<PAGE>
As filed with the Securities and Exchange Commission on February 10, 2000
Registration No. 333-74457
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
Distribution Financial Services Floorplan Master Trust
(Issuer with respect to Certificates)
----------------------
Deutsche Floorplan Receivables, L.P.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
Delaware 655 Maryville Centre Drive 88-0355652
(State or other Jurisdiction of St. Louis, Missouri 63141 (I.R.S. Employer
Incorporation or Organization) (314) 523-3000 Identification Number)
</TABLE>
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
----------------------
Naran U. Burchinow
Senior Vice President and General Counsel
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, Missouri 63141
(314) 523-3905
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------------
With copies to:
Marc L. Klyman Stuart M. Litwin
Mayer, Brown & Platt Mayer, Brown & Platt
190 S. LaSalle Street 190 S. LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois60603
(312) 701-8053 (312) 701-7373
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. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective 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 of
Title of Amount to Maximum Offering Aggregate Offerin Registration
Securities to Be Registered Be Registered/(1)/ Price Per Unit/(2)/ Price/(2)/ Fee/(3)/
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Certificates...... $ 3,000,000,000 100% $ 3,000,000,000 $ 792,000
=======================================================================================================================
</TABLE>
/(1)/ This Registration Statement relates to the initial offering from time to
time of the Asset Backed Certificates. This Registration Statement also
relates to any resales of Asset Backed Certificates in market making
transactions by Deutsche Bank Securities Inc., an affiliate of the
Registrant, to the extent required.
/(2)/ Estimated solely for purposes of calculating the registration fee.
/(3)/ $278 of which was previously paid.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT 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>
The information in this prospectus supplement and the prospectus is not complete
and may be changed. We have filed a registration statement with the Securities
and Exchange Commission relating to these securities. This prospectus supplement
and the prospectus are not an offer to sell these securities and they are not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
Prospectus Supplement to Prospectus dated [ ]
Distribution Financial Services Floorplan Master Trust
Issuer
$[ ] Asset Backed Certificates, Series [ ]
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
The certificates represent interests in the trust only and do not represent
obligations of or interests in, and are not guaranteed by, Deutsche Floorplan
Receivables, L.P., Deutsche Financial Services Corporation, Deutsche Bank AG or
any other person or entity. This prospectus supplement and the accompanying
prospectus together constitute the full prospectus for your series of
certificates.
Investing in the certificates involves certain risks. You should consider the
discussion under "Risk Factors" beginning on page S-10 of this prospectus
supplement and page 3 of the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the prospectus. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Expected Underwriting Net
Principal Interest Final Price to Discounts and Proceeds to
Amount Rate Payment Date Public (1) Commissions Seller
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
[Class A] certificates.... (2)
[Class B] certificates.... (3)
Total.....................
</TABLE>
(1) Plus accrued interest, if any, from [ ].
(2)[Lesser of (a) LIBOR plus __% per annum and (b) the net receivables rate.]
(3) [Lesser of (a) LIBOR plus __% per annum and (b) the net receivables rate.]
[Name(s) of Underwriter(s)]
[DATE]
<PAGE>
[Alternate front cover page]
Prospectus Supplement to Prospectus dated [ ]
Distribution Financial Services Floorplan Master Trust
Issuer
$[ ] Asset Backed Certificates, Series [ ]
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
The certificates represent interests in the trust only and do not represent
obligations of or interests in, and are not guaranteed by, Deutsche Floorplan
Receivables, L.P., Deutsche Financial Services Corporation, Deutsche Bank AG or
any other person or entity. This prospectus supplement and the accompanying
prospectus together constitute the full prospectus for your series of
certificates.
Investing in the certificates involves certain risks. You should consider the
discussion under "Risk Factors" beginning on page S-10 of this prospectus
supplement and page 3 of the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the prospectus. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Expected Underwriting Net
Principal Interest Final Price to Discounts and Proceeds to
Amount Rate Payment Date Public (1) Commissions Seller
--------- -------- ------------ ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
[Class A] certificates... (2)
[Class B] certificates... (3)
Total....................
</TABLE>
(1) Plus accrued interest, if any, from [ ].
(2)[Lesser of (a) LIBOR plus __% per annum and (b) the net receivables rate.]
(3) [Lesser of (a) LIBOR plus __% per annum and (b) the net receivables rate.]
[This prospectus supplement is to be used by Deutsche Bank Securities Inc. in
connection with offers and sales from time to time related to market-making
transactions in the certificates in which Deutsche Bank Securities Inc. acts as
principal. Deutsche Bank Securities Inc. also may act as agent in market-making
transactions. Deutsche Bank Securities Inc. will make sales at negotiated prices
determined at the time of sale. Deutsche Bank Securities Inc. has no obligation
to make a market in the certificates and may discontinue its market-making
activities at any time without notice, in its sole discretion.]
Deutsche Bank Securities
[DATE]
<PAGE>
Important notice about information presented in this
prospectus supplement and the accompanying prospectus
We tell you about the certificates in two separate documents that
progressively provide more detail: (a) the accompanying prospectus, which
provides general information, some of which may not apply to your certificates,
and (b) this prospectus supplement, which describes specific terms of your
series of certificates.
If the terms of the certificates of your series vary between this
prospectus supplement and the prospectus, you should rely on the information in
this prospectus supplement.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus including the information
incorporated by reference. We have not authorized anyone to provide you with
other or different information. We are not offering the certificates in any
state where the offer is not permitted. We do not claim the accuracy of the
information in this prospectus supplement or the accompanying prospectus as of
any date other than the dates stated on their respective covers.
This prospectus supplement may be used to offer and sell the
certificates of your series only if accompanied by the prospectus.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table of
Contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find definitions of some terms used in this prospectus
supplement under the caption "Glossary" beginning on page S-50 in this
prospectus supplement.
S-2
<PAGE>
Table of Contents
[To Be Conformed]
<TABLE>
<CAPTION>
Page
<S> <C>
Summary.................................................................................................... S-5
The Parties....................................................................................... S-5
The Securities.................................................................................... S-5
Credit Enhancement................................................................................ S-7
Servicing......................................................................................... S-8
Optional Repurchase............................................................................... S-8
Tax Matters....................................................................................... S-8
ERISA Considerations.............................................................................. S-8
Offered Certificate Ratings....................................................................... S-9
Risk Factors...................................................................................... S-9
Absence of Market................................................................................. S-9
Risk Factors............................................................................................... S-10
You May Be Unable to Resell Your Certificates..................................................... S-10
You May Be Adversely Affected if Your Certificates are Repaid Faster
or Slower Than You Expect................................................................ S-10
Possible Delays and Reductions in Payments on Certificates Due to Geographic
Concentration............................................................................ S-11
Potential Computer Problems Relating to the Year 2000 May Result in
Delays and Reductions in Payments on Certificates........................................ S-12
Possible Delays and Reductions in Payments on Certificates Due to
Limited Assets of the Trust.............................................................. S-12
Possible Delays and Reductions in Payments on Certificates Due to
Basis Risk............................................................................... S-13
Possible Delays and Reductions In Payments on Certificates Due to
Limited Credit Enhancement............................................................... S-13
Possible Delays and Reductions in Payments on Class B Certificates Due to
Subordination of Class B Certificates.................................................... S-14
Deposits of Funds in the Excess Funding Account Will Reduce the Amount
of Non-Principal Collections that are Available to the Trust............................. S-14
Ability to Change Discount Factor May Result in Delays or Reductions
in Payments on Certificates.............................................................. S-14
Ratings are Not Recommendations................................................................... S-15
The Accounts............................................................................................... S-16
General ......................................................................................... S-16
Description of the Trust Portfolio................................................................ S-17
Yield Information................................................................................. S-20
Major Customers; Major Manufacturers.............................................................. S-20
Delinquency Experience............................................................................ S-21
Loss Experience................................................................................... S-22
Aging Experience.................................................................................. S-23
Deutsche Financial Services Corporation.................................................................... S-24
General ......................................................................................... S-24
Year 2000 Issues.................................................................................. S-24
Deutsche Bank AG........................................................................................... S-26
Maturity and Principal Payment Considerations.............................................................. S-26
Description of the Certificates............................................................................ S-27
Interest ......................................................................................... S-27
Principal......................................................................................... S-28
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
Allocations of Collections, Defaulted Amounts and Miscellaneous Payments.......................... S-28
Discount Factor................................................................................... S-28
Distributions from the Collection Account; Reserve Fund........................................... S-29
Interest Funding Account.......................................................................... S-31
Principal Funding Account......................................................................... S-32
Excess Funding Account............................................................................ S-32
Distributions..................................................................................... S-33
Optional Repurchase............................................................................... S-35
Early Amortization Events......................................................................... S-35
Termination....................................................................................... S-38
Servicing Compensation and Payment of Expenses.................................................... S-39
Reports........................................................................................... S-39
Federal Income Tax Considerations.......................................................................... S-40
Overview.......................................................................................... S-40
Characterization of the Certificates and the Trust................................................ S-41
Taxation of Interest Income of Certificateholders................................................. S-41
Sale of a Certificate............................................................................. S-42
Possible Classification as a Partnership or as an Association Taxable
as a Corporation......................................................................... S-42
FASIT Legislation................................................................................. S-43
Foreign Investors................................................................................. S-43
Backup Withholding................................................................................ S-44
State and Local Tax Consequences........................................................................... S-45
ERISA Considerations....................................................................................... S-46
General ......................................................................................... S-46
Plan Assets and the Availability of Exemptions for Certificates................................... S-46
Review by Benefit Plan Fiduciaries................................................................ S-47
Underwriting............................................................................................... S-48
Legal Matters.............................................................................................. S-49
Annex I: Other Series ..................................................................................... I-1
</TABLE>
S-4
<PAGE>
Summary
This summary highlights selected information from this document. This
summary does not contain all of the information that you need to consider in
making your investment decision and is qualified by the more complete
descriptions contained in this prospectus supplement and the accompanying
prospectus. To understand all of the terms of the certificates, you should read
carefully this entire prospectus supplement and the accompanying prospectus,
including the information under "Risk Factors" in this prospectus supplement and
the accompanying prospectus.
The Parties
Trust.......................... Distribution Financial Services Floorplan
Master Trust.
The assets of the trust include receivables
generated from time to time under accounts
that have been assigned to the trust as well
as receivables generated under any accounts
added to the trust from time to time.
The receivables arise from extensions of
credit made by Deutsche Financial Services
Corporation to dealers, manufacturers or
distributors of various types of products.
The products may include, among other types
of products:
. computers and computer products;
. manufactured housing;
. recreational 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 may change from time to
time. For more detailed information, see "The
Dealer Floorplan Financing Business Seller of
DFS" in the prospectus.
The seller may remove accounts that it
transferred to the trust.
Seller......................... Deutsche Floorplan Receivables, L.P. The
principal executive office of the seller is
located at 655 Maryville Centre Drive, St.
Louis, Missouri 63141, telephone number (314)
523-3000.
Servicer....................... Deutsche Financial Services Corporation.
Trustee........................ _______________________.
S-5
<PAGE>
The Securities The Certificates of Your Series
The trust will issue the following series of
certificates:
. $_________ [Floating] [Fixed] Rate Asset
Backed Certificates, series [ ], Class
A;
. $_________ [Floating] [Fixed] Rate Asset
Backed Certificates, series [ ], Class
B; and
. $_________ [Floating] [Fixed] Rate Asset
Backed Certificates, series [ ], 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 Class A and Class
B certificates are being offered hereby.]
Closing Date
The issuance of the certificates of your
series will take place on or about [ ].
Delivery of Certificates
We expect that delivery of the certificates
will be made in book-entry form only through
the facilities of The Depository Trust
Company. Cedel Bank, societe anonyme and
Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear
system, on or about [ ].
Distribution Dates
The trust will make distributions on the
certificates of your series to the extent of
available funds received during each calendar
month. The distribution date will be the 15th
day of the following month -- or, if that day
isnot a business day, the next business day
-- commencing on [ ]. [If interest is payable
other than on each distribution date, e.g.,
quarterly, refer to the distribution dates as
interest payment dates.]
Interest Payments
. The interest rate for each class of
certificates of your series is specified
on the front cover page of this
prospectus supplement.
. Interest on the outstanding principal
balance of each class of certificates of
your series will accrue at the
applicable interest rate during each
period that we call an interest period.
Each interest period will begin on a
distribution date -- or, in the case of
the first distribution date, will begin
on the closing date -- and will end on
the day preceding the next distribution
date.
. Interest on the certificates of your
series will be calculated on the basis
of [a 360-day year of twelve 30-day
months][the actual number of days in the
related interest period divided by 360].
. The trustee of the trust will distribute
accrued interest on the outstanding
principal amount of each class of
certificates of your series on each
S-6
<PAGE>
distribution date to the extent of
available funds. Payments of interest on
the Class B certificates and the Class C
certificates will be subordinated in
priority to payment in full of accrued
interest on the Class A certificates.
Payments of interest on the Class C
certificates will be subordinated in
priority to payment in full of accrued
interest on the Class B certificates.
Scheduled Principal Payments and Potential
Later Payments
The trust expects to pay the entire principal
amount of your certificates in one payment on
the distribution date in [specify month and
year]. In order to accumulate funds to pay
your certificates on the distribution date in
[specify month and year], the trust will
accumulate principal collections in a deposit
account that we call the principal funding
account, during a period that we call the
accumulation period.
If the Class A certificates are not fully
repaid on the distribution date in [specify
month and year], the Class A certificates
will begin to amortize by means of monthly
payments of principal collections allocated
to your series until the Class A certificates
are fully repaid. After the Class A
certificates are fully repaid, the trust will
use principal collections allocated to your
series to repay the Class B certificates.
If the Class B certificates are not fully
repaid on the distribution date in [specify
month and year], the Class B certificates
will begin to amortize, after the Class A
certificates have been fully repaid, by means
of monthly payments of principal collections
allocated to your series.
Possible Early Principal Repayment of Your
Series
The Class A and Class B certificates may be
repaid earlier than expected as a result of
any of the following:
. the occurrence of an
event that we call an
early amortization event;
. the seller exercises its
option to repurchase the
interest of your series
in the trust; or
. the seller is required to
repurchase theinterest of
your series in the trust.
S-7
<PAGE>
Other Series
Your series of certificates is one of [ ]
series issued by the trust which are expected
to be outstanding on the closing date. Annex
I to this prospectus supplement summarizes
some of the terms of the other outstanding
series.
Allocations
Your series represents the right only to a
portion of collections on the receivables.
Your series will also be allocated a portion
of the defaulted receivables.
Credit Enhancement Credit enhancement of the certificates of
your series will be provided by:
. [the subordination of the
seller's interest in the
trust to the extent of an
amount that we call the
available subordinated
amount];
. amounts in a deposit account
that we call the reserve fund;
and
. the subordination of the
Class B certificates and
the Class C certificates for
the benefit of each class
of certificates of your
series with an earlier
alphabetical designation.
The amount of the credit enhancement is
limited and may not prevent you from
suffering a loss.
Servicing DFS is the initial servicer. The servicer is
responsible for servicing, managing and
making collections on the receivables.
The servicer will receive a monthly servicing
fee and other amounts described in this
prospectus supplement as servicing
compensation from the trust.
Optional Repurchase The seller has the option to repurchase the
interest of your series in the trust once an
amount that we refer to as the invested
amount of your series is reduced to less than
10% of the initial outstanding principal
amount of your series.
Tax Matters In the opinion of Mayer, Brown & Platt,
special tax
S-8
<PAGE>
counsel for the seller, the Class A and Class
B certificates will be characterized as debt
for federal income tax purposes.
In the opinion of Bryan Cave LLP, Missouri
counsel for the seller, the Class A and Class
B certificates will be characterized as debt
for Missouri income tax purposes. If you
purchase a Class A or Class B certificate,
you agree to treat it as debt for tax
purposes.
For further information concerning the
application of federal and Missouri tax laws,
see "Federal Income Tax Considerations" and
"State and Local Tax Consequences" in this
prospectus supplement.
ERISA Considerations The underwriters anticipate that the Class A
certificates will meet the criteria for
treatment as "publicly-offered securities."
If so, taking into account important
considerations described under "ERISA
Considerations" in this prospectus
supplement, the Class A certificates will be
eligible for purchase by persons investing
assets of employee benefit plans.
Pension plans and other investors to which
ERISA applies cannot acquire Class B
certificates. Prohibited investors include:
. any employee benefit plans
to which ERISA applies;
. any plan or other
arrangement to which
section 4975 of the U.S.
Internal Revenue Code
applies; and
. any entity whose underlying
assets may be deemed to
include "plan assets" under
ERISA by reason of any
plan's investment in the
entity.
By purchasing any Class B certificates, you
certify that you are not within any of those
categories.
For further information regarding the
application of ERISA, see "ERISA
Considerations" in this prospectus
supplement.
Offered Certificate Ratings The Class A certificates will be rated at the
time of issuance in the highest long-term
rating category by at
S-9
<PAGE>
least one nationally recognized rating
agency. The Class B certificates will be
rated at the time of issuance in one of the
three highest rating categories by at least
one rating agency.
A security rating is not a recommendation to
buy, sell or hold securities and may be
revised or withdrawn at any time by the
assigning rating agency. Each rating should
be evaluated independently of any other
rating.
Risk Factors You should consider the factors set forth
under "Risk Factors" on pages S-10 through S-
15 of this prospectus supplement.
Absence of Market Your certificates will be a new issue of
securities with no established trading
market. [The trust does not expect to apply
for listing of your certificates on any
securities exchange or quote your
certificates in the automated quotation
system of a registered securities
association.]
S-10
<PAGE>
Risk Factors
In addition to the other information contained in this prospectus
supplement and the prospectus, you should consider the following risk factors--
and the "Risk Factors" set forth in the prospectus--in deciding whether to
purchase certificates. The disclosures below and the "Risk Factors" set forth
in the accompanying prospectus summarize material risks of investing in the
certificates. The summary does not purport to be complete; to fully understand
and evaluate it, you should also read the rest of this prospectus supplement and
the accompanying prospectus.
You May Be Unable to There is currently no secondary market for your
Resell Your Certificates certificates. The underwriters may assist in
resales of your certificates, but they are not
required to do so. If a secondary market does
develop, it might not continue or it might not be
sufficiently liquid to allow you to resell any of
your certificates.
You May Be Adversely You may receive repayment of your certificates
Affected if Your earlier or later than expected.
Certificates are Repaid
Faster or Slower Than . If your certificates are repaid faster
You Expect than you expect, you may be unable to
reinvest principal received on your
certificates at a yield that is equal to
the yield on your certificates. If you
acquire certificates at a premium,
repayment of principal at a rate that is
faster than the rate anticipated will
result in a yield to you that is lower
than you anticipated.
. If your certificates are repaid later
than you expect, you will be unable to
use the principal amount of your
investment at the time that you
expected, and you may miss opportunities
to reinvest the money in other
investments. Also, if you acquire your
certificates at a discount, the
repayment of principal of your
certificates later than you anticipated
will result in a lower than anticipated
yield.
. Numerous factors may result in your
certificates being repaid faster or
slower than you expect; we cannot
predict whether your certificates will
be repaid on any particular date.
Additional discussion of these issues is
set forth under "Maturity and Principal
Payment Considerations" in this
prospectus supplement.
S-11
<PAGE>
Possible Delays and You may suffer delays or reductions in payments
Reductions in Payments on your certificates because of economic
on Certificates Due to conditionsin states where dealers are located.
Geographic Concentration
. As of [specify date], according to their
mailing addresses, dealers owing
receivables representing, by principal
balance, [ ]%, [ ]% and [ ]% of the
receivables in the trust, were located
in [identify states].
. An economic downturn in one or more of
states where concentrations of dealers
are located could adversely affect the
performance of the trust as a whole,
even if national economic conditions
remain unchanged or improve, as dealers
in such state or states experience the
effects of such a downturn and face
greater difficulty in making payments on
the receivables.
. Economic factors such as unemployment,
interest rates and the rate of inflation
may affect the rate of prepayment and
defaults on the receivables and could
reduce or delay payments to you.
S-12
<PAGE>
Potential Computer You may be adversely affected by the fact that
Problems Relating to the many existing computer applications and systems
Year 2000 May Result in are dependent upon calendar dates, including dates
Delays and Reductions in before, on and after January 1, 2000. These
Payments on Certificates applications and systems could fail or could
produc eerroneous results during the transition
from the year 1999 to the year 2000 and
afterwards.
. If the servicer does not have a computer
system that is year 2000 compliant in a
timely manner, the ability of the
servicer to service the receivables may
be adversely affected. Any adverse
effect on the ability of the servicer to
service receivables could result in
delays and reductions in payments on
your certificates.
. If the trustee of the trust does not
have a computer system that is year 2000
compliant in a timely manner, the
ability of the trustee of the trust to
make distributions on your certificates
may be adversely affected, which could
result in delays and reductions in
payments to you.
. Year 2000 issues may also adversely
affect the ability of DTC to perform its
services. Any adverse effect on the
ability of DTC to perform its services
could result in delays and reductions in
payments on your certificates and could
delay or impair your ability to sell
your certificates.
Possible Delays and You may experience delays or reductions in
Reductions in Payments payments on your certificates because the trust
on Certificates Due to will not have any significant assets or sources
Limited Assets of the of funds other than the receivables.
Trust
. Your certificates will be payable only
from the assets of the trust.
. You 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 your certificates.
If losses or delinquencies occur with respect to
receivables which are not covered by payments on
other receivables or by the reserve fund, you may
experience delays and reductions in payments on
your certificates.
The certificates do not represent an interest in
or an obligation of, and are not insured or
guaranteed by, the seller, servicer, DFS, Deutsche
Bank AG or any other person or entity. You will
have no recourse to the seller, servicer, DFS,
Deutsche Bank AG or any other person or entity in
the event that proceeds of the assets of the trust
are insufficient or otherwise unavailable to make
payments on your certificates.
S-13
<PAGE>
Possible Delays and You could suffer delays or reductions in payments
Reductions in Payments on your certificates because of the way the
on Certificates Due to receivables bear or do not bear interest and the
Basis Risk way in which interest is calculated on your
certificates.
. The receivables generally bear interest
at rates announced by particular 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 event that we call an early
amortization event. Some receivables are
originated at a discount and do not bear
interest for a specified period after
their origination.
. [The interest rate on your certificates
is calculated as the lesser of (a) LIBOR
plus a margin and (b) a rate that
reflects the weighted average interest
rates on the receivables. If LIBOR plus
the margin used to compute the interest
rate for your certificates exceeds the
component of the formula that reflects
the interest rates on the receivables,
then interest will accrue on your
certificates during the applicable
interest period at a rate based on the
weighted average interest rates of the
receivables. A reduction in interest
rates on any receivables, or the
inclusion of a greater proportion of
non-interest bearing receivables in the
trust, will increase the likelihood that
you will receive lower interest
payments, based on the interest rate on
the receivables, than you would if you
were receiving interest payments based
on LIBOR.]
. In addition to reducing the interest
rate on your certificates, a reduction
in interest rates on the receivables
will also reduce the amount of
non-principal collections available to
fund other items contemplated by the
supplement for your series.
S-14
<PAGE>
Possible Delays and Credit enhancement of the certificates of your
Reductions In Payments series will be provided by:
on Certificates Due to
Limited Credit
Enhancement . the subordination of the seller's
interest to the extent of the
available subordinated amount as
described in this prospectus
supplement;
. amounts in the reserve fund, if any; and
. the subordination of the Class B
certificates and the Class C
certificates for the benefit of each
class of certificates of your series
with an earlier alphabetical
designation.
The amount of the credit enhancement is limited
and will be reduced from time to time as described
in this prospectus supplement. If the amount of
credit enhancement is reduced to zero, you will
likely experience delays and reductions in
payments on your certificates. Credit enhancement
for any other series will not be available to your
series.
Possible Delays and Payment on the Class B certificates are
Reductions in Payments subordinated to the Class certificates as
on Class B Certificates described in this prospectus supplement.
Due to Subordination of Accordingly, if you acquire a Class B
Class B Certificates certificate, you may suffer delays or reductions
in payments on your certificates even though
payments are being made on the Class A
certificates.
Deposits of Funds in the Pursuant to the supplement for your series, the
Excess Funding Account servicer will establish a deposit account that
Will Reduce the Amount we call the excess funding account. Any funds
of Non-Principal deposited in the excess funding account will
Collections that are likely earn a rate of return lower than the yield
Available to the Trust on a comparableamount of receivables. Accordingly,
any deposit of funds in theexcess funding account
will reduce the amount of non-principal
collections available to the trust and could
result in a delay or reduction in payments to you.
S-15
<PAGE>
<TABLE>
<S> <C>
Ability to Change Discount You may be adversely affected because the discount factor may be changed
Factor May Result in Delays without your consent.
or Reductions in Payments on
Certificates
. This transaction uses the terms principal
collections and non-principal collections
in a way that may not be familiar to you.
For purposes of calculating non-principal
collections, this transaction treats some
principal payments on the receivables as
if they were interest or other non-
principal charges relating to the
receivables.
. Pursuant to the pooling and servicing agreement,
the product of the balance of each receivable
times a percentage that we call the discount factor
will be deemed to be non-principal collections.
. As of [insert date], the discount factor was 0.40%.
The discount factor may be adjusted upwards or
downwards, without your consent, but may in no event
exceed 1%.
. Any increase in the discount factor will result in a
higher amount of non-principal collections 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.
. Changes in the amount of principal collections or
non-principal collections could result in a delay or
reduction in payments to you. For example, the
supplement for your series applies non-principal
collections to pay interest on your certificates.
However, the supplement does not use principal
collections to pay interest on your certificates
except to the extent that principal collections
allocable to the seller are reallocated to pay
interest. See "Description from the Collection
Account; Reverse Fund. "
</TABLE>
S-16
<PAGE>
<TABLE>
<S> <C>
Ratings are not Any rating of your certificates by a rating agency indicates the rating
Recommendations agency's view on the likelihood of the ultimate payment of principal and the
timely payment of interest, at the applicable interest rate, on your
certificates.
Among the things a rating will not indicate are:
. the likelihood that principal will be paid on a
scheduled date;
. the likelihood that an early amortization event will occur;
. the likelihood that any amount that we refer to as a carry-over
amount will be paid;
. whether or not the discussion under "Federal Income Tax
Considerations" or "State and Local Tax Considerations" in this
prospectus supplement is adequate, or the likelihood that a
United States withholding tax will be imposed on non-U.S.
certificateholders;
. whether or not the discussion under "ERISA Considerations" in
this prospectus supplement is adequate, or whether a "prohibited
transaction" will occur;
. the marketability of your certificates;
. the market price of your certificates; or
. whether your certificates are an appropriate investment for any
purchaser.
A rating is not a recommendation to buy, sell, or hold your certificates. A rating may be lowered
or withdrawn at any time. You should evaluate each rating independently of any other rating.
The seller will request at least two rating agencies to rate the Class A 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 rating agency. The seller will request at least two rating
agencies to rate the Class B certificates; 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 agency other than those requested could assign a rating to your
certificates, and its rating could be lower than any rating assigned by a rating agency chosen by
the seller.
</TABLE>
For definitions of some of the terms used in this prospectus supplement, see the
"Glossary" in this prospectus supplement.
S-17
<PAGE>
The Accounts
General
The receivables arise under revolving credit arrangements that we call the
accounts. Each of the revolving credit arrangements is between:
. a dealer, manufacturer or distributor of products; and
. Deutsche Financial Services Corporation ("DFS") or an affiliate of
DFS.
For additional discussion of the origination of the receivables, see "The
Dealer Floorplan Financing Business of DFS" in the prospectus.
For purposes of convenience, this prospectus supplement and the
accompanying prospectus may refer to dealers, manufacturers and distributors
collectively as "Dealers" and individually as a "Dealer."
Accounts may be added to or removed from the trust from time to time. See
"Description of the Certificates--Addition of Accounts" and "Removal of
Accounts; Transfers of Participations" in the prospectus. [On or before the
closing date, the seller expects that it will add to the trust accounts and
related receivables having an outstanding principal amount of $[ ], and that
it will remove from the trust accounts and related receivables having an
outstanding principal amount of $[ ].]
As of [ ], there was $[ ] million of receivables in the
total U.S. portfolio of DFS of which $[ ] million of receivables were
included in the trust as of that date. All references in the tables set forth
below to Receivables Balances refer to the amounts shown in the records of DFS
as the outstanding principal amount of the applicable receivables. The tables
set forth below under the heading "--Description of the Trust Portfolio" contain
information as of [ ] 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.
S-18
<PAGE>
Description of the Trust Portfolio
The following tables set forth the composition of the Trust Portfolio, as
of [ ], 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
[ ]
(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...................... $__________ ____________ ____________ ____________
Accounts Receivable........................ __________ ____________ ____________ ____________
Asset Based Lending........................ __________ ____________ ____________ ____________
Unsecured.................................. __________ ____________ ____________ ____________
Total................................... $========== ============ ============ ============
</TABLE>
Composition of Receivables in the
Trust Portfolio by Payment Plan
[ ]
(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................................ __________ ____________ ____________ ____________
Scheduled Payment Plan..................... __________ ____________ ____________ ____________
Total................................... $__________ 100.0% 100.0%
====== ======
</TABLE>
The following tables set forth the composition of the receivables in the
Trust Portfolio as of [ ] 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.
S-19
<PAGE>
Composition of Receivables in the Trust Portfolio by Account Balance
as of [ ]
(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...................................... $
$1,000,000 to $2,499,999.99............................
$2,500,000 to $4,999,999.99............................
$5,000,000 to $9,999,999.99............................
Over $10,000,000.00....................................
Total............................................... $ 100.0% 100.0%
=========== ==========
</TABLE>
Composition of Receivables in the Trust Portfolio by Product Type
as of [ ]
(Dollars in Millions)
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF NUMBER OF
RECEIVABLES RECEIVABLES OF NUMBER OF
PRODUCT TYPE BALANCE BALANCES ACCOUNTS ACCOUNTS
------------ ----------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Computers and Computer Products............................. $
Manufactured Housing........................................
Accounts Receivable.........................................
Recreational Vehicles.......................................
Boats and Motors............................................
Industrial and Agricultural Equipment.......................
Motorcycles.................................................
Snowmobiles.................................................
Other.......................................................
Consumer Electronics and Appliances.........................
Keyboard and Other Musical..................................
Instruments................................................
Total.................................................. $ 100.0% 100.0%
=========== ==========
</TABLE>
The "Accounts Receivable" category in the preceding table includes Asset
Based Receivables of $____ million. The "Other" category in the preceding table
includes, among other products, heating, ventilating, and air conditioning
equipment, and irrigation systems.
S-20
<PAGE>
Geographic Distribution of Receivables in the Trust Portfolio
as of [ ]
(Dollars in Millions)
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF NUMBER OF
RECEIVABLES RECEIVABLES OF NUMBER OF
STATE BALANCE BALANCES ACCOUNTS ACCOUNTS
- -------------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C>
................................. $
.................................
.................................
.................................
.................................
.................................
.................................
.................................
.................................
.................................
.................................
.................................
Other States.....................
Total......................... $ 100.0% 100.0%
=========== ==========
</TABLE>
The percentage of the "Receivables Balance" represented by receivables in
each state not specifically listed in the preceding table is less than [ ]% of
the "Receivables Balance".
S-21
<PAGE>
Yield Information
The receivables bear interest in their accrual periods at rates generally
equal to a rate referred to in the related financing agreement plus a margin.
The rate in the financing agreements relating to the receivables usually refers
to the prime rate announced from time to time by a bank referred to therein.
Some receivables do not bear interest for a specified period after their
origination.
For [ ], the receivables in the U.S. portfolio of DFS had a yield of
___% per annum, of which (a) approximately ___% was attributable to yield from
the payment of interest accruing on those receivables and (b) approximately ___%
was attributable to the payment of the discounted portion of the receivables
balances and other income. For the first [ ] months of [ ], the
receivables in the U.S. portfolio of DFS had a yield of ___% per annum, of which
(a) approximately ___% was attributable to yield from the payment of interest
accruing on those receivables and (b) approximately ___% was attributable to the
payment of the discounted portion of the receivables balances and other income.
The reduction of yield for the first [ ] months of [ ] compared to [
] reflects competitive pricing pressures as well as seasonality in the U.S.
portfolio of DFS.
The trust will receive the yield attributable to the payment of interest
accruing in the trust -- the type of yield referred to in each clause (a) in the
preceding paragraph -- 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 in the receivables
- -- the type of yield referred to in each clause (b) 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 [specify date]) and will receive the interest payments on the
receivables in accordance with their terms.
If the receivables in the U.S. portfolio of DFS during [ ] were
originated at a discount equal to a discount factor of 0.40% and had a Monthly
Payment Rate of __% and the collection of such discount amounts were treated as
interest, during [ ] the yield on such receivables would have been ___%.
If the receivables in the U.S. portfolio of DFS during the first [__] months of
[ ] were originated at a discount equal to a discount factor of 0.40% and
had a Monthly Payment Rate of __% and the collection of such discount amounts
were treated as interest, during the first [ ] months of [ ] the yield
on such receivables would have been ___%. 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.
Major Customers; Major Manufacturers
At [ ] no one dealer accounted for more than __% of the
aggregate balance of the receivables in the trust. At [ ] no one
Manufacturer was obligated under Floorplan Agreements relating to receivables in
the trust aggregating more than ___% 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 "The Dealer Floorplan
Financing Business of DFS--Floorplan Agreements with Manufacturers" in the
prospectus.
S-22
<PAGE>
Delinquency Experience
The following table sets forth the delinquency experience as of the dates
indicated for the entire U.S. portfolio of DFS. Because the accounts from which
the receivables in the trust will be generated constitute only a portion of the
U.S. portfolio of DFS, the actual delinquency experience with respect to the
accounts in the trust may be different than the experience set forth in the
table below. We cannot assure 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 [ ], 31 As of December 31,
<S> <C> <C> <C> <C> <C> <C>
[ ] [ ] [ ] [ ] [ ] [ ]
Aggregate Principal Balance...............
SAU/NSF 31 days or more...................
Scheduled Payment Plan past due 31 days
or more..................................
Total...................................
SAU/NSF 31 days or more/Aggregate
Principal Balance........................
Scheduled Payment Plan past due 31 days
or more/Aggregate Principal
Balance..................................
Total/Aggregate Principal Balance.........
</TABLE>
A "SAU/NSF" account referred to in the preceding table 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. The "Scheduled
Payment Plan past due 30 days or more" category in the preceding table includes
an immaterial amount of Canadian receivables, which are not part of the U.S.
portfolio of DFS.
S-23
<PAGE>
Loss Experience
The following table sets forth the average principal receivables balance and
loss experience for each of the periods shown with respect to the U.S. portfolio
of DFS. Because the accounts in the trust will be only a portion of the U.S.
portfolio of DFS, actual loss experience with respect to the accounts in the
trust may be different than the experience set forth in the table below. We
cannot assure 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 of DFS. The historical experience set forth below includes the effect
of the financial obligations of Manufacturers in respect of repossessed products
as described in the prospectus under "The Dealer Floorplan Financing Business of
DFS--Floorplan Agreements with Manufacturers." If Manufacturers are not able to
perform those obligations in the future, the loss experience in respect of the
U.S. portfolio of DFS and the receivables may be adversely affected.
Loss Experience for the U.S. Portfolio
--------------------------------------
(Dollars in Millions)
---------------------
<TABLE>
<CAPTION>
[ ] Months Year Ended December 31,
Ended [ ]
------------- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
[ ] [ ] [ ] [ ] [ ] [ ]
Average Principal Receivables......
Balance............................
Gross Losses.......................
Net Losses.........................
Net Losses/Liquidations............
Net Losses/Average Principal.......
Receivables Balance...............
</TABLE>
The "Average Principal Receivables Balance" referred to in the preceding
table is the average weekly principal balances for the twelve months ending on
the last day of the period. "Net Losses" in any period referred to in the
preceding table are gross losses less recoveries for such period. Recoveries
include recoveries from collateral security in addition to recoveries from the
products. The percentage indicated for the [ ] months ended [ ] in the preceding
table is not annualized.
S-24
<PAGE>
Aging Experience
The following table provides the age distribution of inventory for all
dealers in the U.S. portfolio of DFS, as a percentage of total principal
outstanding at the date indicated. The following table excludes Asset Based
Receivables and receivables secured by accounts receivable. Because the accounts
in the trust will only be a portion of the entire U.S. portfolio of DFS, actual
age distribution of the accounts in the trust may be different than the
distribution shown below.
Age Distribution for the U.S. Portfolio(1)
(Dollars in Millions)
---------------------
Receivable Balances
<TABLE>
<CAPTION>
Days
- ---- As of [ ] 31, As of [ ] 31, As of December 31,
------------------- ------------------ ------------------------------------------
[_____] [______] [_____] [______] [_____] [_____]
<S> <C> <C> <C> <C> <C> <C>
1-30.................
31-60................
61-90................
91-120...............
121-180..............
181-270..............
Over 270.............
Total................
</TABLE>
<TABLE>
<CAPTION>
Percentage of Receivables Balance
Days
- ---- As of [ ] 31, As of [ ] 31, As of December 31,
------------------- ------------------ ------------------------------------------
[_____] [______] [_____] [______] [_____] [_____]
<S> <C> <C> <C> <C> <C> <C>
1-30....................
31-60...................
61-90...................
91-120..................
121-180.................
181-270.................
Over 270................
Total..... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== =====
</TABLE>
S-25
<PAGE>
Deutsche Financial Services Corporation
General
Deutsche Financial Services Corporation was incorporated in Nevada in 1975.
It is an indirect, wholly-owned subsidiary of Deutsche Bank AG. Deutsche
Financial Services Corporation is a financial services company which provides
inventory financing, accounts receivable financing and asset based financing to
dealers, distributors and manufacturers of consumer and commercial durable
goods. Industries served by Deutsche Financial Services Corporation include, but
are not limited to:
. computers and computer products;
. manufactured housing;
. recreational vehicles;
. boats and motors;
. consumer electronics and appliances;
. keyboards and other musical instruments;
. industrial and agricultural equipment;
. office automation products;
. snowmobiles; and
. motorcycles.
Deutsche Financial Services Corporation is also in the business of
providing equipment loans and leases, franchisee loans, vendor finance programs
and private label retail finance programs. Deutsche Financial Services
Corporation also provides financing to recreational vehicle and boat customers
nationwide, directly and through its wholly-owned subsidiary, Ganis Credit
Corporation.
As of [ ], none of the dealers were affiliates of Deutsche
Financial Services Corporation and none of the products being financed by the
receivables were made or distributed by affiliates of Deutsche Financial
Services Corporation.
As of [ ], Deutsche Financial Services Corporation 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.
Deutsche Financial Services Corporation 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. The telephone number of such
office is (314) 523-3000.
Year 2000 Issues
Deutsche Financial Services Corporation is committed to taking the
necessary steps to enable both new and existing systems, applications and
equipment to effectively process transactions up to and beyond the Year 2000. To
that end, Deutsche Financial Services Corporation is well underway with its Year
2000 readiness program, having spent approximately $11 million to date. As a
result of the ongoing readiness efforts of Deutsche Financial Services
Corporation, Year 2000 processing issues and risks are not expected to have a
material adverse impact on the ability of Deutsche Financial Services
Corporation to continue its general business operations, or on its ability to
perform its responsibilities as servicer.
S-26
<PAGE>
Currently, Deutsche Financial Services Corporation has completed or is
actively engaged in completing the following Year 2000 program initiatives:
. preparation of a comprehensive analysis of current functions which might
be impacted by Year 2000 issues, and documentation of the results in a
Year 2000 assessment report;
. development and implementation of a detailed plan to address Year 2000
issues as identified, particularly as they pertain to software and
hardware applications;
. establishment of a Year 2000 program management office, staffed by
dedicated and experienced project managers;
. survey of outside vendors to determine the degree of preparedness for
the Year 2000, to uncover potential issues arising from those business
counterparties;
. raising of organizational awareness not only with top management, but
also at the staff level, and involve relevant business group leaders in
reaching solutions; and
. implementation of an ongoing purchasing/procurement plan which is
responsive to Year 2000 concerns.
The risk of failures of computer applications, systems and networks due to
improper Year 2000 data processing are substantial, not only for users of
information technologies, but also for any entities and individuals which
interact with them. When aggregated, multiple individual malfunctions and
failures relating to Year 2000 issues can potentially cause broader, systemic
disruptions across industries and economies. The risks arising from Year 2000
issues which face many companies, including Deutsche Financial Services
Corporation, include, among other things:
. the potential diminished ability to respond to the needs and
expectations of customers in a timely manner; and
. the potential for inaccurate processing of information.
Deutsche Financial Services Corporation has undertaken a systematic review
of its mission-critical computing systems, applications and interfaces in an
effort to identify and resolve Year 2000 issues across the enterprise, in a
manner consistent with the guidance set forth by the Federal Financial
Institutions Examination Council (FFIEC).
In addition, Deutsche Financial Services Corporation has begun developing
contingency plans to complement the Year 2000 readiness efforts already in
progress, including backup and offsite processing of certain information and
functions. Deutsche Financial Services Corporation anticipates that such
contingency plans will provide an additional level of security to its Year 2000
efforts already underway.
The foregoing discussion of Year 2000 issues is based on current estimates
of the management of Deutsche Financial Services Corporation as to the amount of
time and costs necessary to remediate and test the computer systems of Deutsche
Financial Services Corporation. Such estimates are based on the facts and
circumstances existing at this time, and were derived utilizing multiple
assumptions of future events, including, but not limited to, the continued
availability of certain resources, third-party modification plans and
implementation success, and other factors. However, there can be no guarantee
that these estimates will be achieved, and actual costs and results could differ
materially from the costs and results currently anticipated by Deutsche
Financial Services Corporation. Specific factors that might cause such material
differences include, but are not limited to:
. the availability and cost of personnel trained in this area;
. the ability to locate and correct all relevant computer code;
. the planning and modification results of business counterparties of
Deutsche Financial Services Corporation; and
. similar uncertainties.
S-27
<PAGE>
Deutsche Bank AG
Deutsche Bank AG is the largest banking institution in the Federal Republic
of Germany, with total assets at [ ] in excess of $[ ] 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.
Deutsche Financial Services Corporation is an indirect, wholly-owned
subsidiary of Deutsche Bank AG. Deutsche Financial Services Corporation 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 of your series will not be
payable until the distribution date in [specify month and year] unless an Early
Amortization Event has occurred. Full amortization of the certificates of your
series by the distribution date in [specify month and year] depends on, among
other things, repayment by dealers of the receivables and may not occur if
dealers do not fully repay the receivables. Because the receivables are, in
large part, paid upon retail sale of the related product, the timing of payments
on the receivables is uncertain. In addition, we cannot assure you that DFS will
generate additional receivables under the accounts or that any particular
pattern of payments will occur. See "The Dealer Floorplan Financing Business of
DFS" in the prospectus.
The amount of new receivables generated in any month and monthly payment
rates on the receivables may vary because of, among other things:
. 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 the U.S. portfolio of DFS 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 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 of DFS during the applicable period; and
. the denominator of which is the average aggregate principal balances of
such receivables for the applicable period.
We cannot assure that the rate of principal collections will be similar to
the historical experience set forth below. Because the accounts in the trust
will be only a portion of the entire U.S. portfolio of DFS, actual monthly
payment rates with respect to the accounts in the trust may be different from
those shown below. DFS believes that the increase in payment rates since [ ] 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.
S-28
<PAGE>
Monthly Payment Rates for the U.S. Portfolio
<TABLE>
<CAPTION>
[ ] Months
ended [ ], 31 Year Ended December 31,
---------------- ---------------------------------------------
[ ] [ ] [ ] [ ] [ ] [ ] [ ]
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month % % % % % % %
Lowest Month % % % % % % %
Average of the
Months in the % % % % % % %
Period
</TABLE>
The final distribution of principal on your certificates may occur earlier
than expected because:
. an Early Amortization Event may occur which would initiate an Early
Amortization Period;
. the seller may exercise its option to repurchase the interest of your
series in the trust; or
. the seller may have to repurchase the interest of the outstanding
series in the trust because of the breach of certain representations
and warranties.
See "Description of the Certificates--Early Amortization Events" and "--
Optional Repurchase" in this prospectus supplement and "Description of the
Certificates--Representations and Warranties" in the prospectus.
You will bear the risk of being able to reinvest principal received on your
certificates at a yield at least equal to the yield on your certificates. If you
acquire a certificate at a discount, the repayment of principal of your
certificate later than you anticipated will result in a lower than anticipated
yield. In addition, if you acquire certificates at a premium, repayment of
principal at a rate that is faster than the rate you anticipated will result in
a yield that is lower than you anticipated.
Description of the Certificates
The following summary describes certain terms of the pooling and servicing
agreement and the supplement for your series, but it does not purport to be
complete and is qualified in its entirety by reference to the pooling and
servicing agreement and the supplement. See also "Description of the
Certificates" in the prospectus.
Interest
Interest on the outstanding principal balance of each class of certificates
of your series will be payable to the certificateholders of your series, to the
extent of available funds, on each [interest payment date]. However:
. during an Early Amortization Period, interest will be paid on each
distribution date; and
. unless an Early Amortization Period has occurred prior to the
distribution date in [ ] the first interest payment date will
be [ ].
Interest will be calculated on the basis of the actual number of days in
the related interest period divided by 360.
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<PAGE>
Principal
We expect that no principal payments will be made on your certificates
until the distribution date in [specify month and year]. However, principal
payments on your certificates may be made earlier or later. See "Risk Factors"
and "Maturity and Principal Payment Considerations" in this prospectus
supplement and "Risk Factors" in the prospectus.
Allocations of Collections, Defaulted Amounts and Miscellaneous Payments
The servicer will allocate amounts to your series for each calendar month
as follows:
. non-principal collections and the Defaulted Amount will be
allocated to your series based on the Floating Allocation
Percentage;
. during the Revolving Period, principal collections will be
allocated to your series based on the Floating Allocation
Percentage, unless otherwise provided in the next sentence;
. during the Accumulation Period and any Early Amortization
Period, principal collections will be allocated to your
series based on the Principal Allocation Percentage, unless
otherwise provided in the next sentence; and
. Miscellaneous Payments will at all times be allocated to
your series on the basis of the Series [ ] Allocation
Percentage.
However, if the sum of:
. the sum of the floating allocation percentages, including
the Floating Allocation Percentage, if applicable, for each
series in its revolving period, and
. 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 the applicable calendar month will be allocated
among the series pari passu and pro rata on the basis of the floating allocation
percentages and principal allocation percentages. Amounts not allocated to your
series as described above will be allocated to the seller and the other
outstanding series of certificates, if any.
The Floating Allocation Percentage and the Principal Allocation Percentage
will be adjusted for any calendar month in which Additional Accounts are
designated to reflect the additional receivables added to the trust.
For any date on which collections are made, the servicer generally will
distribute directly to the seller an amount equal to the Excess Seller's
Percentage for the related calendar month of principal and non-principal
collections for that date.
In addition, during the Revolving Period, the servicer generally will
distribute directly to the seller an amount equal to the Available Seller's
Principal Collections.
Discount Factor
This transaction creates additional non-principal collections by treating a
portion of the principal balance of a receivable as a non-principal collection.
This is done by multiplying the principal balance of a receivable by a
percentage that we call the discount factor. As of [specify date], the discount
factor was ___%. The discount factor is subject to adjustment as described in
"Description of the Certificates-Discount Factor" in the prospectus.
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<PAGE>
Distributions from the Collection Account; Reserve Fund
Non-Principal Collections. On each distribution date, the trustee of the
trust will apply non-principal collections allocated to your series and
Investment Proceeds, if any, deposited into the collection account for the
related calendar month to make the following distributions in the following
order of priority:
(1) the following amount relating to the Class A certificates will be
deposited in the interest funding account:
. Class A monthly interest for that 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 those prior distribution dates;
plus
. 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;
(2) the following amount relating to the Class B certificates will be
deposited in the interest funding account:
. Class B monthly interest for that 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 those prior distribution dates;
plus
. 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;
(3) the following amount relating to the Class Certificates will be
deposited in the interest funding account:
. Class C monthly interest for that 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 those prior distribution dates;
plus
. 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;
(4) an amount equal to the Monthly Servicing Fee for that distribution
date will be distributed to the servicer, unless that amount has been
netted against deposits to the collection account as described above or
waived as described below;
(5) an amount equal to the reserve fund deposit amount, if any, for
that distribution date will be deposited in the reserve fund;
(6) an amount equal to the Investor Default Amount, if any, for that
distribution date will be treated as a portion of Available
Certificateholder Principal Collections for that distribution date;
S-31
<PAGE>
(7) an amount required to reimburse unreimbursed Class A Investor
Charge-Offs, Class B Investor Charge-Offs and Class C Investor Charge-Offs
will be treated as a portion of principal collections for that distribution
date;
(8) any Class A Carry-over Amount, Class B Carry-over Amount or Class
C Carry-over Amount not previously distributed will be deposited to the
interest funding account; and
(9) the balance, if any, will constitute "Excess Servicing" for that
distribution date.
If non-principal collections allocated to your series and Investment
Proceeds are not sufficient to make the entire distributions required by clauses
(1), (2), (3), (4) and (6), the servicer will direct the trustee of the trust to
withdraw funds from the reserve fund and apply those funds, to the extent
available, to complete the distributions pursuant to those clauses in the
numerical order of those clauses.
If there is a Required Subordination Draw Amount for that distribution
date, the servicer will apply or direct the trustee of the trust to apply the
Available Seller's Collections on deposit in the collection account on that
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 (1) -
(4) and (6) above and that have not been made through the application of funds
from the reserve fund described above. Any of those Available Seller's
Collections remaining after the application pursuant to the preceding sentence
will be treated as a portion of Available Certificateholder Principal
Collections for the distribution date and applied as described under "--
Principal Collections" below, but only up to the amount of unpaid Adjustment
Payments allocated to your series.
If the Required Subordination Draw Amount exceeds Available Seller's
Collections for a distribution date, the Available Subordinated Amount will be
further reduced in accordance with the definition of Available Subordinated
Amount in an amount equal to those Available Seller's Collections.
If for a 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 the distribution date, then the Available Seller's
Collections will be allocated to your series and the other series pro rata on
the basis of the required subordination draw amounts, including the Required
Subordination Draw Amount.
Reserve Fund. An Eligible Deposit Account will be established and
maintained in the name of the trustee of the trust for the benefit of your
series (the "reserve fund"). On the closing date, the seller will cause to be
deposited with the trustee of the trust, and the trustee of the trust will
deposit in the reserve fund, funds in an amount equal to [ ]% of the aggregate
initial principal balance of the certificates of your series.
If, after giving effect to the allocations, distributions and deposits in
the reserve fund described above under "--Non-Principal Collections," the amount
in the reserve fund is less than the Reserve Fund Required Amount, the trustee
of the trust will deposit any remaining non-principal collections allocable to
your series and Investment Proceeds -- to the extent available pursuant to
clause (5) under "--Non-Principal Collections" above -- for the related calendar
month into the reserve fund until the amount in the reserve fund is equal to the
Reserve Fund Required Amount.
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 relating to the calendar month immediately preceding the
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, will be distributed to the seller.
S-32
<PAGE>
Principal Collections. On each distribution date, the servicer will
allocate Available Certificateholder Principal Collections as follows.
For each distribution date relating to the Revolving Period, all
Available Certificateholder Principal Collections will be allocated:
. first, if
(1) the Pool Balance at the end of the preceding calendar
month is less than the Pool Balance at the end of the
second preceding calendar month, and
(2) the Pool Balance at the end of the preceding calendar
month is less than the Required Participation Amount for
that 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 that 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
that distribution date, the Pool Balance is equal to the Required
Participation Amount; and
. second, to Excess Principal Collections as described
under "Description of the Certificates--Allocations
Among Series" in the prospectus.
For each distribution date relating to the Accumulation
Period or any Early Amortization Period, if a responsible officer
of the trustee of the trust has actual knowledge thereof:
. an amount equal to Monthly Principal for the
distribution date will be deposited to the principal
funding account; and
. during the Accumulation Period, the balance, if any,
will be allocated to Excess Principal Collections.
If 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.
Interest Funding Account
The servicer will establish and maintain in the name of the trustee of
the trust, on behalf of the trust, an Eligible Deposit Account for the
benefit of your series (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 that
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 of the trust 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 that
distribution date.
S-33
<PAGE>
Principal Funding Account
The servicer will establish and maintain in the name of the trustee of the
trust, on behalf of the trust, an Eligible Deposit Account for the benefit of
your series (the "principal funding account"). On each distribution date, funds
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 relating to the required addition of accounts, that Early
Amortization Event will have been cured -- the principal funding account balance
will be paid to the certificateholders of your series 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 that 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 of the trust 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."
Excess Funding Account
The servicer will establish and maintain an Eligible Deposit Account in the
name of the trustee of the trust, on behalf of the trust, for the benefit of
your series (the "excess funding account").
On each distribution date during the Revolving Period, if:
. the Pool Balance at the end of the preceding calendar month
is less than the Pool Balance at the end of the second
preceding calendar month; and
. the Pool Balance at the end of the preceding calendar month
is less than the Required Participation Amount for that
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 that distribution date,
then some Available Certificateholder Principal Collections will be deposited in
the excess funding account on the distribution date.
If:
. on any determination date during the Revolving Period there
are any funds in the excess funding account; and
. the Pool Balance at the end of the preceding calendar month
is greater than the Pool Balance at the end of the second
preceding calendar month,
then the Invested Amount and the invested amounts -- but, in each case, not more
than the initial principal amounts -- for all other outstanding series that
provide for an excess funding account or similar arrangement and are in their
revolving periods will be increased so that, after giving effect to the
increases, the Required Participation Amount is at least equal to the Pool
Balance.
On the determination date, the servicer will notify the trustee of the
trust of the amount, if any, of the increase in the Invested Amount and the
trustee of the trust will 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 the increase in
the Invested Amount.
If 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 those other
series' invested amount, as applicable, will be reduced by the amount of that
payment.
In addition, the Invested Amount will not be increased unless after giving
effect to the increase the Pool Balance equals or exceeds the sum of:
S-34
<PAGE>
. the Required Participation Amount -- exclusive of the Trust
Available Subordinated Amount;
. the sum of the Available Subordinated Amount and the sum of
the required subordinated amounts for all other series --
or, if the other series will have no required subordinated
amounts, the available subordinated amounts with respect to
that series; and
. the sum of any subordinated amounts supporting any
Enhancement for all other series. Under some circumstances,
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 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 for your series -- 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 of the trust at the direction of the servicer in investments rated in
the highest short-term category of each rating agency or in any other
investments that are acceptable to each rating agency. These 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 paid to the collection account and applied
as described in this prospectus supplement. See "--Distributions from the
Collection Account; Reserve Fund" above.
Distributions
Payments to certificateholders of your series will be made from the
interest funding account, the principal funding account and the excess funding
account. The servicer will instruct the trustee of the trust to apply the funds
on deposit in the interest funding account, the principal funding account and
the excess funding account and will instruct the trustee of the trust to make,
without duplication, the following distributions:
(a) On each distribution date which is an interest payment date,
available amounts on deposit in the interest funding account will be
distributed in the following order of priority:
(1) to the Class A certificateholders, an amount equal to
(A) the sum of Class A monthly interest for the distribution
date, plus the Class A monthly interest for any prior
distribution date, if any, occurring after the immediately
preceding interest payment date -- or in the case of the
first interest payment date, after the closing date for your
series, plus
(B) any amount determined on any prior interest payment date
pursuant to clause (A) that was not distributed on any prior
interest payment date, plus
(C) 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;
(2) to the Class B certificateholders, an amount equal to
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<PAGE>
(A) the sum of Class B monthly interest for the distribution
date, plus the Class B monthly interest for any prior
distribution date, if any, occurring after the immediately
preceding interest payment date -- or in the case of the
first interest payment date, after the closing date for your
series, plus
(B) any amount determined on any prior interest payment date
pursuant to clause (A) that was not distributed on any prior
interest payment date, plus
(C) 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;
(3) to the Class C certificateholders, an amount equal to
(A) the sum of Class C monthly interest for the distribution
date, plus the Class C monthly interest for any prior
distribution date, if any, occurring after the immediately
preceding interest payment date -- or in the case of the
first interest payment date, after the closing date for your
series, plus
(B) any amount determined on any prior interest payment date
pursuant to clause (A) that was not distributed on any prior
interest payment date, plus
(C) 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;
(4) to the Class A certificateholders, the sum of
(A) any Class A Carry-over Amount for the
interest payment date, plus
(B) any Class A Carry-over Amount for each other
distribution date, if any, occurring after
the immediately preceding interest payment
date -- or in the case of the first interest
payment date, after the closing date for your
series;
(5) to the Class B certificateholders, the sum of
(A) any Class B Carry-over Amount for the interest payment
date, plus
(B) any Class B Carry-over Amount for each other
distribution date, if any, occurring after
the immediately preceding interest payment
date -- or in the case of the first interest
payment date, after the closing date for your
series; and
(6) to the Class C certificateholders, the sum of
(A) any Class C Carry-over Amount for the interest payment
date, plus
(B) any Class C Carry-over Amount for each other
distribution date, if any, occurring after the
immediately preceding interest payment date --or in the
case of the first interest payment date, after the
closing date for your series.
(b) On each distribution date during an Early Amortization
Period --if a responsible officer of the trustee of the trust has
actual knowledge of that 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
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<PAGE>
paragraph (a) above -- any amounts in the interest funding account will be
distributed to the certificateholders of your series in the following order
of priority:
. first, to the Class A certificateholders until the
outstanding principal balance of the Class A
certificates has been reduced to zero;
. second, to the Class B certificateholders until the
outstanding principal balance of the Class B
certificates has been reduced to zero; and
. 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 distribution date will not
exceed the excess of (A) the sum of the outstanding
principal balance of the Class A, Class B and Class C
certificates, as applicable, over (B) the sum of
unreimbursed Class A, Class B and Class C Investor
Charge-Offs, each on that distribution date.
Distributions on the certificates of your series will be made on each
applicable distribution date to the holders of certificates in whose names the
certificates were registered -- expected to be Cede, as nominee of DTC, for the
Class A and Class B certificates -- at the close of business on the day
preceding that distribution date -- or, if definitive certificates are issued,
on the last day of the preceding calendar month --. However, the final
distribution on the certificates of your series will be made only at the time of
presentation and surrender of the certificates.
Optional Repurchase
On any distribution date occurring after the Invested Amount of the
certificates of your series is reduced to less than 10% of the initial
outstanding principal amount of the certificates of your series, the seller will
have the option to repurchase the interest of your series in the trust. The
purchase price at that time will be equal to the outstanding Invested Amount
plus accrued and unpaid interest on the certificates of your series 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 that option.
Following that repurchase, the certificateholders of your series will have
no further rights relating to the trust, other than the right to receive the
final distribution on the certificates of your series. In the event that the
seller fails for any reason to deposit the purchase price as described above,
payments will continue to be made to your series as described under "--
Distributions" above.
Early Amortization Events
For purposes of your series, the "Early Amortization Events" consist of:
. the "Early Amortization Events" which are set forth in the
pooling and servicing agreement; and
. the additional "Early Amortization Events" which are set
forth in the supplement for your series.
The supplement for each other series will also set forth additional Early
Amortization Events applicable to the other series -- which may be the same as
or different from the additional Early Amortization Events for your series
described below.
For your series and every other series, "Early Amortization Event" includes
any of the following events:
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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 those receivables pursuant to the pooling and
servicing agreement, as described under "Description of the Certificates --
Addition of Accounts" in the prospectus;
2. failure on the part of the seller, the servicer or DFS,
as applicable,
. 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 that payment or deposit is required to be made;
. 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 the trust of that failure;
. 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 will not be deemed to have occurred if the seller
will have repurchased the related receivables or, if
applicable, all the receivables during that period in
accordance with the provisions of the pooling and
servicing agreement;
. 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 that 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 of the trust to identify the accounts
. proves to have been incorrect in any material respect
when made and continues to be incorrect in any material
respect for a period of 60 days after written notice;
and
. as a result the interests of the certificateholders of
all series 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;
. however, an Early Amortization Event will not be deemed
to occur applicable, during that period in accordance
with the provisions of the pooling and servicing
agreement;
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<PAGE>
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; or
6. any Servicer Default occurs.
The additional "Early Amortization Events" which are Early Amortization
Events for purposes of your series consist of any of the following events:
1. a Carry-over Amount is outstanding on six consecutive distribution
dates -- after giving effect to the distribution on each of those
distribution dates;
2. on any determination date, the average of the Monthly Payment
Rates for the three preceding calendar months is less than [ ]%;
3. the failure to pay the outstanding principal amount of the
certificates of your series by the distribution date in [specify month and
year];
4. the Three Month Net Loss Ratio exceeds [ ]% on an annualized
basis; however, this clause 4. may be amended or waived with the consent of
the seller and each rating agency that the seller has requested to rate
your series and without the consent of any certificateholder;
5. 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 [ ]% 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 dates relating to those
determination dates; or
6. on any distribution date, the balance of the reserve fund is less
than [ ]% of the aggregate outstanding principal balance of the
certificates of your series, in each case after giving effect to all
deposits and distributions on the distribution date.
If any of the above events occur:
. an Early Amortization Event will be deemed to have
occurred without any notice or other action on the part
of any other party immediately on the occurrence of
that event; and
. the Early Amortization Period will commence as of the
day on which the Early Amortization Event occurs.
Monthly distributions of principal to the certificateholders of your series
will begin on the first distribution date following the calendar month 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 involving the seller, or the seller
violates its covenant not to create any lien on any receivable, in each case as
provided in the pooling and servicing agreement, on the day of that insolvency
event or that violation, as applicable:
. the seller will immediately cease to transfer
receivables to the trust and promptly give notice to
the trustee of the trust of that insolvency event or
violation, as applicable; and
. the trust will be deemed to have terminated, in
accordance with the liquidation, winding up and
dissolution procedures described below.
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Unless the provisions of the pooling and servicing agreement have been
amended, as described under "Description of the Certificates--Amendments" in the
prospectus, to eliminate the provisions relating to the sale of receivables
following the occurrence of an insolvency event relating to the seller -- the
pooling and servicing agreement provides that following the occurrence of an
insolvency event relating to the seller:
. within 15 days the trustee of the trust will publish a
notice of that insolvency event or violation stating
that the trustee of the trust intends to sell,
liquidate or otherwise dispose of the receivables in a
commercially reasonable manner and on commercially
reasonable terms;
. however, the trustee will refrain from that action if
within a specified period of time holders of
certificates of each series representing more than 50%
of the aggregate outstanding principal amount of the
certificates of each series -- or, for any series with
two or more classes, the certificates of each class --
and each person holding a Supplemental Certificate,
instruct the trustee of the trust not to sell,
liquidate or dispose of the receivables and to continue
transferring receivables as before that insolvency
event or violation, as applicable.
If the portion of those proceeds allocated to your series and the proceeds
of any collections on the receivables in the collection account allocable to
your series are not sufficient to pay the aggregate unpaid principal balance of
the certificates in full plus accrued and unpaid interest thereon, you 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 your series are sufficient to pay
the aggregate unpaid principal balance of the certificates of your series in
full plus accrued and unpaid interest on those certificates.
Termination
The trust will terminate on the date set forth under "Description of the
Certificates--Termination" in the prospectus.
In any event, the last payment of principal and interest on the
certificates will be due and payable no later than the distribution date in
[specify month and year]. In the event that the Invested Amount is greater than
zero on that distribution date, the trustee of the trust will sell or cause to
be sold -- and apply the proceeds to the extent necessary to pay those remaining
amounts to all certificateholders -- an interest in the receivables or some of
the receivables, as specified in the pooling and servicing agreement, in an
amount equal to the sum of:
. 110% of the Invested Amount, after giving effect to deposits
and distributions otherwise to be made on that distribution
date; and
. the Available Subordinated Amount on the preceding
determination date, after giving effect to allocations to be
made on the distribution date following that determination
date.
However, the amount will not exceed the Series [ ] Allocation
Percentage of receivables on that determination date.
The net proceeds of that 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
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. 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.
Servicing Compensation and Payment of Expenses
The servicer's compensation for its servicing activities and reimbursement
for its expenses will be a servicing fee in an amount payable in arrears on each
distribution date generally equal to one-twelfth of the product of:
. 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; and
. the Pool Balance as of the last day of the second preceding
calendar month.
The share of the servicing fee allocable to the certificateholders of your
series for any distribution date will generally be equal to one-twelfth of the
product of:
. 2%; and
. the Invested Amount as of the last day of the second
preceding calendar month.
The remainder of the servicing fee will be paid by the seller and the
certificateholders of other series. The servicing fee will 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
servicing fee relating to the waived servicing fee, in which case the servicing
fee for that distribution date will 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
of the trust 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.
Reports
On each distribution date, the trustee of the trust 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 prepared by the
servicer setting forth the following information:
. the aggregate amount of collections, the aggregate amount of
non-principal collections and the aggregate amount of
principal collections processed during the immediately
preceding calendar month and the amount on deposit in the
collection account;
. the Series [ ] Allocation Percentage, the Floating
Allocation Percentage and the Principal Allocation
Percentage for that calendar month;
. the total amount, if any, distributed on the certificates of
your series;
. the amount of that distribution allocable to principal on
each class of certificates of your series;
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. the amount of that distribution allocable to interest on
each class of certificates of your series;
. the Investor Default Amount for that distribution date;
. the Required Subordination Draw Amount, if any, for the
preceding calendar month;
. the amount of the Class A, Class B and Class C Investor
Charge-Offs and the amounts of reimbursements thereof for
the preceding calendar month;
. the amount of the servicing fee for the preceding calendar month;
. the Controlled Distribution Amount;
. 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 of your series for that distribution --
after giving effect to all distributions which will occur on
that distribution date;
. the "pool factor" for each class of certificates of your
series as of the determination date relating to that
distribution date, which consists of an eleven-digit decimal
expressing the Invested Amount of each class as of that
determination date -- determined after taking into account
any reduction in the Invested Amount for that class which
will occur on that distribution date -- as a portion of the
initial principal balance of that class;
. the Available Subordinated Amount for that determination date;
. the reserve fund balance for that date; and
. the principal funding account balance and the interest
funding account balance for that date.
On or before January 31 of each calendar year, the trustee of the trust
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 the preceding calendar year or the applicable portion thereof
during which that person was a certificateholder, together with other customary
information as is necessary to enable the certificateholders to prepare their
tax returns.
In addition, 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 of the trust. See "Federal Income Tax Considerations" and "State and
Local Tax Consequences" in this prospectus supplement.
Federal Income Tax Considerations
Overview
The following is a summary of material U.S. Federal income tax consequences
of the purchase, ownership and disposition of the Class A certificates and the
Class B certificates, or the "offered certificates". This summary is based on
current provisions of the Internal Revenue Code of 1986, called the "Code",
proposed, temporary and final Treasury regulations under the Code, and published
rulings and court decisions. The current tax laws and the current regulations,
rulings and court decisions may be changed, possibly retroactively. The parts of
this summary which relate to matters of law or legal conclusions, represent the
opinion of Mayer, Brown & Platt, special Federal tax counsel for the seller, and
are qualified in this summary.
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We have not sought and will not seek any rulings from the Internal Revenue
Service (the "IRS") about any of the Federal income tax consequences we discuss.
The IRS could take positions contrary to those we discuss.
Characterization of the Certificates and the Trust
In the opinion of Mayer, Brown & Platt, the trust will not be classified as
an association or publicly traded partnership taxable as a corporation for
Federal income tax purposes. Mayer, Brown & Platt is also of the opinion that,
based on the substantive terms of the offered certificates, the offered
certificates will be treated as indebtedness for Federal income tax purposes.
In general, whether for Federal income tax purposes a transaction
constitutes a sale of property or a loan which is secured by the property, is a
question of fact, and is based on the economic substance of the transaction
rather than its form or label. The primary factor in determining whether the
substance of a transaction is a sale or a loan is whether the person who has
purchased the property or made a loan secured by the property has assumed the
risk of loss from the property and has obtained the benefits of ownership of the
property. The intention of the parties is another important factor in
determining whether a transaction will be treated as a sale or a loan for
Federal income tax purposes. The seller expresses in the pooling agreement its
intent that for federal, state and local income and franchise tax purposes, the
offered certificates will be indebtedness. Further, the seller, the servicer and
each initial and subsequent investor, by acquiring an interest in an offered
certificate, agrees or will be deemed to agree to treat the offered certificates
as indebtedness for Federal, state and local income or franchise tax purposes.
Based on its analysis of the substance of the transaction contemplated in
this prospectus and the parties' intentions, Mayer, Brown & Platt has concluded
that the purchasers of the offered certificates will be treated as making a loan
to the seller secured by the receivables. Therefore, Mayer, Brown & Platt is of
the opinion that the offered certificates will be treated as debt for Federal
income tax purposes. However, no transaction closely comparable to that
contemplated in this prospectus has been the subject of any Treasury regulation,
revenue ruling or judicial decision. Prospective investors should also be aware
that opinions of counsel are not binding on the IRS, and the IRS could
successfully challenge treatment of the offered certificates as indebtedness for
Federal income tax purposes.
Except as otherwise expressly indicated, the remaining discussion assumes
that the offered certificates will be treated as debt for Federal income tax
purposes and that payments on the offered certificates are denominated in U.S.
dollars.
Taxation of Interest Income of Certificateholders
If the offered certificates are not treated as issued with "original issue
discount" or "OID", investors will be required to include the stated interest on
the offered certificates in income either when received or accrued, according to
their method of tax accounting. The offered certificates will not be treated as
issued with OID if (1) the interest payable on the offered certificates meets
the requirements for "qualified stated interest" under Treasury Regulations
relating to OID, and (2) any excess of the principal amount of the offered
certificates over the issue price of the offered certificates does not exceed a
de minimis amount. Qualified stated interest generally includes interest that is
payable unconditionally at least annually at a single fixed rate that
appropriately takes into account the length of time between payments. It is
uncertain whether interest payable on the offered certificates will be treated
as qualified stated interest. A de minimis amount is defined by Treasury
Regulations as 1/4% of the principal amount of the offered certificates
multiplied by the number of full years included in their term.
If the offered certificates are treated as issued with OID, then the excess
of the payments other than "qualified stated interest" over the original issue
price for the offered certificates will constitute OID. The original issue price
for the offered certificates will be the initial offering price at which a
substantial amount of the offered certificates are sold to the public. The owner
of an offered certificate must include OID, if any, in income as interest over
the term of the certificate under a constant yield method. In general, OID must
be included in income in advance of the receipt of cash representing that
income. Further, under the Code, special rules relating to OID, market discount
and acquisition premium apply to debt obligations which may be accelerated due
to prepayments of obligations securing the debt obligation. It is uncertain
whether these special
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rules apply to the offered certificates. If they were to apply, the seller would
calculate and report OID, if any, based on a reasonable prepayment assumption.
A subsequent investor who purchases an offered certificate for less than or
more than the adjusted issue price of an offered certificate will be governed by
special rules. A subsequent investor who purchases an offered certificate for
less than the adjusted issue price of the offered certificate, which is referred
to as market discount, may be governed by the "market discount" rules of the
Code. These rules provide, in part, that gain attributable to accrued market
discount will be treated as ordinary income on the receipt of partial principal
payments, or on the sale or disposition of the offered certificate. These rules
also provide for the deferral of interest deductions related to debt incurred to
acquire or carry the offered certificate. An investor who purchases an offered
certificate for more than the adjusted issue price of the offered certificate,
which is referred to as a premium, may elect to offset this premium against
interest income over the remaining term of the offered certificate pursuant to
Section 171 of the Code.
Sale of a Certificate
An investor who disposes of an offered certificate by sale, exchange,
redemption or otherwise will recognize gain or loss equal to the difference
between the amount of cash and the fair market value of any property received,
other than amounts attributable to, and taxable as, accrued interest, and the
investor's adjusted tax basis in the offered certificate. In general, the
adjusted tax basis of an offered certificate will equal the investor's cost for
the offered certificate, increased by an OID or market discount previously
included in income by the investor and decreased by any deductions previously
allowed for amortizable bond premium and by any payment reflecting principal or
OID on the offered certificate. Any gain or loss will generally be long-term
capital gain or loss, provided that the offered certificate was held as a
capital asset for more than one year. The maximum ordinary income tax rate for
individuals exceeds the maximum long-term capital gains rate for individuals.
Any realized capital losses may generally 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.
Possible Classification as a Partnership or as an Association Taxable as a
Corporation
The opinions of Mayer, Brown & Platt that the trust will not be treated as
an association or publicly traded partnership taxable as a corporation and that
the offered certificates will be treated as debt are not binding on the courts
or the IRS. Further, the IRS could assert that, for purposes of the Code, the
transactions contemplated in this prospectus constitute a sale of the
receivables, or an interest in the receivables, to the investors and that the
legal relationship between the seller and some or all of the investors resulting
from the transactions is a partnership, including a publicly traded partnership,
or a publicly traded partnership taxable as a corporation. The seller currently
does not intend to comply with the Federal income tax reporting requirements
that would apply if any offered certificates were treated as interests in a
partnership or a publicly traded partnership taxable as a corporation.
If a partnership, other than a publicly traded partnership taxable as a
corporation, between the seller and investors were held to exist, the
partnership itself would not be required to pay Federal income tax. Rather, the
partners of the partnership, including the investors, would be taxed
individually on their distributive shares of the partnership's income, gain,
loss, deductions and credits. The amount and timing of items of income and
deductions of an investor could differ if the offered certificates were held to
constitute partnership interests, rather than debt. In addition, unless the
partnership were treated as engaged in a trade or business, an individual
investor's share of expenses of the partnership would be miscellaneous itemized
deductions that, in the aggregate, are allowed as deductions only to the extent
they exceed two percent of the individual's adjusted gross income, and could be
reduced under Section 68 of the Code if the individual's adjusted gross income
exceeded specified limits. Furthermore, these deductions would be eliminated
altogether for purposes of the alternative minimum tax. As a result, the
individual might be taxed on a greater amount of income than the stated rate on
the offered certificates. Finally, if a partnership were held to exist, all or a
portion of any taxable income allocated to an investor 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" which generally would be taxable to the tax-exempt investor under the
Code.
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If it were determined that a transaction created an entity classified as a
publicly traded partnership taxable as a corporation, the trust would be
required to pay Federal income tax at corporate income tax rates on its income,
and may have to pay certain state and local taxes, which would reduce the
amounts available for distribution to the investors. If the offered
certificates were treated as partnership interests in a publicly traded
partnership, taxable as a corporation, distributions to the investors generally
would not be deductible in computing the taxable income of the publicly traded
partnership. Also, cash distributions to the investors generally would be
treated as dividends for tax purposes, but possibly without the benefit of a
dividends received deduction.
FASIT Legislation
Recent legislation created a new type of entity for Federal income tax
purposes called a "financial asset securitization investment trust" or "FASIT."
Arrangements similar to the trust may elect to be treated as a FASIT. A FASIT
election would enable the trust to avoid Federal income taxation and to issue
securities, similar to the offered certificates, which would be treated as debt
for Federal income tax purposes. The seller and servicer will be permitted to
amend the pooling and servicing agreement or the supplement for your series 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 any
modifications to the pooling and servicing agreement or the supplement for your
series as may be permitted by reason of the making of a FASIT election.
We cannot assure you that the seller will or will not cause any permissible
FASIT election to be made regarding the trust or amend the pooling and servicing
agreement or the supplement for your series in connection with any election. In
addition, if a FASIT election is made, it may cause a holder to recognize gain,
but not loss on any certificates of your series 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 FASIT election and any related amendments to the pooling and
servicing agreement or the supplement involving your series 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 FASIT election and any permitted related amendments on them in their
particular circumstances.
Although the FASIT legislation was effective as of September 1, 1997, many
technical issues have not been addressed by Treasury regulations. Transition
rules permit an entity in existence on or after August 31, 1997, like the trust,
to elect FASIT status. However, it is not clear how outstanding interests of an
electing entity would be treated after an election. Thus, it is not clear how
the certificates of your series would be treated if the trust made a FASIT
election. Further, while proposed regulations regarding FASITs were issued on
February 7, 2000, the proposed regulations are generally proposed to be
effective only after publication of final regulations. Accordingly, it is
uncertain when the proposed regulations would be effective and whether the
proposed regulations will be finalized in the form proposed.
Prospective investors should consult their tax advisors about how a FASIT
election may affect them.
Foreign Investors
The following information describes the U.S. Federal income tax treatment
of investors that are Foreign Investors if the offered certificates are treated
as debt. The term "Foreign Investor" means any person who is not:
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity organized in or under the
laws of the United States or any political subdivision of the United
States,
(3) an estate, the income of which is includible in gross income for United
States Federal income tax purposes, regardless of its source, or
(4) a trust if a U.S. court is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust.
Tax would be withheld from payments of interest, including OID, paid to a
Foreign Investor at a rate of 30% unless (1) the income is "effectively
connected" with the conduct by the Foreign Investor of a trade or
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business in the United States as evidenced by an IRS Form 4224 or new IRS
Form W-8ECI, signed by the investor or its agent; (2) the Foreign Investor
delivers an IRS Form 1001 or new IRS Form W-8BEN, signed by the investor or its
agent, claiming exemption from withholding or a reduced rate of withholding
under an applicable tax treaty; or (3) the Foreign Investor and each securities
clearing organization, bank, or other financial institution that holds the
offered certificates on behalf of the customer in the ordinary course of its
trade or business, in the chain between the investor and the United States
person otherwise required to withhold the United States tax, complies with
applicable identification requirements, and the investor does not actually or
constructively own 10% or more of the voting stock of the seller and is not a
controlled foreign corporation of the seller. Applicable identification
requirements generally will be satisfied if there is delivered to a securities
clearing organization and to the United States entity otherwise required to
withhold tax an IRS Form W-8 or new IRS Form W-8BEN signed under penalties of
perjury by the investor, stating that the investor is not a United States person
and providing the investor's name and address. In the case of (1), (2) or (3)
above, the appropriate form will be effective provided, that (a) the applicable
form is delivered as required by applicable procedures and is properly
transmitted to the United States entity otherwise required to withhold tax, and
(b) none of the entities receiving the form has actual knowledge that the
investor is a United States person.
An investor that is a nonresident alien or foreign corporation will not be
liable for United States Federal income tax on gain realized on the sale,
exchange, or redemption of an offered certificate, if (1) this gain is not
effectively connected with the conduct of a trade or business in the United
States, (2) in the case of an individual foreign investor, the investor is not
present in the United States for 183 days or more during the taxable year of the
sale, exchange, or redemption, and (3) in the case of gain representing accrued
interest, the conditions described in the last paragraph are satisfied.
If the trust were reclassified as a partnership that is not taxable as a
corporation, a Foreign Investor might be required to file a U.S. Federal income
tax return and pay tax on its share of partnership income at regular United
States rates, including the branch profits tax in the case of a Foreign Investor
that is a corporation. Withholding tax, at the current rate of 39.6% in the
case of individuals and 35% in the case of corporations would also be deducted
from a Foreign Investor's share of the partnership's "effectively connected
taxable income." If the offered certificates were recharacterized as equity
interests in a publicly traded partnership taxable as a corporation, tax would
be withheld from distributions on the offered certificates treated as dividends
generally at a rate of 30% unless reduced by an applicable treaty or other
exemption.
New Withholding Regulations. The Treasury Department has issued new
withholding regulations containing modifications to the withholding, backup
withholding and information reporting rules described in this prospectus
supplement. For example, persons currently required to file Form W-8 or Form
1001 will be required to file new Form W-8BEN and persons currently required to
file Form 4224 will be required to file new Form W-8ECI. The new withholding
regulations will generally be effective for payments made after December 31,
2000, but Forms W-8, 1001 and 4224 filed before that date will continue to be
effective until the earlier of December 31, 2000 or their current expiration
date. Prospective investors are advised to consult their tax advisors regarding
the new withholding regulations.
Backup Withholding
Backup withholding taxes will be imposed on payments to any investor, other
than an exempt holder like a corporation, tax exempt organization, qualified
pension and profit sharing trust, individual retirement account or nonresident
alien who provides certification of their status as nonresident, at the rate of
31% of the interest paid, and original issue discount accrued, if any, on the
offered certificates if the investor, at the time of issuance, fails to supply
the trustee of the trust or its broker with a certified statement, under
penalties of perjury, containing the investor's name, address, correct taxpayer
identification number, and a statement that backup withholding is not required.
Information returns will be sent annually to the IRS and to each investor
stating the amount of interest paid, and original issue discount accrued, if
any, on the offered certificates and the amount of tax withheld from payments on
the certificates. We advise investors to consult with their tax advisors about
their eligibility for, and the procedure for obtaining, exemption from backup
withholding.
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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 on the net income
of corporations, partnerships and other entities doing business in the State of
Missouri. This discussion is based on present provisions of Missouri statutes
and the regulations promulgated thereunder, and applicable judicial or ruling
authority, all of which may 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 Class A and Class B 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 required to pay Missouri income tax and
certificateholders not otherwise required to pay Missouri tax would not be
required to pay that tax solely because of their mere ownership of the Class A
and Class B certificates. Certificateholders already being taxed 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 required to pay 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 required to pay in Missouri to pay Missouri income tax on income
beyond that derived from the Class A and Class B 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
required to pay the Missouri income tax. Those taxes could result in reduced
distributions to certificateholders. A certificateholder not otherwise required
to pay tax in Missouri would not be required to pay Missouri income tax as a
result of its mere ownership of that interest.
Notwithstanding the foregoing, regardless of the treatment of the Class A
and Class B certificates or the arrangement for federal income tax purposes, a
certificateholder could be required to pay Missouri income tax if that
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 required to pay any Missouri franchise tax imposed under Chapter 147
of the Revised Statutes of Missouri.
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 required to pay tax. We recommend that
you consult your own tax advisors regarding state and local income and franchise
taxes.
Due to the complexity of federal, state, local and foreign 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 about the Federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
certificates. For example, this prospectus supplement does not discuss tax
consequences to various investors, including banks and thrifts, insurance
companies, regulated investment companies, dealers in securities, holders that
will hold the offered certificates as a position in a "straddle" for tax
purposes or as a part of a "synthetic security" or "conversion transaction" or
other integrated investment comprised of the offered certificates and one or
more other investments, foreign investors, trusts and estates and pass-through
entities with any of these types of investors as equity holders. Further, we do
not furnish information in this summary in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an
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investor's own tax advisor. Additionally, the discussion is limited to the
federal income tax consequences to initial investors and not to purchasers in
the secondary market.
ERISA Considerations
General
Section 406 of the Employee Retirement Income Security Act of 1974
("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. A violation of these "prohibited
transaction" rules may generate excise tax and other liabilities under ERISA and
the Code for that person. For example, if a plan were to acquire certificates,
a prohibited transaction would arise, unless an exemption, like one of the class
exemptions described below, were available, if the seller were a disqualified
person or party in interest. By its acceptance of a Class A certificate or an
interest in a Class A certificate, each Class A certificateholder and owner of
any beneficial interest in a Class A certificate 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.
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 to which ERISA or the Code applies, 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 that 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
regarding a 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
. freely transferable;
. part of a class of securities that is held, on completion of the
public offering made hereby, by 100 or more investors independent of
the trust and of one another; and
. either is (A) part of a class of securities registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934 (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 of 1933 (the "Securities Act") and the class of
securities of which that security is a part is registered under the
Exchange Act within 120 days, or any later time as may be allowed by
the Securities and Exchange Commission, after the end of the fiscal
year of the issuer during which the offering of those securities to
the public occurred.
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
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independent persons at the conclusion of the offering, although no one can
assure you, and no monitoring or other measures will be taken to ensure, that
the 100 independent person requirement will be satisfied.
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" 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 certificates by that plan could constitute a
prohibited transaction. There are five class exemptions issued by the DOL that
may apply in that event:
. DOL Prohibited Transaction Class 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.
No one can assure you that these exemptions, even if all of the conditions
specified in those exemptions 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 independent 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 to which ERISA applies;
(b) any plan or other arrangement -- including an individual retirement
account or Keogh plan -- to which section 4975 of the Code applies; or
(c) any entity whose underlying assets include "plan assets" under the
Publicly-Offered Securities Exemption by reason of any 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 an
employee benefit plan, plan or arrangement to which Section 4975 of the Code
applies, or other type of entity covered by clause (a), (b) or (c) of the
preceding sentence.
Review by Benefit Plan Fiduciaries
Due to the complexity of these rules and the penalties imposed on 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 regarding 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.
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Underwriting
The seller has agreed to sell [name(s) of underwriter(s)] have agreed to
purchase the principal amount of the [Class A and Class B certificates] listed
in the table below. The terms of these purchases are governed by an
underwriting agreement between the seller and [ ], for itself and as
representative of all underwriters.
Underwriters [Principal Amount of Underwriter's Price to
- ------------ Class A Certificates] Commission Public
--------------------- ---------- ------
[Principal Amount of Underwriter's Price to
Class B Certificates] Commission Public
--------------------- ---------- ------
The underwriters have agreed to purchase all of the offered certificates if
any of the offered certificates are purchased.
[[ ], as representative of the underwriters, has advised the seller that
the underwriters propose initially to offer the [Class A certificates] to the
public at the public offering price stated on the cover page of this prospectus
supplement, and to some dealers at that price, less a concession of up to
[____]% for each [Class A certificate]. The underwriters may allow, and those
dealers may reallow, concessions up to [____]% of the principal amount of the
[Class A certificates] to some brokers and dealers.]
[[ ], as representative of the underwriters, has advised the seller that
the underwriters propose initially to offer the [Class B certificates] to the
public at the public offering price stated on the cover page of this prospectus,
and to some dealers at that price, less a concession not more than [____]% for
each [Class B certificate]. The underwriters may allow, and those dealers may
reallow, concessions of up to [____]% of the principal amount of the [Class B
certificates] to some brokers and dealers.]
Additional offering expenses are estimated to be $[________].
[The seller and DFS will indemnify the underwriters against liabilities
caused by (1) any untrue statement or alleged untrue statement of a material
fact contained in this prospectus supplement, the prospectus or the related
registration statement or (2) any omission or alleged omission to state a
material fact required to be stated in this prospectus supplement, the
prospectus or the registration statement or necessary to make the statements in
this prospectus supplement, the prospectus or the related registration statement
not misleading. The seller and DFS will not, however, indemnify the
underwriters against liabilities caused by any untrue statement or omission,
real or alleged, made in reliance on and in conformity with information relating
to and provided by any underwriter for use in this prospectus supplement, the
prospectus and the registration statement.]
[The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids for the offered
certificates in accordance with Regulation M under the Exchange Act.
. Over-allotment transactions involve syndicate sales exceeding the
offering size, which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the offered
certificates so long as the stabilizing bids do not exceed a specified
maximum.
. Syndicate covering transactions involve purchases of the offered
certificates in the open market after the distribution has been
completed in order to cover syndicate short positions.
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. Penalty bids permit the underwriters to reclaim a selling concession
from a syndicate member when the offered certificates originally sold
by that syndicate member are purchased in a syndicate covering
transaction.]
These transactions may cause the prices of the offered certificates to be
higher than they would otherwise be in the absence of those transactions.
Neither the seller nor any of the underwriters represent that the underwriters
will engage in any of those transactions or that those transactions, once
commenced, will not be discontinued without notice at any time.
[For any underwriter which is an affiliate of DFS, add: [name of
underwriter] 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 [name of underwriter] are the sole responsibility of [name of underwriter]
and do not create any obligation on the part of any affiliate of [name of
underwriter].]
[This prospectus supplement is to be used by Deutsche Bank Securities Inc.
in connection with offers and sales from time to time related to market-making
transactions in the certificates in which Deutsche Bank Securities Inc. acts as
principal. Deutsche Bank Securities Inc. also may act as agent in market-making
transactions. Deutsche Bank Securities Inc. will make sales at negotiated prices
determined at the time of sale. Deutsche Bank Securities Inc. has no obligation
to make a market in the certificates and may discontinue its market-making
activities at any time without notice, in its sole discretion.]
Legal Matters
Certain legal matters relating to the certificates will be passed on for
the seller by Naran U. Burchinow, Esq., General Counsel of DFS, and by Mayer,
Brown & Platt, Chicago, Illinois. Certain federal income tax matters will be
passed on for the seller by Mayer, Brown & Platt, Chicago, Illinois. Certain
legal matters and certain Missouri income tax matters will be passed on for the
seller by Bryan Cave LLP, St. Louis, Missouri. Certain legal matters will be
passed on for the underwriter(s) by [ ].
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Glossary
[To be conformed]
"Accumulation Period" means the period beginning on [ ] and ending on
the earlier of (a) the commencement of an Early Amortization Period and (b) the
distribution date in [specify month and year].
"Accumulation Period Length" means [ ].
"Additional Interest" for any distribution date will mean an amount equal
to the sum of the Class A Additional Interest, the Class B Additional Interest
and the Class C Additional Interest.
"Adjustment Date" means, for any interest period, the second London
Business Day prior to the interest payment date preceding that interest period,
and for an interest period commencing on an interest payment date, the second
London Business Day preceding that interest payment date; provided that for 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.
"Adjustment Payment" means a deposit in the collection account as described
below. If the servicer adjusts the amount of any receivable because of a
rebate, refund, credit adjustment or billing error to a dealer, or because the
receivable relates to inventory which was refused or returned by a dealer:
. the Seller's Participation Amount will be reduced by the amount of
the adjustment; and
. if following that 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 that determination date -- the seller will
be required to deposit a cash amount equal to that deficiency -- up to
the amount of the adjustment -- into the collection account in
immediately available funds on the day on which that adjustment
occurs.
"Approved Affiliate" means any affiliate of DFS as to which the Rating
Agency Condition has been satisfied.
"Asset Based Receivables" means receivables arising from the asset based
lending business.
"Available Certificateholder Principal Collections" for any distribution
date means the sum of
. the product of: (1) the Floating Allocation Percentage, for the
Revolving Period, or the Principal Allocation Percentage, for the
Accumulation Period or any Early Amortization Period, for the related
calendar month -- or any partial calendar month which occurs as the
first calendar month during an Early Amortization Period) and (2)
principal collections for the related calendar month -- or any partial
calendar month which occurs as the first calendar month during an
Early Amortization Period;
. the amount, if any, of non-principal collections, funds in the Excess
Servicing and Available Seller's Collections, allocated in each case
to cover the Investor Default Amount or reimburse Investor Charge-
Offs; and
. the Series [ ] Allocation Percentage of Miscellaneous Payments
for that distribution date.
"Available Seller's Collections" for any date means the sum of:
. the Available Seller's Non-Principal Collections; plus
. the Available Seller's Principal Collections;
. however, the Available Seller's Collections will be zero for any
calendar month if the Available Subordinated Amount is zero on the
determination date immediately following the end of that calendar
month.
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"Available Seller's Non-Principal Collections" for any date means an amount
equal to the result obtained by multiplying:
. the excess of (a) the Seller's Percentage for the related calendar
month over (b) the Excess Seller's Percentage for that calendar month;
by
. non-principal collections for that date.
"Available Seller's Principal Collections" for any date means an amount
equal to the product of:
. the excess of (a) the Seller's Percentage for the related calendar
month over (b) the Excess Seller's Percentage for that calendar month;
and
. principal collections for that date.
"Available Subordinated Amount" for a determination date is equal
to [ ].
"Carry-over Amount" means the sum of the Class A Carry-over Amount, the
Class B Carry-over Amount and the Class C Carry-over Amount.
"Class A Additional Interest" means, as of any interest payment date, an
amount equal to the product of:
. the Class A interest rate;
. a fraction the numerator of which is the actual number of days in the
period from and including the prior interest payment date to but
excluding the current interest payment date and the denominator of
which is 360; and
. Class A Interest Shortfall, or the portion thereof, for that
interest payment date which has not been paid or deposited in the
interest funding account on any prior distribution date.
"Class A Carry-over Amount" for a distribution date is an amount equal to
the excess, if any, of:
. Class A monthly interest for that distribution date, determined as if
the interest rate were based on LIBOR rather than the Net Receivables
Rate; over
. the actual Class A monthly interest for that distribution date.
"Class A Initial Invested Amount" for any date means:
. the initial principal amount of the Class A certificates, which is
$__________, plus
. the product of (a) the Class A Percentage multiplied by (b) the
amount of any withdrawals from the excess funding account in
connection with an increase in the Pool Balance since the closing date
for your series; minus
. the product of (a) the Class A Percentage multiplied by (b) the
amount of any additions to the excess funding account in connection
with a reduction in the Pool Balance since the closing date for your
series.
"Class A interest rate" is a rate per annum equal to the lesser of:
. [LIBOR] plus ____% per annum; and
. the related Net Receivables Rate.
"Class A Interest Shortfall" is an amount, calculated by the servicer on
the determination date preceding each interest payment date, equal to the
excess, if any, of:
. the sum of (a) the Class A monthly interest for the interest period
applicable to that interest payment date plus (b) the Class A monthly
interest for each
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interest period applicable to each other distribution date, if any,
occurring after the immediately preceding interest payment date -- or
for the first interest payment date, after the closing date; over
. the amount which will be available to be paid to the Class A
certificateholders as Class A monthly interest from the interest
funding account on that interest payment date.
"Class A Invested Amount" for any date means an amount equal to the sum of:
. the Class A Initial Invested Amount; minus
. the aggregate amount of principal payments made to Class A
certificateholders prior to that date; minus
. the aggregate amount of all unreimbursed Class A Investor Charge-
Offs;
. however, the Class A Invested Amount will not be less than zero.
"Class A Investor Charge-Off" for a distribution date means the lesser of:
. the amount by which the Class B Investor Charge-Off for that
distribution date would have reduced the Class B Invested Amount to
below zero, if the Class B Invested Amount were permitted to be
reduced to below zero; and
. the portion, if any, of the Investor Default Amount for the related
calendar month remaining after applying that Investor Default Amount
to cap the size of the Class C Investor Charge-Off and the Class B
Investor Charge-Off for that distribution date pursuant to the
definitions of Class C Investor Charge-Off and the Class B Investor
Charge-Off.
"Class A monthly interest" on any distribution date will be an amount equal
to the product of:
. the Class A interest rate;
. 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
. 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 that preceding distribution date, if any, or for
the first distribution date, the initial principal amount of the Class
A certificates.
"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 of your series.
"Class B Additional Interest" means, as of any interest payment date, an
amount equal to the product of:
. the Class B interest rate;
. a fraction the numerator of which is the actual number of days in the
period from and including the prior interest payment date to but
excluding the current interest payment date and the denominator of
which is 360; and
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. that Class B Interest Shortfall, or the portion thereof for that
interest payment date, which has not been paid or deposited in the
interest funding account on any prior distribution date.
"Class B Carry-over Amount" for a distribution date is an amount equal to
the excess, if any, of:
. Class B monthly interest for that distribution date, determined as if
the interest rate were based on LIBOR rather than the Net Receivables
Rate; over
. the actual Class B monthly interest for that distribution date.
"Class B Initial Invested Amount" for any date means:
. the initial principal amount of the Class B certificates, which is
$__________, plus
. the product of (a) the Class B Percentage multiplied by (b) the
amount of any withdrawals from the excess funding account in
connection with an increase in the Pool Balance since the closing date
for your series; minus
. the product of (a) the Class B Percentage multiplied by (b) the
amount of any additions to the excess funding account in connection
with a reduction in the Pool Balance since the closing date for your
series.
"Class B interest rate" is a rate per annum equal to the lesser of:
. [LIBOR] plus ____% per annum; and
. the related Net Receivables Rate.
"Class B Interest Shortfall" is an amount, calculated by the servicer on
the determination date preceding each interest payment date, equal to the
excess, if any, of:
. the sum of (a) the Class B monthly interest for the interest period
applicable to that interest payment date plus (b) 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 for the first interest payment date, after
the closing date; over
. the amount which will be available to be paid to the Class B
certificateholders as Class B monthly interest from the interest
funding account on that interest payment date.
"Class B Invested Amount" for any date means an amount equal to the sum of:
. the Class B Initial Invested Amount; minus
. the aggregate amount of principal payments made to Class B
certificateholders prior to that date; minus
. the aggregate amount of all unreimbursed Class B Investor Charge-
Offs;
. however, the Class B Invested Amount will not be less than zero.
"Class B Investor Charge-Off" for a distribution date means the lesser of:
. the amount by which the Class C Charge-Off for that distribution date
would have reduced the Class C Invested Amount to below zero, if the
Class C Invested Amount were permitted to be reduced to below zero;
and
. the portion, if any, of the Investor Default Amount for the related
calendar month remaining after applying that Investor Default Amount
to cap the size of the Class C Investor Charge-Off for that
distribution date pursuant to the definition of Class C Investor
Charge-Off -- that is, the amount, if any, by
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which Investor Default Amount for the related calendar month exceeds
the amount of the Class C Investor Charge-Off for that distribution
date.
"Class B monthly interest" on any distribution date will be an amount equal
to the product of:
. the Class B interest rate;
. 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
. 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 that preceding distribution date, if any, or for
the first distribution date, the initial principal amount of the Class
B certificates.
"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 of your series.
"Class C Additional Interest" means, as of any interest payment date, an
amount equal to the product of:
. the Class C interest rate;
. a fraction the numerator of which is the actual number of days in the
period from and including the prior interest payment date to but
excluding the current interest payment date and the denominator of
which is 360; and
. that Class C Interest Shortfall, or the portion thereof, for that
interest payment date, which has not been paid or deposited in the
interest funding account on any prior distribution date.
"Class C Carry-over Amount" for a distribution date is an amount equal to
the excess, if any, of:
. Class C monthly interest for that distribution date, determined as if
the interest rate were based on LIBOR rather than the Net Receivables
Rate; over
. the actual Class C monthly interest for that distribution date.
"Class C Initial Invested Amount" for any date means:
. the initial principal amount of the Class C certificates, which is
$__________, plus
. the product of (a) the Class C Percentage multiplied by (b) the
amount of any withdrawals from the excess funding account in
connection with an increase in the Pool Balance since the closing date
for your series; minus
. the product of (a) the Class C Percentage multiplied by (b) the
amount of any additions to the excess funding account in connection
with a reduction in the Pool Balance since the closing date for your
series.
"Class C interest rate" is a rate per annum equal to the lesser of:
. [LIBOR] plus ____% per annum; and
. the related Net Receivables Rate.
"Class C Investor Charge-Off" for a distribution date means the lesser of:
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. the amount by which the Class C Charge-Off for that distribution date
would have reduced the Class C Invested Amount to below zero, if the
Class C Invested Amount were permitted to be reduced to below zero;
and
. the portion, if any, of the Investor Default Amount for the related
calendar month remaining after applying that Investor Default Amount
to ____ the size of the Class C Investor Charge-Off for that
distribution date pursuant to the definition of Class C Investor
Charge-Off -- that is, the amount, if any, by which Investor Default
Amount for the related calendar month exceeds the amount of the Class
C Investor Charge-Off for that distribution date.
"Class C Interest Shortfall" is an amount, calculated by the servicer on
the determination date preceding each interest payment date, equal to the
excess, if any, of:
. the sum of (a) the Class C monthly interest for the interest period
applicable to that interest payment date plus (b) 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 for the first interest payment date, after
the closing date; over
. the amount which will be available to be paid to the Class C
certificateholders as Class C monthly interest from the interest
funding account on that interest payment date.
"Class C Invested Amount" for any date means an amount equal to the sum of:
. the Class C Initial Invested Amount; minus
. the aggregate amount of principal payments made to Class C
certificateholders prior to that date; minus
. the aggregate amount of all unreimbursed Class C Investor Charge-
Offs;
. however, the Class C Invested Amount will not be less than zero.
"Class C Investor Charge-Off" for a distribution date will be calculated as
follows:
. If on that distribution date, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on that
distribution date, either (a) the Available Subordination Amount for
the related determination date exceeds zero, or (b) the balance of the
reserve fund on the distribution date exceeds zero, then the Class C
Investor Charge-Off will be zero for that distribution date.
. If on that distribution date, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on that
distribution date, both (a) the Available Subordination Amount for the
related determination date is zero, and (b) the balance of the reserve
fund is zero, then the Class C Investor Charge-Off for that
distribution date will equal the lesser of the Deficiency Amount for
that distribution date and the Investor Default Amount for the
preceding calendar month.
"Class C monthly interest" on any distribution date will be an amount equal
to the product of:
. the Class C interest rate;
. 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
. 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
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repayments of principal made to Class C certificateholders on that
preceding distribution date, if any, or for the first distribution
date, the initial principal amount of the Class C certificates.
"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 of your series.
"Collateral Security" for a receivable generally includes the security
interest granted by or on behalf of the related Dealer with respect thereto.
["Controlled Amortization Amount" means an amount equal to [ ].]
["Controlled Distribution Amount" for a distribution date means [ ].]
"Dealer" means a person engaged generally in the business of purchasing
consumer or commercial products from a manufacturer or distributor thereof and
holding the 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.
"Defaulted Amount" on any determination date means an amount, which will
not be less than zero, equal to:
. 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
calendar month; less
. the full amount, exclusive of the discounted portion, of any Defaulted
Receivables which may be reassigned to the seller or purchased by the
servicer for that calendar month unless certain events of bankruptcy,
insolvency, or receivership have occurred regarding either of the
seller or the servicer, in which event the Defaulted Amount will not
be reduced for those Defaulted Receivables. The pooling and servicing
agreement provides that 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.
"Defaulted Receivables" on any determination date are:
(1) 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 those receivables to the trust
and which remained outstanding for any six consecutive determination
dates thereafter; and
(2) all receivables, other than all Ineligible Receivables, which were
charged off as uncollectible for the immediately preceding calendar
month.
DFS's charge-off policy is based on SAU/NSF aging.
. For "Pay-as-Sold" accounts, see "Description of the Dealer Floorplan
Financing Business of DFS--Payment Terms" in the prospectus,
receivables which are coded as SAU/NSF are charged off at the end of
the month in which those 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
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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.
"Deficiency Amount" is the amount, if any, by which
(1) the sum of
(a) Monthly Interest for the next distribution date,
(b) any Monthly Interest for any prior distribution dates required to
be but not deposited in the interest funding account on a prior
distribution date,
(c) Additional Interest, if any, for the next 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,
(d) the Monthly Servicing Fee for the next distribution date,
(e) the Investor Default Amount for the next distribution date, and
(f) the amount of any Adjustment Payment allocated to your series for
the next distribution date that has not been deposited in the
collection account as required under the pooling and servicing
agreement; exceeds
(2) the sum of non-principal collections allocated to your series for the
next distribution date, plus any Investment Proceeds for the next
distribution date.
"Delayed Funding Receivable" means 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 the product. If the Rating Agency
Condition is satisfied, then the receivables referred to in the preceding
sentence will not be Delayed Funding Receivables and the provisions relating to
Delayed Funding Receivables will no longer be of any force or effect.
"Discount Factor" will be calculated as follows:
. If on any distribution date the Net Receivables Rate for that
distribution date less (1) the weighted average of the interest rates,
as determined below, for all outstanding series of certificates for
that distribution date less (2) the annualized Net Loss Rate -- as
defined in the pooling and servicing agreement -- for the preceding
twelve calendar months is less than 1%, then the Discount Factor for
that distribution date will 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 (1) less the
rate in clause (2) will be equal to 1%; and the Discount Factor will
remain at the 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 will 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 will be the percentage
-- which will in no event be less than 0% -- rounded down to the
nearest
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0.1%, which, when applied, will cause the Pool Balance to at least
equal the Required Participation Amount. For purposes of this
definition:
(1) if the interest rate on a class of certificates is calculated
as the lesser of (a) a fixed rate or a formula rate and (b) the Net
Receivables Rate, then the interest rate will be the rate in clause
(a); and
(2) if an interest rate swap agreement provides the interest
distributable on a series or class of certificates, then the interest
rate for the series or class of certificates will be the interest rate
payable to the related swap counterparty.
"Discount Portion" means, for a receivable, the portion of that receivable
equal to the product of the Discount Factor and the balance of the receivable.
"Early Amortization Event" has the meaning set forth under "Description of
the Certificates--Early Amortization Events" in this prospectus supplement.
"Early Amortization Period" for any series will begin at the close of
business on the business day preceding the occurrence of an Early Amortization
Event for that series--that is, either
(a) one of the Early Amortization Events set forth in the pooling and
servicing agreement that applies to all series or
(b) one of the Early Amortization Events that applies to that
particular series and is set forth in the supplement for that
series. The Early Amortization Events applicable to your series
are listed under Description of the Certificates -- Early
Amortization Events" in this prospectus supplement.
The Early Amortization Period for any series will end on the earliest to
occur of:
(a) the payment in full of the invested amount for that series, or in
the case of your series, the Invested Amount,
(b) the date specified as a termination date in the supplement for
that series, which in the case of your series is the distribution
date in [specify month and year], and
(c) the end of the first month during which the seller cured an Early
Amortization Event relating to 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 to
convey those receivables pursuant to the pooling and servicing
agreement--so long as no other Early Amortization Event has
occurred relating to that series and the scheduled termination of
the Revolving Period for that series has not occurred.
"Eligible Account" means 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:
. is in favor of a Dealer which is doing business in the United States
of America, including its territories and possessions, and 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,
. is in existence and maintained and serviced by DFS or an Approved
Affiliate and
. is an account 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"
in the prospectus. Receivables arising in accounts in which another lender
participates include only DFS's undivided interest in the related advance and
not the undivided interest of the other lender.
"Eligible Deposit Account" means either:
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. a segregated account with an Eligible Institution; or
. 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:
. the corporate trust department of the trustee;
. 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 (1) has either (a) a
long-term unsecured debt rating acceptable to each rating agency or
(b) a certificate of deposit rating acceptable to each rating agency
and (2) is a member of the FDIC.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities of the type contemplated by the pooling and servicing agreement,
or 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" means each receivable:
. which was originated or acquired by DFS in the ordinary course of
business;
. which arose under an account that at that time was an Eligible
Account;
. which is owned by DFS at the time of sale or contribution by DFS to
the seller;
. which represents the obligation of a Dealer to repay an advance made
to or on behalf of the Dealer;
. which at the time of creation and at the time of transfer to the
trust is 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; however, the
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 that account was designated as
an account on or before the closing date for a series issued in 1994;
. 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;
. for which all consents and governmental authorizations required to be
obtained by DFS or the seller in connection with the creation of that
receivable or the transfer of that receivable to the trust or the
performance by DFS of the floorplan, accounts receivable, asset based
lending or unsecured receivable financing agreement pursuant to which
that receivable was created, have been duly obtained and are in full
force and effect;
. as to which at all times following the transfer of that 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;
. which has been the subject of a valid transfer and assignment from
the seller to the trust of all the seller's interest in that
receivable, including any proceeds of that receivable;
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. which will at all times be the legal and assignable payment
obligation of the related Dealer, enforceable against the Dealer in
accordance with its terms except as may be limited by applicable
bankruptcy or other similar laws;
. which at the time of transfer to the trust is not encumbered by any
right of rescission, setoff, or any other defense of the Dealer;
. as to which, at the time of transfer of the receivable to the trust,
DFS and the seller have satisfied all their respective obligations
regarding that receivable required to be satisfied at that time;
. as to which, at the time of transfer of the 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
in that receivable;
. 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; however, the financing agreement giving rise to
the receivable may, however, be subject by its terms, or by judicial
interpretation, to the laws of other states;
. which was transferred to the trust with all applicable governmental
authorizations; and
. if the receivable has the benefit of a Floorplan Agreement with a
Manufacturer, the Floorplan Agreement provides, except as otherwise
provided in that agreement -- which may vary among Floorplan
Agreements -- that the Manufacturer is obligated to repurchase the
products securing the receivable after the servicer repossesses the
products following the related Dealer's default. For a description of
Floorplan Agreements, see "The Dealer Floorplan Financing Business of
DFS--Floorplan Agreements with Manufacturers" in the prospectus.
Delayed Funding Receivables will be Eligible Receivables. Delayed Funding
Receivables -- including any collections on those Delayed Funding Receivables
and Defaulted Amounts in respect of those Delayed Funding Receivables -- will
cease to be included in the trust on the day, if any, on which an insolvency
event in respect of DFS occurs.
"Enhancement" means the rights and benefits provided to the
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 will be deemed to be an Enhancement.
"Enhancement Provider" means the provider of any Enhancement, other than
any certificateholders the certificates of which are subordinated to any series
or class.
"Excess Seller's Percentage" for any calendar month means a percentage,
which will never be less than 0% nor more than 100%, calculated as described
below.
. If the Excess Seller's Percentage is applied to non-principal
collections and defaulted receivables, it means 100% minus the sum of:
(1) the aggregate of the floating allocation percentages for each
outstanding series for the applicable calendar month; plus
(2) 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 that
calendar month -- after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the next
distribution date -- and the denominator of which is the Pool
Balance as of the last day of the immediately preceding calendar
month.
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. If the Excess Seller's Percentage is applied to principal collections,
it means 100% minus the sum of:
(a) the sum of the aggregate of the principal allocation percentages
for each outstanding series in its amortization, accumulation or
early amortization period for the applicable calendar month and
the aggregate of the floating allocation percentages for each
outstanding series in its revolving period for that calendar
month; plus
(b) the percentage described in clause (2) above for that calendar
month.
"Excess Servicing" for any distribution date means the amount described in
clause (9) under Description of the Certificates -- Distributions from the
Collection Account; Reserve Fund" in this prospectus supplement.
"Financing Agreement" means any wholesale financing agreement, accounts
receivable financing agreement, asset based lending financing agreement or
unsecured receivable financing agreement.
"Floating Allocation Percentage" for any calendar month after the month in
which the closing date for your series occurs means the percentage equivalent,
which will never exceed 100%, of a fraction:
. the numerator of which is the Invested Amount as of the last day of
the immediately preceding calendar month; and
. the denominator of which is the Pool Balance as of that last day.
The Floating Allocation Percentage for the month in which the closing date
for your series occurs will mean the percentage equivalent of a fraction:
. the numerator of which is the sum of the initial principal balances of
the certificates of your series; and
. the denominator of which is the Pool Balance on the [specify cut-off
date].
"Floorplan Agreement" means 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 the Manufacturer agrees, among other matters, to
repurchase from DFS or the Approved Affiliate, as applicable, Products sold by
the manufacturer to any of its Dealers and financed by DFS or the Approved
Affiliate under a wholesale financing agreement if DFS or the Approved Affiliate
acquires possession of the Products because of a default by the Dealer under the
wholesale financing agreement, voluntary surrender or other circumstances.
"Incremental Default Amount" on any determination date equals:
. the Overconcentration Default Amount on that determination date; minus
. the full amount of any defaulted receivables included in the
definition of Overconcentration Default Amount which may be reassigned
or assigned to the seller or the servicer in accordance with the terms
of the pooling and servicing agreement, but not less than zero, except
as described in the next sentence.
If certain events of bankruptcy, insolvency or receivership involving
the seller have occurred, the amount of the defaulted receivables which may
be reassigned to the seller will not be so subtracted and, if certain
events of bankruptcy, insolvency or receivership involving the seller have
occurred, the amount of the defaulted receivables which may be assigned to
the servicer will not be so subtracted.
"Ineligible Account" means an Account that at the time of determination is
not an Eligible Account.
"Ineligible Receivable" means, without duplication,
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. 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,
. any receivable that, at the time of its transfer to the trust, has
been SAU or NSF for more than 30 days and
. the aggregate of receivables that, at the time of transfer of each of
the receivables to the trust, have been SAU or NSF for a period of one
to 30 days but only to the extent that the aggregate amount exceeds
0.75% of the Pool Balance at the end of the calendar month.
"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.
"Investment Proceeds" for any distribution date means an amount equal to
the sum of:
. the net investment earnings credited to the collection account on the
related determination date on funds held in the interest funding
account, the principal funding account, the excess funding account and
the reserve fund; and
. the Series [ ] Allocation Percentage of net investment earnings
credited to the collection account on the related determination date
relating to funds held in the collection account.
"Investor Default Amount" means, for any distribution date, an amount equal
to the product of:
. the Defaulted Amount for the preceding calendar month, and
. the Floating Allocation Percentage for the preceding calendar month.
["LIBOR" means, for 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 the date of calculation as
determined by the trustee of the trust.] If at least two 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 those offered rates.
If fewer than two offered rates appear, LIBOR for the interest period will
be determined at approximately 11:00 A.M., London time, on the 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 of the trust
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 that market at that time.
. The trustee of the trust will request the principal London office of
each of those banks to provide a quotation of its rate.
. If at least two of the banks quote rates to the trustee, LIBOR will be
the arithmetic mean -- rounded upwards, if necessary, to the nearest
one-sixteenth of one percent -- of those quotations.
. If fewer than two of the banks quote rates to the trustee, LIBOR for
that interest period will be the arithmetic mean -- rounded upwards,
if necessary, to the nearest one-sixteenth of one percent -- of the
rates quoted at approximately 11:00 A.M., New York City time, on the
Adjustment Date by three major banks in New York, New York selected by
the trustee of the trust for loans in United States dollars to leading
European banks having the Index
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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
that market at that time.
. However, if the banks selected are not providing quotations, 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" will
equal one month.
"London Business Day" means any business day on which dealings in deposits
in United States dollars are transacted in the London interbank market.]
"Manufacturer" means a manufacturer, distributor or other vendor engaged
generally in the business of manufacturing or distributing products for sale or
lease to Dealers in the ordinary course of business.
"Miscellaneous Payments" for any calendar month means the sum of:
. Adjustment Payments and Transfer Deposit Amounts received during that
calendar month; and
. Unallocated Principal Collections on the applicable distribution date
available to be treated as Miscellaneous Payments as described under
"Description of the Certificates--Allocations Among Series" in the
prospectus.
"Monthly Interest" for any distribution date will mean an amount equal to
the sum of the Class A monthly interest, the Class B monthly interest and the
Class C monthly interest.
"Monthly Payment Rate" for a calendar month is the percentage equivalent of
a fraction:
. the numerator of which is the principal collections, without
deducting the discount portion, collected during that calendar month;
and
. the denominator of which is the average daily aggregate principal
balance of the receivables -- without deducting the discount portion -
- for that calendar month.
"Monthly Principal" for any distribution date relating to the Accumulation
Period or any Early Amortization Period will equal the Available
Certificateholder Principal Collections for that distribution date. However,
. for each distribution date during the Accumulation Period, Monthly
Principal may not exceed the Controlled Distribution Amount for that
distribution date; and
. Monthly Principal will not exceed the aggregate outstanding principal
balances of the certificates of your series.
["Monthly Servicing Fee" means [ ]
"Net Receivables Rate" for each distribution date immediately following an
interest period is:
. the weighted average of the interest rates borne by the receivables
during the second calendar month preceding that distribution date --
interest payments on the receivables at those rates generally being
due and payable in the calendar month preceding that distribution
date; plus
. the product of (a) the Monthly Payment Rate for the calendar month
preceding that distribution date, (b) the discount factor for that
distribution date and (c) twelve; less
. 2% per annum, unless the Servicing Fee has been waived for the
applicable calendar month.
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"Non-Principal Collections" means collections of interest, all other non-
principal charges, including insurance service fees and handling fees, and
Discount Portions under the receivables; provided that all Recoveries will be
Non-Principal Collections.
"Non-Principal Receivables" for any account means all amounts billed to the
related Dealer in respect of interest and all other non-principal charges.
"Overconcentration Default Amount" on any determination date means the
lesser of:
. the aggregate amount of receivables which became defaulted receivables
during that calendar month and which arose in an account that is
included in the calculation of the Overconcentration Amount; and
. the Overconcentration Amount on that determination date.
"Pay-as-Sold" is described in the prospectus under "The Dealer Floorplan
Financing Business of DFS -- Payment Terms."
"Pool Balance" means, as of the time of determination, (a) the aggregate of
Principal Receivables, without deducting therefrom the Discount Portion, in the
trust at the time, other than all Ineligible Receivables, multiplied by (b) 1
minus the Discount Factor.
"Principal Allocation Percentage" for any calendar month means the
percentage equivalent, which will 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 calendar month;
However, for the portion of any calendar month that falls after the date on
which any Early Amortization Event occurs, unless, in limited circumstances
involving the addition of accounts, that Early Amortization Event will have been
cured, the Principal Allocation Percentage will be reset using the Pool Balance
as of the close of business on the date on which the Early Amortization Event
occurred and principal collections will be allocated for that portion of the
calendar month using the reset Principal Allocation Percentage.
"Principal Receivables" for an Account means amounts shown on the
servicer's records as receivables, other than the amounts which represent Non-
Principal Receivables and Discount Portions, payable by the related Dealer.
"Products" means the commercial and consumer goods financed by DFS or the
related Approved Affiliate for Dealers pursuant to a wholesale financing
agreement.
"Rating Agency Condition" means, for any action, that each rating agency
will have notified the seller, the servicer and the trustee in writing that the
action will not result in a reduction or withdrawal of the rating of any
outstanding series or class for which it is a rating agency.
"Recoveries" on any determination date means all amounts received,
including insurance proceeds, by the servicer during the calendar month
immediately preceding the determination date from receivables which have
previously become Defaulted Receivables.
"Required Participation Amount" for any date means an amount equal to the
sum of:
. the sum of the product for each series of (1) the Required
Participation Percentage for that series times (2) the initial
invested amount of that 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
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. 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 that determination date.
"Required Participation Percentage" means, for any series, the percentage
specified for that series in the related supplement; provided, however, that the
seller may, with 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.
"Required Subordination Draw Amount" means the lesser of the Deficiency
Amount and the Available Subordinated Amount.
"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.
"Reserve Fund Required Amount" means an amount which on any distribution
date will equal the product of:
. [ ]%; and
. the aggregate outstanding balance of the certificates of your series
as of that distribution date -- after giving effect to any change in
that aggregate outstanding balance on that distribution date.
"Revolving Period" for your series means the period beginning on the
closing date for your series and ending on the earlier of:
. the close of business on the day immediately preceding the
Accumulation Period, and
. the close of business on the day an Early Amortization Period
commences;
. however, if any Amortization Period ends as described in clause (c) of
the definition of Early Amortization Period, the Revolving Period will
recommence as of the close of business on the day that Early
Amortization Period ends.
"Seller's Participation Amount" means, at any time of determination, an
amount equal to the Pool Balance at the time minus the aggregate Invested
Amounts for all outstanding series at the time.
"Seller's Percentage" means a percentage calculated as described below.
. If the Seller's Percentage is applied to non-principal collections and
defaulted receivables, it means 100% minus the aggregate of the
floating allocation percentages for each outstanding series, including
your series.
. If the Seller's Percentage is applied to principal collections, it
means 100% minus the sum of:
(a) the aggregate of the floating allocation percentages for each
outstanding series, including your series, if applicable, in its
revolving period; and
(b) the aggregate of the principal allocation percentages for each
outstanding series, including your series, if applicable, in its
amortization, accumulation or early amortization period, but in
each case will not be less than 0%.
"Series [ ] Allocation Percentage" means, for any calendar month, the
percentage equivalent of a fraction:
. the numerator of which is the Invested Amount as of the last day of
the immediately preceding calendar month; and
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. the denominator of which is the Trust Invested Amount as of that last
day.
"Termination Date" means the distribution date in [specify month and year].
"Three Month Net Loss Ratio" means the ratio, expressed as a percentage,
of:
. the average for each month of the net losses on the receivables,
exclusive of the ineligible receivables, owned by the trust -- that
is, gross losses less recoveries on the 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
. the average of the month-end aggregate balances of those receivables
-- without deducting the discount portion -- for that three-month
period.
"Transfer Deposit Amount" means, for any receivable reassigned or assigned
to the seller or the servicer, as applicable, the amounts specified in the
pooling and servicing agreement.
"Trust Available Subordinated Amount" means the sum of:
. the Available Subordinated Amount; and
. the aggregate available subordinated amounts for all other outstanding
series.
"Trust Incremental Subordinated Amount" on any determination date equals
the excess, if any, of:
. the Overconcentration Amount on that determination date; over
. the Incremental Default Amount for that determination date.
"Trust Invested Amount" means, for any calendar month, the sum of:
. the Invested Amount; and
. the invested amounts for all other outstanding series.
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Annex I
Other Series
This Annex I sets forth certain characteristics of Series [ ].
Initial principal balance ............ $[ ]
Scheduled interest payment dates ..... The fifteenth day of each month (or,
if that day is not a business day,
the next succeeding business day)
Current outstanding principal
balance .............................. $[ ]
Revolving period ..................... [ ] to the earlier of (i) the
day immediately preceding the
accumulation period for that series
(which day could be [ ]) and
(ii) the business day immediately
preceding an Early Amortization
Period.
Expected final distribution date ..... [ ] distribution date
Termination date ..................... [ ] distribution date
I-1
<PAGE>
Distribution Financial Services Floorplan Master Trust
Issuer
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
$[ ] Asset Backed Certificates, Series [ ], [Class A]
$[ ] Asset Backed Certificates, Series [ ], [Class B]
______________________________
PROSPECTUS SUPPLEMENT
______________________________
[Name(s) of Underwriter(s)]
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with other
or different information.
We are not offering the certificates in any jurisdiction where the offer is not
permitted.
Until [ ], all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and regarding their unsold allotments or
subscriptions.
<PAGE>
Prospectus
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST
Issuer
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
ASSET BACKED CERTIFICATES
_______________________________________________________________________________
Consider carefully the discussion under "Risk Factors" beginning on page 4 of
this prospectus.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of the seller, the servicer, Deutsche Bank
AG, or any other person or entity. This prospectus and the accompanying
prospectus supplement together constitute the full prospectus for the
certificates of your series.
This prospectus may be used to offer and sell any series of certificates only if
accompanied by the prospectus supplement for that series.
_______________________________________________________________________________
The trust --
. may periodically issue asset backed certificates in one or more series with
one or more classes; and
. will own --
. receivables generated from time to time in a portfolio of revolving
credit arrangements with dealers, manufacturers or distributors to
finance inventory, accounts receivable or other assets;
. payments due on those receivables; and
. other property described in this prospectus and in the accompanying
prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the certificates or determined that
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.
________ __, ____
<PAGE>
Important notice about information presented in this
prospectus and the accompanying prospectus supplement
We provide information to you about the certificates in two separate documents
that progressively provide more detail: (a) this prospectus, which provides
general information, some of which may not apply to a particular series of
certificates, including your series, and (b) the accompanying prospectus
supplement, which describes specific terms of your series of certificates.
If the terms of your series of certificates vary between this prospectus and
the accompanying prospectus supplement, you should rely on the information in
the prospectus supplement.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement including the information incorporated by
reference. We have not authorized anyone to provide you with other or different
information. We are not offering the certificates in any jurisdiction where the
offer is not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and in the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
Some terms used in this prospectus are defined under the caption "Glossary"
beginning on page 43 in this prospectus.
<PAGE>
TABLE OF CONTENTS
[TO BE CONFORMED]
<TABLE>
<CAPTION>
Page
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<S> <C>
Summary........................................................................ 1
The Parties.................................................................... 1
Servicer................................................................... 1
Trustee.................................................................... 1
The Trust.................................................................. 1
The Certificates............................................................... 1
The Trust Assets............................................................... 2
Tax Status..................................................................... 2
ERISA Considerations........................................................... 2
Risk Factors................................................................... 2
Risk Factors................................................................... 3
Bankruptcy of DFS or the Seller Could Result in Losses
or Delays in Payments on the Certificates................................. 3
Prior Interests in Receivables Could Result in Losses or Delays in
Payments on the Certificates....................................... 5
Commingling by the Servicer May Result in Delays or Reductions in
Payments on the Certificates....................................... 5
Insolvency Laws May Adversely Affect the Collection of Receivables........... 5
Lack of Security Interest Could Result in Delays or Reductions in
Payments on the Certificates....................................... 5
Reduced Collections or Originations of Receivables Could Result in Early
Repayment, Delayed Payment or Reduced Payment of the Certificates.. 6
Potential Delays or Reductions in Payments on Certificates Due to
Addition of Accounts............................................... 6
Potential Delays or Reductions in Payments on Certificates Due to
Dependence of the Trust on DFS..................................... 7
Potential Delays and Losses on the Certificates Due to Decrease in
Sales of Products.................................................. 7
You May Not Be Able to Influence Actions of the Trust........................ 8
The Existence or Issuance of Additional Series May Adversely Affect
the Timing and Amounts of Payments on Certificates................. 8
Possible Delays and Reductions in Payments on Certificates Due to
Priority Differences Among the Classes............................. 8
Potential Delays or Reductions in Payments on Certificates Due to the
Ability of the Servicer to Change Payment Terms.................... 8
Deutsche Floorplan Receivables, L.P.
and Deutsche Floorplan Receivables, Inc............................ 10
Deutsche Floorplan Receivables, L.P.......................................... 10
Deutsche Floorplan Receivables, Inc.......................................... 10
The Trust ..................................................................... 11
Use of Proceeds................................................................ 11
The Dealer Floorplan Financing Business of DFS................................. 11
</TABLE>
i
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<TABLE>
<S> <C>
General...................................................................... 11
Credit Underwriting Process.................................................. 12
Creation of Receivables...................................................... 13
Payment Terms................................................................ 14
Floorplan Agreements with Manufacturers...................................... 15
Billing Procedures........................................................... 15
Dealer Monitoring............................................................ 15
Realization on Receivables................................................... 16
Asset Based Receivables...................................................... 16
Private Label Programs....................................................... 17
Participation Arrangements................................................... 17
Description of the Certificates................................................ 18
General...................................................................... 18
Principal and Interest on the Certificates................................... 18
Book-Entry Registration...................................................... 19
Definitive Certificates...................................................... 22
Supplemental Certificates.................................................... 23
New Issuances................................................................ 23
Uncertificated Series........................................................ 24
Representations and Warranties............................................... 25
The Overconcentration Amounts................................................ 26
Addition of Accounts......................................................... 27
Removal of Accounts; Transfers of Participations............................. 27
Collection Account........................................................... 28
Allocations Among Series..................................................... 28
Discount Factor.............................................................. 29
Allocation of Collections; Deposits in Collection Account.................... 29
Termination.................................................................. 30
Indemnification.............................................................. 30
Collection and Other Servicing Procedures.................................... 31
Servicer Covenants........................................................... 31
Servicing Compensation....................................................... 32
Certain Matters Regarding the Servicer....................................... 32
Servicer Default............................................................. 32
Evidence as to Compliance.................................................... 33
Amendments................................................................... 33
List of Certificateholders................................................... 34
The Trustee.................................................................. 34
Description of the Receivables Contribution and Sale Agreement................. 35
Sale or Transfer of Receivables.............................................. 35
Representations and Warranties............................................... 35
Certain Covenants............................................................ 36
Termination.................................................................. 37
Certain Legal Aspects of the Receivables....................................... 37
Transfer of Receivables...................................................... 37
Certain Matters Relating to Bankruptcy....................................... 38
Legal Matters.................................................................. 39
Reports to Certificateholders.................................................. 40
Where You Can Find More Information............................................ 40
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Glossary....................................................................... 41
U.S. Federal Income Tax Documentation Requirements............................. A-3
</TABLE>
iii
<PAGE>
Summary
This summary highlights selected information from this document. This
summary does not contain all of the information that you need to consider in
making your investment decision and is qualified by the more complete
descriptions contained in this prospectus and the accompanying prospectus
supplement. To understand all of the terms of an offering of the certificates,
you should read carefully this entire prospectus and the accompanying prospectus
supplement, including the information under "Risk Factors" in this prospectus
and the accompanying prospectus supplement.
The Parties
Seller..................... Deutsche Floorplan Receivables, L.P., a
Delaware limited partnership.
. The general partner of the seller is
Deutsche Floorplan Receivables, Inc., a
wholly-owned subsidiary of Deutsche
Financial Services Corporation.
. The limited partner of the seller is
Deutsche Financial Services Corporation.
Originator of the
Receivables................. Deutsche Financial Services Corporation:
. is a party to revolving credit
arrangements that give rise to
receivables; and
. transfers receivables to the seller
pursuant to a receivables contribution
and sale agreement.
Servicer.................... Deutsche Financial Services Corporation.
Trustee..................... ___________________________.
The Trust................... Distribution Financial Services Floorplan
Master Trust. The trust was formed pursuant
to a pooling and servicing agreement among
the seller, the servicer and the trustee. The
trust is a master trust and will engage in
the following activities:
. acquiring and holding accounts and
related assets;
. issuing and making payment on the
certificates; and
. activities which are incidental to or
relating to the foregoing.
The Certificates Each prospectus supplement will describe the
certificates that are being offered to
investors at that time. The offered
certificates will include one or more classes
of certificates issued pursuant to a
supplement to the pooling and servicing
agreement. This prospectus and the
accompanying prospectus supplement sometimes
refer to the certificates issued pursuant to
a supplement as a series. This prospectus and
the accompanying prospectus supplement may
not offer all classes of a
1
<PAGE>
series. Instead, the seller may retain one or
more classes and may sell one or more classes
in private placements.
The Trust Assets The assets of the trust include receivables
generated from time to time under revolving
credit arrangements that we call accounts.
The assets of the trust also include all of
the seller's right, title and interest in:
. all security interests purporting to
secure payment of the receivables, and
all agreements or arrangements
supporting or securing payment of the
receivables;
. all documents, books and records
relating to the receivables; and
. monies due or to become due on the
foregoing.
The seller may remove accounts that it
transferred to the trust.
The trust's assets will be allocated among
the seller and the certificateholders of all
series.
Tax Status The related prospectus supplement contains
information concerning the application of the
federal income tax laws, including whether
the certificates of your series will be
characterized as debt for federal income tax
purposes.
ERISA Considerations The related prospectus supplement contains
information concerning whether the
certificates of your series are eligible for
purchase by employee benefit plans.
Risk Factors You should consider the factors set forth
under "Risk Factors" beginning on page 3 of
this prospectus.
2
<PAGE>
Risk Factors
In addition to the other information contained in this prospectus and the
prospectus supplement, you should consider the following risk factors, and the
"Risk Factors" set forth in the prospectus supplement, in deciding whether to
purchase certificates. The disclosure below and in the "Risk Factors" set forth
in the prospectus supplement summarize material risks of investing in the
certificates. The summary does not purport to be complete; to fully understand
and evaluate it, you should also read the rest of this prospectus and the
related prospectus supplement.
Bankruptcy of DFS or the Seller DFS has warranted to the seller in the
Could Result in Losses or Delays receivables contribution and sale
in Payments on the Certificates agreement that the initial contribution and
subsequent sales of the receivables by it to
the seller are valid transfers of the
receivables to the seller. However, if DFS
were to become a debtor in a bankruptcy case,
a bankruptcy trustee or creditor of DFS, or
DFS as debtor in possession, may take the
position that the transfer of the receivables
to the seller should be characterized as a
pledge of the receivables. If so, the trustee
for the trust would be required to go through
bankruptcy court proceedings to establish its
rights to collections on the receivables in
the trust, and, if the transfer were held to
be a pledge, to establish the amount of
claims secured by the pledge. These
proceedings could result in delays and
possibly reductions in payments to you.
Likewise, if the seller were to become a
debtor in a bankruptcy case and a bankruptcy
trustee or creditor of the seller or the
seller as debtor in possession were to take
the position that the transfer of the
receivables from the seller to the trust
should be characterized as a pledge of those
receivables, then delays and reductions in
payments on the certificates could result.
Payments for 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 those payments are made
within one year prior to the filing of a
bankruptcy case relating to DFS or the
seller.
If the seller, the servicer or DFS were to
become the subject of bankruptcy proceedings,
an early amortization event would occur for
all outstanding series. Under the terms of
the relevant agreements:
. the bankruptcy of the seller and the
involuntary bankruptcy of DFS may result
in no new receivables being transferred
to the trust; and the bankruptcy of the
seller will result in the trustee of the
trust selling the receivables unless
holders of more than 50% of the investor
interest of each class of outstanding
certificates gave the trustee other
instructions. The trust would then
terminate earlier than planned and you
could have a loss if the sale of the
receivables produced insufficient net
proceeds to pay you in full.
The bankruptcy court may have the power:
3
<PAGE>
. regardless of the terms of the relevant
agreements, (a) to prevent the beginning
of an early amortization period, (b) to
prevent the early sale of the
receivables and termination of the trust
or (c) to require new receivables to
continue being transferred to the trust;
or
. regardless of the instructions of the
certificateholders, (a) to require the
early sale of the trust's receivables,
(b) to require termination of the trust
and retirement of the certificates,
including the certificates of your
series, or (c) to prohibit the continued
transfer of receivables to the trust.
There is a time delay between the servicer's
receipt of collections and its deposit of
those collections in a deposit account of the
trust. If the servicer becomes the subject of
bankruptcy proceedings, the trustee's claim
to collections in the servicer's possession
at the time of the bankruptcy filing may not
be perfected. In this event, funds available
to pay principal and interest on your
certificates may be reduced.
If the servicer becomes insolvent, the
bankruptcy court might have the power to
prevent either the trustee or the holders of
certificates from appointing a new servicer.
In this event, the ability of the servicer to
service the receivables could be impaired by
its bankruptcy and its actions would be
supervised by a court, which could cause
delays or reductions in payments to you.
In addition, in a case decided by United
States Court of Appeals for the Tenth Circuit
in 1993, the court said, in effect, that
accounts transferred by a seller to a buyer
would remain property of the debtor's
bankruptcy estate. If, following a bankruptcy
of DFS or the seller, a court were to follow
the reasoning of the court in that case,
delays and reductions in payments on your
certificates could result.
If DFS were to become a debtor in a
bankruptcy case and a creditor or trustee-in-
bankruptcy of that debtor or that debtor
itself were to request a bankruptcy court to
order that DFS be substantively consolidated
with the seller, delays and reductions in
payments on your certificates could result.
In addition, if an insolvency event were to
occur involving DFS, any delayed funding
receivables that had not yet been funded may
not become funded and may be executory
contracts that can be disaffirmed by the
trustee-in-bankruptcy of DFS, in which case
the related dealers would no longer be
obligated to pay those delayed funding
receivables, which the trust has already paid
for. A delayed funding receivable is a
receivable for which the related agreement
permits DFS to delay payment of the purchase
price of the related product to the
manufacturer for a specified period after the
invoice date for the product.
Prior Interests in Receivables The receivables contribution and sale
Could Result in Losses or Delays agreement provides for the transfer of
in Payments on the Certificates receivables by DFS to the seller. The pooling
and servicing agreement provides for the
transfer of receivables by the
4
<PAGE>
seller to the trust. However, a court could
conclude that the government or other persons
or entities have a lien or other interest in
the receivables with priority over the
trust's interest. Claims of the government or
other persons or entities in the receivables
could reduce or delay the collections on the
receivables available for distribution to
you.
For example, if a court concludes that the
transfer by DFS to the seller, or the
transfer by the seller to the trust, is only
a grant of a security interest in the
receivables, some liens on the property of
DFS or the seller arising before new
receivables come into existence may take
priority over, and may be entitled to be paid
before, the interest of the seller or the
trust in those receivables. Those liens
include a tax or government lien or other
liens permitted under the law without the
consent of DFS or the seller.
Commingling by the Servicer May The pooling and servicing agreement allows
Result in Delays or Reductions the servicer to retain collections received
in Payments on the Certificates from the receivables. So long as rating
agencies that have rated outstanding series
have approved of the retention of collections
by the servicer, the servicer does not have
to deposit collections into the collection
account until the related distribution date.
Until the servicer deposits payments on the
receivables into the collection account, the
servicer may use those funds for its own
benefit and will not segregate those funds
from its own assets, and the proceeds of any
investment of those 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 collections on the
receivables. If the servicer became
insolvent, the servicer's failure to deposit
collections in the collection account may
result in delays or reductions in payments on
your certificates.
Insolvency Laws May Adversely If a customer of DFS becomes bankrupt or
Affect the Collection of insolvent, federal and state bankruptcy and
Receivables debtor relief laws may result in delays or
reductions in payments due on those
receivables and, in turn, could result in
reductions or delays in payments to you.
Lack of Security Interest The seller has represented and warranted in
Could Result in Delays or the pooling and servicing agreement that each
Reductions in Payments on receivable is at the time of creation
the Certificates generally secured by a first priority
perfected security interest in the related
product, account receivable or other asset.
. However, receivables arising in an
account for which the payment terms are
on a scheduled payment plan basis and
whose maximum credit limit is at or
below $250,000 need not be secured by a
first priority security interest if the
account was in the trust at or before
March 1994 -- although after March 1994,
the first priority requirement can be
waived for particular accounts with
requisite credit approval. The failure
of these accounts to be secured by a
first priority security interest will
not constitute a breach of the seller's
representation and warranty as to
perfection matters.
5
<PAGE>
. Even if a receivable is secured by a
product held by a dealer, DFS's security
interest in the product will terminate
at the time that the product is sold. If
the dealer is not required to remit, or
fails to remit, to DFS amounts owed on
products that have been sold, the
related receivables will no longer be
secured by the products. As a result,
delays or reductions in the amounts of
collections on the related receivables
could occur and, in turn, delays and
reductions in payments to you could
occur.
Reduced Collections or You may suffer delays on reductions in
Originations of Receivables payments on your certificates because of the
Could Result in Early Repayment, performance of the dealers or the
Delayed Payment or Reduced receivables.
Payment of the Certificates
. The receivables arising from the
purchase of inventory are generally
payable by dealers either after retail
sale of the related product or, in some
cases, in accordance with a
predetermined schedule, whether or not
the product has been sold. The timing of
sales of products is uncertain and
varies depending on the product type.
. We refer to receivables payable in
accordance with a predetermined
schedule, regardless of whether the
product has been sold, as scheduled
payment plan receivables. If inventory
securing scheduled payment plan
receivables sells more quickly than
anticipated, then the receivables may,
from time to time, not be secured by
inventory. Conversely, when inventory
sells more slowly than anticipated,
scheduled payment plan receivables may
have the benefit of excess inventory
collateral.
. The relative portions of the trust's
pool of receivables made up of
receivables secured by products,
receivables secured by accounts
receivable and receivables secured by
other assets may vary over time and
cannot be predicted. 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.
. We cannot promise you 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
depends on dealer repayments, and
collections during the accumulation
period described in the related
prospectus supplement may not be
sufficient to fully amortize your
certificates on the date referred to
in the prospectus supplement.
In addition, a significant decline in the
amount of receivables generated could cause
an early amortization event and could result
in payment of your certificates sooner than
expected.
The receivables will be treated as being
transferred to the trust at a discount in
order to generate imputed interest
collections. Reductions in the payment rate
by dealers 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.
6
<PAGE>
Potential Delays or Reductions You may suffer delays or reductions in
in Payments on Certificates Due payments on your certificates because of the
to Addition of Accounts addition of accounts
. The seller may, and in some cases will
be obligated to, designate additional
accounts, the receivables in which will
be conveyed to the trust.
. Additional accounts may include accounts
originated under criteria different from
those which were applied to previously
designated additional accounts.
Additional accounts may also provide
financing for products of types
different from those included in the
trust at the time that your series is
issued.
. Additional accounts designated in the
future may not be of the same credit
quality, any may not relate to the same
types of products, as previously
designated accounts. If additional
accounts are not of the same credit
quality as previously designated
accounts or if new product types that
secure the receivables in new accounts
do not provide security that is as
favorable as that provided by existing
product types, then delays or reductions
in payments on your certificates could
result.
Potential Delays or Reductions You may suffer delays and reductions in
to the trust. Payments on payments on your certificates if DFS does not
Certificates Due to Dependence generate a sufficient level of receivables
of the Trust on DFS or if DFS does if DFS does not perform its
obligations as servicer or otherwise under
the pooling and servicing agreement, the
supplements or the receivables contribution
and sale agreement.
. The trust completely depends on DFS to
generate new receivables. DFS competes
with various other financing sources,
including independent finance companies,
manufacturer-affiliated finance
companies and banks, which are in the
business of providing financing
arrangements to dealers. Competition
from other financing sources may result
in a reduction in the amount of
receivables generated by DFS. We cannot
assure you that DFS will continue to
generate receivables at the same
rate as in prior years.
. In addition, if DFS were to cease acting
as servicer or to fail to perform its
obligations as servicer, delays in
processing payments on the receivables
and information relating to the trust
and its assets could occur and could
result in delays and reductions in
payments to you.
Potential Delays and Losses on You may suffer delays or reductions in
the Certificates Due to Decrease payments on your certificates due to
in Sales of Products decreased sales of products relating to the
receivables.
. DFS's ability to generate new
receivables, and a dealer's ability to
make payments on the receivables owned
by the trust, will depend on the sales
of the products relating to those
receivables. A variety of social and
economic factors will affect the level
of sales of products relating to the
receivables, including national and
regional unemployment levels and levels
of economic
7
<PAGE>
activity in general, interest rates and
consumer perceptions of economic
conditions.
. A reduction in sales of products of the
type that secure receivables would
reduce payments to the trust, which, in
turn, could result in delays or
reductions in payments to you.
You May Not Be Able to Influence You may be unable to influence or otherwise
Actions of the Trust control the actions of the trust, and, as a
result, you may be unable to stop actions
that are adverse to you.
. Certificateholders of any series or any
class within a series may need the
approval or consent of other
certificateholders, whether in the same
or a different series, to take or direct
various actions, including amending the
pooling and servicing agreement and
directing a reassignment of the entire
portfolio of receivables.
. In addition, following the occurrence of
an insolvency event involving 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 certificate
representing a portion of the seller's
interest in the trust], will be required
in order to direct the trustee not to
sell or otherwise liquidate the
receivables.
. The interests of the certificateholders
of any class or series may not coincide
with your interests, making it more
difficult for you to achieve your
desired results in a situation requiring
the consent or approval of other
certificateholders.
. In addition, the seller, the servicer
and the trustee may amend the pooling
and servicing agreement or the
supplement for your series without your
consent in the circumstances described
in this prospectus.
The Existence or Issuance of The existence or issuance of other series
Additional Series May Adversely could result in delays or reductions in
Affect the Timing and Amounts payments on your series. The trust has issued
of Payments on Certificates series before issuing your series. The trust
is expected to issue additional series--which
may be represented by different classes
within a series--from time to time without
your consent. The terms of any series may be
different from your series. It is a condition
to the issuance of each new series that each
rating agency that has rated an outstanding
series confirm in writing that the issuance
of the new series will not result in a
reduction or withdrawal of its rating.
However, a ratings confirmation does not
guarantee that the timing or amount of
payments on your series will remain the same.
Possible Delays and Reductions Each class of certificates of a series may
in Payments on Certificates Due have a different priority in the ranking of
to Priority Differences Among payments of principal and interest. Because
the Classes of this priority structure, if you hold a
class that is paid later than another class,
you bear more risk of loss than holders of
prior classes and you could experience delays
or reductions in payments on your
certificates.
8
<PAGE>
Potential Delays or Reductions The servicer will have the right to change
in Payments on Certificates Due the terms of the receivables--including
to the Ability of the Servicer payment terms, finance charges and other fees
to Change Payment Terms it charges. Changes in relevant law, changes
in the marketplace or prudent business
practice could lead the servicer to change
the terms of the receivables, which could
result in delays or reductions in payments on
your certificates.
For definitions of some of the terms used in this prospectus, see the "Glossary"
in this prospectus.
9
<PAGE>
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. 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 organized for limited purposes, which include:
. purchasing receivables from DFS and its affiliates;
. transferring receivables to third parties; and
. any activities incidental to and necessary or convenient for the
accomplishment of those purposes.
The seller has taken steps in structuring the transactions contemplated
hereby that are intended to reduce the likelihood that the voluntary or
involuntary application for relief by DFS under the United States Bankruptcy
Code or similar applicable state laws will not result in consolidation of the
assets and liabilities of the seller with those of DFS. For example, articles of
incorporation of the general partner of the seller:
. restrict the nature of the general partner's business;
. restrict the seller's ability to commence a voluntary case or proceeding
under the U.S. Bankruptcy Code without the unanimous affirmative vote of
all of its directors; and
. provide for the general partner to have not less than two directors
who qualify under the articles of incorporation as "independent
directors."
We cannot assure you that those steps will be sufficient to prevent the
consolidation of the seller and DFS.
If Additional Accounts are added to the trust, DFS may make 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 in 1993. Deutsche Floorplan Receivables,
Inc. 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 those 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 those purposes.
The principal executive offices of Deutsche Floorplan Receivables, Inc. are
located at Bank of America Plaza, 300 South Fourth Street, Suite 1100, Las
Vegas, Nevada 89101. The telephone number of those offices is (702) 385-1668.
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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 trust was formerly known
as Deutsche Floorplan Receivables Master Trust. The seller has transferred and
will transfer to the trust, without recourse, the receivables arising under
accounts. The property of the trust will consist of:
. receivables generated in any accounts in the trust or added to the trust
from time to time, excluding: (a) receivables paid or charged off; (b)
receivables in any accounts that are removed from the trust from time to
time; and (c) any undivided interest in the receivables in some accounts
that have been transferred to a third party as described in this
prospectus under "The Dealer Floorplan Financing Business of DFS--
Participation Arrangements";
. an assignment of all the seller's rights and remedies under the
receivables contribution and sale agreement;
. funds collected or to be collected in respect of the receivables;
. funds on deposit in certain accounts of the trust;
. a security interest in the Collateral Security; and
. rights of the seller regarding the financed inventory under the
Floorplan Agreements.
See "Description of the Certificates" in this prospectus.
The property of the trust may include Enhancements for the benefit of a
particular series. Your series will not have any interest in any Enhancements
provided for the benefit of any other series.
Use of Proceeds
The net proceeds from the sale of each series will be paid to the seller as
consideration for the transfer of the receivables to the trust. The seller will
use those proceeds for general operating purposes, including the distribution of
those proceeds 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 Dealers in the
Floorplan Business and the Accounts Receivable Business.
The products financed within the Floorplan Business may include, among
others:
. computers and computer products;
. manufactured housing;
. recreational vehicles;
. boats and motors;
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. 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. Occasionally, specific
transactions under the Accounts Receivable Business are documented as sales of
receivables to DFS.
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 amounts of the advances are generally equal to 100% of the invoice
price of the product.
The A/R Receivables are secured by accounts receivable owed to the Dealer
against which an extension of credit was made and, in limited cases, by other
personal property, 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.
In the future, receivables in the trust may include receivables originated by
affiliates of DFS, on the condition that the Rating Agency Condition is
satisfied. References in this prospectus to originations by DFS will be deemed
to include originations by any affiliate of DFS if the Rating Agency Condition
is satisfied regarding the 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 that 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 those 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 on a weighing of the above factors. The Dealer credit
underwriting process of DFS also involves the use of a system that DFS
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refers to as the "expert credit system". The expert credit system employs
artificial intelligence technology to simulate the analytical approach of senior
underwriting personnel. By utilizing a standardized review process to analyze
credit information, the expert credit system adds greater consistency to
underwriting decisions across geographic areas and product lines. While all
Dealer applications are processed through the expert credit system, DFS does not
use the expert credit system 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.
The size and risk weighting of a credit line to a Dealer determines who in
DFS or above DFS must approve the credit line.
. Extensions of credit lines of more that $50,000,000 if secured and
$25,000,000 if unsecured may be approved by management of Deutsche Bank
AG.
. Extensions of credit up to $20,000,000 if secured and $5,000,000 if
unsecured may be approved by the president of DFS.
. Extensions of credit up to $10,000,000 if secured and $5,000,000 if
unsecured 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 $2,500,000.
. Less senior officers have lower levels of approval authority.
DFS reviews individual Dealer credit limits:
. prior to any increase in that credit limit;
. generally every 12 to 18 months; and
. after becoming aware that the Dealer is experiencing financial
difficulties or is in default on its obligations under its agreement
with DFS.
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.
. The agreement generally is for an unspecified period of time and creates
a discretionary line of credit, which DFS may terminate at any time in
its sole discretion. However, termination of a line of credit may be
limited by 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 the 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 that Dealer's program with DFS, as
described below.
In the case of Floorplan Receivables, advances made for the purchase of
inventory are most commonly arranged in the following manner: The Dealer will
contact the 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
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source, the Manufacturer will contact DFS to obtain an approval number
for the purchase order. At the time of that request, DFS will determine
whether:
. the Manufacturer is in compliance with its Floorplan Agreement;
. the Dealer is in compliance with its program with DFS; and
. the 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 the 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. These Delayed
Funding Receivables will be transferred to and paid for by the trust on the date
of the invoice, even though the receivables are not funded by DFS until a later
time -- that is, 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 when it receives the discounted
amount. Typically, in exchange for the float and income 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.
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 on any particular item of
inventory financed by DFS is due and payable only at the time sale of that 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 curtailment payments are owing on a unit, the
outstanding balance owing on that unit will remain fully payable if the unit is
sold. Pay-as-Sold programs are principally offered in the motorcycle,
manufactured housing, recreational 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 on the product line and the
particular inventory turns of the individual Dealer, the majority of these
payment terms are generally no longer than 90 days. Under a Scheduled Payment
Plan, the Dealer is obligated to make payments in accordance with an agreed on
schedule, regardless of when the item of inventory is actually sold. DFS offers
Scheduled Payment Plans principally in the computer, consumer
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electronics and other product lines where the individual inventory price is
relatively low, and the product inventory turn is relatively fast.
In the case of A/R Receivables, the Dealer is obligated to pay interest or
finance charges monthly. Principal repayment is due at the end of the term of
the credit facility, or, if earlier, when and to the extent principal
outstandings exceed Accounts Receivable at negotiated advance rates.
In the case of Asset Based Receivables, interest is payable monthly, while
principal is payable at 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.
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 floorplan or vendor agreement
("Floorplan Agreement") with the Manufacturer of the product. Pursuant to the
Floorplan Agreement, the Manufacturer will agree, among other matters, to
purchase from DFS those products sold by the Manufacturer to a Dealer and
financed by DFS if DFS acquires possession of the 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 repurchase obligations of Manufacturers 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 of
that product.
. On occasion, different terms may be negotiated. The 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 will apply.
. Some Floorplan Agreements may also eliminate the repurchase obligation
or reduce the purchase price payable by the Manufacturer, depending on
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 those 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 of more than $10,000,000 and less
frequently in the case of other Manufacturers.
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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 that
statement by the 15th of that 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.
. Floorchecks are performed by field service representatives who are
specially trained to audit Dealer inventory. DFS has developed a
computerized field audit communications network providing field service
representatives 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 a field service
representative, are promptly reported to regional office management.
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, field service representatives 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
If a Dealer has defaulted in its obligations to DFS under the related
financing agreement:
. After expiration of any and all applicable notice and cure periods that
may have been agreed to between DFS and that Dealer, DFS may declare the
Dealer's obligations immediately due and payable and enforce all of its
legal rights and remedies, including commencement of proceedings to
foreclose on any collateral, limited by the prevailing standards of
commercial reasonableness and good faith.
. After learning of the 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, those disputes
may be submitted to arbitration. If DFS determines that 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 A/R Receivables. In the case of A/R Receivables, DFS attempts to
collect directly from the obligors on the accounts receivable; for some
accounts relating to A/R Receivables, DFS will already control the
collection of accounts receivable through the use of lockboxes.
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. 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.
See "The Accounts--Loss Experience" in the prospectus supplement.
Asset Based Receivables
Asset Based Receivables arise from asset based revolving credit facilities
provided to some Dealers and Manufacturers.
. 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 the line of credit or a
specifically negotiated loan availability amount. The loan availability
amount is determined by multiplying agreed 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 normally are not supported by a Floorplan Agreement with a
Manufacturer.
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; and
. MicroAge Commercial Credit, to provide financing to Dealers of products
manufactured or sold by MicroAge Computer Centers, Inc. --computer
products.
The Manufacturer may or may not have an equity participation in certain of
the receivables funded by those 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.
. 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
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agree to provide a portion of the funding for that facility in exchange
for an agreed interest rate. Occasionally, fees and other charges may
also be shared with the participant.
. In some situations, if participants cease to participate, the size of
the credit facility may be reduced.
. 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, limited by substantially the same limitations that apply
to the removal of accounts, the seller may cause the trust to transfer
an interest in some receivables to the seller, which may thereafter
transfer that 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.
Description of the Certificates
General
The certificates will be issued in series. Each series will represent an
interest in [some of the assets of] the trust. Each series will be issued
pursuant to the pooling and servicing agreement, as supplemented by the
supplement for that series. The pooling and servicing agreement, in the form in
effect at the time that the registration statement became effective, and a form
of supplement have been filed as exhibits to the Registration Statement of which
this prospectus is a part. A copy of the supplement relating to a series will
be filed with the Securities and Exchange Commission following issuance of the
related series. The following summary describes certain terms of the pooling
and servicing agreement and supplement, but it does not purport to be complete
and is qualified in its entirety by reference to the pooling and servicing
agreement and each supplement. See also "Description of the Certificates" in
the related prospectus supplement.
The certificates will evidence undivided interests in [some of the assets
of] the trust representing the right to receive from the trust funds up to, but
not more than the amounts required to make payments of interest on and principal
of the certificates.
Each class of certificates offered by this prospectus and the related
prospectus supplement will initially be represented by one or more certificates
registered in the name of the nominee of The Depository Trust Company, except as
set forth below. The offered certificates will be available for purchase in
minimum denominations of $1,000 and integral multiples in book-entry form. The
seller has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the holder of record of the offered
certificates. No certificate owner will be entitled to receive a certificate
representing that person's beneficial interest in the offered certificates.
Unless and until definitive certificates are issued under the limited
circumstances described in this prospectus, all references in this prospectus or
the prospectus supplement to actions by certificateholders will refer to actions
taken by DTC on instructions from its participants, and all references in this
prospectus or the prospectus supplement to distributions, notices, reports and
statements to certificateholders will refer to distributions, notices, reports
and statements to Cede & Co., as the registered holder of the offered
certificates. See "--Book-Entry Registration" and "--Definitive Certificates"
below.
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Principal and Interest on the Certificates
The timing and priority of payment, seniority, interest rate and amount of
or method of determining payments of principal and interest, and any other
payments, if so specified in the related prospectus supplement, on each class of
certificates will be described in the related prospectus supplement. Each
prospectus supplement will specify the dates on which payments will be made,
which may be monthly, quarterly or otherwise.
The right of holders of any class of certificates to receive payments of
principal and interest, and any other payments, if so specified in the related
prospectus supplement, may be senior or subordinate to the rights of holders of
any other class or classes of certificates of the series, as described in the
related prospectus supplement. If provided in the related prospectus supplement,
a series may include one or more classes of certificates entitled to (a)
principal payments with disproportionate, nominal or no interest payments or (b)
interest payments with disproportionate, nominal or no principal payments. Each
class of certificates may have a different interest rate, which may be a fixed,
variable or adjustable interest rate, and which may be zero for certain classes
of certificates, or any combination of the foregoing. The related prospectus
supplement will specify the interest rate or the method for determining the
interest rate for each class of certificates of a given series. One or more
classes of certificates of a series may be redeemable in whole or in part under
the circumstances specified in the related prospectus supplement.
In the case of a series of certificates which includes two or more classes
of certificates, the sequential order and priority of payment in respect of
principal and interest of each class, if any, will be set forth in the related
prospectus supplement.
One or more classes of the related series of certificates may be entitled
to receive principal payments prior to the receipt of principal payments by
other classes of that series.
One or more classes of a series of certificates may have principal payment
schedules which are fixed or based on targeted schedules derived by assuming
differing prepayment rates. One or more classes of the related series of
certificates may be designated to receive principal payments on a distribution
date only if principal payments have been made to another class of certificates,
and to receive any excess payments over the amount required to be paid to
another class of certificates.
Book-Entry Registration
Certificate owners may hold their interests in the offered certificates
through DTC, in the United States, or Cedel Bank or the Euroclear System, in
Europe, if they are participants in those systems, or indirectly through
organizations that are participants in those systems. Cede & Co., as nominee for
DTC, will hold the offered certificates. Cedel and Euroclear will hold omnibus
positions on behalf of their respective participants, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries. The depositaries in turn will hold the positions in
customers' securities accounts in the depositaries' names on the books of DTC.
DTC has advised us and the underwriters that it is:
. a limited-purpose trust company organized under the New York Banking
Law;
. a "banking organization" within the meaning of the New York Banking Law;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
. a "clearing agency" registered under the provisions of Section 17A of
the Exchange Act.
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DTC holds securities for its participants and facilitates the clearance and
settlement among its participants of securities transactions, including
transfers and pledges, in deposited securities through electronic book-entry
changes in its participants' accounts. This eliminates the need for physical
movement of securities certificates. DTC participants include securities brokers
and dealers, banks, trust companies, clearing corporations and other
organizations. Indirect access to the DTC system is also available to others
including securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a participant, either directly
or indirectly. The rules applicable to DTC and its participants are on file
with the Securities and Exchange Commission.
Transfers between participants on the DTC system will occur in accordance
with DTC rules. Transfers between participants on the Cedel system and
participants on the Euroclear system will occur in accordance with their 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 by DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by that system's depositary. However, these cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in that 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
their system's depositary.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date. The credits for any transactions in these
securities settled during this processing will be reported to the relevant Cedel
participant or Euroclear participant on that business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
participant or a Euroclear participant to a DTC participant will be received and
available on the DTC settlement date. However, it will not be available in the
relevant Cedel or Euroclear cash account until the business day following
settlement in DTC.
Purchases of offered certificates under the DTC system must be made by or
through DTC 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 DTC participants' and
indirect participants' records. Certificate owners will not receive written
confirmation from DTC of their purchase. However, certificate owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the DTC participant or
indirect participant through which the 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 DTC participants acting on
behalf of certificate owners. Certificate owners will not receive certificates
representing their ownership interest in offered certificates unless use of the
book-entry system for the offered certificates is discontinued.
To facilitate subsequent transfers, all securities deposited by DTC
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. effects no change in beneficial ownership. DTC has no knowledge of the
actual certificate owners of the offered certificates; DTC's records reflect
only the identity of the DTC participants to whose accounts the offered
certificates are credited, which may or may not be the actual beneficial owners
of the certificates. The DTC participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC participants,
by DTC participants to indirect participants, and by DTC participants and
indirect participants to certificate owners will be governed by
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arrangements among them and by any statutory or regulatory requirements as may
be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote on behalf of 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 & Co.'s
consenting or voting rights to those DTC participants to whose accounts the
offered certificates are credited on the record date, identified in a listing
attached the proxy.
Principal and interest payments on the offered certificates will be made to
DTC. DTC's practice is to credit its 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
that distribution date. Payments by DTC participants to certificate owners will
be governed by standing instructions, customary practices, and any statutory or
regulatory requirements as may be in effect from time to time. These payments
will be the responsibility of the DTC participant and not of DTC, the trustee or
the seller. Payment of principal and interest to DTC is the responsibility of
the trustee, disbursement of the payments to DTC participants is the
responsibility of DTC, and disbursement of the payments to certificate owners is
the responsibility of DTC participants and indirect participants.
DTC may discontinue providing its services as securities depository for the
offered certificates at any time by giving reasonable notice to the seller or
the trustee. Under these circumstances, if a successor securities depository is
not obtained, definitive certificates are required to be printed and delivered.
The seller and, after the occurrence of a Servicer Default, a specified
percentage of each class of certificate owners may decide to discontinue use of
the system of book-entry transfers through DTC or a successor securities
depository. In that event, definitive certificates will be delivered to
certificate owners. See "--Definitive Certificates."
DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent on calendar dates, including dates
before, on, and after January 1, 2000, may encounter Year 2000 problems. DTC has
informed its participants and other members of the financial community that it
has developed and is implementing a program so that its systems continue to
function appropriately, as the same relate to the timely payment of
distributions to securityholders, book-entry deliveries, and settlement of
trades within DTC.
DTC's ability to perform properly its services is also dependent on other
parties, including issuers and their agents, DTC's direct and indirect
participants, third party vendors from whom DTC licenses software and hardware,
and third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers.
DTC has informed members of the financial community that it is contacting, and
will continue to contact, third party vendors from whom DTC acquires services
to: (1) impress on them the importance of these services being Year 2000
compliant; and (2) determine the extent of their efforts for Year 2000
remediation and testing of their services.
According to DTC, the foregoing information about DTC has been provided for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations 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. Transactions may be settled in Cedel in any of 32 currencies,
including United States dollars.
Cedel participants are financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, and
clearing corporations. Indirect access to Cedel is also available to others,
including banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedel participant, either directly or
indirectly.
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The Euroclear System was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment. This
eliminates the need for physical movement of certificates. Transactions may be
settled in any of 32 currencies, including United States dollars.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, the Euroclear operator, under contract with
Euroclear Clearance System, Societe Cooperative, a Belgium cooperative
corporation, the Euroclear 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
Euroclear cooperative. The board of the Euroclear cooperative establishes policy
for the Euroclear System.
Euroclear participants include banks -- including central banks --
securities brokers and dealers and other professional financial intermediaries.
Indirect access to the Euroclear System is also available to other firms that
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
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. These terms and conditions
govern transfers of securities and cash within the Euroclear System, withdrawal
of securities and cash from the Euroclear System, and receipts of payments for
securities in the Euroclear System. All securities in the Euroclear System are
held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear operator acts under these
terms and conditions only on behalf of Euroclear participants and has no record
of or relationship with persons holding through Euroclear participants.
Distributions on the offered certificates held through Cedel 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. These distributions must be reported for
tax purposes in accordance with United States tax laws and regulations. Cedel or
the Euroclear operator, as the case may be, will take any other action permitted
to be taken by a certificateholder on behalf of a Cedel participant or Euroclear
participant only in accordance with its rules and procedures, and depending on
its depositary's ability to effect these actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of offered certificates among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue to
perform these procedures and these procedures may be discontinued at any time.
Definitive Certificates
Certificates issued in fully registered, certificated form are referred to
in this prospectus as "definitive certificates". Certificates will be issued as
definitive certificates, rather than to DTC or its nominee, only if:
. the seller advises the trustee in writing that DTC is no longer willing
or able to properly discharge its responsibilities as Depository
regarding the offered certificates, as applicable, and the trustee or
the seller is unable to locate a qualified successor;
. the seller, at its option, elects to terminate the book-entry system
through DTC regarding that class; or
. after the occurrence of a Servicer Default, certificateholders, as
applicable, representing not less than 50% of the aggregate unpaid
principal amount of those certificates advise the trustee for the trust
and advise and DTC through clearing agency 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 those certificateholders.
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If any of these events occurs, DTC is required to notify all of its
participants of the availability through DTC of definitive certificates. At the
time of surrender by DTC of the certificate or certificates representing the
outstanding certificates and instructions for re-registration, the trustee will
issue those certificates, as applicable, in the form of definitive certificates,
and thereafter the trustee will recognize the holders of those definitive
certificates as certificateholders under the pooling and servicing agreement.
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 in this prospectus and in the pooling and servicing agreement. See
"Description of the Certificates--Distributions" in the prospectus supplement.
. Distributions on each distribution 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 each
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 after
presentation and surrender of the certificate on the final payment date
at office or agency that is specified in the notice of final
distribution to certificateholders. The trustee will provide that notice
to registered certificateholders not later than the fifth day of the
month of the final distribution.
. The trustee will pay to the seller any monies held by it for the payment
of principal or interest that remain unclaimed for two years after that
notice. After that payment to the seller, certificateholders entitled to
the money must look to the seller for payment as general creditors
unless an applicable abandoned property law designates another person.
Definitive certificates will be transferable or exchangeable at the offices
of the trustee, which will initially be [ ]. The trustee will not impose a
service charge 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 in the trust for a
supplemental certificate for transfer or assignment to a person designated by
the seller at the time of execution and delivery of a supplement to the pooling
and servicing agreement, which supplement will be limited by 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:
. the seller will after giving effect thereto have an interest in the
Pool Balance of not less than 2% of the Pool Balance,
. the seller will have delivered to the trustee, each rating agency and
any Enhancement Provider a Tax Opinion regarding that exchange and
. the seller will have delivered to the trustee evidence of satisfaction
of the Rating Agency Condition.
[The pooling and servicing agreement will permit the seller's interest in
the trust to be uncertificated rather than represented by a physical
certificate. All references in this prospectus or the related prospectus
supplement to the "seller's certificate" will be deemed to refer to an
uncertificated interest of the seller in the trust.]
The seller's interest in the trust is not being offered by this prospectus
or any prospectus supplement.
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New Issuances
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, the following type of terms for any series, not all of which will
necessarily be applicable to each series:
. the name or designation for the series;
. its initial principal amount, if applicable;
. its interest rate or the method for determining its interest rate;
. a date on which it will begin its amortization period or controlled
amortization period, if any;
. the method for allocating principal and interest, if applicable, to
certificateholders;
. the percentage used to calculate monthly servicing fees;
. the issuer and terms of any Enhancement, if applicable, for the series
or the level of subordination provided by the seller's interest;
. if applicable, the terms on which the certificates of that series may be
exchanged for certificates of another series, be repurchased, redeemed
in an optional redemption or mandatory redemption by the seller or be
remarketed by any remarketing agent;
. the series termination date; and
. any other terms permitted or not prohibited by the pooling and
servicing agreement.
The seller may offer any series under a prospectus or other disclosure
document in transactions either registered under the Securities Act of 1933 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.
Each series may have 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.
Also, different series may have the benefits of different forms of Enhancement
issued by the same or different entities. A series need not have an accumulation
period.
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. Your series will not have any interest in any
Enhancements provided for the benefit of any other series. The pooling and
servicing agreement also provides that the seller may specify different interest
rates and monthly servicing fees for 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 on which
a series, or classes within a series, may be repurchased by the seller.
A new series may be issued at any time if the conditions specified in the
pooling and servicing agreement are satisfied.
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The trust may issue one or more series that represent an interest in a
limited portion of the trust assets. For example, the trust may issue a series
that represents an interest only in the portions of receivables that exceed
specified concentration limits.
Uncertificated Series
Notwithstanding the references in this prospectus and the prospectus
supplement to certificates of a series, any series may be issued in
uncertificated form--that is, without being evidenced by a certificate of any
kind. This is in addition to, and not the same as, the fact that certificates
of a series may be issued in book-entry form and held through DTC, Cedel Bank or
the Euroclear System.
All references in this prospectus or the related prospectus supplement (a)
to a series of certificates will be deemed to refer also to an uncertificated
series, and (b) to certificateholders of a series will be deemed to refer also
to the holder or holders of an uncertificated series.
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:
. as of the Initial Cut-Off Date and each Series Issuance Date, or, in the
case of an Additional Account, as of the Additional Cut-Off Date, and
the Addition Date, each account or Additional Account was or is an
Eligible Account or, if it was or is an Ineligible Account on that date,
that account is being removed from the trust in accordance with the
requirements of the pooling and servicing agreement;
. 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 any Transfer Date,
each receivable conveyed to the trust is an Eligible Receivable except
as provided in the pooling and servicing agreement;
. each receivable and all Collateral Security conveyed to the trust 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
. all appropriate consents and governmental authorizations required to be
obtained by the seller in connection with the conveyance of each
receivable or Collateral Security have been duly obtained.
If the seller breaches any representation and warranty described in the
preceding paragraph and the breach remains uncured for 30 days or any longer
period as may be agreed to by the trustee, after the earlier to occur of the
discovery of that breach by the seller or the servicer or receipt of written
notice of that breach by the seller or the servicer, and that breach has a
material adverse effect on the certificateholders' interest in any receivable or
account, that receivable or, in the case of a breach relating to an account, all
receivables in the related account will be reassigned to the seller on the terms
and conditions set forth below and that account will no longer be included as an
account.
The applicable receivable will be reassigned to the seller on or before the
end of the calendar month in which that reassignment obligation arises by the
seller directing the servicer to deduct the principal balance of that
receivable, discounted by the Discount Factor for the calendar month preceding
that determination date, from the Pool Balance.
. In the event that the 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
that determination date -- on the date on which that reassignment is to
occur the seller will be obligated to make a deposit into the
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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, 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 the 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 regarding the 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 each Series Issuance Date:
. 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 the seller;
and
. 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 (a) the receivables and the Collateral Security,
whether then existing or thereafter created, (b) the receivables
contribution and sale agreement, and (c) the resulting proceeds --
including proceeds in any of the accounts established for the benefit of
the certificateholders -- and at the time of 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, at the time of creation of that receivable, the
trust will have a perfected ownership interest in that property.
In the event that the breach of any of the representations and warranties
described in the preceding paragraph has a material adverse effect on the
interests of the holders of the outstanding series, then either the trustee or
the holders of certificates of all outstanding series 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 Enhancement
Provider if given by certificateholders -- may direct the seller to accept the
reassignment of the certificateholders' interest in the trust within 60 days of
that notice, or within any longer period specified in that notice.
. The seller will be obligated to accept the reassignment of the
certificateholders' interest on a distribution date occurring within the
60-day period. The reassignment will not be required to be made,
however, if at the end of that period of time, the representations and
warranties will then be true and correct in all material respects and
any material adverse effect caused by that breach will have been cured.
. The portion of the price for the reassignment will be equal to the sum
of the amounts for each outstanding series specified for that portion in
the related supplement for those series. 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 in
the trust. The portion of funds allocable to the certificateholders'
interest in the trust will be distributed following 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 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.
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[The Overconcentration Amounts]
[The Available Subordinated Amount will be adjusted to reflect, on each
determination date, the aggregate principal amount of receivables in the trust
on that distribution date which are A/R Receivable Overconcentrations, Asset
Based Receivable Overconcentrations, Dealer Overconcentrations, Manufacturer
Overconcentrations, and Product Line Overconcentrations allocable to the
certificateholders' interest.
The seller, without the consent of any certificateholder, may change each
of the Overconcentrations to a level acceptable to each rating agency as long as
the Rating Agency Condition is satisfied.]
Addition of Accounts
The seller has the right to designate from time to time Additional Accounts
to be included in the trust if it satisfies the conditions set forth in the
pooling and servicing agreement. In addition, the seller is required to add the
receivables of Additional Accounts if either:
. the Pool Balance, exclusive of Delayed Funding Receivables, on the last
day of any calendar month is less than the Required Participation Amount
as of the following distribution date; or
. 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 that last
day.
In either case, unless insolvency events contemplated by the pooling and
servicing agreement have occurred involving the seller, the seller will be
required to transfer and assign to the trust, within 10 business days after the
end of the applicable calendar month, interests in all receivables arising in
the Additional Accounts, whether those receivables are then existing or
thereafter created.
Additional Accounts may not be of the same credit quality as the accounts
which are in the trust at the time the Additional Accounts are added to the
trust. Additional Accounts may have been originated by DFS at a later date
using credit criteria different from those which were applied to existing
accounts.
We cannot assure you that the seller would be able to, or would be
permitted to, add Additional Accounts to the trust at any particular time.
Removal of Accounts; Transfers of Participations
The seller will 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 on the Eligible Accounts to be removed. To
remove any Eligible Account and those amounts, the seller, or the servicer on
its behalf, will, among other things:
. on or before the fifth business day prior to the date of removal,
furnish to the trustee, any Enhancement Provider, and each rating agency
a written notice of removal specifying the removal date;
. on or before the fifth business day after the removal date, the seller
will have furnished to the trustee a computer file, microfiche list or
other list of the 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 that removed account and
the aggregate amount of receivables in that removed account;
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. represent and warrant that the removal of any 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;
. 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; and
. obtain evidence that the Rating Agency Condition has been satisfied.
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 the account -- the seller will commence the removal
of that account from the trust. However, all receivables existing in the
account -- other than an account that was 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, limited by the same limitations
described above regarding 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 the
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").
Funds in the collection account generally will be invested in investments
acceptable to each rating agency as being consistent with the then-current
rating of the certificates. 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.
Allocations Among Series
The supplement for each series will specify how collections of Non-
Principal Receivables and Principal Receivables, Defaulted Receivables and
Miscellaneous Payments will be allocated to that Series, between the
certificateholders' interest and the seller's interest, among the series in any
group and among the classes in any series. Amounts so allocated to any series
will not, except as specified in the related supplement, be available to any
other series.
On each distribution date, (a) the servicer will allocate Excess Principal
Collections, as described below, to each series as set forth in the related
supplement and (b) the servicer will instruct the trustee to withdraw from the
Collection Account and pay to the seller:
(1) an amount equal to the excess, if any, of (a) 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" for that distribution date over (b) the
aggregate amount, if any, for all
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outstanding series which the related supplements specify are "Principal
Shortfalls" for that distribution date; and
(2) without duplication, 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
for that distribution date;
provided, however, that, in the case of clauses (1) and (2), the amounts will be
paid to the seller only if the Pool Balance for that distribution date,
determined after giving effect to any Principal Receivables transferred to the
trust on that 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") will 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 that distribution date immediately following that 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 will be deemed to be
"Miscellaneous Payments".
Discount Factor
Finance charges are payable on the receivables generally. However, 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 those
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 the receivable is collected will be equal to the
product of the balance of the receivable times the Discount Factor in
effect at the time of the collection of the receivable.
Allocation of Collections; Deposits in Collection Account
The pooling and servicing agreement provides that the servicer, no later
than two business days after the processing date, will deposit all collections
received from the receivables, excluding, with certain exceptions, certain
portions thereof of those collections allocable to the seller, into the
collection account. However, for so long as:
. DFS remains the servicer under the pooling and servicing agreement;
. no Servicer Default has occurred and is continuing; and
. DFS arranges for and maintains a letter of credit or other form of
Enhancement for 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 DFS otherwise
obtains each rating agency confirmation described below, then DFS need
not deposit collections into the collection account until the business
day immediately preceding the date on which those funds are required to
be distributed to certificateholders, at which time DFS will make those
deposits in an amount equal to the net amount of those deposits and
withdrawals which would have been made had the conditions of this
sentence not applied
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Until collections are deposited into the collection account, the servicer
may use the collections for its own benefit, and the proceeds of any investment
of those collections will accrue to the servicer. So long as the servicer holds
collections and is permitted to use the collections for its own benefit, the
certificateholders are exposed 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.
In addition, during any calendar month 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 that calendar month.
If, at any time prior to that 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 the 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.
Termination
The trust will terminate on the earlier to occur of:
. 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 that time; and
. December 31, 2014.
At the time of 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.
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 agreement.
. However, that the trust or the trustee will not be so indemnified if
those acts or omissions constitute fraud, gross negligence, breach of
fiduciary duty or willful misconduct by the trustee.
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. 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 generally provides that, except as
described above, 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.
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
legal action which it may deem necessary or desirable for the benefit of
certificateholders regarding 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.
Pursuant to the pooling and servicing agreement, DFS covenants that it may
only change the terms relating to the accounts if:
. in the servicer's reasonable judgment, no Early Amortization Event will
occur as a result of the change; and
. 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 for each account.
Managerial and custodial services performed by the servicer on behalf of
the trust include:
. providing assistance in any inspections of the documents and records
relating to the accounts and receivables by the 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
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. 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:
. 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;
. it will not permit any rescission or cancellation of a receivable
except as ordered by a court of competent jurisdiction or other
government authority;
. it will do nothing to impair the rights of the certificateholders in
the receivables; and
. 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.
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
the noncompliance has not been cured within 30 days thereafter, or any 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 that receivable or all receivables in
that account, as applicable. That 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 that receivable plus accrued
and unpaid interest on that receivable in the collection account.
. The amount of the deposit will be deemed a Transfer Deposit Amount.
The purchase by the servicer constitutes the sole remedy available to the
certificateholders if that covenant or warranty of the servicer is not satisfied
and the trust's interest in any of those purchased receivables will be
automatically assigned to the servicer.
Servicing Compensation
The servicer's compensation for each series for its servicing activities
and reimbursement for its expenses will be a monthly servicing fee in an amount,
specified in the related prospectus supplement, payable in arrears on each
distribution date prior to the Termination Date.
Certain Matters Regarding the Servicer
The pooling and servicing agreement provides that servicer may not resign
from its obligations and duties under the pooling and servicing agreement,
except on determination that those duties are no longer permissible under
applicable law. No resignation of the servicer 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.
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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
receivables and the proceeds of those receivables and appoint a new servicer.
The rights and interest of the seller under the pooling and servicing agreement
in the seller's interest will not be affected by the appointment of a new
servicer.
The trustee will as promptly as possible appoint a successor servicer and
if no successor servicer has been appointed by the trustee and has accepted that
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 will pass to and be vested in the trustee.
Prior to any appointment of a new servicer, 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 more than the Servicing Fee plus certain excess
amounts payable to the seller.
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 of those obligations, 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 action will 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 if the Rating
Agency Condition is satisfied.
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:
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(1) to add, modify or eliminate provisions that 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,
and to the extent that those 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 that type of 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 that type of election, which may include
elimination of the sale of receivables should an insolvency event involving
the seller occur 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 the 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 that type of amendment occurs while the series issued by
the trust in 1996 is outstanding an opinion of counsel for the seller,
addressed and delivered to the trustee, will be required providing that the
amendment will not adversely affect in any material respect the interests
of any investor certificateholders of the series issued by the trust in
1996.
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. The amendment, however, may not:
(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 that series
or class; or
(e) reduce the percentage described above of the unpaid principal amount
of certificates the holders of which are required to consent to any
amendment, in the case of (a), (b) and (c) without the consent of the
holder of that certificate and, in the case of (e), without the consent of
all certificateholders of the adversely affected series.
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.
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List of Certificateholders
On written request of any three or more certificateholders of record the
trustee will afford those certificateholders access during business hours to the
current list of certificateholders for purposes of communicating with other
certificateholders about their rights under the pooling and servicing agreement.
See "--Book-Entry Registration" and "--Definitive Certificates" above.
The pooling and servicing agreement does not provide for any annual or
other meetings of certificateholders.
The Trustee
[ ], a [ ], 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 __________________________________. 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.
The pooling and servicing agreement does not require the trustee:
. to 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;
or
. 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.
For purposes of meeting the legal requirements of certain local
jurisdictions, the trustee will have the power to appoint a co-trustee or
separate trustees of all or a part of the trust. In the event of that type of
appointments, all rights, powers, duties and obligations will be conferred or
imposed on the trustee and the separate trustee or co-trustee jointly, or in any
jurisdiction in which the trustee will be incompetent or unqualified to perform
certain acts singly, on the separate trustee or co-trustee, who will exercise
and perform the 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 trustee under the
pooling and servicing agreement or if the trustee becomes insolvent. In those
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. The receivables contribution and sale agreement, in the form in
effect at the time that the registration statement became effective, was filed
as an exhibit to the registration statement. If affiliates of DFS originate
receivables and sell them to the seller for transfer to the trust, those other
affiliates will become parties to the receivables contribution and sale
agreement and make representations, warranties and covenants similar to those
described regarding DFS.
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Sale or Transfer of Receivables
Pursuant to the receivables contribution and sale agreement, DFS has
contributed or sold to the seller all of its 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. At the
time that the receivables contribution and sale agreement was entered into,
Deutsche Business Services Corporation was a party to the receivables
contribution and sale agreement and sold receivables to the seller. Since that
time, Deutsche Business Services Corporation has ceased to be an active
corporation and no longer sells receivables to the seller. However, the
receivables contribution and sale agreement has not been amended to remove
Deutsche Business Services Corporation as a party. 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.
Representations and Warranties
DFS has or will make representations and warranties to the seller to the
effect that, among other things, as of 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.
DFS has or will also make representations and warranties to the seller
relating to the receivables to the effect, among other things that:
. as of the Initial Cut-Off Date and each Series Issuance 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, the Additional Account is an Eligible
Account; and
. on the Initial Closing Date, each Additional Cut-Off Date and on each
Transfer Date, each receivable conveyed on that date is an Eligible
Receivable or, if that receivable is not an Eligible Receivable, the
receivable is conveyed to the seller.
In the event of a breach of the representation and warranty described in
the preceding sentence, which results in a transfer of the receivable to the
seller pursuant to the pooling and servicing agreement, then DFS will repurchase
the receivable from the seller on the date of that retransfer. The purchase
price for the Ineligible Receivable will be the face amount of that Ineligible
Receivable plus any accrued and unpaid interest thereon.
DFS has or will also make representations and warranties to the seller to
the effect, among other things, that as of the Initial Closing Date and each
Series Issuance Date:
. the receivables contribution and sale agreement constitutes a legal,
valid and binding obligation of DFS; and
. the receivables contribution and sale agreement constitutes a valid
sale or transfer to the seller of all right, title and interest of DFS
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 at the time of the creation
of that receivable.
If the breach of any of the representations and warranties described in the
preceding sentence results in the obligation of the seller under the pooling and
servicing agreement to accept retransfer of the receivables, DFS 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 that retransfer.
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DFS 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, DFS 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.
DFS has covenanted further that, except for the sale and conveyances under
the receivables contribution and sale agreement and the interests created under
Participations, DFS will not sell, pledge, assign or transfer any interest in
the receivables to any other person. DFS 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 of any of its representations, warranties or
covenants contained in the receivables contribution and sale agreement.
In addition, DFS has 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 becomes party to any bankruptcy
or similar proceeding, other than as a claimant, and, if that proceeding is not
voluntary and is not dismissed within 60 days of its institution, DFS will
immediately cease to sell or transfer receivables to the seller and will
promptly give notice of that event to the seller and to the trustee.
Certain Legal Aspects of the Receivables
Transfer of Receivables
Pursuant to the receivables contribution and sales agreement, DFS transfers
receivables to the seller and pursuant to the pooling and servicing agreement,
the seller transfers those receivables to the trust. The seller has represented
and warranted and will represent and warrant on the closing date for each series
that the transfer 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"
in this prospectus.
DFS and the seller have represented that the receivables are "chattel
paper", "accounts" or "general intangibles" for purposes of the UCC as in effect
in Missouri.
If the receivables are deemed to be chattel paper and the transfer of those
receivables by DFS 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
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 in that chattel paper.
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If the receivables are treated as accounts and the transfer of those
receivables by either DFS 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 in those accounts under the UCC in Missouri.
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 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 is not applicable and no further action under the UCC
as in effect in that state is required to protect the trust's interest from
creditors of DFS and the seller.
DFS has retained and will retain and will not deliver to the trustee
records or agreements relating to the receivables. 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. Any interest in receivables acquired
by the seller, and the trust, will be limited by the rights and defenses --
including rights of setoff -- of the applicable Dealer against DFS.
There are some circumstances under the UCC and applicable federal law in
which third parties could have an interest in the 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 -- that is,
the chattel paper -- in the ordinary course of that 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 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 that receivable. Statutory and
judgment liens arising under local law may also gain priority over claims of 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 involved in bankruptcy
proceedings, the certificateholders might incur a loss on collections not
deposited in the collection account. See "Risk Factors--Commingling By the
Servicer May Result in Delays or Reductions in Payment on the Certificates" in
this prospectus.
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 in the receivables and, with certain exceptions, proceeds of those
receivables. Nevertheless, a tax or government lien on property of DFS 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 that 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 the exercise of a right of set-off may take the form of not
funding a Delayed Funding Receivable owned by the trust and applying the funds
toward an obligation of the Manufacturer in respect of a receivable owned by DFS
or one of its affiliates. The Dealer obligated under that 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 that Delayed Funding Receivable.
Certain Matters Relating to Bankruptcy
DFS 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 and the seller
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have agreed to treat the transactions described in this prospectus as a sale of
the receivables to the seller, and DFS has and will take all actions that are
required under Missouri law to perfect the seller's ownership interest in the
receivables. Notwithstanding the foregoing, if DFS were to become a debtor in a
bankruptcy case and a creditor or trustee in bankruptcy of that debtor or that
debtor itself were to take the position that the sale of receivables from that
debtor to the seller should be recharacterized as a pledge of those receivables
to secure a borrowing from the debtor, then delays in payments of collections of
receivables to the seller could occur or, should the court rule in favor of any
trustee, debtor in possession or creditor, reductions in the amount of those
payments could result.
In addition, if DFS were to become a debtor in a bankruptcy case and a
creditor or trustee-in-bankruptcy of that debtor or that debtor itself were to
request a court to order that DFS should be substantively consolidated with the
seller, delays in payments on the certificates could result. Should the
bankruptcy court rule in favor of any creditor, trustee-in-bankruptcy or such
debtor, reductions in those payments could result.
If DFS were to become a debtor in a bankruptcy case prior to funding a
Delayed Funding Receivable, its trustee-in-bankruptcy or its creditors may
assert that the Delayed Funding Receivable is an executory contract and the
trustee-in-bankruptcy may disaffirm DFS's obligation to fund the receivable. A
disaffirmance would discharge the obligation of the Dealer on that Delayed
Funding Receivable to pay that receivable and the trust would suffer a loss in
respect of that receivable.
A limited partnership, like the seller, could become insolvent if its
general partner becomes insolvent -- which, in the case of the seller, is
Deutsche FRI. 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. However, 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 the
receivables, then delays in payments on the certificates or, should the court
rule in favor of the trustee, debtor in possession or creditor, reductions in
the amount of those payments could result.
If DFS or the seller were to become a debtor in a bankruptcy case, 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 those circumstances, the servicer is obligated to allocate
all Principal collections to the oldest principal balance first. If that
allocation method were to be altered by the bankruptcy court, the rate of
payment on the certificates might be adversely affected.
The occurrence of certain events of bankruptcy, insolvency or receivership
involving the servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in an Early Amortization Event. See "Description
of the Certificates--Early Amortization Events" in the prospectus supplement. If
no other Servicer Default other than the commencement of 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 if a court were to find, among
other things, that DFS received less than reasonably equivalent value or fair
consideration for those receivables and at the time of any transfers were
insolvent.
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 those
payments are made within one year prior to the filing of a bankruptcy case in
respect of DFS.
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Legal Matters
Naran U. Burchinow, Esq., General Counsel of DFS, will render an opinion
for the seller regarding certain legal matters relating to each series. Mayer,
Brown & Platt, Chicago, Illinois will render an opinion for the seller regarding
certain legal matters and certain federal income tax matters relating to each
series. Bryan Cave LLP, St. Louis, Missouri will render an opinion for the
seller regarding certain legal matters and certain Missouri tax matters relating
to each series.
Reports to Certificateholders
The servicer will prepare monthly and annual unaudited reports that will
contain information about the trust. The reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
Unless and until definitive Certificates are issued, the reports will be sent
only to Cede & Co. which is the nominee of DTC and the registered holder of the
offered certificates. See "Description of the Certificates--Book-Entry
Registration," and "--Evidence as to Compliance" in this prospectus and
"Description of the Certificates--Reports" in the prospectus supplement.
Where You Can Find More Information
We filed a registration statement relating to the certificates with the
Securities and Exchange Commission. This prospectus is part of the registration
statement, but the registration statement includes additional information.
You may read and copy any reports, statements or other information we file
with the Securities and Exchange Commission at the public reference room of the
Securities and Exchange Commission in Washington, D.C., New York, New York or
Chicago, Illinois. You can request copies of these documents, on payment of a
duplicating fee, by writing to the Securities and Exchange Commission. Please
call the Securities and Exchange Commission at (800) SEC-0330 for further
information on the operation of the public reference rooms. Our Securities and
Exchange Commission filings are also available to the public on the Securities
and Exchange Commission Internet site (http://www.sec.gov.).
The Securities and Exchange Commission allows us to "incorporate by
reference" information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus. Information that we file later with the Securities and Exchange
Commission will automatically update the information in this prospectus. In all
cases, you should rely on the later information over different information
included in this prospectus or the accompanying prospectus supplement. We
incorporate by reference any future reports and proxy materials filed by or on
behalf of the trust until we terminate our offering of the certificates.
As a recipient of this prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents -- unless
the exhibits are specifically incorporated by reference -- at no cost, by
writing or calling us at: Deutsche Financial Services Corporation, 655 Maryville
Centre Drive, St. Louis, Missouri 63141, Telephone (314) 523-3000, Attention:
General Counsel.
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Glossary
[To be conformed]
"Accounts Receivable" means, for any Dealer, all amounts shown on the
Dealer's records as amounts payable by a customer in respect of goods or
services sold by the Dealer to the customer.
"Accounts Receivable Business" means the extensions of credit made by DFS
or an Approved Affiliate to Dealers in order to finance the Accounts Receivable
of the Dealers.
"Accounts Receivable Financing Agreement" means an accounts receivable
financing agreement entered into by DFS or an Approved Affiliate with a Dealer
in connection with the Accounts Receivable Business with the Dealer, as amended
or modified from time to time.
"Addition Date" means [ ].
"Additional Accounts" means 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, or the Asset Based Lending
Business, which account is designated to be included as an Account in the trust.
"Additional Cut-Off Date" means, for Additional Accounts, the day specified
in accordance with the pooling and servicing agreement.
"Adjustment Payment" means a deposit in the collection account as described
below. If the servicer adjusts the amount of any receivable because of a rebate,
refund, credit adjustment or billing error to a Dealer, or because the
receivable relates to inventory which was refused or returned by a Dealer:
. the Seller's Participation Amount will be reduced by the amount of the
adjustment; and
. if following that 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 that determination date --the seller will
be required to deposit a cash amount equal to that deficiency -- up to
the amount of the adjustment -- into the collection account in
immediately available funds on the day on which that adjustment
occurs.
"Approved Affiliate" means any affiliate of DFS as to which the Rating
Agency Condition has been satisfied.
["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 calendar month immediately preceding the determination
date, over
(b) 20% of the Pool Balance on the last day of that immediately preceding
calendar month.]
"A/R Receivables" means receivables arising from the Accounts Receivable
Business.
"Asset Based Lending Business" means 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 the Dealer and secured by a first priority security
interest in the assets.
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"Asset Based Lending Financing Agreement" means 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 the Dealer, as amended or
modified from time to time.
["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 calendar month immediately preceding that
determination date, over
(b) 15% of the Pool Balance on the last day of that immediately
preceding calendar month.]
"Asset Based Receivables" means receivables arising from Asset Based
Lending Business.
"Automatic Addition Condition" will mean, for the addition of accounts
that:
. during the calendar quarter in which that addition occurs, the
number of new accounts for Dealers that are financing products of
the type already being financed by DFS and purchasing those
products from Existing Manufacturers does not exceed 5% of the
number of all accounts at the end of the preceding calendar
quarter,
. during the twelve months ending at the beginning of that calendar
quarter, the number of those new accounts does not exceed 20% of
the number of all accounts at the beginning of that twelve month
period,
. the average for the three months preceding the month of that
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 the
addition; and
. the annualized average for that 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 the addition.
"Collateral Security" for a Receivable generally includes the security
interest granted by or on behalf of the related Dealer with respect thereto.
"Dealer" means a person engaged generally in the business of purchasing
consumer or commercial products from a manufacturer or distributor of those
types of products and holding the 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 means,
(1) for any account with a Dealer other than a Specified Dealer,
the excess of:
(a) the aggregate amount of principal receivables in that
account on the last day of the calendar month immediately
preceding that determination date, over
(b) 2% of the Pool Balance on the last day of that immediately
preceding calendar month; and
(2) any account with a Specified Dealer, the excess of (a) the
aggregate amount of principal receivables in that account on the
last day of the calendar month immediately preceding that
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determination date over (b) 3% of the Pool Balance as of that
immediately preceding calendar month.]
"Defaulted Amount" on any determination date means an amount, which will
not be less than zero, equal to:
. 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
calendar month; less
. the full amount, exclusive of the discounted portion, of any Defaulted
Receivables which may be reassigned to the seller or purchased by the
servicer for that calendar month unless certain events of bankruptcy,
insolvency, or receivership have occurred regarding either of the
seller or the servicer, in which event the Defaulted Amount will not
be reduced for those Defaulted Receivables. The pooling and servicing
agreement provides that 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.
"Defaulted Receivables" on any determination date are:
(1) 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 those receivables to the trust
and which remained outstanding for any six consecutive determination
dates thereafter; and
(2) all receivables, other than all Ineligible Receivables, which were
charged off as uncollectible for the immediately preceding calendar
month.
DFS's charge-off policy is based on SAU/NSF aging.
. For "Pay-as-Sold" accounts, see "Description of the Dealer Floorplan
Financing Business of DFS--Payment Terms" in this prospectus,
receivables which are coded as SAU/NSF are charged off at the end of
the month in which those 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.
"Definitive Certificates" are defined under "Description of the
Certificates -- Definitive Certificates."
"Delayed Funding Receivable" means 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 the product. If the Rating Agency
Condition is satisfied, then the receivables referred to in the preceding
sentence will not be Delayed Funding Receivables and the provisions relating to
Delayed Funding Receivables will no longer be of any force or effect.
"Determination Date" means, for any distribution date, the day that is two
business days prior to the distribution date.
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"DFS" means Deutsche Financial Services Corporation, a Nevada corporation,
and its successors and assigns.
"Discount Factor" will be calculated as follows:
. If on any distribution date the Net Receivables Rate for that
distribution date less (1) the weighted average of the interest rates,
as determined below, for all outstanding series of certificates for
that distribution date less (2) the annualized Net Loss Rate -- as
defined in the pooling and servicing agreement --for the preceding
twelve calendar months is less than 1%, then the Discount Factor for
that distribution date will 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 (1) less the
rate in clause (2) will be equal to 1%; and the Discount Factor will
remain at the 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 will 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 will be the percentage
-- which will 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:
(1) if the interest rate on a class of certificates is
calculated as the lesser of (a) a fixed rate or a formula rate and (b)
the Net Receivables Rate, then the interest rate will be the rate in
clause (a); and
(2) if an interest rate swap agreement provides the interest
distributable on a series or class of certificates, then the interest
rate for the series or class of certificates will be the interest rate
payable to the related swap counterparty.
"Discount Portion" means, for a receivable, the portion of that receivable
equal to the product of the Discount Factor and the balance of the receivable.
"DTC" means The Depository Trust Company.
"Early Amortization Event" has the meaning set forth in the prospectus
supplement.
"Early Amortization Period" has the meaning set forth in the prospectus
supplement.
"Eligible Account" means 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:
. is in favor of a Dealer which is doing business in the United States
of America, including its territories and possessions, and 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,
. is in existence and maintained and serviced by DFS or an Approved
Affiliate and
. is an account in respect of which no amounts have been charged off as
uncollectible.
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Eligible Accounts include accounts in which another lender participates.
See "The Dealer Floorplan Financing Business of DFS--Participation Arrangements"
in this prospectus. Receivables arising in accounts in which another lender
participates include only DFS's undivided interest in the related advance and
not the undivided interest of the other lender.
"Eligible Deposit Account" means either:
. a segregated account with an Eligible Institution; or
. 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 -- or any domestic branch
of a foreign bank -- having corporate trust powers and acting as
trustee for funds deposited in that account, so long as any of the
securities of that 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:
. the corporate trust department of the trustee;
. a depository institution or trust company organized under the laws of
the United States or any one of the states, or a domestic branch of a
foreign bank, which at all times (1) has either (a) a long-term
unsecured debt rating acceptable to each rating agency or (b) a
certificate of deposit rating acceptable to each rating agency and (2)
is a member of the FDIC.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities of the type contemplated by the pooling and servicing agreement,
or 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" means each receivable:
. which was originated or acquired by DFS in the ordinary course of
business;
. which arose under an account that at that time was an Eligible
Account;
. which is owned by DFS at the time of sale or contribution by DFS to
the seller;
. which represents the obligation of a Dealer to repay an advance made
to or on behalf of the Dealer;
. which at the time of creation and at the time of transfer to the trust
is 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; however, the 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 that account was designated as an account on or
before the closing date for a series issued in 1994;
. 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;
. for which all consents and governmental authorizations required to be
obtained by DFS or the seller in connection with the creation of that
receivable or the transfer of that receivable to the trust or the
performance by DFS of the floorplan, accounts receivable, asset based
lending or unsecured receivable
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financing agreement pursuant to which that receivable was created,
have been duly obtained and are in full force and effect;
. as to which at all times following the transfer of that 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;
. which has been the subject of a valid transfer and assignment from the
seller to the trust of all the seller's interest in that receivable,
including any proceeds of that receivable;
. which will at all times be the legal and assignable payment obligation
of the related Dealer, enforceable against the Dealer in accordance
with its terms except as may be limited by applicable bankruptcy or
other similar laws;
. which at the time of transfer to the trust is not encumbered by any
right of rescission, setoff, or any other defense of the Dealer;
. as to which, at the time of transfer of the receivable to the trust,
DFS and the seller have satisfied all their respective obligations
regarding that receivable required to be satisfied at that time;
. as to which, at the time of transfer of the 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
in that receivable;
. 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; however, the financing agreement giving rise to
the receivable may, however, be subject by its terms, or by judicial
interpretation, to the laws of other states;
. which was transferred to the trust with all applicable governmental
authorizations; and
. if the receivable has the benefit of a Floorplan Agreement with a
Manufacturer, the Floorplan Agreement provides, except as otherwise
provided in that agreement -- which may vary among Floorplan
Agreements -- that the Manufacturer is obligated to repurchase the
products securing the receivable after the servicer repossesses the
products following the related Dealer's default. For a description of
Floorplan Agreements, see "The Dealer Floorplan Financing Business of
DFS--Floorplan Agreements with Manufacturers."
Delayed Funding Receivables will be Eligible Receivables. Delayed Funding
Receivables -- including any collections on those Delayed Funding Receivables
and Defaulted Amounts in respect of those Delayed Funding Receivables -- will
cease to be included in the trust on the day, if any, on which an Insolvency
Event in respect of DFS occurs.
"Enhancement" means the rights and benefits provided to the
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
will be deemed to be an Enhancement.
"Enhancement Agreement" means any agreement, instrument or document
governing the terms of any series Enhancement or pursuant to which any
Enhancement is issued or outstanding, as may be amended or modified from time to
time.
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"Enhancement Provider" means the provider of any Enhancement, other than
any certificateholders the certificates of which are subordinated to any series
or class.
"Existing Manufacturer" means:
. each Manufacturer with which DFS has entered into a business
arrangement, either through a Floorplan Agreement or another
arrangement, on or prior to the closing date,
. each Manufacturer with which DFS enters into a business arrangement
after the closing date for a series issued in 1994 so long as the
aggregate balances of the receivables relating to that Floorplan
Agreement do not exceed the lesser of (a) 1% of the Pool Balance at
the beginning of the calendar month in which the addition of the
related account occurs and (b) $25 million; and
. each Manufacturer with which DFS enters into that type a business
arrangement after the closing date for a series issued in 1994 and
as to which the Rating Agency Condition is satisfied.
"Financing Agreement" means any Wholesale Financing Agreement, Accounts
Receivable Financing Agreement, Asset Based Lending Financing Agreement or
Unsecured Receivable Financing Agreement.
"Floorplan Agreement" means 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 the Manufacturer agrees, among other matters, to
repurchase from DFS or the Approved Affiliate, as applicable, Products sold by
the Manufacturer to any of its Dealers and financed by DFS or the Approved
Affiliate under a Wholesale Financing Agreement if DFS or the Approved Affiliate
acquires possession of the Products because of a default by the Dealer under the
Wholesale Financing Agreement, voluntary surrender or other circumstances.
"Floorplan Business" means 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" means receivables arising from the Floorplan
Business.
"Global Certificate" means a certificate described in Exhibit A to this
prospectus.
"Ineligible Account" means an Account that at the time of determination is
not an Eligible Account.
"Ineligible Receivable" means, without duplication,
. 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,
. any receivable that, at the time of its transfer to the trust, has
been SAU or NSF for more than 30 days and
. the aggregate of receivables that, at the time of transfer of each of
the receivables to the trust, have been SAU or NSF for a period of one
to 30 days but only to the extent that the aggregate amount exceeds
0.75% of the Pool Balance at the end of the calendar month.
"Initial Account" means 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 identified in the list delivered to the
trustee on the first closing date under the pooling and servicing agreement by
the seller.
"Initial Cut-Off Date" means [ ].
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"Manufacturer" means a manufacturer, distributor or other vendor 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 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 immediately preceding calendar month, over
(b) 15% of the Pool Balance on the last day of the immediately preceding
calendar month.]
"Miscellaneous Payments" means, for any calendar month, 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 the
pooling and servicing agreement on the distribution date.
"Non-Principal Collections" means collections of interest, all other non-
principal charges, including insurance service fees and handling fees, and
Discount Portions under the receivables; provided that all Recoveries will be
Non-Principal Collections.
"Non-Principal Receivables" for any account means all amounts billed to the
related Dealer in respect of interest and all other non-principal charges.
["Overconcentration Amount" on any determination date means 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 the
Determination Date.]
["Overconcentration Default Amount" on any Determination Date means the
lesser of (a) the aggregate amount of receivables which became Defaulted
Receivables during the calendar month and which arose in an Account that is
included in the calculation of the Overconcentration Amount and (b) the
Overconcentration Amount on the Determination Date.]
"Participation" means the undivided interest, created pursuant to a
Participation Agreement, in a receivable in which a receivable represents the
remaining undivided interest.
"Participation Agreement" means an agreement between DFS or an Approved
Affiliate and a lender pursuant to which DFS or the Approved Affiliate, as
applicable, conveys to the 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 the Approved Affiliate,
as applicable.
"Pay-as-Sold" is described under "The Dealer Floorplan Financing Business
of DFS --Payment Terms."
"Pool Balance" means, as of the time of determination, (a) the aggregate of
Principal Receivables, without deducting the Discount Portion, in the trust at
the time, other than all Ineligible Receivables, multiplied by (b) 1 minus the
Discount Factor.
"Principal Collections" means collections under the receivables other than
Non-Principal Collections.
"Principal Receivables" for an Account means amounts shown on the
servicer's records as receivables, other than the amounts which represent Non-
Principal Receivables and Discount Portions, payable by the related Dealer.
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["Principal Terms" means, for any series: (a) the name or designation; (b)
the initial principal amount or method for calculating the amount; (c) the
interest rate or method for the determination; (d) the payment date or dates and
the date or dates from which interest will accrue; (e) the method for allocating
collections to certificateholders; (f) the designation of any series Accounts
and the terms governing the operation of any the 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 certificates of the series may be exchanged for certificates
of another series, repurchased by the seller or remarketed to other investors;
(j) the Termination Date; (k) the number of classes of certificates of the
series and, if more than one class, the rights and priorities of each the class;
(l) the extent to which the certificates of the series will be issuable in
temporary or permanent global form (and, in the case, the depositary for the
Global Certificate or certificates, the terms and conditions, if any, under
which the 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 certificates of
the series may be issued in bearer form and any limitations imposed on those
certificates; (n) the priority of the series over any other series; (o) whether
the series will be part of a group; and (p) any other terms of the series.]
["Product Line Overconcentration" on any determination date means, for
accounts created pursuant to Wholesale Financing Agreements, the excess of:
(a) the aggregate of all amounts of principal receivables in those
accounts that represent financing for a single product line on the
last day of the calendar month immediately preceding the determination
date, over
(b) 25%, or 40% in the case of computer products, of the Pool Balance on
the last day of that immediately preceding calendar month.]
"Products" means the commercial and consumer goods financed by DFS or the
related Approved Affiliate for Dealers pursuant to a Wholesale Financing
Agreement.
"Rating Agency" means, for any outstanding series or class, each
statistical rating agency selected by the seller to rate the certificates of the
series or class.
"Rating Agency Condition" means, for any action, that each Rating Agency
will have notified the seller, the servicer and the trustee in writing that the
action will not result in a reduction or withdrawal of the rating of any
outstanding series or class for which it is a Rating Agency.
"Receivables Contribution and Sale Agreement" means the agreement among
DFS, Deutsche BSC and the seller, governing the terms and conditions under which
the seller acquires receivables transferred to the trust.
"Recoveries" on any determination date means all amounts received,
including insurance proceeds, by the servicer during the calendar month
immediately preceding the determination date from receivables which have
previously become Defaulted Receivables.
"Removal Date" means [ ].
"Removal Notice" means [ ].
"Removed Account" means [ ].
"Required Participation Amount" for any date means an amount equal to the
sum of:
. the sum of the product for each series of (1) the Required
Participation Percentage for that series times (2) the initial
invested amount of that series minus the amount of any deposits into
its excess funding
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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
. 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 that determination date.
"Required Participation Percentage" means, for any series, the percentage
specified for that series in the related supplement; provided, however, that the
seller may, with 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.
"Revolving Period" is defined in the prospectus supplement.
"SAU" means, for a receivable, that if the receivable was originally
secured by a security interest in a Product, the Product has been sold and the
receivable is not paid in full.
"Scheduled Payment Plans" are defined under "The Dealer Floorplan Financing
Business of DFS -- Payment Terms."
"Seller's Participation Amount" means, at any time of determination, an
amount equal to the Pool Balance at the time minus the aggregate Invested
Amounts for all outstanding series at the time.
"Series Cut-Off Date" means, for any series, the date specified as the cut
off date in the related supplement.
"Series Issuance Date" means, for any series, the date on which the
certificates of the series are to be originally issued in accordance with the
pooling and servicing agreement and the related supplement.
"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 that failure;
(2) failure on the part of the servicer duly to observe or perform:
(a) 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 will not be deemed to have
occurred if the seller or the servicer will have repurchased
the related receivables or, if applicable, all the
receivables during that period in accordance with the terms
and provisions of the pooling and servicing agreement; or
(b) 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" above, 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 of that failure 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
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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 will not be
deemed to have occurred if the seller or the servicer will have repurchased
the related receivables or, if applicable, all the receivables during that
period in accordance with the provisions of the pooling and servicing
agreement; or
(4) the occurrence of certain events of bankruptcy, insolvency or
receivership involving 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, will not
constitute a servicer Default if that delay or failure was caused by an act of
God or other similar occurrence.
"Specified Dealer" means, for a Dealer, that on the last day of the
immediately preceding calendar month referred to above, any account with the
Dealer is among one of the fifteen accounts having the largest amount of all
principal receivables in all of the accounts as of that last day.
"Supplement" means, for any series, a supplement to the pooling and
servicing agreement.
"Tax Opinion" generally means, for any action, an Opinion of Counsel to the
effect that, for Federal income and Missouri state income and franchise tax
purposes, (a) the action will not adversely affect the characterization of the
certificates of any outstanding series or class as debt or as partnership
interests, (b) the action will not cause or constitute a taxable event for any
certificateholders or the trust and (c) if the action is the issuance of a new
series, each class of certificates of the new series will be characterized as
debt or as partnership interests.
"Termination Date" means, for any series, the termination date specified in
the related supplement to the pooling and servicing agreement.
"Transfer Date" means [ ].
"Transfer Deposit Amount" means, for any receivable reassigned or assigned
to the seller or the servicer, as applicable, the amounts specified in the
pooling and servicing agreement.
["Trust Available Subordinated Amount" means, at any time of determination,
the sum of the available subordinated amounts, if any, for all outstanding
series at the time.]
["Trust Incremental Subordinated Amount" on any Determination Date means
the excess, if any, of (a) the Overconcentration Amount on the Determination
Date over (b) the Incremental Default Amount for the Determination Date.]
"Trust Invested Amount" means, at any time of determination, the sum of the
invested amounts for all outstanding series at the time.
"Unallocated Principal Collections" means [ ].
"Wholesale Financing Agreement" means a wholesale financing agreement
entered into by DFS or the related Approved Affiliate and a Dealer in order to
finance Products purchased by the Dealer from a Manufacturer.
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Exhibit A
Global Clearance, Settlement and Tax Documentation
Procedures
In most circumstances, the certificates offered by this prospectus and the
prospectus supplement will be issued only as "global certificates" which are
registered and held by a depository. Certificate owners of the global
certificates may hold their global certificates through any of DTC, Cedel or
Euroclear. The global certificates will be tradeable as home market instruments
in both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding global certificates
through Cedel 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, which is seven calendar day settlement.
Secondary market trading between investors holding global certificates
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
participants holding global certificates will be effected on a delivery-against-
payment basis through the respective depositaries of Cedel and Euroclear and the
DTC participants.
Non-U.S. holders of global certificates may have to pay U.S. withholding
taxes unless the holders meet the requirements for exemption from the tax and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All global certificates will be held in book-entry form by DTC in the name
of Cede & Co., as nominee of DTC. Certificate owners' interests in the global
certificates will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, which in turn will hold their positions in accounts as
DTC participants.
Certificate owners electing to hold their global certificates through DTC
will follow the settlement practices applicable to U.S. corporate debt
obligations. Certificate owner securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Certificate owners electing to hold their global certificates through Cedel
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 certificates 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 U.S. corporate
debt obligations in same-day funds.
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Trading between Cedel 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 or Euroclear purchaser. When global
certificates are to be transferred from the account of a DTC participant to the
account of a Cedel participant or a Euroclear participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel participant or Euroclear
participant at least one business day before settlement. Cedel or Euroclear will
instruct the respective Depositary, as the case may be, to receive the global
certificates against payment. Payment will include interest accrued on the
global certificates from and including the last coupon payment date to and
excluding the settlement date. Payment will then be made by the respective
Depositary to the DTC participant's account against delivery of the global
certificates. After settlement has been completed, the global certificates 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 global certificates credit will appear the next day
according to European time, and the cash debit will be back-valued to, and the
interest on the global certificates will accrue from, the value date. The value
date would be the preceding day when settlement occurred in New York. If the
trade fails and settlement is not completed on the intended value date, the
Cedel or Euroclear cash debit will be valued instead on 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 pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the global
certificates are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel participants or Euroclear participants can elect not to pre-position
funds and instead use that credit line to make the funds necessary to process
same-day funds settlement available to the respective clearing systems. Under
this procedure, Cedel participants or Euroclear participants purchasing global
certificates would incur overdraft charges for one day, assuming they cleared
the overdraft when the global certificates were credited to their accounts.
However, interest on the global certificates would accrue from the value date.
Therefore, in many cases the investment income on the global certificates earned
during that one-day period may substantially reduce or offset the amount of the
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 certificates
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 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
certificates are to be transferred by the respective clearing system, through
the respective Depositary, to a DTC participant. The seller will send
instructions to Cedel or Euroclear through a Cedel participant or Euroclear
participant at least one business day before settlement. In these cases, Cedel
or Euroclear will instruct the respective Depositary, as appropriate, to deliver
the bonds to the DTC participant's account against payment. Payment will include
interest accrued on the global certificates from and including the last coupon
payment date to and excluding the settlement date. 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. The
value date 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 debit in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft charges incurred
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over that one-day period. If the trade fails and settlement is not completed on
the intended value date, receipt of the cash proceeds in the Cedel participant's
or Euroclear participant's account would instead be valued on the actual
settlement date. Finally, day traders that use Cedel or Euroclear and that
purchase global certificates 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:
(a) borrowing through Cedel or Euroclear for one day, until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts, in
accordance with the clearing system's customary procedures;
(b) borrowing the global certificates in the U.S. from a DTC participant
no later than one day prior to settlement, which would give the global
certificates sufficient time to be reflected in their Cedel 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.
U.S. Federal Income Tax Documentation Requirements
A beneficial owner of global certificates holding securities through Cedel
or Euroclear, or through DTC if the holder has an address outside the U.S., will
be required to pay 30% U.S. withholding tax that generally applies to payments
of interest, including original issue discount, on registered debt issued by
U.S. Persons, unless (a) 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 that beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (b) that 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 or new Form W-8BEN). Beneficial
owners of global certificates that are non-U.S. Persons can obtain a complete
exemption form the withholding tax by filing a signed Form W-8--Certificate of
Foreign Status. If the information shown on Form W-8--or new Form W-8BEN--
changes a new Form W-8, or new Form W-8BEN, must be filed within 30 days of the
change.
Exemption for non-U.S. Persons with effectively connected income (Form 4224
or new Form W-8ECI). 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--or New Form W-8ECI--Certificate of Foreign Persons Claim for
Exemption from Withholding 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 or new Form W-8BEN). Non-U.S. Persons that are beneficial owners of
Global certificates 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,
or by filing new Form W-8BEN. 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
whereas new Form W-8BEN must be filed by the beneficial owner.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9--Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
Global certificate 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
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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, but Forms W-8,
1001 and 4224 will not be effective after December 31, 2000.
A new Form W-8BEN, if furnished with a taxpayer identification number
("TIN"), will remain in effect until the status of the beneficial owner changes,
or a change in circumstances makes any information on the form incorrect. A new
Form W-8BEN, if furnished without a TIN, and a new Form W-8ECI will remain in
effect for a period starting on the date the form is signed and ending on the
last day of the third succeeding calendar year, unless a change in circumstances
makes any information on the form incorrect.
The term "U.S. Person" means:
. a citizen or resident of the United States;
. a corporation or partnership organized in or under the laws of the
United States or any political subdivision of the United States;
. an estate, the income of which is includible in gross income for
United States tax purposes, regardless of its source; or
. a trust if a U.S. court is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust.
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 certificates.
Certificate owners are advised to consult their own tax advisers for specific
tax advice concerning their holding and disposing of the global certificates.
In 1997, final Treasury regulations (the "New Withholding Regulations")
were issued that modify certain of the filing requirements with which non-U.S.
persons must comply in order to be entitled to an exemption from U.S.
withholding tax or a reduction to the applicable U.S. withholding tax rate.
Those persons currently required to file Form W-8 or Form 1001 will be required
to file new Form W-8BEN, while those persons currently required to file Form
4224 will be required to file new Form W-8ECI. The New Withholding Regulations
generally are effective for payments of interest due after December 31, 2000,
but Forms W-8, 1001 and 4224 filed prior to that date will continue to be
effective until the earlier of December 31, 2000 or the current expiration date
of those forms. Prospective investors should consult their tax advisors
regarding the effect of the New Withholding Regulations.
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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:
SEC registration fee.................................... $ 792,000
Accounting fees and expenses............................ $ 50,000
Printing and engraving.................................. $ 150,000
Legal fees and expenses................................. $ 300,000
Trustee fees and expenses............................... $ 30,000
Blue sky fees and expenses.............................. $ 10,000
Rating agency fees...................................... $ 300,000
Miscellaneous........................................... $ 50,000
Total............................................. $1,682,000
==========
Item 15. Indemnification of Directors and Officers.
Article NINTH of the articles of incorporation of Deutsche Floorplan
Receivables, Inc. (referred to in that Article as the " Corporation") provides
that:
The Corporation shall indemnify any person who is or was a director or
officer of the Corporation, with respect to actions taken or omitted by
such person in any capacity in which such person serves the Corporation, to
the full extent authorized or permitted by law, as now or hereafter in
effect, and such right to indemnification shall continue as to a person who
has ceased to be a director or officer, as the case may be, and shall inure
to the benefit of such person's heirs, executors and personal legal
representatives; provided, however, that, except for proceedings to enforce
rights to indemnification, the Corporation shall not be obligated to
indemnify any person in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was
authorized in advance, or unanimously consented to, by the Board of
Directors of the Corporation. Directors and officers of the Corporation
shall have the right to be paid by the Corporation expenses incurred in
defending or otherwise participating in any proceeding in advance of its
final disposition. The Corporation may, to the extent authorized from time
to time by the Board of Directors, provide rights to indemnification and to
the advancement of expenses to employees and agents of the Corporation. The
rights to indemnification and to the advancement of expenses conferred in
this Section shall not be exclusive of any other right that any person may
have or hereafter acquire under these Articles of Incorporation, the By-
Laws, any statute, agreement, vote of stockholders or disinterested
directors, or otherwise. Any repeal or modification of this Section by the
stockholders of the Corporation shall not adversely affect any rights to
indemnification and to advancement of expenses that any person may have at
the time of such repeal or modification with respect to any acts or
omissions occurring prior to such repeal or modification.
Section 4 of the by-laws of Deutsche Floorplan Receivables, Inc. (referred
to in that Section as the " Corporation") provides as follows:
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4. INDEMNIFICATION.
(a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interest of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or
was a Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(c) To the extent that a Director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) or (b), or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless
ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b). Such determination shall
be made (1) by the Board by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or
(2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested Directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(e) Expenses incurred by a Director or officer in defending a
civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of any undertaking by or on behalf of such
Director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
Corporation as authorized in this Section. Such expenses incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
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(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this Section
shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled
under any By-law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office.
(g) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section.
(h) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person.
Section 78.7502 of the Nevada Revised Statutes provides that a
corporation may (and that in certain circumstances a corporation is required to)
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement incurred in connection with the action, suit or
proceeding. Section 78.752 of the Nevada Revised Statutes provides that a
corporation may purchase and maintain insurance or make other financial
arrangements on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, for any liability
asserted against such person and liability and expenses incurred by such person
in such person's capacity as a director, officer, employee or agent, or arising
out of such person's status as such, whether or not the corporation has the
authority to indemnify such person against such liability and expenses.
Deutsche Bank AG maintains a directors and officers liability
insurance policy with respect to certain direct and indirect subsidiaries,
including Deutsche Floorplan Receivables, Inc. In general, the policy insures
the officers and directors of Deutsche Floorplan Receivables, Inc. against loss
arising from wrongful acts or omissions, subject to the terms and conditions
contained in the policy.
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Item 16. Exhibits.
1.1 Form of Underwriting Agreement
3.1 Form of Agreement of Limited Partnership of the Registrant
4.1 Form of Pooling and Servicing Agreement
4.2 Form of supplement (including forms of certificates)
5.1 Opinion of Mayer, Brown & Platt as to legality of the
Certificates
8.1 Opinion of Mayer, Brown & Platt as to certain U.S. tax matters
8.2 Opinion of Bryan Cave LLP as to certain Missouri tax matters
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 LLP (included in exhibit 8.2 hereof)
24.1 Power of Attorney (included in Part II of the registration
statement filed on March 16, 1999)
Item 17. Undertakings.
(a) As to Rule 415:
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement.
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective 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 in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(3) 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) As to documents subsequently filed that are
incorporated by reference:
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The undersigned Registrant hereby undertakes
that, for purposes of determining any liability
under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is
incorporated by reference in 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.
(c) As to indemnification:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 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 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.
(d) The undersigned Registrant hereby undertakes
that:
(1) For purposes of determining any liability
under the Securities Act of 1933, as amended, the
information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed
by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act will be deemed to be part of this
Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any
liability under the Securities Act of 1933, as amended,
each post-effective amendment that contains a form of
prospectus will be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(e) The undersigned Registrant hereby undertakes to
file in a current report a Form 8-K or in a
post-effective amendment an opinion with
respect to any Federal tax consequences
material to an investor with regard to a
specific series to be issued pursuant to this
Registration Statement where such tax
consequences have not been addressed in the
prospectus or the prospectus supplement related
to such series.
II-5
<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 that the security rating requirement
will be met at the time of sale) and has duly caused this Amendment No. 2 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of St. Louis, State of Missouri on February 10,
2000.
Deutsche Floorplan Receivables, L.P.
By: Deutsche Floorplan Receivables,
Inc., its General Partner
By: /s/ Richard H. Schumacher
-----------------------------------
Name: Richard H. Schumacher
---------------------------------
Title: President and Treasurer
--------------------------------
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Treasurer February 10, 2000
------------------------------
Richard H. Schumacher (Principal Executive Officer and
Principal Financial Officer)
* Senior Vice President and Controller February 10, 2000
------------------------------
Stephen J. Gentry (Principal Accounting Officer)
* Director February 10, 2000
------------------------------
Richard C. Goldman
* Director February 10, 2000
------------------------------
C. Don Brown
* Director February 10, 2000
------------------------------
Phil Stout
</TABLE>
*IN WITNESS WHEREOF, Naran U. Burchinow has signed this Amendment No.
2 to the Registration Statement on February 10, 2000 on behalf of the officers
and directors named above as their attorney-in-fact under a power of attorney.
/s/ Naran U. Burchinow
-----------------------------------
Naran U. Burchinow
II-7
<PAGE>
Exhibit 1.1
-----------
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST
Asset Backed Certificates
UNDERWRITING AGREEMENT
----------------------
[DATE]
[NAME OF LEAD UNDERWRITER]
Acting on behalf of itself and, if applicable, as the Representative of the
several Underwriters named in Schedule 1 to the Terms Agreement (in either such
capacity sometimes herein the "Representative")
[Address]
Ladies and Gentlemen:
Section 1. Introductory. Deutsche Floorplan Receivables, L.P., a
------------
Delaware limited partnership (the "Depositor"), proposes to sell Asset Backed
Certificates (the "Certificates" or the "Securities") from time to time in one
or more series (each, a "Series"). Each Series, which may include one or more
classes of Certificates, will be issued by the Distribution Financial Services
Floorplan Master Trust (the "Trust") formed pursuant to the Pooling and
Servicing Agreement as amended and restated as of October 1, 1996 (as the same
may be amended, amended and restated or otherwise modified from time to time,
the "Pooling and Servicing Agreement") among the Seller, Deutsche Financial
Services Corporation, as Servicer, and the trustee specified therein (the
"Trustee"). Each Certificate will represent a fractional undivided interest in
the related Trust. The assets of the Trust (the "Trust Property") will include,
among other things, a pool of dealer floorplan receivables (the "Receivables")
The Securities are more fully described in the Registration Statement (as
defined herein). Each Series of Securities and any classes of Securities (each,
a "Class") within such Series may vary as to, among other things, number and
types of Classes, principal amount and interest rate.
Each offering of the Securities to which this Underwriting Agreement
applies will be made pursuant to the Registration Statement through the
Representative or through an
<PAGE>
underwriting syndicate managed by the Representative. Whenever the Seller
determines to make such an offering of Securities of a Series, it will enter
into an appropriate agreement (the "Terms Agreement"), a form of which is
attached hereto as Exhibit A, providing for the sale of certain classes of such
Securities to, and the purchase and offering thereof by, the Representative and
such other underwriters, if any, as have authorized the Representative to enter
into such Terms Agreement on their behalf (the "Underwriters," which term shall
include the Representative, whether acting alone in the sale of such Securities,
in which case any reference herein to the Representative shall be deemed to
refer to the Representative in its individual capacity as Underwriter of the
Securities, or as a member of an underwriting syndicate). Such Terms Agreement
shall specify the principal amount of each Class of the Securities to be issued,
the Classes of Securities subject to this Underwriting Agreement, the price at
which such Classes of Securities are to be purchased by the Underwriters from
the Seller and the initial public offering price or prices or the method by
which the price or prices at which such Securities are to be sold will be
determined.
Each such offering of Securities as to which [ ] is the sole
underwriter or acts as the Representative of the several Underwriters will be
governed by this Underwriting Agreement, as supplemented by the applicable Terms
Agreement, and this Underwriting Agreement and such Terms Agreement shall inure
to the benefit of and be binding upon each Underwriter participating in the
offering of such Securities. This Underwriting Agreement is non-exclusive, and
the Seller may enter into any other underwriting agreement with any other
underwriter with respect to the offering and sale of Securities of a Series.
Section 2. Representations, Warranties and Covenants of DFS and the
--------------------------------------------------------
Seller. Each of Deutsche Financial Services Corporation ("DFS") and the Seller,
- ------
as applicable, represents and warrants to, and agrees with, each Underwriter, as
of the date of the related Terms Agreement, that:
(a) The registration statement specified in the related Terms Agreement,
on Form S-3, including a prospectus, has been filed with the Securities and
Exchange Commission (the "Commission") for the registration under the Securities
Act of 1933, as amended (the "Act"), of the Securities, which registration
statement has been declared effective by the Commission. Such registration
statement, as amended to the date of the related Terms Agreement, including any
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the effective date of the
Registration Statement (as such date is defined in Rule 158(c) under the Act,
the "Effective Date"), is hereinafter called the "Registration Statement," and
such prospectus, as such prospectus is supplemented by a prospectus supplement
relating to the Securities of the related Series, each in the form first filed
after the date of the related Terms Agreement pursuant to Rule 424(b) under the
Act, including any documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the Act which were filed under the Exchange Act on or
before the date of such prospectus supplement (such prospectus supplement,
including such incorporated documents, in the form first filed after the date of
the related Terms Agreement pursuant to Rule 424(b) is hereinafter called the
"Prospectus Supplement"), is hereinafter called the "Prospectus" (except where
the context requires otherwise). Any reference herein to the terms "amend,"
"amendment" or
2
<PAGE>
"supplement" with respect to the Registration Statement, the Prospectus or the
Prospectus Supplement shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date or the issue date of
the Prospectus or Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference pursuant to Item 12 of Form S-3 under the Act.
(b) The related Registration Statement, at the time it became effective,
and the prospectus contained therein, and any amendments thereof and supplements
thereto filed prior to the date of the related Terms Agreement, conformed in all
material respects to the requirements of the Act and the rules and regulations
of the Commission thereunder (the "Rules and Regulations"); on the date of the
related Terms Agreement and on the related Closing Date, the Registration
Statement, the Prospectus and the related Prospectus Supplement, and any
amendments thereof and supplements thereto, will conform in all material
respects to the requirements of the Act and the Rules and Regulations; such
Registration Statement, at the time it became effective, did 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;
such Prospectus and Prospectus Supplement, on the date of any filing pursuant to
Rule 424(b) and on the related Closing Date, will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading; provided, however, that neither DFS nor the Seller makes
any representations or warranties as to the information contained in or omitted
from (A) such Registration Statement or such Prospectus (or any supplement
thereto) in reliance upon and in conformity with written information furnished
to the Seller by or on behalf of the Underwriters specifically for use in the
preparation thereof as specified in the related Terms Agreement or (B) any ABS
Filing (as defined herein), or in any amendment thereof or supplement thereto,
incorporated by reference in such Registration Statement or such Prospectus (or
any amendment thereof or supplement thereto).
(c) DFS is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, the Seller is a
limited partnership duly formed, validly existing and in good standing under the
laws of its state of formation, and each of DFS and the Seller 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 power to own, lease and operate its
property and conduct its business as it is currently conducted.
(d) Each of DFS and the Seller has, and will have, the requisite power to
execute and deliver each this Underwriting Agreement and each agreement and
document executed by either of them in connection with the issuance and sale of
the related Securities (each, an "Agreement") (as applicable) and Terms
Agreement and to perform their respective obligations hereunder and thereunder.
(e) Each of the Agreements (as applicable), Terms Agreements and this
Underwriting Agreement has been, or will be, duly and validly authorized,
executed and delivered by each of DFS and the Seller, and each of the Agreements
(as applicable), Terms Agreements and this Underwriting Agreement constitutes,
or will constitute, the valid, legal
3
<PAGE>
and binding obligation of each of DFS and the Seller, enforceable against each
of DFS and the Seller in accordance with its terms.
(f) The Securities of each Series conform, or will conform as of the
related Closing Date, to the description thereof contained in the Registration
Statement, the Prospectus, and the related Prospectus Supplement; and the
Securities of such Series, on the related Closing Date, will have been duly and
validly authorized and, when such Securities are duly and validly executed,
issued and delivered in accordance with the related Agreement, and sold to the
Underwriters as provided herein and in the related Terms Agreement, will each be
validly issued and outstanding and entitled to the benefits of such, Agreement.
(g) Neither the execution and delivery by DFS or the Seller of any
Agreement (as applicable), Terms Agreement or this Underwriting Agreement nor
the consummation by DFS or the Seller of the transactions contemplated herein or
therein, nor the issuance of the Securities of a Series by a Trust or the public
offering thereof as contemplated in the Prospectus and the applicable Prospectus
Supplement, 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 the Seller
(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 the Seller 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 Seller. Neither DFS nor the Seller is in
violation of its certificate of incorporation or certificate of limited
partnership, as applicable, 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, trust agreement, transfer 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.
(h) No legal or governmental proceedings are pending to which DFS or the
Seller is a party or of which any property of DFS or the Seller is the subject,
which if determined adversely to DFS or the Seller would, individually or in the
aggregate, have a material adverse effect on the financial position,
shareholders' equity or results of operations of DFS or the Seller; and to the
best of DFS's or the Seller's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(i) No consent, approval, authorization or order of, or registration,
filing or declaration with, any court or governmental agency or body is
required, or will be required, in connection with (i) the execution and delivery
by DFS or the Seller of any Agreement (as applicable), Terms Agreement or this
Underwriting Agreement or the performance by DFS or the Seller of any Agreement
(as applicable), Terms Agreement or this Underwriting Agreement or (ii) the
offer, sale or delivery of the Securities of any Series, 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 applicable Closing Date, or will not materially
adversely affect the ability of DFS or the Seller to perform its obligations
under any Agreement (as applicable),
4
<PAGE>
Terms Agreement or this Underwriting Agreement.
(j) Each of DFS and the Seller possesses, and will possess, 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 and Prospectus
Supplement, except to the extent that the failure to have such licenses,
certificates, authorities or permits does not have a material adverse effect on
the Securities of any Series or the financial condition of DFS or the Seller,
and neither DFS nor the Seller has received, nor will have received as of each
Closing Date, 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.
(k) On the related Closing Date, (i) the Seller or the Trust will have good
and marketable title to the related Receivables, free and clear of any Lien,
except to the extent permitted in the applicable Agreement, (ii) the Seller will
not have assigned to any person any of its right, title or interest in such
Receivables or in the applicable Agreement, and (iii) the Seller will have the
power and authority to sell such Receivables to the Trust.
(l) The properties and businesses of each of DFS and the Seller conform,
and will conform, in all material respects, to the descriptions thereof
contained in the Prospectus and the Prospectus Supplements.
(m) Since the date as of which information is given in the Registration
Statement, there has not been any material adverse change in the business or net
worth of the Seller or DFS.
Section 3. Purchase, Sale and Delivery of Securities. (a) On the
-----------------------------------------
basis of the representations, warranties and agreements contained in this
Underwriting Agreement and in the Terms Agreement for a particular offering of
Securities, but subject to the terms and conditions set forth in this
Underwriting Agreement and subject to the execution of such Terms Agreement, the
Seller agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Seller, the
respective original principal amounts of the related Securities set forth in the
related Terms Agreement opposite the name of such Underwriter, plus any
additional original principal amount of Securities which such Underwriter may be
obligated to purchase pursuant to Section 12 hereof, at the purchase price
therefor set forth in such Terms Agreement.
The parties hereto agree that settlement for all securities sold pursuant
to this Underwriting Agreement shall take place on the terms set forth herein
and not as set forth in Rule 15c6-1(a) under the Exchange Act.
(b) Against payment of the purchase price specified in the applicable
Terms Agreement in same day funds drawn to the order of the Seller (or paid by
such other manner as may be agreed upon by the Seller and the Representative),
the Seller will deliver the related Securities of a Series to the Underwriters
at the offices of Mayer, Brown & Platt, 190
5
<PAGE>
South LaSalle Street, Chicago, Illinois 60603 at such time as shall be specified
in such Terms Agreement, or at such other place and time as the Representative
and the Seller shall agree upon, each such time being herein referred to as a
"Closing Date." The Securities of each Series will initially be in definitive,
fully registered form or will be maintained through the facilities of The
Depository Trust Company, as indicated in the applicable Prospectus Supplement.
Section 4. Public Offering of Securities. It is understood by the
-----------------------------
parties hereto that, after the Registration Statement becomes effective, the
Underwriters propose to offer the Securities for sale to the public (which may
include selected dealers), as set forth in the Prospectus.
Section 5. Covenants of DFS and the Seller. Each of DFS and the Seller
-------------------------------
jointly and severally covenants and agrees with each Underwriter:
(a) That immediately following the execution of each Terms Agreement, the
Seller shall prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in the
Prospectus, the price at which such Securities are to be purchased by the
Underwriters from the Seller, either the initial public offering price or the
method by which the price at which such Securities are to be sold will be
determined, the selling concessions and reallowances, if any, and such other
information as the Representative and the Seller deem appropriate in connection
with the offering of such Securities; provided, however, that each of DFS and
the Seller shall make no amendment or supplement to the Registration Statement
affecting or relating to any material extent to the Securities of a Series to
which this Underwriting Agreement relates, and shall make no amendment or
supplement to the Prospectus or the Prospectus Supplement 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 shall not
file any such amendment or supplement to which the Representative shall
reasonably object; and, provided further, that each of DFS and the Seller shall
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 or the Prospectus Supplement or
any amended Prospectus or Prospectus Supplement 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 Securities of a Series 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, the Prospectus or the Prospectus Supplement 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 or
Prospectus Supplement relating to the Securities of a Series or suspending any
such qualification, promptly shall use its best efforts to obtain its
withdrawal.
(b) That the Seller shall cause any Computational Materials and any
Structural Term Sheets (each as defined herein) with respect to the Securities
of a Series that are delivered by an Underwriter to the Seller pursuant to
Section 9 to be filed with the Commission on a Current Report on Form 8-K (an
"ABS Filing") pursuant to Rule 13a-11 under the Exchange Act on the business day
immediately following the later of (i) the day on
6
<PAGE>
which such Computational Materials and Structural Term Sheets are delivered to
counsel for the Seller by an Underwriter prior to 1:00 p.m. New York time and
(ii) the date on which the related Prospectus Supplement is first made available
to the public. The Seller shall cause any Collateral Term Sheet with respect to
the Securities of a Series that is delivered by the Representative to the Seller
in accordance with the provisions of Section 10 to be filed with the Commission
on an ABS Filing pursuant to Rule 13a-11 under the Exchange Act on the business
day immediately following the day on which such Collateral Term Sheet is
delivered to counsel for the Seller by the Representative. Each such ABS Filing
shall be incorporated by reference in the related Prospectus and the related
Registration Statement.
(c) Promptly from time to time to take such action as the Representative
may reasonably request in order to qualify the Securities of a Series 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 Securities; provided, that in
connection therewith neither DFS nor the Seller shall be required to qualify as
a foreign corporation to do business or to file a general consent to service of
process in any jurisdiction.
(d) 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 may from time to time reasonably request; and, if the delivery of a
Prospectus or Prospectus Supplement shall be at the time required by law in
connection with sales of the Securities of a Series and either (i) any event
shall have occurred as a result of which the Prospectus or Prospectus Supplement
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 or Prospectus Supplement, 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
or Prospectus Supplement which will correct such statement or omission or effect
such compliance, or if it is necessary at any time to amend or supplement the
Prospectus or Prospectus Supplement to comply with the Act or the Rules and
Regulations, the Seller will promptly prepare and file with the Commission an
amendment or supplement that will correct such statement or omission or an
amendment that will effect such compliance; provided, however, that the Seller
will not be required to file any such amendment or supplement with respect to
any Computational Materials, Structural Term Sheets or Collateral Term Sheets
incorporated by reference in the Prospectus other than any amendments or
supplements of such Computational Materials or Structural Term Sheets that are
furnished to the Seller by the Underwriters pursuant to Section 9(c) hereof or
any amendments or supplements of such Collateral Term Sheets that are furnished
to the Seller by the Underwriters pursuant to Section 10(c) hereof which are
required to be filed in accordance therewith.
(e) To file or cause to be filed with the Commission all reports required
to be filed with respect to each Series pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange
7
<PAGE>
Act.
(f) So long as any of the Securities of a Series are outstanding, to
furnish each Underwriter copies of all reports or other communications
(financial or other) furnished to holders of such Securities, 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 the Seller as such Underwriter may from time to time
reasonably request.
(g) To pay all expenses (other than fees of counsel for the Underwriters,
except as provided below) incident to the performance of the obligations under
this Underwriting Agreement and the related Terms 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 Underwriting Agreement and the related
Terms Agreement;
(iii) the preparation, printing, issuance and delivery of the
Securities of each Series to the Underwriters;
(iv) the fees and disbursements of counsel and accountants for DFS
and/or the Seller;
(v) the qualification of the Securities of a Series 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 Securities 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 Prospectus
Supplement 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 any rating agency rating the Securities of a Series;
and
(x) the fees and expenses of each Trustee and its counsel.
8
<PAGE>
If the sale of the Securities of a Series is not consummated by reason of
any failure, refusal or inability on the part of DFS or the Seller 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 the Seller 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 the Seller.
(h) So long as the Securities of a Series are outstanding, or until such
time as each Underwriter shall cease to maintain a secondary market in such
Securities, whichever occurs first, to deliver to each Underwriter all
statements and reports furnished to the Trustee pursuant the applicable
Agreement, as soon as such statements and reports are furnished to such Trustee.
(i) From and after the related Closing Date, not to take any action
inconsistent with the Trust's ownership of the related Receivables other than as
permitted by the applicable Agreement.
(j) To the extent, if any, that the rating provided with respect to any
Class of Securities of a Series by a rating agency or agencies that initially
rate such Securities is conditional upon the furnishing of documents or the
taking of any other actions by DFS and/or the Seller, to furnish such documents
and take any such other actions.
(k) That during the period when a prospectus is required by law to be
delivered in connection with the sale of the Securities of a Series pursuant to
this Underwriting Agreement and the related Terms Agreement, the Seller will
file, or cause the Trustee to file on behalf of the Trust, on a timely and
complete basis, all documents that are required to be filed by such Trust with
the Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
Section 6. Conditions Precedent to the Obligations of the Underwriters.
-----------------------------------------------------------
The obligation of the Underwriters to purchase and pay for the Securities of a
Series is subject to the accuracy of the representations and warranties on the
part of DFS and the Seller herein and in the related Terms Agreement as of the
respective dates thereof and the related Closing Date, to the accuracy of the
statements of officers of DFS and the Seller made pursuant to the provisions
hereof and thereof, to the performance by each of DFS and the Seller of its
obligations hereunder and thereunder 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 Underwriting
Agreement or such later date as shall have been consented to by the
Representative; and prior to the related 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 the Seller, shall be contemplated by the Commission. If the Seller has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Securities of a Series and any price-related information previously omitted from
the effective Registration
9
<PAGE>
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the related Closing Date the
Seller 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 Rules and Regulations.
(b) Each of DFS and the Seller shall have delivered on or before the
related Closing Date to the Representative a certificate, dated as of such
Closing Date, signed by the president, a senior vice president or a vice
president of DFS or of the general partner of the Seller, as the case may be, to
the effect that the signer of such certificate has carefully examined the
Registration Statement, the Prospectus, each related Agreement and this
Underwriting Agreement and related Terms Agreement and that:
(i) to the best of such officer's knowledge, the representations and
warranties of DFS and/or the Seller, as the case may be, in this
Underwriting Agreement and the related Terms Agreement are true and correct
in all material respects at and as of such Closing Date with the same
effect as if made on such Closing Date;
(ii) each of DFS and the Seller, 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 such 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 the Seller's knowledge, threatened as of such
Closing Date; and
(iv) nothing has come to such person's attention that would lead such
person to believe that the Prospectus as amended and supplemented as of
such Closing Date 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 and Prospectus Supplement, 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 related Trust,
the Seller or DFS or any material adverse change in the financial position or
results or operations of such Trust, the Seller or DFS otherwise than as set
forth or contemplated in the Prospectus and Prospectus Supplement, which in any
such case makes it impracticable or inadvisable in the Representative's judgment
to proceed with the public offering or the delivery of the related Securities on
the terms and in the manner contemplated in the related Terms Agreement and
Prospectus and Prospectus Supplement.
(d) Subsequent to the execution and delivery of a Terms 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 the Seller
10
<PAGE>
which, in the Representative's judgment, materially impairs the investment
quality of the related Securities, (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 or inadvisable to market such Securities or
to enforce contracts for the sale of such Securities, (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
such Terms Agreement or this Underwriting Agreement or default in the
performance of DFS's or the Seller's obligations under any related 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
reasonably satisfactory to the Representative) for DFS and the Seller, an
opinion, dated the related Closing Date, addressed to the Underwriters and
reasonably satisfactory in form and substance to the Representative and to
counsel to the Underwriters.
(f) The Representative shall have received from counsel (who shall be
satisfactory to the Representative) for the Seller, an opinion, dated the
related 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 Prospectus and Prospectus Supplement under the heading "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.
(g) The Representative shall have received from counsel (who shall be
reasonably satisfactory to the Representative) for DFS and the Seller, an
opinion, dated the related Closing Date, addressed to the Underwriters and
reasonably 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 counsel (who shall be
reasonably satisfactory to the Representative) for the Trustee, an opinion,
dated the related Closing Date, addressed to the Underwriters, DFS and the
Seller and reasonably satisfactory in form and substance to the Representative
and to counsel to the Underwriters.
(i) The Representative shall have received an officer's certificate dated
the related 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 related Agreement are true and correct in all material respects, and that
such Trustee has complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or satisfied under the
related Agreement at or prior to such Closing Date.
(j) The Trustee shall have furnished to the Representative a certificate
of the
11
<PAGE>
Trustee, signed by one or more duly authorized officers of the Trustee, dated
the related Closing Date, as to the due acceptance of the related Agreement by
the Trustee and the due execution and delivery of the Securities of such Series
by the Trustee thereunder and such other matters as the Representative shall
reasonably request.
(k) Counsel to DFS and the Seller shall have furnished to the
Representative any opinions supplied to the rating agencies relating to certain
matters with respect to the Securities of a Series, which opinions 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
related Closing Date.
(l) The Representative shall have received a letter, dated the related
Closing Date and addressed to the Underwriters, from certified public
accountants (who shall be satisfactory to the Representative), substantially in
the form approved by the Representative and counsel to the Underwriters.
(m) The Representative shall have received a copy of (i) a file-stamped
acknowledgment copy of each UCC-1 financing statement on Form UCC-1
appropriately filed with respect to the transfer of the related Receivables by
DFS to the Seller, identifying such Receivables as collateral and naming DFS as
debtor and the Seller as the secured party and (ii) a file-stamped
acknowledgment copy of each UCC-1 financing statement on Form UCC-1
appropriately filed with respect to the transfer of the related Receivables by
the Seller to the Trustee pursuant to the related Agreement, identifying such
Receivables as collateral and naming the Seller as debtor and the Trust as the
secured party.
(n) All documents incident to the Agreements, Terms Agreements and this
Underwriting Agreement shall be reasonably satisfactory in form and substance to
the Representative and counsel to the Underwriters; and all actions taken by the
Seller to authorize the offering and sale of the Securities of a Series shall be
reasonably satisfactory in form and substance to the Representative and counsel
to the Underwriters; and DFS and/or the Seller shall furnish the Representative
and counsel to the Underwriters with such other opinions, certificates, letters
and documents as the Representative or counsel to the Underwriters shall
reasonably request.
(o) The Securities of the related Series shall have received the ratings
specified in the related Terms Agreement.
(p) On or prior to the related Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended or possible
downgrading or (ii) any review or possible changes in rating the direction of
which has not been indicated, in the rating accorded and originally requested by
and paid for by or on behalf of the Seller relating to any previously issued
asset-backed securities of the Trust by any "nationally recognized statistical
rating organization" (as such terms is defined for purposes of the Exchange
Act).
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Underwriting Agreement (with respect
to the related Securities) and the related Terms Agreement may be terminated by
the Representative by notice to the
12
<PAGE>
Seller at any time at or prior to the related Closing Date, 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 the
--------------------------------
Seller 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, 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 the Seller and DFS (which consent shall not be
unreasonably withheld); and
(iii) against any and all expense whatsoever (including, subject to
Section 7(c) hereof, the reasonable fees and disbursements of counsel
chosen by the Representative) 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 Section 7 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 (A) in reliance upon and
in conformity with written information furnished to the Seller 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) and set forth in the Prospectus and in the Prospectus
Supplement, in each case as specified in the related Terms Agreement, or (B) in
any ABS Filing or any amendment or supplement thereof, except to the extent that
any untrue statement or alleged untrue statement therein or omission therefrom
results (or is alleged to have resulted) from an error (a "Pool Error") in the
information concerning the characteristics of the Receivables furnished by the
Seller to the Underwriter in writing or by electronic transmission that was used
in the preparation of any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) included in such ABS Filing (or amendment or
supplement thereof).
13
<PAGE>
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Seller and DFS, each of their respective directors, each of their respective
officers who signed the Registration Statement, and each person, if any, who
controls the Seller 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 (i) 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 the Seller 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), in each
case as specified in the related Terms Agreement, or (ii) any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof) furnished to
the Seller by such Underwriter through the Representative pursuant to Section 9
or Section 10, or directly by such Underwriter, to the extent that such
materials were delivered to investors by such Underwriter, and incorporated by
reference in such Registration Statement or the related Prospectus or any
amendment or supplement thereof (except that no such indemnity shall be
available for any losses, claims, damages or liabilities, or actions in respect
thereof, resulting from any Pool Error).
(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 Section 7. 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, the Seller and DFS, jointly
and severally, on the one hand, and the Underwriters (as applicable), on the
other, shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by said Section 7 incurred by the
Seller, DFS and one or more Underwriters, as incurred, in such proportions that
each applicable Underwriter is responsible for that portion represented by the
percentage that the underwriting discount received by it bears to the initial
public offering price of the related Series of Securities, and the Seller 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
such Securities were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay in respect of such
14
<PAGE>
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 15 of the Act shall have the same rights to contribution as such
Underwriter and each officer of the Seller or DFS who signed the Registration
Statement, and each person, if any, who controls the Seller or DFS within the
meaning of Section 15 of the Act shall have the same rights to contribution as
the Seller and DFS.
Section 9. Computational Materials and Structural Term Sheets. (a)
--------------------------------------------------
Not later than 5 p.m., New York time, on the business day before the date on
which the applicable ABS Filing relating to the Securities of a Series is
required to be filed by the Seller with the Commission pursuant to Section 5(b)
hereof, the Representative shall deliver to the Seller a complete copy of all
materials provided by the Underwriters to prospective investors in such
Securities that constitute (i) "Computational Materials" within the meaning of
the no-action letter dated May 20, 1994, issued by the Division of Corporation
Finance of the Commission to Kidder, Peabody Acceptance Corporation I, Kidder,
Peabody & Co. Incorporated and Kidder Structured Asset Corporation and the no-
action letter dated May 27, 1994, issued by the Division of Corporation Finance
of the Commission to the Public Securities Association (together, the "Kidder
Letters"), the filing of which material is a condition of the relief granted in
such letters (such materials being the "Computational Materials") and (ii)
"Structural Term Sheets" within the meaning of the no-action letter dated
February 17, 1995, issued by the Division of Corporation Finance of the
Commission to the Public Securities Association (the "PSA Letter"), the filing
of which material is a condition of the relief granted in such letter (such
materials being the "Structural Term Sheets"); prior to such delivery by the
Representative to the Seller of such materials, the Representative shall notify,
or cause to be notified, the Seller or its counsel by telephone of its intention
to deliver such materials and the approximate date on which such delivery of
such materials is expected to occur.
(b) Each Underwriter represents and warrants to and agrees with the
Seller, as of the date of the related Terms Agreement and as of the related
Closing Date, that:
(i) the Computational Materials furnished to the Seller pursuant to
Section 9(a) constitute (either in original, aggregated or consolidated
form) all of the materials furnished to prospective investors by such
Underwriter prior to the time of delivery thereof to the Seller that are
required to be filed with the Commission with respect to the related
Securities in accordance with the Kidder Letters, and such Computational
Materials comply with the requirements of the Kidder Letters; and
(ii) the Structural Term Sheets furnished to the Seller pursuant to
Section 9(a) constitute all of the materials furnished to prospective
investors by the Underwriter prior to the time of delivery thereof to the
Seller that are required to be filed with the Commission as "Structural
Term Sheets" with respect to the related Securities in accordance with the
PSA Letter, and such Structural Term Sheets comply with the requirements of
the PSA Letter.
(c) If, at any time when a prospectus relating to the Securities of a
Series is required to be delivered under the Act, it shall be necessary to amend
or supplement the related Prospectus and Prospectus Supplement as a result of an
untrue statement of a material
15
<PAGE>
fact contained in any Computational Materials or Structural Term Sheets provided
by the Underwriters pursuant to this Section 9 or the omission to state therein
a material fact required, when considered in conjunction with the related
Prospectus and Prospectus Supplement, to be stated therein or necessary to make
the statements therein, when read in conjunction with the related Prospectus and
Prospectus Supplement, not misleading, or if it shall be necessary to amend or
supplement any ABS Filing relating to any Computational Materials or Structural
Term Sheets to comply with the Act or the Rules and Regulations, the
Representative promptly will prepare and furnish to the Seller for filing with
the Commission an amendment or supplement that will correct such statement or
omission or an amendment which will effect such compliance.
Section 10. Collateral Term Sheets. (a) Prior to the delivery of any
----------------------
"Collateral Term Sheet" within the meaning of the PSA Letter, the filing of
which material is a condition of the relief granted in such letter (such
material being the "Collateral Term Sheets" and together with Structural Term
Sheets, referred to herein as "ABS Term Sheets"), to a prospective investor in
Securities of a Series, the Representative shall, in order to facilitate the
timely filing of such material with the Commission, notify the Seller and its
counsel by telephone of its intention to deliver such materials and the
approximate date on which the first such delivery of such materials is expected
to occur. Not later than 2 p.m., New York time, on the business day immediately
following the date on which any Collateral Term Sheet was first delivered to a
prospective investor in such Securities, the Representative shall deliver to the
Seller a complete copy of all materials provided by the Underwriters to
prospective investors in the Securities that constitute "Collateral Term
Sheets." At the time of each such delivery, the Representative shall indicate
in writing that the materials being delivered constitute Collateral Term Sheets.
(b) Each Underwriter represents and warrants to and agrees with the Seller
as of the date of the related Terms Agreement and as of the related Closing
Date, that the Collateral Term Sheets furnished to the Seller pursuant to
Section 10(a) constitute all of the materials furnished to prospective investors
by such Underwriter prior to time of delivery thereof to the Seller that are
required to be filed with the Commission as "Collateral Term Sheets" with
respect to the related Securities in accordance with the PSA Letter, and such
Collateral Term Sheets comply with the requirements of the PSA Letter.
(c) If, at any time when a prospectus relating to the Securities of a
Series is required to be delivered under the Act, it shall be necessary to amend
or supplement the related Prospectus and Prospectus Supplement as a result of an
untrue statement of a material fact contained in any Collateral Term Sheets
provided by the Underwriters pursuant to this Section 10 or the omission to
state therein a material fact required, when considered in conjunction with the
related Prospectus and Prospectus Supplement, to be stated therein or necessary
to make the statements therein, when read in conjunction with the related
Prospectus and Prospectus Supplement, not misleading, or if it shall be
necessary to amend or supplement any ABS Filing relating to any Collateral Term
Sheets to comply with the Act or the Rules and Regulations, the Representative
promptly will prepare and furnish to the Seller for filing with the Commission
an amendment or supplement that will correct such statement or omission or an
amendment which will effect such compliance.
16
<PAGE>
Section 11. Survival of Representations and Obligations. The respective
-------------------------------------------
indemnities, agreements, representations, warranties and other statements of
each of DFS, the Seller or its officers and of the Underwriters set forth in or
made pursuant to this Underwriting Agreement and the related Terms 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, the Seller or any of their respective representatives, officers or
directors of any controlling person, and will survive delivery of and payment
for the related Securities.
Section 12. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail on a Closing Date to purchase the related
Securities which it or they are obligated to purchase under this Underwriting
Agreement and the applicable Terms 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 and under the applicable Terms Agreement; 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 such Series of Securities to be purchased pursuant to
such Terms Agreement, each of the non-defaulting Underwriters named in such
Terms Agreement shall be obligated, severally and not jointly, to purchase the
full amount thereof in the proportions that their respective underwriting
obligations thereunder 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 such Series of Securities to be purchased pursuant to such
Terms Agreement, the applicable Terms Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 12 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
the related Terms Agreement, either the Representative or the Seller shall have
the right to postpone the related Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration Statement,
Prospectus or Prospectus Supplement or in any other documents or arrangements.
Section 13. 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:
17
<PAGE>
______________________________
______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Facsimile: __________________;
with a copy to:
______________________________
______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Facsimile: __________________;
(ii) if sent to the Seller, 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;
(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: Richard Schumacher
Telephone: (314) 523-3950
Facsimile: (314) 523-3993;
or to such other address as DFS, the Seller or the Representative may designate
in writing to the other parties hereto.
Section 14. Successors. This Underwriting Agreement will inure to the
----------
benefit of and be binding upon the Underwriters, DFS and the Seller 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 15. Governing Law. THIS UNDERWRITING AGREEMENT SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE OR
18
<PAGE>
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
UNDERWRITING AGREEMENT AND ANY TERMS AGREEMENT, AND IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH STATE OR FEDERAL COURT, AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OF PROCEEDING.
Section 16. Nonpetition Covenant. Notwithstanding any prior termination
--------------------
of this Underwriting Agreement or any Terms Agreement, the Underwriters shall
not acquiesce, petition or otherwise invoke or cause the Seller or the general
partner of the Seller or the Trust to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller or the general partner of the Seller or the Trust under any federal
or state bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or the general partner of the Seller or the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Seller of the general partner of the Seller or the Trust.
Section 17. Counterparts. This Underwriting 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.
19
<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, the Seller
and DFS.
Very truly yours,
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
By: Deutsche Floorplan Receivables, Inc., its general
partner
By: __________________________________________________
Name:
Title:
By: __________________________________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: __________________________________________________
Name:
Title:
By: __________________________________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
[ ]
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
Acting on behalf of itself and, if applicable, as the Representative of the
Underwriters named in the related Terms Agreement.
<PAGE>
EXHIBIT A
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST
Asset Backed Certificates
TERMS AGREEMENT
---------------
[Date]
To: Deutsche Floorplan Receivables, L.P.
Re: Underwriting Agreement dated as of [ ] (the "Standard Terms," and
together with this Terms Agreement, the "Agreement").
Series Designation: Series ____.
------------------
Terms of the Series Securities: Distribution Financial Services
--------------------------------------
Floorplan Master Trust Series ____-__ Asset Backed Certificates, Class __, Class
__, Class __, Class __, Class __, Class __ and Class __ Certificates (the
"Securities") will evidence beneficial ownership interest in a pool of
Receivables having the characteristics described in the Prospectus Supplement
dated the date hereof. Only the Class __, Class __, Class __, Class __ and
Class __ Certificates (collectively, the "Offered Securities") are being sold
pursuant to the terms hereof.
Registration Statement: File Number 333-74457
----------------------
Ratings: It is a condition of Closing that at the Closing Date the Class
-------
__ and Class __ Securities be rated "____" by _______________ ("____") and "___"
by _____________ ("_____"); that the Class __ Securities be rated "___" by ____
and "___" by ____; that the Class __ Securities be rated "__" by ____ and "__"
by _______.
Terms of Sale of Offered Securities: The Seller agrees to sell to [ ]
-----------------------------------
[and ______________________________ (the "Underwriter[s]")] [and
___________________ each] agree[s][, severally and not jointly,] to purchase
from the Seller the Offered Securities in the principal amounts and prices set
forth beneath their [respective] name[s] on Schedule 1. The purchase price for
each class of the Offered Securities shall be the applicable Purchase Price
Percentage set forth in Schedule 1 multiplied by the applicable principal
amount.
A-2
<PAGE>
Cut-off Date: [Date]
------------
Closing Date: 10:00 A.M., New York time, on or about [Date]. On the
------------
Closing Date, the Seller will deliver the Offered Securities to the Underwriters
against payment therefor.
Underwriter-Provided Information: The Seller and DFS each acknowledge and
--------------------------------
agree that the information set forth in (i) the table immediately following the
_______ paragraph under the caption "Underwriting" in the Prospectus Supplement
dated [Date], (ii) the _______ and _______ paragraphs under such caption in such
Prospectus Supplement and (iii) the table immediately following the _______
paragraph under such caption in such Prospectus Supplement, as such information
relates to the Securities, constitute the only information furnished in writing
by or on behalf of the Underwriters for inclusion in the Registration Statement,
the Prospectus or the Prospectus Supplement, and the Underwriters confirm that
such statements are correct.
Incorporation of the Standard Terms: Each of the provisions of the
-----------------------------------
Standard Terms is incorporated herein by reference in its entirety and shall be
deemed to be a part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein and each of the representations and
warranties set forth therein shall be deemed to have been made on and as of the
date of this Terms Agreement, and the Standard Terms and this Terms Agreement
shall be construed as, together, one and the same agreement. Without limiting
the foregoing, Sections 14 through 17 of the Standard Terms are incorporated
herein by reference in their entirety.
A-3
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the undersigned a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement among the
Underwriters, Deutsche Floorplan Receivables, L.P. and Deutsche Financial
Services Corporation.
Very truly yours,
[ ]
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
[Acting on behalf of itself and as the
Representative of the Underwriters named herein.]
Accepted in New York, New York,
as of the date hereof:
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
By: Deutsche Floorplan Receivables, Inc., its
general partner
By: ___________________________________________
Name:
Title:
By: ___________________________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: ___________________________________________
Name:
Title:
By: ___________________________________________
Name:
Title:
A-4
<PAGE>
Schedule 1
----------
<TABLE>
<CAPTION>
Class Interest Purchase Approximate Approximate
- -----
Rate Initial Price Amount Amount
--------
Principal Percentage Purchased by Purchased by
----------
Amount (1) [ ] [ ]
---------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Class $ % $ $
Class $ % $ $
Class $ % $ $
Class $ % $ $
Class $ % $ $
Total $ % $ $
</TABLE>
(1) Approximate.
<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.
<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
-8-
<PAGE>
being an officer, director, or shareholder of the General Partner;
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,
-9-
<PAGE>
i. matters related to the business of the Partnership not
otherwise enumerated in this 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:
-13-
<PAGE>
(a) To each Partner's Capital Account there shall be credited such Partner's
Capital Contributions, as set forth 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
-15-
<PAGE>
determined by the General Partner, using any permissible method 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
-16-
<PAGE>
creation of Reserves, and no Partner shall have any claim against the
Partnership for the distribution of Cash Flow to it.
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
-17-
<PAGE>
acceptance thereof and (ii) the Rating Agency Condition in respect of such
proposed transfer shall have been satisfied.
(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
-18-
<PAGE>
harmless all of the other Partners and the Partnership from any claims, demand,
suits, losses, judgments, and damages, including 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;
-19-
<PAGE>
(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 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
-20-
<PAGE>
documents as may be required by law to effect and evidence dissolution and
termination of the Partnership.
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;
-21-
<PAGE>
(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 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.
-22-
<PAGE>
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.
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: /s/ Richard H. Schumacher
_______________________________________
Title: President and Treasurer
By: /s/ Naran Burchinow
_______________________________________
Title: Vice President and Assistant Secretary
LIMITED PARTNER:
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By: /s/ Richard H. Schumacher
_______________________________________________
Title: Senior Vice President and Treasurer
By: /s/ Naran Burchinow
______________________________________________
Title: Senior Vice President, General Counsel
and Secretary
-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 Receivables, Inc. 1% $ 33,235,685.51 $ 33,235,685.51
Limited Partner
- ---------------
Deutsche Financial Services
Corporation 99% $3,290,332,865.49 $3,290,332,865.49
--- ----------------- -----------------
100% $3,323,568,551.00 $3,323,568,551.00
=== ================= =================
</TABLE>
<PAGE>
EXHIBIT B
---------
Partnership Property
--------------------
Receivables Totaling $3,323,568,551.00
<PAGE>
EXHIBIT C
---------
Agreed Market Value
-------------------
Receivables Totaling $3,323,568,551.00
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
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>
Page
<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............................... 56
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
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
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
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............. 70
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.................. 77
SECTION 7.1. Liability of the Seller..................................... 77
SECTION 7.2. Limitation on Liability of the Seller....................... 77
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........................................ 81
SECTION 8.8. Examination of Records...................................... 81
SECTION 8.9. Custodial Arrangements...................................... 81
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX
Early Amortization Events....................... 82
SECTION 9.1. Early Amortization Events................................... 82
SECTION 9.2. Additional Rights Upon the Occurrence of
Certain Events...................................... 84
ARTICLE X
Servicer Defaults........................... 86
SECTION 10.1. Servicer Defaults........................................... 86
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........................................ 95
SECTION 11.4. Trustee May Own Certificates................................ 95
SECTION 11.5. The Servicer to Pay Trustee's Fees and
Expenses............................................ 95
SECTION 11.6. Eligibility Requirements for Trustee........................ 96
SECTION 11.7. Resignation or Removal of Trustee........................... 96
SECTION 11.8. Successor Trustee........................................... 97
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................................................. 99
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................... 100
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.......................................... 101
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............................................ 106
SECTION 13.3. Limitation on Rights of Certificateholders.................. 107
SECTION 13.4. No Petition................................................. 108
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 13.5. GOVERNING LAW............................................... 108
SECTION 13.6. Notices..................................................... 108
SECTION 13.7. Severability of Provisions.................................. 109
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................................................ 110
SECTION 13.13. Third-Party Beneficiaries................................... 110
SECTION 13.14. Actions by Certificateholders............................... 110
SECTION 13.15. Rule 144A Information....................................... 110
SECTION 13.16. Action by Trustee........................................... 110
SECTION 13.17. Merger and Integration...................................... 111
SECTION 13.18. Headings 111
SECTION 13.19. Continued Effectiveness of the Pooling
and Servicing Agreement............................. 111
SECTION 13.20. Submission to Jurisdiction.................................. 111
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit A Form of ITT 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
SCHEDULES
Schedule 1 List of Accounts
Schedule 2 Designation of Collection Account
v
<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 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 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 Recoveries shall
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 issued
-------------
and 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.
"Servicer Default" shall have the meaning specified in Section 10.1.
----------------
27
<PAGE>
"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).
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 6.4.
28
<PAGE>
"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.
"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
29
<PAGE>
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 document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions
30
<PAGE>
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 the
State of Missouri and Recoveries) thereof, (b) all of the Seller's rights,
remedies, powers and privileges with respect to
31
<PAGE>
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 form UCC-1 (and continuation
statements when applicable) with respect to the Receivables now existing and
hereafter created for
32
<PAGE>
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 Receivables and the Collateral Security and all proceeds thereof, the
Floorplan Agreements and the Receivables Contribution and
33
<PAGE>
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 Certificates by the Seller and the consummation
of the transactions provided for or contemplated by this Agreement and
34
<PAGE>
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
Certificates, the performance of the transactions contemplated by this
Agreement, the applicable Supplement and any of the Related
35
<PAGE>
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 Receivables to the Trust and the
issuance of the Certificates. Upon discovery by the Seller, the Servicer, any
Agent or any
36
<PAGE>
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:
(i) Each Receivable and all other Trust Assets existing on the
first Closing Date or, in the case of
37
<PAGE>
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 (or, in the case of Additional
Accounts, on the applicable Additional Cut-Off Date) and the date the
related Receivables are transferred to the Trust, each such 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 Section 2.8.
(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
38
<PAGE>
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 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 the conveyance of such
39
<PAGE>
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
Addition Date (except for the condition in clause (vii), if applicable, which
shall be satisfied on or before the tenth Business Day after the applicable
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
(vii) 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) 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
Opinion of Counsel and Tax
42
<PAGE>
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
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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 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) if such Account was an Ineligible Account at the time it was
originally designated as an Account, 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) if such Account was an Ineligible Account at the time it was
originally designated as an Account, 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.
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<PAGE>
(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 upon the written request of the Servicer, the Trustee shall
deliver to the Seller a Reassignment; provided, however, that, notwithstanding
-------- -------
any other provision of this Agreement, unless such Account was an Ineligible
Account at the time it was originally designated as an Account, the Reassignment
shall remove only the Account and shall not reassign any Receivable existing in
such Account as of the related Removal Date.
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
49
<PAGE>
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 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
50
<PAGE>
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.
(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.
51
<PAGE>
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).
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
52
<PAGE>
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 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
53
<PAGE>
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.
(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
54
<PAGE>
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 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
55
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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 (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
56
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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 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
57
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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.
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 pari passu, 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
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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 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
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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 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.
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(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 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,
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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 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
62
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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,
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
63
<PAGE>
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 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
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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.
(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
--------
65
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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 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.
66
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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
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
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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.
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. With respect to any such
Certificate that is a Book-Entry Certificate, by acquiring any interest in such
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
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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, 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
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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 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:
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(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;
(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
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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 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 6.1 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
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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 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
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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 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 6.1 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
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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 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
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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 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.
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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 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
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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
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 VII
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:
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(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
(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.
The Servicer (if DFS) shall notify the Rating Agencies promptly in the
event that DFS ceases to be a wholly-owned indirect subsidiary of Deutsche Bank
AG.
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
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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 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
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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 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.
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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 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
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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 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
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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
(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
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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, 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.
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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 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
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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;
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
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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 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
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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 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
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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 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
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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 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
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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,
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
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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 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
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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
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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
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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 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.
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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
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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 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
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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.
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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 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.
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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.
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
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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 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.
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(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 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
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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
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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
(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
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"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 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
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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 with respect to a Series that
remain unclaimed for two years after the date of the first notice of final
distribution with respect to such Series. After such 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 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
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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
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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 XII
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
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
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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 the
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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-
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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 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
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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
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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. 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
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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 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.
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(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 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
107
<PAGE>
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 AND THE CERTIFICATES SHALL
-------------
BE GOVERNED BY AND 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 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.
108
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(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 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,
109
<PAGE>
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.
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
110
<PAGE>
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, any Supplement,
the Assignments, the Reassignments 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 determined in accordance with Section 13.6; 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.
111
<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 /s/ Richard H. Schumacher
_______________________________________
Name: Richard H. Schumacher
Title: President and Treasurer
By /s/ Naran Burchinow
_______________________________________
Name: Naran Burchinow
Title: Vice President and Assistant Secretary
DEUTSCHE FINANCIAL SERVICES
CORPORATION, Servicer
By /s/ Richard H. Schumacher
_______________________________________
Name: Richard H. Schumacher
Title: Senior Vice President and Treasurer
By /s/ Naran Burchinow
_______________________________________
Name: Naran Burchinow
Title: Senior Vice President, General Counsel
and Secretary
THE CHASE MANHATTAN BANK,
Trustee
By /s/ Marcus Gustafson
_______________________________________
Name: Marcus Gustafson
Title: Assistant Vice President
112
<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 FLOOR PLAN 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-2
<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-3
<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-4
<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-5
<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-6
<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, (ii 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:
- --
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.
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 [ ], substantially
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 (ii 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>
Certificates and the date of the delivery of the Certificates in definitive
form.
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(g)(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
______________________
G-2-1
<PAGE>
* Include bracketed language only in the case of additions of Accounts effected
pursuant to Section 2.05 of the Pooling and Servicing Agreement.
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
G-2-2
<PAGE>
relating to or affecting creditors' rights generally and to general equity
principles.
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;
H-1
<PAGE>
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. (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] [in the case of Removed
Accounts which are to be removed pursuant to Section 2.8 of the Agreement and
which were not Ineligible Accounts at the time they were originally designated
as Accounts, replace the immediately preceding bracketed text with the
following: the Removed Accounts but not any right, title and interest of the
Trust in, to and under (i) all Receivables existing at the close of business on
the Removal Date in Removed Accounts designated hereby, (ii) all Collateral
Security relating to such Receivables, (iii) all monies due or to become due and
all amounts received with respect to such Receivables (including all Non-
Principal Receivables), (iv) all proceeds (as defined in Section 9-306 of the
UCC in effect in the State of Missouri) of such Receivables and (v) all
Recoveries of such Receivables relating thereto, it being understood that the
H-2
<PAGE>
items described in clauses (i)-(v) will continue to be Trust Assets].
(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 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,
H-3
<PAGE>
(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:
(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.
H-4
<PAGE>
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-5
<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:
By:_____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, Trustee
By:_____________________________________
Name:
Title:
H-6
<PAGE>
EXHIBIT I
FORM OF RECEIVABLES CONTRIBUTION
AND SALE AGREEMENT
[SEE TAB 11]
I-1
<PAGE>
Schedule 1
List of Accounts
Delivered separately to the Trustee and deemed to be incorporated herein.
<PAGE>
Schedule 2
The Collection Account for the Deutsche Floorplan Receivables Master
Trust has been established with The Chase Manhattan Bank, Account #507-865677.
<PAGE>
Exhibit 4.2
-----------
================================================================================
DEUTSCHE FLOORPLAN RECEIVABLES, L.P.
Seller
DEUTSCHE FINANCIAL SERVICES CORPORATION
Servicer
and
[ ]
Trustee
-------------------------------------
SERIES [ ] SUPPLEMENT
Dated as of [ ]
to
POOLING AND SERVICING AGREEMENT
Amended and Restated as of October 1, 1996
--------------------------------------
$[ ]
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST
SERIES [ ]
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Creation of the Series [ ] Certificates
SECTION 1.1 Designation.......................................................... 1
ARTICLE II
Definitions
SECTION 2.1 Definitions.......................................................... 1
ARTICLE III
Servicing Fee
SECTION 3.1 Servicing Compensation............................................... 14
ARTICLE IV
Rights of Series [ ] Certificateholders and
Allocation and Application of Collections
SECTION 4.1 Allocations; Payments to Seller...................................... 16
SECTION 4.2 Monthly Interest; Determination of Certificate Rate.................. 17
SECTION 4.3 Determination of Monthly Principal................................... 18
SECTION 4.4 Establishment of Reserve Fund and Funding Accounts................... 18
SECTION 4.5 Deficiency Amount.................................................... 21
SECTION 4.6 Application of Investor Non-Principal Collections, Investment
Proceeds and Available Investor Principal Collections.............. 22
SECTION 4.7 Distributions to Series [ ] Certificateholders...................... 24
SECTION 4.8 Application of Reserve Fund and Available Subordinated Amount........ 26
SECTION 4.9 Investor Charge-Offs................................................. 27
SECTION 4.10 Excess Servicing..................................................... 28
SECTION 4.11 Excess Principal Collections......................................... 28
SECTION 4.12 Excess Funding Account............................................... 28
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
Distribution and Reports to
Series [ ] Certificateholders
SECTION 5.1 Distributions........................................................ 30
SECTION 5.2 Reports and Statements to Series [ ] Certificateholders........... 30
ARTICLE VI
Early Amortization Events
SECTION 6.1 Additional Early Amortization Events................................. 31
ARTICLE VII
Optional Repurchase
SECTION 7.1 Optional Repurchase.................................................. 32
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....... 32
SECTION 8.2 Distribution of Proceeds of Sale, Disposition or Liquidation of
the Receivables Pursuant to Section 9.2 of the Agreement........... 33
ARTICLE IX
Miscellaneous Provisions
SECTION 9.1 Registration of the Series [ ] Certificates under the
Securities Exchange Act of 1934.................................... 34
SECTION 9.2 Ratification of Agreement............................................ 34
SECTION 9.3 Counterparts......................................................... 35
SECTION 9.4 Governing Law........................................................ 35
SECTION 9.5 Limitation of Class C Certificates................................... 35
SECTION 9.6 The Trustee.......................................................... 36
SECTION 9.7 Instructions in Writing.............................................. 36
SECTION 9.8 Initial Funding of Reserve Fund...................................... 36
</TABLE>
ii
<PAGE>
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Class C Certificate
Exhibit D Distribution Date Statement
SCHEDULES
Schedule 1 Accounts
Schedule 2 Initial Principal Amounts of Certificates
iii
<PAGE>
SERIES [ ] SUPPLEMENT dated as of [ ] (this "Series Supplement") among
DEUTSCHE FLOORPLAN RECEIVABLES, L.P., a Delaware limited partnership, as Seller,
DEUTSCHE FINANCIAL SERVICES CORPORATION, a Nevada corporation, as Servicer, and
[ ] 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 [ ] 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 [
]," which shall consist of three Classes to be known, respectively, as the
"Floating Rate Asset Backed Certificates, Series [ ], Class A," "Floating
Rate Asset Backed Certificates, Series [ ], Class B" and "Floating Rate Asset
Backed Certificates, Series [ ], 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 [ ].
-------------------
"Accumulation Period Commencement Date" shall mean the date which is the
-------------------------------------
first day of the [specify month and year] 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
- -------- ------- -------
<PAGE>
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 [specify month and year] Collection
Period.
"Accumulation Period Length" shall mean [ ].
--------------------------
"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 [ ].
"Allocable Miscellaneous Payments" shall mean, with respect to any
--------------------------------
Distribution Date, the product of (a) the Series [ ] Allocation Percentage
for the related Collection Period and (b) Miscellaneous Payments with respect to
the related Collection Period.
"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.
2
<PAGE>
"Available Subordinated Amount" shall mean, for the first Determination
-----------------------------
Date, an amount equal to [ ]. The "Available Subordinated Amount" for any
subsequent Determination Date shall mean an amount equal to (i) [ ]
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.
"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 [ ] basis points [ ]% 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 [ ], 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.
3
<PAGE>
"Class A Interest Shortfall" shall have the meaning specified in Section
--------------------------
4.2(a).
"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 [ ], 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
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 [ ] basis points [ ]% per annum and
(ii) the related Net Receivables Rate.
"Class B Certificateholders" shall mean the Holders of Class B
--------------------------
Certificates.
4
<PAGE>
"Class B Certificates" shall mean any one of the "Floating Rate Asset
--------------------
Backed Certificates, Series [ ], 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
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 [ ], 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
5
<PAGE>
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 [ ] basis points [ ]% 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 [ ], 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 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 [ ], 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.
6
<PAGE>
"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 [ ].
------------
"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 [ ].
"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
7
<PAGE>
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 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 [ ] 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 [ ] 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 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 [specify month and
year], the first Interest Payment Date shall be [ ].
8
<PAGE>
"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 [ ] Accounts, together with an
amount equal to the Series [ ] 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 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 [ ]) pro rata on the basis of such floating
allocation percentages and principal allocation percentages.
9
<PAGE>
"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 as determined by the Trustee. 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.
"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 generally 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) [ ]% per annum, unless the
----
Servicing Fee has been waived for such Collection Period.
10
<PAGE>
"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 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 [ ] 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 [ ] Certificateholders on a prior Distribution
Date.
11
<PAGE>
"Required Participation Percentage" shall mean, with respect to Series [
---------------------------------
], [ ]%; 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) [ ] percent ([ ]%) 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 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 [ ]" shall mean the Series of Investor Certificates, the terms
-------------
of which are specified in this Series Supplement.
12
<PAGE>
"Series [ ] Accounts" shall have the meaning specified in Section
----------------------
4.4(e).
"Series [ ] 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 [ ] Certificateholders" shall mean, collectively, the Class A
--------------------------------
Certificateholders, the Class B Certificateholders and the Class C
Certificateholders.
"Series [ ] Certificateholders' Interest" shall mean that portion of the
------------------------------------------
Certificateholders' Interest evidenced by the Series [ ] Certificates.
"Series [ ] Certificates" shall mean, collectively, the Class A
--------------------------
Certificates, the Class B Certificates and the Class C Certificates.
"Series [ ] Cut-Off Date" shall mean [ ].
--------------------------
"Series [ ] Excess Principal Collection" shall mean that portion of
-----------------------------------------
Excess Principal Collections allocated to Series [ ] pursuant to Section
4.11.
"Series [ ] 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 [ ], [ ]% 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 [specify month and year] 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 [ ].
13
<PAGE>
(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 [ ], Standard & Poor's,
Moody's and Fitch's. As used in this Series Supplement and in the Agreement
with respect to Series [ ], "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, 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.
(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 [ ] 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 [ ], as of the
Closing Date). The share of the Servicing Fee allocable to the Series [ ]
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 [
- -------- -------
], 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 [ ], 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.
14
<PAGE>
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 [ ] 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 [ ]
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 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 [ ] 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 [ ], 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
15
<PAGE>
(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 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 [ ]
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 [ ] 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 the applicable 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
16
<PAGE>
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.
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
distributed to Class C Certificateholders only to the extent permitted by
applicable law.
17
<PAGE>
(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 of the Trustee's
determination of LIBOR. The establishment of LIBOR 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) 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 [ ]
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 [ ] Certificates.
SECTION 4.4 Establishment of Reserve Fund and Funding Accounts. (a)(i)
--------------------------------------------------
The Trustee, for the benefit of the Series [ ] 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 Distribution Financial Services
Floorplan Master Trust, Series [ ]" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series [ ] 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 [ ] 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.
(b)(i) The Trustee, for the benefit of the Series [ ]
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
Distribution Financial Services Floorplan Master Trust, Series [ ]" and shall
bear a designation clearly indicating that the funds deposited therein are held
for the benefit of the Series [ ] Certificateholders.
18
<PAGE>
(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 [ ] 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 Trustee, 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 Distribution Financial Services
Floorplan Master Trust, Series [ ]" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series [ ] 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 [ ] 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 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 Trustee, for the benefit of the Series [ ]
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 Distribution
Financial Services Floorplan Master Trust, Series [ ]" and shall bear a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series [ ] 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
19
<PAGE>
Investments shall be held by the Trustee for the benefit of the Series [ ]
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 [ ]
Accounts") and in all proceeds thereof. The Series [ ] 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 [ ] 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 [ ]
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 [ ] 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 [ ] Account, except as expressly provided herein. Schedule 1, which is
hereby incorporated into and made part of this Series Supplement, identifies
each Series [ ] 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 [ ] 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 [ ] 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 [ ] 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 [ ] 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
20
<PAGE>
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),
(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 [ ] 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:
21
<PAGE>
(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 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;
22
<PAGE>
(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;
(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 [ ]).
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
23
<PAGE>
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 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
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 [ ] 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 [ ] 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;
(B) second, to the Class B Certificateholders, an amount equal to
------
(i) 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 (ii) any amount determined on any
24
<PAGE>
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 [ ] 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) to the Class C Certificateholders
25
<PAGE>
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 [ ] 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 (and the Trustee shall 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 the 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 [ ] 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 [ ])
pro rata on the basis of such required subordination draw amounts (including the
Required Subordination Draw Amount).
(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 [ ] Certificates, any funds
remaining on deposit in the Reserve Fund shall be paid to the Seller.
26
<PAGE>
(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 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) 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 [ ] Excess Principal Collections", with respect to any
------------------------------------------
Distribution Date, shall mean an amount equal to the lesser of (a) the Series [
] Principal Shortfall, if any, for such Distribution Date and (b) an amount
equal to the product of (x) excess principal collections for
27
<PAGE>
all Series for such Distribution Date and (y) a fraction, the numerator of which
is the Series [ ] 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 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
28
<PAGE>
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 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 [ ] Certificateholders
--------------------------------
SECTION 5.1 Distributions. (a) On each Distribution Date, the Trustee
-------------
as paying agent shall distribute to each Series [ ] 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 [ ] Certificates held by such Certificateholder) of the amounts on
deposit in the Series [ ] Accounts as is payable to and Series [ ]
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 [ ] Certificateholders hereunder
shall be made by check mailed to each Series [ ] Certificateholder at such
Certificateholder's address appearing in the
29
<PAGE>
Certificate Register without presentation or surrender of any Series [ ]
Certificate or the making of any notation thereon; provided, however, that with
respect to Series [ ] 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 [ ] 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 [ ] Certificateholder such statement prepared by
the Servicer setting forth certain information relating to the Trust and the
Series [ ] 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 [ ] 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 [ ], the Trustee shall furnish or cause to be furnished to each Person who
at any time during the preceding calendar year was a Series [ ]
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to Series [ ]
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 [ ] 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 [ ]
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 of the Trustee or the Series [ ]
Certificateholders, be deemed to be an Early Amortization Event solely with
respect to Series [ ] (each, an "Additional Early Amortization Event"):
(a) on any Distribution Date, the balance of the Reserve Fund is less
than [ ] percent of the aggregate outstanding principal balance of the
Certificates, in each case after giving effect to all deposits and
distributions on such Distribution Date;
30
<PAGE>
(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 [ ] percent;
(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 [
] percent 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 [ ] percent of the total assets of the Trust on
each of [ ] 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.
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 less than ten percent
(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 [
] 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
31
<PAGE>
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 [ ] 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 [ ]
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 [ ] 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.
(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
32
<PAGE>
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 [ ].
(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 [ ] 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 of this Series Supplement shall
be deemed to be a final distribution pursuant to Section 12.2 of the Agreement
with respect to Series [ ].
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 [ ] 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 [ ] 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 [ ] 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 [ ]
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
33
<PAGE>
allocated to the Series [ ] 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 [ ]
Certificateholders in the 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 [ ].
ARTICLE IX
Miscellaneous Provisions
------------------------
[SECTION 9.1 Registration of the Series [ ] 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 [ ] and thereafter maintain such registration until the
Series [ ] 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 governed by
-------------
and 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.
34
<PAGE>
(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 (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 the Trustee shall
deposit in the Reserve Fund, available funds in an amount equal to [ ]
percent of the aggregate initial principal balance of the Certificates.
35
<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:
[ ], as Trustee
By:_____________________________
Name:
Title:
S-1
<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.
$___________ FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES [ ], CLASS A
evidencing a fractional undivided interest in certain
assets of the
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST.
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"), Deutsche Financial Services Corporation ("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 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
- --------------------------
*/ Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
- -
<PAGE>
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
2
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this 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:
S-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Pooling and
Servicing Agreement.
[ ],
as Trustee,
By: _______________________
Authorized Officer
Dated:
S-2
<PAGE>
FORM OF THE REVERSE OF CLASS A CERTIFICATE
This certifies that Cede & Co. (the "Series [ ] Class A
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the DISTRIBUTION FINANCIAL SERVICES FLOORPLAN 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 [ ] Supplement dated as of [ ] (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 [ ], as trustee
(the "Trustee"), that are allocated to the Series [ ] 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."
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 [ ] 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 [ ] Certificates have been (or will be) issued with the intention that
the Series [ ] 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 [ ] 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.
<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 Principal Balance: */
-
REGISTERED $______________________
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.
- -
<PAGE>
$___________ FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES [ ], CLASS B
evidencing a fractional undivided interest in certain
assets of the
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST.
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"), Deutsche Financial Services Corporation ("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.
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this 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:
S-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Pooling and
Servicing Agreement.
[ ],
as Trustee,
By: _______________________
Authorized Officer
Dated:
S-2
<PAGE>
FORM OF THE REVERSE OF CLASS B CERTIFICATE
This certifies that Cede & Co. (the "Series [ ] Class B
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the DISTRIBUTION FINANCIAL SERVICES FLOORPLAN 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 [ ] Supplement dated as of [ ] (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 [ ], as trustee
(the "Trustee"), that are allocated to the Series [ ] 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 Class B Certificates will be subordinated to the Class A Certificates
to the extent described in the Series Supplement.
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 [ ] 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 [ ] Certificates have been (or will be) issued with the intention that
the Series [ ] 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 [ ] 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.
<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 Principal Balance: */
-
REGISTERED
$______________________
Certificate No. R-
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.
<PAGE>
$___________ FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES [ ], CLASS C
evidencing a fractional undivided interest in certain
assets of the
DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST.
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"), Deutsche Financial Services Corporation ("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.
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this 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:
S-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Pooling and
Servicing Agreement.
[ ],
as Trustee,
By: _______________________
Authorized Officer
Dated:
S-2
<PAGE>
FORM OF THE REVERSE OF CLASS C CERTIFICATE
This certifies that [_______________________] (the "Series [ ] Class C
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the DISTRIBUTION FINANCIAL SERVICES FLOORPLAN 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 [ ] Supplement dated as of [ ] (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 [ ], as trustee
(the "Trustee"), that are allocated to the Series [ ] 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 Class C Certificates will be subordinated to the Class A Certificates
and the Class B Certificates to the extent described in the Series Supplement.
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 [ ] 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 [ ] 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.
Each Series [ ] Class C Certificateholder (other than the Seller)
represents and warrants to the Seller and the Trustee that such Series [ ]
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.
<PAGE>
Each Series [ ] 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 [ ] Class C Certificateholder by the Seller, the Servicer or the
Trustee.
2
<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 [ ] Allocation Percentage for such Collection
Period;
(c) The total amount, if any, distributed on the Series [ ]
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;
(n) LIBOR and the applicable Net Receivables Rate for the next Interest
Period;
<PAGE>
(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
Name of Series
[ ] Account Account No.
- -------------- -----------
Interest Funding Account
Principal Funding Account
Excess Funding Account
Reserve Fund
All of the foregoing accounts are maintained at the Trustee.
<PAGE>
SCHEDULE 2
Initial Principal Amounts of Certificates
-----------------------------------------
Class Initial Principal Amount
- ----- ------------------------
Class A $
Class B $
Class C $
<PAGE>
Exhibit 5.1
-----------
February 10, 2000
Deutsche Floorplan Receivables, L.P.
655 Maryville Centre Drive
St. Louis, Missouri 63141
Re: Deutsche Floorplan Receivables, L.P.
Registration Statement on Form S-3 (No. 333-74457)
--------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for Deutsche Floorplan Receivables, L.P.,
a Delaware limited partnership (the "Seller"), in connection with the
preparation of the Registration Statement on Form S-3, File No. 333-74457
(together with the exhibits and amendments thereto, the "Registration
Statement") filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), for the registration under the
Act of certain series of Asset Backed Certificates (the "Certificates").
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 the Underwriting Agreement, the Limited Partnership Agreement, the Pooling
and Servicing Agreement, the Supplement, and the Receivables Contribution and
Sale Agreement (the "Operative Documents"). Terms used herein without definition
have the meanings given to such terms in the Registration Statement. We have
also examined such statutes, records and other instruments as we have deemed
necessary for the purposes of this opinion.
Based on and subject to the foregoing, we are of the opinion that, with
respect to the Certificates of any series, when: (a) the Registration Statement
becomes effective pursuant to the provisions of the Act, (b) the amount, price,
interest rate and other principal terms of such Certificates have been fixed by
or pursuant to authorization of the Board of Directors of the general partner of
the Seller, (c) the Operative Documents relating to such series have each been
<PAGE>
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 and authenticated by the trustee, and sold by
the Seller or by the Trust, at the direction of the Seller, as applicable, and
(e) payment of the agreed consideration for such Certificates shall have been
received by the Seller, all in accordance with the terms and conditions of the
related Operative Documents and a definitive purchase, underwriting or similar
agreement with respect to such Certificates 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
nonassessable, except as may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws), and by general principles of equity, regardless of whether
such matters are considered in a proceeding in equity or at law.
Our opinions expressed herein are limited to the federal laws of the United
States and the laws of the State of New York.
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.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
-2-
<PAGE>
Exhibit 8.1
-----------
[LETTERHEAD OF MAYER, BROWN & PLATT]
February 10, 2000
Deutsche Floorplan Receivables, L.P.
655 Maryville Centre Drive
St. Louis, Missouri 63141
Re: Deutsche Floorplan Receivables, L.P.;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special tax counsel for Deutsche Floorplan Receivables,
L.P., a Delaware limited partnership (the "Seller"), in connection with the
preparation of the Registration Statement on Form S-3, File No. 333-74457 (as
amended, the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), for the
registration under the Act of certain series (each, a "Series") of Asset Backed
Certificates (the "Certificates"), each such Series representing an undivided
interest in a trust (the "Trust") formed pursuant to a Pooling and Servicing
Agreement among the Trustee, the Seller and Deutsche Financial Services
Corporation, as Servicer. Capitalized terms used herein without definitions have
the meanings ascribed to them in the Registration Statement.
We hereby confirm that the statements set forth in the prospectus
supplement relating to the Certificates (the "Prospectus Supplement") forming a
part of the Registration Statement under the headings "Summary -- Tax Matters"
and "Federal Income Tax Consequences," which statements have been prepared by
us, to the extent that they constitute matters of law or legal conclusions with
respect thereto relating to federal tax matters, are correct in all material
respects, and we hereby confirm and adopt the opinions set forth therein. 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.
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
<PAGE>
judicial decisions. No tax rulings will be sought from the IRS with respect to
any of the matters discussed herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are
"experts" within the meaning of the term used in the Act 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
-2-
<PAGE>
Exhibit 8.2
-----------
February 10, 2000
To the Parties Listed on Schedule A
Re: Deutsche Floorplan Receivables, L.P.
Registration Statement on Form S-3
Registration No. 333-74457
Gentlemen:
We have acted as Special State Tax Counsel to Deutsche Floorplan
Receivables, L.P. (the "Seller") in connection with the Seller's Registration
Statement filed on Form S-3 (Registration No. 333-74457) as amended (the
"Registration Statement"). You have asked our opinion with respect to certain
State tax matters contained in the Prospectus Supplement which is included as
part of the Registration Statement.
In our opinion, the description of the Missouri income tax aspects of
the offering contained in the Prospectus Supplement under the headings
"Summary - Tax Matters" and "State and Local Tax Consequences" is an accurate
description of certain Missouri tax consequences of the Trust and the holders of
the Certificates described therein.
Our opinion is based on the Statutes of Missouri and rules and
regulations promulgated thereunder, and interpretations thereof existing on this
date. Our opinion represents judgements concerning complex issues and is not
binding upon any taxing authority. No assurance can be given that the Missouri
tax treatment described in the Prospectus Supplement 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 LLP in the Prospectus
Supplement under the headings "Summary - Tax Matters" and "State and Local Tax
Consequences."
Very truly yours,
/s/ Bryan Cave LLP
BRYAN CAVE LLP
<PAGE>
Schedule A
Deutsche Financial Services Corporation
655 Maryville Centre Drive
St. Louis, Missouri 63141
Deutsche Floorplan Receivables, L.P.
665 Maryville Centre Drive
St. Louis, Missouri 63141
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
================================================================================
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
<S> <C>
ARTICLE I
Definitions
Section 1.1. Definitions................................................... 1
Section 1.2. Other Definitional Provisions................................. 2
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...................................... 5
Section 2.3. Representations and Warranties of the
Sellers Relating to the Receivables8
Section 2.4. Addition of Accounts.......................................... 9
Section 2.5. Covenants of the Sellers...................................... 12
Section 2.6. Removal of Eligible Accounts.................................. 13
Section 2.7. Removal of Ineligible Accounts................................ 15
Section 2.8. Sale of Ineligible Receivables................................ 16
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........................................ 17
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
Section 4.1. Allocations and Applications of Collections
and Other Funds........................................ 17
ARTICLE V
Other Matters Relating to the Sellers
Section 5.1. Merger or Consolidation of, or Assumption of,
the Obligations of the Sellers......................... 17
Section 5.2. Sellers' Indemnification of the Buyer......................... 18
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI
Termination......................................... 18
ARTICLE VII
Miscellaneous Provisions
Section 7.1. Amendment......................................................... 19
Section 7.2. Protection of Right, Title and
Interest to Receivables.................................... 20
Section 7.3. Limited Recourse.................................................. 21
Section 7.4. No Petition....................................................... 21
Section 7.5. GOVERNING LAW..................................................... 22
Section 7.6. Notices........................................................... 22
Section 7.7. Severability of Provisions........................................ 22
Section 7.8. Assignment........................................................ 22
Section 7.9. Further Assurances................................................ 22
Section 7.10. No Waiver; Cumulative Remedies.................................... 22
Section 7.11. Counterparts...................................................... 23
Section 7.12. Third-Party Beneficiaries......................................... 23
Section 7.13. Merger and Integration............................................ 23
Section 7.14. Headings.......................................................... 23
Section 7.15. Continued Effectiveness of the
Receivables Contribution and
Sale Agreement............................................. 23
Section 7.16. Submission to Jurisdiction........................................ 23
</TABLE>
-ii-
<PAGE>
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
-iii-
<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 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.
<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 (or interests
in any of the foregoing).
-3-
<PAGE>
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 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 and other items 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
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<PAGE>
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
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.
-5-
<PAGE>
(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 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
-6-
<PAGE>
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 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).
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<PAGE>
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:
(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
-8-
<PAGE>
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 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, if any, 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
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<PAGE>
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 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 modified, if applicable, to reflect contributions to (and by) the
general partner of the Buyer (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.
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<PAGE>
(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) 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) 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
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<PAGE>
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 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
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<PAGE>
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
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), subject to Section 2.6(d).
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<PAGE>
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:
(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, subject to Section 2.6(d), shall deliver to
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<PAGE>
the applicable Seller a reassignment in substantially the form of Exhibit C (the
"Reassignment").
------------
(d) Notwithstanding any other provision of this Agreement, the Buyer shall
have the right to consent or to decline to consent to any removal of Removed
Accounts (and the related Receivables) to a Seller pursuant to this Section 2.6.
If the Buyer declines to consent to any such removal of Removed Accounts (and
the related Receivables) to a Seller, the Buyer shall provide notice thereof to
the Rating Agencies.
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 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) 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) if such Account was an Ineligible Account at the time it was
originally designated as an Account, 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) if such Account was an Ineligible Account at the time it was
originally designated as an Account, on each
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<PAGE>
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; provided, however, that notwithstanding any other
-------- -------
provision of this Agreement, unless such Account was an Ineligible Account at
the time it was originally designated as an Account, the Reassignment shall
reassign only the Account and shall not reassign any Receivable existing in such
Account as of the related Removal Date.
Section 2.8. Sale of Ineligible Receivables. Each Seller shall sell to the
------------------------------
Buyer 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) 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.
-16-
<PAGE>
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
-------------------------------------
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.
-17-
<PAGE>
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.
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
-18-
<PAGE>
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 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
-19-
<PAGE>
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.
(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 deemed to 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
-20-
<PAGE>
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 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,
-21-
<PAGE>
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 or,
in the case of notices to Deutsche BSC, to the following address: 655 Maryville
Centre Drive, St. Louis, Missouri 63141, Attention: Secretary.
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.
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
-22-
<PAGE>
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, the Receivables Contribution
- --------------
and Sale Agreement shall continue to be in full force and effect and is hereby
ratified and confirmed in all respects.
Section 7.16. 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, the Assignments,
the Reassignments 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;
-23-
<PAGE>
(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 determined in accordance with Section 7.6; 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.
-24-
<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: /s/ Richard H. Schumacher
---------------------------------------
Name: Richard H. Schumacher
---------------------------------
Title: President and Treasurer
-------------------------------
By: /s/ Naran Burchinow
---------------------------------------
Name: Naran Burchinow
---------------------------------
Title: Vice President and Assistant
Secretary
-------------------------------
DEUTSCHE FINANCIAL SERVICES
CORPORATION, Seller
By: /s/ Richard H. Schumacher
---------------------------------------
Name: Richard H. Schumacher
---------------------------------
Title: Senior Vice President and
Treasurer
-------------------------------
By: /s/ Naran Burchinow
---------------------------------------
Name: Naran Burchinow
---------------------------------
Title: Senior Vice President, General
Counsel and Secretary
-------------------------------
DEUTSCHE BUSINESS SERVICES
CORPORATION, Seller
By: /s/ Richard H. Schumacher
---------------------------------------
Name: Richard H. Schumacher
---------------------------------
Title: Senior Vice President
-------------------------------
By: /s/ Naran Burchinow
---------------------------------------
Name: Naran Burchinow
---------------------------------
Title: Vice President and Secretary
-------------------------------
-25-
<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 E T H:
- - - - - - - - -
WHEREAS 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
A-1
<PAGE>
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 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
A-2
<PAGE>
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] [true contributions].
(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;
A-3
<PAGE>
(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
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
A-4
<PAGE>
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 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
A-5
<PAGE>
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.
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, ________________.
C-1
<PAGE>
2. Notice of Removed Accounts. The Seller shall deliver to the Buyer,
--------------------------
the Trustee, any Enhancement Providers and the Rating 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][in the case of Removed Accounts which are to be removed pursuant to
Section 2.7 of the Receivables Contribution and Sale Agreement and which were
not Ineligible Accounts at the time they were originally designated as Accounts,
replace the immediately preceding bracketed text with the following: the
Removed Accounts but not any right, title and interest of the Trust in, to and
under (i) any Receivables existing as of the Removal Date in Removed Accounts
designated hereby, (ii) all Collateral Security relating to such Receivables,
(iii) the related Floorplan Rights, (iv) all monies due or to become due and all
amounts received with respect to such Receivables (including all Non-Principal
Receivables), (v) all proceeds (as defined in Section 9-306 of the UCC as in
effect in the State of Missouri [Georgia] and Recoveries) thereof relating to
such Receivables, it being understood that the items described in clauses (i)-
(v) will continue to be Trust Assets] .
(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
C-2
<PAGE>
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, 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
C-3
<PAGE>
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 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:
C-4
<PAGE>
[DEUTSCHE FINANCIAL SERVICES
CORPORATION, Seller]
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
C-5
<PAGE>
[DEUTSCHE BUSINESS SERVICES
CORPORATION, Seller]
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
C-6
<PAGE>
Schedule 1
----------
List of Accounts
----------------
[Provided separately to the Buyer and the
Trustee and deemed to be incorporated herein.]
