Seller to effect the conveyance of such Receivables pursuant
to this Section. The obligation of such Seller to repurchase any such
Receivable shall constitute the sole remedy respecting the event giving rise to
such obligation available to the Buyer and to the Certificateholders (or the
Trustee on behalf of Certificateholders).
Section 2.4. Addition of Accounts. (a) Each Seller may from time to
time offer to voluntarily designate additional Eligible Accounts to be included
as Accounts, subject to the conditions specified in paragraph (b) below. If any
such offer is accepted by the Buyer, Receivables and Collateral Security, if
any, from such Additional Accounts shall be sold to the Buyer (or contributed to
the Buyer in accordance with Section 2.1) effective on a date (the "Addition
Date") specified in a written notice provided by the Seller (or the Servicer on
its behalf) to the Buyer and any Enhancement Providers specifying the Additional
Cut-Off Date and the Addition Date for such Additional Accounts (the "Addition
Notice") on or before the fifth Business Day but not more than the 30th day
prior to the related Addition Date or, if the Automatic
-9-
<PAGE>
Addition Condition is satisfied, on the Determination Date following the
Collection Period in which such Addition Dates occur (the "Notice Date"). An
Addition Notice may relate to one or more Accounts on one or more Addition
Dates.
(b) Each Seller shall be permitted to convey to the Buyer the
Receivables and all Collateral Security, if any, related thereto in any
Additional Accounts designated by such Seller as such pursuant to Section 2.4(a)
only upon satisfaction of each of the following conditions on or prior to the
related Addition Date (except for the condition in clause (vii), if applicable,
which shall be satisfied on or before the tenth Business Day after such Notice
Date):
(i) Such Seller shall provide the Buyer and any Enhancement
Providers with a timely Addition Notice.
(ii) Such Additional Accounts shall all be Eligible Accounts.
(iii) Such Seller shall have delivered to the Buyer a duly
executed written assignment (including an acceptance by the Buyer)
covering the Receivables specified in the Addition Notice in
substantially the form of Exhibit A (the "Assignment") and the
computer file or microfiche or written list required to be delivered
pursuant to Section 2.1.
(iv) Such Seller shall have delivered to the Buyer for deposit in
the Collection Account all Collections with respect to such Additional
Accounts since the Additional Cut-Off Date.
(v) (A) No selection procedures believed by such Seller to be
adverse to the interests of the Buyer or the Beneficiaries were used
in selecting such Additional Accounts; (B) the list of Additional
Accounts delivered pursuant to clause (iii) above is true and correct
in all material respects as of the Additional Cut-Off Date and (C) as
of each of the Notice Date and the Addition Date, neither such Seller,
the Buyer nor the servicer are insolvent nor will have been made
insolvent by such transfer nor are aware of any pending insolvency.
(vi) If the Automatic Addition Condition is not satisfied with
respect to such addition, the Rating Agency Condition shall have been
satisfied with respect to such addition.
(vii) If (A) one or more of the Additional Accounts specified in
such Addition Notice will contain Receivables secured by a security
interest in a type of Product that has not been previously financed in the
Floorplan Business or (B) one or more of the Additional Accounts is
supported by a
-10-
<PAGE>
Floorplan Agreement with a Manufacturer that, as of the related Addition
Date, is not an Existing Manufacturer, then, whether or not the Automatic
Condition is satisfied, the Rating Agency Condition shall have been
satisfied in respect of the addition of each Additional Account specified
in clauses (A) and (B) on or prior to the related Addition Date.
(viii) The addition of the Receivables arising in such Additional
Accounts shall not result in the occurrence of an Early Amortization Event.
(ix) Such Seller shall have delivered to the Buyer and any
Enhancement Providers a certificate of a Vice President or more senior
officer confirming the items set forth in paragraphs (ii) through (vi) and
(viii) above.
(x) On or before each Notice Date, such Seller shall have
delivered to the Trustee and any Enhancement Providers (A) an Opinion of
Counsel with respect to the Receivables in the Additional Accounts added
since the last delivery of such opinion substantially in the form of
Exhibit G-2 to the Pooling and Servicing Agreement and (B) except in the
case of an addition in connection with an addition of Receivables by the
Buyer to the Trust required by Section 2.5(a) of the Pooling and Servicing
Agreement, a Tax Opinion with respect to such addition; provided that if
such Opinion of Counsel and Tax Opinion are required to be delivered, they
shall be rendered by outside counsel no less frequently than quarterly.
(c) Each Seller hereby represents and warrants as of the applicable
Addition Date as to the matters set forth in Section 2.4(b)(v). The
representations and warranties set forth in Section 2.4(b)(v) shall survive the
sale and assignment of the respective Receivables and Collateral Security, if
any, to the Buyer. Upon discovery by either Seller or the Buyer of a breach of
any of the foregoing representations and warranties, the party discovering the
breach shall give prompt written notice to the other parties and to any
Enhancement Providers.
(d) Notwithstanding anything in this Section 2.4 to the contrary, the
additions of Additional Accounts pursuant to Section 2.5 on or prior to the
Closing Date for Series 1994-1 need not satisfy clause (i), (vi), (vii) or (x).
Section 2.5. Covenants of the Sellers. Each Seller hereby covenants
that:
(a) No Liens. Except for the conveyances hereunder and the
conveyance of Participation Interests pursuant to the terms of any
Participation Agreements, such Seller will not sell, pledge, assign or
transfer to any other Person, or
-11-
<PAGE>
grant, create, incur, assume or suffer to exist any Lien on, any
Receivable or any Collateral Security, whether now existing or
hereafter created, or any interest therein, and such Seller shall
defend the right, title and interest of the Buyer and the Trust in, to
and under the Receivables and the Collateral Security, whether now
existing or hereafter created, against all claims of third parties
claiming through or under such Seller.
(b) Financing Agreements and Guidelines. Each Seller shall comply
with and perform its servicing obligations with respect to the
Accounts and Receivables in accordance with (i) the Wholesale
Financing Agreements, Accounts Receivable Financing Agreements, Asset
Based Lending Financing Agreements and Unsecured Receivable Financing
Agreements relating to the Accounts and (ii) the Financing Guidelines,
except insofar as any failure to so comply or perform would not
materially and adversely affect the rights of the Buyer, the Trust or
any of the Beneficiaries. Subject to compliance with all Requirements
of Law, such Seller may change the terms and provisions of (i) the
Wholesale Financing Agreements, Accounts Receivable Financing
Agreements, Asset Based Lending Financing Agreements and Unsecured
Receivable Financing Agreements or (ii) the Financing Guidelines in
any respect (including the calculation of the amount or the timing of
charge-offs and the rate of the finance charge assessed thereon) only
if such change would be permitted pursuant to Section 3.1(d) of the
Pooling and Servicing Agreement.
(c) Account Allocations. In the event that such Seller is unable
for any reason to transfer Receivables to the Buyer, then such Seller
agrees that it shall allocate, after the occurrence of such event,
payments on each Account with respect to the principal balance of such
Account first to the oldest principal balance of such Account and to
have such payments applied as Collections in accordance with the terms
of the Pooling and Servicing Agreement. The parties hereto agree that
Non-Principal Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Buyer and by the
Buyer to the Trust shall continue to be a part of the Trust
notwithstanding any cessation of the transfer of additional Principal
Receivables to the Buyer and Collections with respect thereto shall
continue to be allocated and paid in accordance with Article IV of the
Pooling and Servicing Agreement.
(d) Delivery of Collections. In the event that such Seller
receives Collections, such Seller agrees to pay the Servicer or any
Successor Servicer all payments received by the Seller in respect of
the Receivables as soon as practicable after receipt thereof by such
Seller, but in no
-12-
<PAGE>
event later than two Business Days after the receipt by such Seller
thereof.
(e) Notice of Liens. Each Seller shall notify the Buyer and the
Trustee promptly after becoming aware of any Lien on any Receivable
conveyed by such Seller other that the conveyances hereunder or under
the Pooling and Servicing Agreement.
(f) Compliance with Law. Each Seller hereby agrees to comply in
all material respects with all Requirements of Law applicable to such
Seller.
(g) Concentration of Risk. In order to avoid a concentration of
the risks associated with participating its extensions of credit to
Dealers, each Seller may create Participation Interests in its
receivables to be sold or contributed to the Buyer in the same manner
and using the same standards as such Seller does in creating
participation interests in receivables to be retained by such Seller.
(h) Limitation on Creation of Participation Interests. Such
Seller shall not create Participation Interests in its receivables to
the extent that the creation of such Participation Interests would, at
the time of such creation, cause the Pool Balance to be less than the
Required Participation Amount.
(i) Performance of Floorplan Agreements. Such Seller shall
perform its obligations under each Floorplan Agreement in accordance
with the terms thereof in all material respects.
Section 2.6. Removal of Eligible Accounts. (a) On each Determination
Date on which Accounts, including all amounts then held by the Trust or
thereafter received by the Trust with respect to such Accounts, are removed from
the Trust pursuant to Section 2.7 of the Pooling and Servicing Agreement, the
Buyer shall be deemed to have offered to the applicable Seller automatically and
without notice to or action by or on behalf of the Buyer, the right to remove
Eligible Accounts from the operation of this Agreement in the manner prescribed
in Section 2.6(b). The termination of an Account by a Dealer upon such Dealer's
payment in full of such Account shall not be a removal of an Account under this
Section.
(b) To accept such offer and remove Accounts, including all amounts then
held by the Trust or thereafter received by the Trust with respect to such
Accounts, the applicable Seller (or the Servicer on its behalf) shall take the
following actions and make the following determinations:
-13-
<PAGE>
(i) not less than five Business Days prior to the Removal
Date, furnish to the Buyer, the Trustee, any Enhancement Providers and
the Rating Agencies a written notice (the "Removal Notice") specifying
the Determination Date (which may be the Determination Date on which
such notice is given) on which removal of the Receivables of one or
more Accounts (the "Removed Accounts") will occur (a "Removal Date");
(ii) from and after such Removal Date, cease to transfer to the
Buyer any and all Receivables arising in such Removed Accounts;
(iii) represent and warrant that the removal of any such
Eligible Account on any Removal Date shall not, in the reasonable
belief of such Seller, cause an Early Amortization Event to occur or
cause the Pool Balance to be less than the Required Participation
Amount;
(iv) represent and warrant that no selection procedures
believed by such Seller to be adverse to the interests of the
Beneficiaries were utilized in selecting the Accounts to be removed;
and
(v) on or before the fifth Business Day after the Removal
Date, furnish to the Trustee a computer file, microfiche list or other
list of the Removed Accounts that were removed on the Removal Date,
specifying for each Removed Account as of the date of the Removal
Notice its number, the aggregate amount outstanding in such Removed
Account and the aggregate amount of Principal Receivables therein and
represent that such computer file, microfiche list or other list of
the Removed Accounts is true and complete in all material respects.
(c) Subject to Section 2.6(b), on the Removal Date with respect to any
such Removed Account, such Removed Account shall be deemed removed by operation
of this Agreement for all purposes. After the Removal Date and upon the written
request of the Servicer, the Buyer shall deliver to the applicable Seller a
reassignment in substantially the form of Exhibit C (the "Reassignment").
Section 2.7. Removal of Ineligible Accounts. (a) On any date on which
an Account becomes an Ineligible Account (which shall be deemed the Removal
Commencement Date with respect to such Account), the applicable Seller shall
commence removal of the Receivables of such Ineligible Account in the manner
prescribed in Section 2.7(b).
(b) With respect to each Account that becomes an Ineligible Account,
the applicable Seller (or the Servicer on its behalf)
-14-
<PAGE>
shall take the following actions and make the following determinations:
(i) furnish to the Buyer, the Trustee and any Enhancement
Providers a Removal Notice specifying a Removal Commencement Date and
the Ineligible Accounts to be treated as Designated Accounts;
(ii) determine on the Removal Commencement Date with respect to
such Designated Accounts the Designated Balance with respect to each
such Designated Account and amend Schedule 1 by delivering to the
Buyer a computer file or microfiche or written list containing a true
and complete list of the Removed Accounts specifying for each such
Account, as of the Removal Commencement Date, its account number, the
aggregate amount of Receivables outstanding in such Account and the
Designated Balance;
(iii) from and after such Removal Commencement Date, cease to
transfer to the Buyer any and all Receivables arising in such
Designated Accounts;
(iv) from and after such Removal Commencement Date, allocate
Collections of Principal Receivables in respect of each Designated
Account, first to the oldest outstanding principal balance of such
Designated account, until the Removal Date with respect thereto; and
(v) on each Business Day from and after such Removal Commencement
Date to and until the related Removal Date, allocate (A) to the Buyer
Defaulted Receivables and Collections of Non-Principal Receivables and
Collections of Non-Principal Receivables in respect of each Designated
Account, based on the ratio of the aggregate amount of Principal
Receivables in all Designated Accounts sold to the Buyer on such
Business Day to the total aggregate amount of Principal Receivables in
all such Designated Accounts on such Business Day and (B) to such
Seller, the remainder of the Defaulted Receivables and Collections of
Non-Principal Receivables in all such Designated Accounts on such
Business Day.
(c) On the Removal Date with respect to any such Designated Account,
such Seller shall cease to allocate any Collections therefor in accordance
herewith and such Designated Account shall be deemed a Removed Account. After
the Removal Date and upon the written request of the Servicer, the Buyer shall
deliver to such Seller a Reassignment.
Section 2.8. Sale of Ineligible Receivables. Each Seller shall sell to
the Buyer on each Transfer Date any and all
-15-
<PAGE>
Receivables arising in any Eligible Accounts that are Ineligible Receivables,
provided that on the Cut-Off Date or, in the case of Receivables arising in
Additional Accounts, on the related Additional Cut-Off Date, and on the
applicable Transfer Date, the Account in which such Receivables arise is an
Eligible Account.
ARTICLE III
Administration and Servicing of Receivables
-------------------------------------------
Section 3.1. Acceptance of Appointment and Other Matters Relating to
the Servicer. (a) DFS agrees to act as the Servicer under this Agreement and the
Pooling and Servicing Agreement, and the Buyer consents to DFS acting as
Servicer. DFS will have ultimate responsibility for servicing, managing and
making collections on the Receivables and will have the authority to make any
management decisions relating to such Receivables, to the extent such authority
is granted to the Servicer under this Agreement and the Pooling and Servicing
Agreement.
(b) DFS shall service and administer the Receivables in accordance
with the revisions of the Pooling and Servicing Agreement.
Section 3.2. Servicing Compensation. As full compensation for its
servicing activities hereunder and under the Pooling and Servicing Agreement,
DFS shall be entitled to receive the Servicing Fee on each Distribution Date so
long as it is the Servicer under the Pooling and Servicing Agreement. The
Servicing Fee shall be paid in accordance with the terms of the Pooling and
Servicing Agreement.
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
-----------------------------------------
Section 4.1. Allocations and Applications of Collections and Other
Funds. The Servicer will apply all Collections with respect to the Receivables
and all funds on deposit in the Collection Account as described in Article IV of
the Pooling and Servicing Agreement.
ARTICLE V
Other Matters Relating to the Sellers
-------------------------------------
-16-
<PAGE>
Section 5.1. Merger or Consolidation of, or Assumption of, the
Obligations of the Sellers. Neither Seller shall consolidate with or merge into
any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which
such Seller is merged or the Person which acquires by conveyance or
transfer the properties and assets of such Seller substantially as an
entirety shall be a corporation organized and existing under the laws
of the United States of America or any State or the District of
Columbia and, if such Seller is not the surviving entity, such
corporation shall assume, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, the
performance of every covenant and obligation of such Seller hereunder;
and
(b) such Seller has delivered to the Buyer and the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer comply with this Section
5.1 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
Section 5.2. Sellers' Indemnification of the Buyer. Each Seller shall
indemnify and hold harmless the Buyer, from and against any loss, liability,
expense, claim, damage or injury suffered or sustained by reason of any acts,
omissions or alleged acts or omissions arising out of activities of such Seller
pursuant to this Agreement arising out of or based on the arrangement created by
this Agreement and the activities of such Seller taken pursuant thereto,
including any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that such Seller
shall not indemnify the Buyer if such acts, omissions or alleged acts or
omissions constitute fraud, gross negligence or wilful misconduct by the Buyer;
and provided further, that such Seller shall not indemnify the Buyer for any
liabilities, cost or expense of the Buyer with respect to any federal, state or
local income or franchise taxes (or any interest or penalties with respect
thereto) required to be paid by the Buyer in connection herewith to any taxing
authority. Any indemnification under this Article V shall survive the
termination of the Agreement.
-17-
<PAGE>
ARTICLE VI
Termination
-----------
This Agreement will terminate immediately after the Trust terminates
pursuant to the Pooling and Servicing Agreement. In addition, the Buyer shall
not purchase Receivables from a Seller nor shall a Seller designate Additional
Accounts if such Seller shall become an involuntary party to (or be made the
subject of) any proceeding provided for by any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
such Seller or relating to all or substantially all of its property (an
"Involuntary Case") and such Involuntary Case shall have continued for a period
of ten Business Days from and including the day of receipt by such Seller at its
principal corporate office of notice of such Involuntary Case; provided, that
during such ten Business Day period, the Buyer shall suspend its purchase of
Receivables and shall hold all Collections of Principal Receivables that would
have been available to purchase Receivables in the Collection Account and (a) if
by the first Business Day after such ten Business Day period, the Buyer has not
obtained an order from the court having jurisdiction of such case or filing
which order approves the continuation of the sale of Receivables by such Seller
to the Buyer and which provides that the Buyer and any of its transferees
(including the Trustee) may rely on such order for the validity and nonavoidance
of such transfer (the "Order"), the Buyer shall hold such Collections in the
Collection Account until such time as they may be paid as elsewhere provided
herein and shall not purchase Receivables thereafter or designate Additional
Accounts for transfer to the Buyer, or (b) if by such first Business Day, the
Buyer has obtained such Order, such Seller may continue selling Receivables, and
the Buyer may continue purchasing Receivables, pursuant to the terms hereof, as
modified by the immediately succeeding sentence. During the period after the ten
Business Day period described above and before the end of the 60-day period
described below, the purchase price of the Receivables transferred during such
period, notwithstanding anything in this Agreement to the contrary, shall be
paid to such Seller by the Buyer in cash not later than the same Business Day of
any sale of Receivables. During such period, Receivables will be considered
transferred to the Buyer only to the extent that the purchase price therefor has
been paid in cash on the same Business Day. If an Order is obtained but
subsequently is reversed or rescinded or expires, such Seller shall immediately
cease selling Receivables to the Buyer and the Buyer shall immediately cease
buying Receivables. Each Seller shall give prompt written notice to each of the
Buyer and the Trustee immediately upon becoming a party to an Involuntary Case.
If by the first Business Day after the 60-day period after such involuntary
filing, such Involuntary Case has not been dismissed, the Buyer shall not
purchase
-18-
<PAGE>
thereafter Receivables or designated Additional Accounts for transfer to the
Issuer.
ARTICLE VII
Miscellaneous Provisions
------------------------
Section 7.1. Amendment. (a) This Agreement may be amended from time
to time by the Sellers and the Buyer; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel for the Sellers addressed and
delivered to the Trustee, adversely affect in any material respect the interests
of any Investor Certificateholder.
(b) This Agreement may also be amended from time to time by the Buyer
and the Sellers with the consent of the Holders of Investor Certificates
evidencing more than 50% of the aggregate unpaid principal amount of the
Investor Certificates of all materially adversely affected Series, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Sellers; provided, however, that no such amendment shall (i) reduce in any
manner the amount of or delay the timing of any distributions to be made to
Investor Certificateholders or deposits of amounts to be so distributed with the
amount available under any Enhancement without the consent of each affected
Investor Certificateholder, (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholders without the consent
of each affected Certificateholder, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each
Certificateholder or (iv) adversely affect the rating of any Series or Class by
any Rating Agency without the consent of the Holders of all of the Investor
Certificates of such Series or Class. Any amendment to be effected pursuant to
this paragraph shall be deemed to materially adversely affect all outstanding
Series, other than any Series with respect to which such action shall not, as
evidenced by an Opinion of Counsel for the Sellers, addressed and delivered to
the Trustee, adversely affect in any material respect the interests of any
Investor Certificateholder of such Series. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's rights,
duties or immunities under this Agreement or otherwise.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Sellers shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, each Enhancement Provider, each Agent and each Rating Agency.
-19-
<PAGE>
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this Section to the contrary, no
amendment may be made to this Agreement which would adversely affect in any
material respect the interests of any Enhancement Provider without the consent
of such Enhancement Provider.
(f) Deutsche BSC ratifies and affirms, and shall be a party to, that
certain amendment dated as of January 24, 1996 among DFS, the Buyer and the
Trustee.
Section 7.2. Protection of Right, Title and Interest to Receivables.
(a) The Sellers shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the Buyer's right, title and interest to the Receivables and
Collateral Security relating thereto to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Buyer hereunder. Each Seller shall
deliver to the Buyer file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Buyer shall cooperate
fully with the Sellers in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this Section 7.2(a).
(b) Within 30 days after a Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with Section 7.2(a) seriously
misleading within the meaning of Section 9-402(7) of the UCC as in effect in the
State of Missouri or the State of Georgia, as applicable, or such other
applicable jurisdiction, such Seller shall give the Buyer and any Agent notice
of any such change and shall file such financing statements or amendments as may
be necessary to continue the perfection of the Buyer's security interest in the
Receivables and the proceeds thereof.
(c) Each Seller will give the Buyer prompt written notice of any
relocation of any office at which it keeps Records concerning the Receivables or
of its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to perfect or to continue the perfection of the Buyer's security
interest in the Receivables and the proceeds
-20-
<PAGE>
thereof. Each Seller will at all times maintain its principal executive offices
within the United States of America.
(d) Each Seller will deliver to the Buyer upon the execution and
delivery of each amendment of this Agreement, an Opinion of Counsel to the
effect specified in Exhibit B.
Section 7.3. Limited Recourse. Notwithstanding anything to the
contrary contained herein, the obligations of the Buyer hereunder shall not be
recourse to the Buyer (or any person or organization acting on behalf of the
Buyer or any affiliate, Officer or director of the Buyer), other than to (a) the
portion of the Seller's Interest on any date of determination which is in excess
of the Required Participation Amount and (b) any other assets of the Buyer not
pledged to third parties or otherwise encumbered in a manner permitted by the
Buyer's Partnership Agreement; provided, however, that any payment by the Buyer
made in accordance with this Section 7.3 shall be made only after payment in
full of any amounts that the Buyer is obligated to deposit in the Collection
Account pursuant to this Agreement; provided further that the Investor
Certificateholders shall be entitled to the benefits of the subordination of the
Collections allocable to the Seller's Interest to the extent provided in the
Supplements.
Section 7.4. No Petition. Each Seller hereby covenants and agrees
that it will not at any time institute against the Buyer or Deutsche FRI any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law.
SECTION 7.5. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.6. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to the parties at such addresses specified in the Pooling and Servicing
Agreement.
Section 7.7. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders.
-21-
<PAGE>
Section 7.8. Assignment. Notwithstanding anything to the contrary
contained herein, this Agreement may not be assigned by either Seller without
the prior consent of the Buyer and the Trustee. The Buyer may assign its rights,
remedies, powers and privileges under this Agreement to the Trust pursuant to
the Pooling and Servicing Agreement.
Section 7.9. Further Assurances. Each Seller agrees to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Buyer more fully to effect
the purposes of this Agreement, including the execution of any financing
statements or continuation statements relating to the Receivables for filing
under the provisions of the UCC of any applicable jurisdiction.
Section 7.10. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Buyer, any right, remedy, power
or privilege under this Agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 7.11. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 7.12. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the
Certificateholders, the Trustee and the other Beneficiaries and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation hereunder.
Section 7.13. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 7.14. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 7.15. Continued Effectiveness of the Receivables Contribution
and Sale Agreement. As amended and restated hereby,
-22-
<PAGE>
the Receivables Contribution and Sale Agreement shall continue to be in full
force and effect and is hereby ratified and confirmed in all respects.
-23-
<PAGE>
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this
Receivables Contribution and Sale Agreement to be duly executed by their
respective officers as of the day and year first above written.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.,
Buyer
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC.,
its general partner
By: ________________________________
Name: __________________________
Title: ________________________
By: ________________________________
Name: __________________________
Title: ________________________
DEUTSCHE FINANCIAL SERVICES
CORPORATION, Seller
By: ________________________________
Name: __________________________
Title: ________________________
By: ________________________________
Name: __________________________
Title: ________________________
DEUTSCHE BUSINESS SERVICES
CORPORATION, Seller
By: ________________________________
Name: __________________________
Title: ________________________
By: ________________________________
Name: __________________________
Title: ________________________
-24-
<PAGE>
EXHIBIT A
TO RCSA
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.4
of the Receivables Contribution and Sale Agreement)
ASSIGNMENT No._____ OF RECEIVABLES IN ADDITIONAL ACCOUNTS dated as
of __________, __________, (this "Assignment"), between Deutsche Floorplan
Receivables, L.P., as buyer (the "Buyer"), and [Deutsche Financial Services
Corporation], [Deutsche Business Services Corporation] as seller [contributor]
(the "Seller"), pursuant to the Receivables Contribution and Sale Agreement
referred to below.
W I T N E S S E T H:
WHEREAS the DFS, Deutsche BSC and the Buyer are parties to a
Receivables Contribution and Sale Agreement dated as of December 1, 1993,
amended and restated as of March 1, 1994, amended as of January 24, 1996 and
amended and restated as of October 1, 1996 (as amended or supplemented, the
"Receivables Contribution and Sale Agreement");
WHEREAS, pursuant to the Receivables Contribution and Sale Agreement,
the Seller wishes to designate Additional Accounts to be included as Accounts
and to convey the Receivables and related Collateral Security of such Additional
Accounts, whether now existing or hereafter created, to the Buyer as part of the
corpus of the Trust (as each such term is defined in the Receivables
Contribution and Sale Agreement); and
WHEREAS the Buyer is willing to accept such designation and conveyance
subject to the terms and conditions hereof;
NOW, THEREFORE, the Seller and the Buyer hereby agree as follows:
1. Defined Terms. All capitalized terms used herein (including in the
recitals hereto) shall have the meanings ascribed to them in the Receivables
Contribution and Sale Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional
Accounts designated hereby, ___________, 19___.
2. Designation of Additional Accounts. The Seller hereby delivers
herewith a computer file or microfiche or written list containing a true and
complete list of all such Additional Accounts specifying for each such Account,
as of the Additional Cut-Off Date, its account number, the aggregate amount of
Receivables outstanding in such Account and the aggregate amount of Principal
A-1
<PAGE>
Receivables in such Account. Such file or list shall, as of the date of this
Assignment, supplement Schedule 1 to the Receivables Contribution and Sale
Agreement.
3. Conveyance of Receivables. (a) The Seller does hereby [sell]
[contribute], transfer, assign, set over and otherwise convey, without recourse
(except as expressly provided in the Receivables Contribution and Sale
Agreement), to the Buyer, on the Addition Date all of its right, title and
interest in, to and under the Receivables in such Additional Accounts, all
Collateral Security and the related Floorplan Rights with respect thereto, owned
by the Seller and existing at the close of business on the Additional Cut-Off
Date and thereafter created from time to time, all monies due or to become due
and all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the [State of
Missouri] [State of Georgia] and Recoveries) thereof. The foregoing [sale]
[contribution], transfer, assignment, set-over and conveyance does not
constitute and is not intended to result in the creation or an assumption by the
Buyer of any obligation of the Servicer, the Seller or any other Person in
connection with the Accounts, the Receivables or under any agreement or
instrument relating thereto, including any obligation under the Financing
Agreement, Floorplan Agreement and any Participation Agreement, including any
other obligation to any Dealer or Manufacturer.
(b) In connection with such [sale] [contribution], the Seller agrees
to record and file, at its own expense, a financing statement on form UCC-1 (and
continuation statements when applicable) with respect to the Receivables now
existing and hereafter created for the sale of chattel paper, accounts and
general intangibles (as defined in Section 9-105 or 9-106 of the UCC as in
effect in any state where the Seller's or the Servicer's chief executive offices
or books and records relating to the Receivables are located) meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect the sale and assignment of the Receivables and the
Collateral Security to the Buyer, and to deliver a file-stamped copy of such
financing statements or other evidence of such filing to the Buyer on or prior
to the Addition Date to the extent, if any, that the UCC-1 financing statements
filed pursuant to Section 2.1 of the Receivables Contribution and Sale Agreement
are not sufficient for such purpose. In addition, the Seller shall cause to be
timely filed in the appropriate filing office any UCC-1 financing statement and
continuation statement necessary to perfect any sale of Receivables to the
Seller. The Buyer shall be under no obligation whatsoever to file such financing
statement, or a continuation statement to such financing statement, or to make
any other filing under the UCC in connection with such [sale] [contribution].
The parties hereto intend that the [sales] [contributions] of Receivables
effected by this Agreement be [sales] [contributions].
A-2
<PAGE>
(c) In connection with such [sale] [contribution], the Seller further
agrees, at its own expense, on or prior to the Addition Date, to indicate
in its books and records, which may include its computer files, that the
Receivables created in connection with the Additional Accounts designated
hereby have been sold and the Collateral Security assigned to the Buyer
pursuant to this Assignment and sold to the Trust pursuant to the Pooling
and Servicing Agreement for the benefit of the Certificateholders and the
other Beneficiaries.
4. Acceptance by Buyer. Subject to the satisfaction of the
conditions set forth in Section 6 of this Assignment, the Buyer hereby
acknowledges its acceptance of all right, title and interest to the
property, now existing and hereafter created, conveyed to the Buyer
pursuant to Section 3(a) of this Assignment. The Buyer further acknowledges
that, prior to or simultaneously with the execution and delivery of this
Assignment, the Seller delivered to the Buyer the computer file or
microfiche or written list relating to the Additional Accounts described in
Section 2 of this Assignment.
5. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer, on behalf of the Trust, as of the
date of this Assignment and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This Assignment
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors, rights in general and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(b) Organization and Good Standing. The Seller is a corporation
duly organized and validly existing and in good standing under the law
of the State of its incorporation and has, in all material respects,
full corporate power, authority and legal right to own its properties
and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and
perform its obligations under this Assignment;
(c) Due Qualification. The Seller is duly qualified to do
business and, where necessary, is in good standing as a foreign
corporation (or is exempt from such requirement) and has obtained all
necessary licenses and approvals in each jurisdiction in which the
conduct of its business requires such qualification except where the
failure to so qualify or
A-3
<PAGE>
obtain licenses or approvals would not have a material adverse effect
on its ability to perform its obligations hereunder;
(d) Eligible Accounts. Each Additional Account designated hereby
is an Eligible Account;
(e) Selection Procedures. No selection procedures believed by
the Seller to be adverse to the interests of the Beneficiaries were
utilized in selecting the Additional Accounts designated hereby;
(f) Insolvency. As of the Notice Date and the Addition Date, the
Seller is not insolvent nor, after giving effect to the conveyance set
forth in Section 3 of this Assignment, will it have been made
insolvent, nor is it aware of any pending insolvency;
(g) Valid Transfer. This Assignment constitutes a valid [sale]
[contribution], transfer and assignment to the Buyer of all right,
title and interest of the Seller in the Receivables and the Collateral
Security and the proceeds thereof and upon the filing of the financing
statements described in Section 3 of this Assignment with the
Secretary of State of the State of [Missouri] [and other applicable
states and counties] and, in the case of the Receivables [and the
Collateral Security] hereafter created and the proceeds thereof, upon
the creation thereof, the Buyer shall have a first priority perfected
ownership interest in such property, except for Liens permitted under
Section 2.6(a) of the Receivables Contribution and Sale Agreement;
(h) Due Authorization. The execution and delivery of this
Assignment and the consummation of the transactions provided for or
contemplated by this Assignment have been duly authorized by the
Seller by all necessary corporation action on the part of the Seller;
(i) No Conflict. The execution and delivery of this Assignment,
the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof, will not conflict with,
result in any breach of any of the material terms and provisions of,
or constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which the Seller is a party or
by which it or its properties are bound;
(j) No Violation. The execution and delivery of this Assignment
by the Seller, the performance of the transactions contemplated by
this Assignment and the fulfillment of the
A-4
<PAGE>
terms hereof will not conflict with or violate any material
Requirements of Law applicable to the Seller;
(k) No Proceedings. There are no proceedings or, to the best
knowledge of the Seller, investigations pending or threatened against
the Seller before any Governmental Authority (i) asserting the
invalidity of this Assignment, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Assignment, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Seller, would materially and adversely
affect the performance by the Seller of its obligations under this
Assignment, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Assignment or (v) seeking to affect adversely the income tax
attributes of the Trust under the United States federal or any State
income, single business or franchise tax systems;
(l) Record of Accounts. As of the Addition Date, Schedule 1 to
this Assignment is an accurate and complete listing in all material
respects of all the Additional Accounts as of the Additional Cut-Off
Date and the information contained therein with respect to the
identity of such Accounts and the Receivables existing thereunder is
true and correct in all material respects as of the Additional Cut-Off
Date;
(m) No Liens. Each Receivable and all Collateral Security
existing on the Addition Date has been conveyed to the Buyer free and
clear of any Lien;
(n) All Consents Required. With respect to each Receivable and
all Collateral Security existing on the Addition Date, all consents,
licenses, approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be obtained,
effected or given by the Seller in connection with the conveyance of
such Receivable or Collateral Security to the Buyer, the execution and
delivery of this Assignment and the performance of the transactions
contemplated hereby have been duly obtained, effected or given and are
in full force and effect; and
(o) Eligible Receivables. On the Additional Cut-Off Date each
Receivable conveyed to the Buyer as of such date is an Eligible
Receivable or, if such Receivable is not an Eligible Receivable, such
Receivable is conveyed to the Buyer in accordance with Section 2.8 of
the Receivables Contribution and Sale Agreement.
A-5
<PAGE>
6. Conditions Precedent. The acceptance of the Buyer set forth in
Section 4 of this Assignment is subject to the satisfaction, on or prior to
the Addition Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by the Seller in Section 5 of this Assignment
shall be true and correct as of the date of this Assignment and as of
the Addition Date;
(b) Agreement. Each of the conditions set forth in Section 2.4(b)
of the Receivables Contribution and Sale Agreement applicable to the
designation of the Additional Accounts to be designated hereby shall
have been satisfied; and
(c) Addition Information. The Seller shall have delivered to the
Buyer such information as was reasonably requested by the Buyer to
satisfy itself as to the accuracy of the representation and warranty
set forth in Section 5(d) of this Assignment.
7. Ratification of Agreement. As supplemented by this Assignment,
the Receivables Contribution and Sale Agreement is in all respects ratified
and confirmed and the Receivables Contribution and Sale Agreement as so
supplemented by this Assignment shall be read, taken and construed as one
and the same instrument.
8. Counterparts. This Assignment may be executed in two or more
counterparts (and by different parties in separate counterparts), each of
which shall be an original but all of which together shall constitute one
and the same instrument.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-6
<PAGE>
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Assignment to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.,
as Buyer
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC.,
its general partner
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
[DEUTSCHE FINANCIAL SERVICES
CORPORATION], as Seller
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
[DEUTSCHE BUSINESS SERVICES
CORPORATION], as Seller
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
A-7
<PAGE>
EXHIBIT B
TO RCSA
FORM OF OPINION OF COUNSEL
(As required by Section 7.2(d) of
---------------------------------
the Receivables Contribution and Sale Agreement)
------------------------------------------------
(a) The Amendment to the Receivables Contribution and Sale Agreement,
attached hereto as Schedule 1 (the "Amendment"), has been duly authorized,
executed and delivered by each Seller and constitutes the legal, valid and
binding agreement of each Seller, enforceable in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally from time to time in effect. The enforceability of each
Seller's obligations is also subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(b) The Amendment has been entered into in accordance with the terms
and provisions of Section 7.1 of the Receivables Contribution and Sale
Agreement.
(c) The Amendment will not adversely affect in any material respect
the interests of the Investor Certificateholders. [Include this clause (iii)
only in the case of amendments effected pursuant to Section 7.1(a) of the
Receivables Contribution and Sale Agreement.]
B-1
<PAGE>
EXHIBIT C
TO RCSA
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.6 of the Receivables
Contribution and Sale Agreement referred to below)
REASSIGNMENT NO._____ OF RECEIVABLES, dated as of __________,
____, by and between DEUTSCHE FLOORPLAN RECEIVABLES, L.P., as
buyer (the "Buyer"), and DEUTSCHE FINANCIAL SERVICES CORPORATION
[or DEUTSCHE BUSINESS SERVICES CORPORATION), as seller (the
"Seller"), pursuant to the Receivables Contribution and Sale
Agreement referred to below.
WITNESSETH
WHEREAS the Seller and the Buyer are parties to the Receivables
Contribution and Sale Agreement dated as of December 1, 1993, amended and
restated as of March 1, 1994, amended as of January 24, 1996, and amended and
restated as of October 1, 1996 (as amended or supplemented, the "Receivables
Contribution and Sale Agreement");
WHEREAS, pursuant to the Receivables Contribution and Sale Agreement, the
Seller wishes to remove all Receivables from certain Accounts, the Collateral
Security thereof and the related Floorplan Rights (the "Removed Accounts") and
to cause the Buyer to reconvey the Receivables of such Removed Accounts and such
Collateral Security and Floorplan Rights, whether now existing or hereafter
created, and all amounts currently held by the Buyer or thereafter received by
the Trust in respect of such Removed Accounts, from the Buyer to the Seller (as
each such term is defined in the Receivables Contribution and Sale Agreement);
and
WHEREAS the Buyer is willing to accept such removal and to reconvey the
Receivables in the Removed Accounts, such Collateral Security and any related
amounts held or received by the Trust subject to the terms and conditions
hereof.
NOW, THEREFORE, the Seller and the Buyer hereby agree as follows:
1. Defined Terms. All terms defined in the Agreement and used herein
shall have such defined meanings when used herein, unless otherwise defined
herein.
"Removal Date" shall mean, with respect to the Removed Accounts
designated hereby, ________________.
2. Notice of Removed Accounts. The Seller shall deliver to the Buyer,
the Trustee, any Enhancement Providers and the Rating
C-1
<PAGE>
Agencies a computer file or microfiche or written list containing a true and
complete list of the Removed Accounts specifying for each such Account, as of
the Removal Commencement Date, its account number, the aggregate amount of
Receivables outstanding in such Accounts and the Designated Balance. Such list
shall be marked as Schedule 1 to this Reassignment and shall be incorporated
into and made a part of this Reassignment as of the Removal Date and shall amend
Schedule 1 to the Receivables Contribution and Sale Agreement.
3. Conveyance of Receivables and Accounts. (a) The Buyer does hereby
transfer, assign, set over and otherwise convey to the Seller, without recourse,
representation or warranty on and after the Removal Date, all right, title and
interest of the Trust in, to and under all Receivables now existing at the close
of business on the Removal Date and thereafter created from time to time until
the termination of the Trust in Removed Accounts designated hereby, all
Collateral Security thereof, the related Floorplan Rights, all monies due or to
become due and all amounts received with respect thereto (including all Non-
Principal Receivables), all proceeds (as defined in Section 9-306 of the UCC as
in effect in the State of Missouri [Georgia] and Recoveries) thereof relating
thereto.
(b) If requested by the Seller, in connection with such transfer, the
Buyer agrees to execute and deliver to the Seller, on or prior to the date of
this Reassignment, a termination statement with respect to the Receivables
existing at the close of business on the Removal Date and thereafter created
from time to time and Collateral Security thereof in the Removed Accounts
reassigned hereby (which may be a single termination statement with respect to
all such Receivables and Collateral Security) evidencing the release by the
Trust of its lien on the Receivables in the Removed Accounts and the Collateral
Security, and meeting the requirements of applicable state law, in such manner
and such jurisdictions as are necessary to remove such lien.
4. Acceptance by Buyer. The Buyer hereby acknowledges that, prior to or
simultaneously with the execution and delivery of this Reassignment, the Seller
delivered to the Buyer the computer file or such microfiche or written list
described in Section 2(b) of this Reassignment.
5. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer as of the date of this Reassignment and
as of the Removal Date:
(a) Legal, Valid and Binding Obligation. This Reassignment
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization,
C-2
<PAGE>
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights generally and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(b) No Early Amortization Event. The removal of the Accounts hereby
removed shall not, in the reasonable belief of the Seller, cause an Early
Amortization Event to occur or cause the Pool Balance to be less than the
Required Participation Amount;
(c) Selection Procedures. No selection procedures believed by the
Seller to be adverse to the interests of the Beneficiaries were utilized
in selecting the Accounts to be removed; and
(d) True and Complete List. The list of Removed Accounts described in
Section 2(b) of this Assignment is, as of the Removal Commencement Date,
true and complete in all material respects.
provided, however, that in the event that the removal on such Removal Date
relates solely to Ineligible Accounts, the Seller shall be deemed to make only
the representations and warranties contained in paragraph 5(a) above.
6. Condition Precedent. In addition to the conditions precedent set
forth in Section 2.6 of the Receivables Contribution and Sale Agreement, the
obligation of the Buyer to execute and deliver this Reassignment is subject to
the Seller having delivered on or prior to the Removal Date to the Trustee, the
Buyer, any Agent, and any Enhancement Providers an Officers' Certificate
certifying that (i) as of the Removal Date, all requirements set forth in
Section 2.6 of the Agreement for removing such Accounts and reconveying the
Receivables of such Removed Accounts, the Collateral Security and the related
Floorplan Rights, whether existing at the close of business on the Removal Date
or thereafter created from time to time until the termination of the Trust, have
been satisfied, and (ii) each of the representations and warranties made by the
Seller in Section 5 hereof is true and correct as of the date of this
Reassignment and as of the Removal Date. The Buyer may conclusively rely on
such officers' Certificate, shall have no duty to make inquiries with regard to
the matters set forth therein and shall incur no liability in so relying.
7. Ratification of Agreement. As supplemented by this Reassignment the
Receivables Contribution and Sale Agreement is in all respects ratified and
confirmed and the Receivables Contribution and Sale Agreement as so supplemented
by this
C-3
<PAGE>
Reassignment shall be read, taken and construed as one and the same instrument.
8. Counterparts. This Reassignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
9. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this Reassignment to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.,
Buyer
By: DEUTSCHE FLOORPLAN RECEIVABLES, INC.,
its general partner
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
[DEUTSCHE FINANCIAL SERVICES
CORPORATION, Seller]
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
[DEUTSCHE BUSINESS SERVICES
CORPORATION, Seller]
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
C-4
<PAGE>
Schedule 1
----------
List of Accounts
----------------
[Deemed to be incorporated.]
