AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 1999
REGISTRATION NO. 333-_________
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------------
YAMAHA MOTOR MASTER TRUST
(Issuer With Respect To Certificates)
--------------------------------
YAMAHA MOTOR RECEIVABLES CORPORATION
(Originator Of The Trust Described Herein)
(Exact Name Of Registrant As Specified In Its Charter)
DELAWARE 9999 33-0592719
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE NO.)
ORGANIZATION)
6555 KATELLA AVENUE
CYPRESS, CA 90630
(714) 761-7500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------------------
RUSSELL D. JURA, ESQ.
GENERAL COUNSEL
6555 KATELLA AVENUE
CYPRESS, CA 90630
(714) 761-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------------
Copies To:
MELANIE GNAZZO, ESQ. SUSAN M. CURTIS, ESQ.
GIANCARLO & GNAZZO, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
A PROFESSIONAL CORPORATION 919 THIRD AVENUE
625 MARKET STREET, 11TH FLOOR NEW YORK, NEW YORK 10022
SAN FRANCISCO, CALIFORNIA 94105
---------------------------------
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
---------------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for
the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. |_|
---------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING MAXIMUM AMOUNT OF
SECURITIES TO BE BE REGISTERED PRICE PER AGGREGATE REGISTRATION FEE
REGISTERED UNIT(1) OFFERING
PRICE(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLOATING RATE SERIES
1999-1 ASSET-BACKED
CERTIFICATES.............. $1,000,000.00 100% $1,000,000.00 $278.00
===============================================================================================
</TABLE>
(1) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
=============================================================================
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus Dated March , 1999
$---------------
YAMAHA MOTOR MASTER TRUST
FLOATING RATE SERIES 1999-1, CLASS A ASSET-BACKED CERTIFICATES
FLOATING RATE SERIES 1999-1, CLASS B ASSET-BACKED CERTIFICATES
YAMAHA MOTOR RECEIVABLES CORPORATION
TRANSFEROR
YAMAHA MOTOR CORPORATION, U.S.A.
SERVICER
<TABLE>
<S> <C> <C>
THE TRUST IS OFFERING: CLASS A CERTIFICATES CLASS B CERTIFICATES
Principal Amount $_________________ $_________________
Price $___________ (_____%) $___________ (_____%)
Underwriter's
Commission $___________ (_____%) $___________ (_____%)
Proceeds to the
Issuer $___________ (_____%) $___________ (_____%)
Interest Rate one-month LIBOR + __% p.a. one-month LIBOR + __% p.a.
Interest Distribution monthly on the 15th or the monthly on the 15th or the
Dates first business day after first business day after
the 15th the 15th
First Interest
Distribution Date ___________, 1999 ___________, 1999
Expected Final
Payment Date ___________ distribution ___________ distribution
date date
</TABLE>
o The trust is also issuing $__________ principal amount of Class C
Certificates. The Class C Certificates are not being offered by
this prospectus.
CREDIT ENHANCEMENT:
Credit enhancement for the Class A Certificates is provided by:
o subordination of the Class B Certificates;
o subordination of the Class C Certificates; and
o subordination of the transferor interest in the trust up to
the available subordination amount.
Credit enhancement for the Class B Certificates is provided by:
o subordination of the Class C Certificates; and
o subordination of the transferor interest in the trust up to the
available subordination amount.
THESE SECURITIES ARE INTERESTS IN YAMAHA MOTOR MASTER TRUST, AND ARE BACKED
ONLY BY THE ASSETS OF THE TRUST. NEITHER THESE SECURITIES NOR THE ASSETS OF
THE TRUST ARE OBLIGATIONS OF YAMAHA MOTOR RECEIVABLES CORPORATION, YAMAHA
MOTOR CORPORATION, U.S.A. OR ANY OF THEIR AFFILIATES OR INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES ARE HIGHLY STRUCTURED. BEFORE YOU PURCHASE THESE
SECURITIES, BE SURE YOU UNDERSTAND THE STRUCTURE AND THE RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The trust is offering these securities subject to availability.
CHASE SECURITIES INC.
The date of this prospectus is , 1999.
TABLE OF CONTENTS
PAGE
----
WHERE TO FIND INFORMATION IN THIS PROSPECTUS...............................4
SUMMARY OF TERMS...........................................................5
STRUCTURAL SUMMARY.........................................................6
SELECTED TRUST PORTFOLIO SUMMARY DATA......................................9
RISK FACTORS..............................................................10
THE TRANSFEROR AND RELATED PARTIES........................................15
Yamaha Motor Receivables Corporation...................................15
Yamaha Motor Corporation, U.S.A........................................15
Deutsche Financial Services Corporation................................16
Insolvency-Related Matters.............................................16
The Trust..............................................................17
The Transferor's Other Activities......................................17
USE OF PROCEEDS...........................................................18
THE DEALER FLOORPLAN FINANCING BUSINESS...................................18
Credit Underwriting Process............................................18
Creation of Receivables................................................19
Payment Terms..........................................................20
Billing and Collection Procedures......................................20
Interest Rates.........................................................21
Relationship between Deutsche Financial
and Yamaha.............................................................21
Dealer Monitoring......................................................21
"Red Flag" and Deutsche Financial's
Write-Off Policy.......................................................21
THE ACCOUNTS..............................................................22
Loss Experience........................................................23
Aging Experience.......................................................24
Geographic Distribution................................................24
MATURITY AND PRINCIPAL PAYMENT
CONSIDERATIONS.........................................................25
DESCRIPTION OF THE OFFERED CERTIFICATES...................................27
Interests in the Trust.................................................27
Interest Payments......................................................28
Principal Payments.....................................................29
Registration of the Offered Certificates in
the Name of Cede as Nominee of DTC.....................................30
Book-Entry Registration of the Offered
Certificates...........................................................30
DTC's Year 2000 Efforts................................................33
Issuance of Definitive Certificates Upon
the Occurrence of Certain Circumstances................................34
Rating of the Offered Certificates.....................................34
Conveyance of Receivables..............................................35
Exchanges..............................................................35
Covenants, Representations and
Warranties.............................................................38
Addition of Accounts...................................................41
Removal of Accounts....................................................41
Collection Account.....................................................42
Principal Funding Account..............................................43
Special Funding Account................................................44
Servicer Cash Collateral Account.......................................44
Allocation Percentages.................................................45
Allocation of Collections; Deposits in
Collection Account.....................................................46
Yield Factor; Yield Collections........................................47
Principal Collections for All Series...................................48
Application of Collections.............................................48
Subordination of Transferor Interest in
Certain Circumstances..................................................48
Distributions from the Collection
Account................................................................50
Distributions to Certificateholders....................................52
Defaulted Receivables; Recoveries,
Adjustment Payments....................................................53
Investor Charge-Offs...................................................54
Final Payment of Principal; Termination
of Trust...............................................................54
Early Amortization Events..............................................55
Indemnification........................................................57
Collection and Other Servicing
Procedures.............................................................58
Servicer Covenants.....................................................58
Servicing Compensation and Payment
of Expenses............................................................59
Certain Matters Regarding the Servicer.................................59
Servicer Default.......................................................60
Reports to Certificateholders..........................................61
Evidence as to Compliance..............................................63
Amendments.............................................................63
List of Certificateholders.............................................64
The Trustee............................................................64
DESCRIPTION OF THE RECEIVABLES SALE AGREEMENT.............................64
DESCRIPTION OF THE RECEIVABLES PURCHASE
AGREEMENT..............................................................65
Sale of Receivables....................................................65
Representations and Warranties.........................................65
Certain Covenants......................................................66
Termination............................................................67
CERTAIN TRANSFER, SECURITY INTEREST AND
BANKRUPTCY CONSIDERATIONS..............................................67
Transfer of Receivables................................................67
CERTAIN MATTERS RELATING TO BANKRUPTCY....................................68
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.................................68
Characterization of the Offered
Certificates as Indebtedness...........................................69
Future Legislation.....................................................69
Taxation of Interest Income............................................69
Sales of Offered Certificates..........................................70
Tax Characterization of the Trust......................................71
Possible Classification of the
Transaction as a Partnership...........................................71
Federal Income Tax Consequences to
Foreign Investors......................................................72
Backup Withholding.....................................................72
New Withholding Regulations............................................73
State, Local and Foreign Taxation......................................73
ERISA CONSIDERATIONS......................................................73
UNDERWRITING..............................................................74
LEGAL MATTERS.............................................................75
REPORTS TO CERTIFICATEHOLDERS.............................................76
WHERE YOU CAN FIND MORE INFORMATION.......................................76
INDEX OF PRINCIPAL TERMS..................................................77
ANNEX A...................................................................81
WHERE TO FIND INFORMATION IN THIS PROSPECTUS
This prospectus provides the specific terms of the Class A and Class B
Certificates as well as general information about Yamaha Motor Master
Trust, including terms and conditions that are generally applicable to the
securities issued by the trust. You should rely only on the information
about the certificates provided in this prospectus. We have not authorized
anyone to provide you with different information.
This prospectus begins with several introductory sections describing
your series and the trust in abbreviated form:
o Summary of Terms provides important amounts, dates and other terms
of your series;
o Structural Summary gives a brief introduction of the key
structural features of your series and directions for locating
further information;
o Selected Trust Portfolio Summary Data provides financial information
about the assets of the trust; and
o Risk Factors describes risks that apply to your certificates.
As you read through these sections, cross-references will direct you
to more detailed sections where you can find additional information. You
can also directly reference key topics by looking at the table of contents.
You can find a listing of the pages where capitalized terms used in this
prospectus are defined beginning on page 77 in this prospectus.
TO UNDERSTAND THE STRUCTURE OF THESE SECURITIES, YOU MUST READ
CAREFULLY THIS PROSPECTUS IN ITS ENTIRETY.
SUMMARY OF TERMS
This summary contains a brief description of the certificates. You
will find a detailed description of the terms of the offering of the Class
A and Class B Certificates following this summary.
The Trust: Yamaha Motor Master Trust
Transferor of the Receivables: Yamaha Motor Receivables Corporation
Transferor's Address: 6555 Katella Avenue, Cypress, CA 90630
Transferor's Telephone Number: (714) 761-7500
Servicer of the Receivables: Yamaha Motor Corporation, U.S.A.
Trustee: The Fuji Bank and Trust Company
Clearance and Settlement: The Depository Trust Company, Cedel Bank,
societe anonyme and the Euroclear System
Assets of the Trust: The assets of the trust include:
o wholesale receivables generated from
revolving financing arrangements with
dealers in products manufactured by
Yamaha Motor Company, Ltd., Yamaha Motor
Manufacturing Corporation of America and
Tennessee Watercraft, Inc.;
o collections on the receivables;
o funds in the accounts of the trust;
o any enhancements issued which benefit
certificateholders of another series; and
o security interests in the inventory of
the dealers financed by the receivables
THE TERMS OF THE SERIES:
<TABLE>
<CAPTION>
Class A Certificates Class B Certificate Class C Certificates
<S> <C> <C> <C>
Principal Amount: $_________ $_________ $_________
Interest Rate: one-month LIBOR one-month LIBOR one-month LIBOR
plus ____% p.a. plus ____% p.a. plus ____% p.a.
Percent of Series: __________% __________% __________%
Interest Accrual Method: actual/360 actual/360 actual/360
Interest Distribution Dates: monthly (15th) monthly (15th) monthly (15th)
First Interest Distribution
Date: __________, 1999 __________, 1999 __________, 1999
Commencement of Accumulation
Period: ___________ ___________ none
Expected Final Payment Date: ___________ ___________ ___________
distribution date distribution date distribution date
Annual Servicing Fee: 2% 2% 2%
Anticipated Ratings (Moody's/
S&P):* Aaa/AAA A3/A not rated
Credit Enhancement: subordination of subordination of limited subordina-
Class B and Class Class C and tion of transferor
C and limited sub- limited subordina- interest
ordination of tion of transferor
transferor interest interest
CUSIP Number: ___________ ___________ ___________
ISIN: ___________ ___________ ___________
Common Code: ___________ ___________ ___________
</TABLE>
- --------------------------
* It is a condition to the offering of the Class A and Class B
Certificates that one of these ratings be obtained. However, a rating
agency in its discretion may lower or withdraw its rating in the future.
STRUCTURAL SUMMARY
This summary briefly describes some of the major structural components
of the certificates. To fully understand the terms of the offering, you
will need to read this prospectus in its entirety.
THE CERTIFICATES
Your certificates represent the right to a portion of collections on
the underlying trust assets. Your certificates will also be allocated a
portion of net losses on the receivables, if there are any. Any collections
allocated to your series will be used to make interest and principal
payments, to pay a portion of Yamaha Motor Corporation, U.S.A.'s fees as
servicer and to cover net losses allocated to your series. Any collections
allocated to your series in excess of the amount owed to you or Yamaha as
servicer will be shared with other series of certificates issued by the
trust or returned to the transferor. In no case will you receive more than
the principal and interest owed to you under the terms described in this
prospectus.
For further information on allocations and payments, see "Description
of the Offered Certificates-- Allocation Percentages" and "--Application of
Collections." For a more detailed discussion of your certificates, see
"Description of the Offered Certificates." For a discussion of losses, see
"Description of the Offered Certificates--Defaulted Receivables;
Recoveries, Adjustment Payments" and "-- Investor Charge-Offs." See "Risk
Factors" for more detailed discussions of the risks of investing in the
certificates.
THE RECEIVABLES
The receivables supporting your certificates consist of rights to
payment arising out of wholesale floor plan financing arrangements and other
inventory financing arrangements between Deutsche Financial Services
Corporation and Yamaha dealers. The dealers use these financing
arrangements to purchase products manufactured by Yamaha Motor
Manufacturing Corporation of America, Yamaha Motor Company, Ltd. and
Tennessee Watercraft, Inc. Generally, Deutsche Financial advances the
wholesale purchase price of a new product to the dealer. The dealer
generally must repay this amount when it sells the financed product. Yamaha
also offers special sales programs to its dealers several times a year.
For further information about the receivables supporting your
certificates, see "The Accounts," "The Dealer Floorplan Financing
Business--Creation of Receivables" and "--Payment Terms."
As new receivables arise, Deutsche Financial sells them to Yamaha. In
turn, Yamaha sells the receivables to the transferor, and the transferor
transfers them to the trust. The amount of receivables in the trust will
fluctuate over time.
For a detailed description of this process, see "Description of the
Receivables Sale Agreement" and "Description of the Receivables Purchase
Agreement."
CREDIT ENHANCEMENT
Your certificates feature credit enhancement by means of the
subordination of other interests. This subordination is intended to protect
you from net losses and shortfalls in cash flow. Credit enhancement is
provided to the Class A Certificates by the following:
o subordination of the Class B Certificates;
o subordination of the Class C Certificates; and
o subordination of the transferor interest in the
trust up to the available subordination amount.
Credit enhancement is provided to the Class B Certificates by the
following:
o subordination of the Class C Certificates; and
o subordination of the transferor interest in the trust up to the
available subordination amount.
The effect of subordination is that the more subordinated interests
will absorb any net losses allocated to your series, and make up any
shortfalls in cash flow, before the more senior interests are affected. If
the cash flow and the subordination do not cover all net losses allocated
to your series, your payments of interest and principal will be reduced and
you may suffer a loss of principal.
For a more detailed description of the subordination provisions of your
series, see "Description of the Offered Certificates--Allocation
Percentages," and "--Subordination of Transferor Interest in Certain
Circumstances."
YAMAHA MOTOR MASTER TRUST
Your series is one of three outstanding series issued by the trust. The
trust is maintained by the trustee for the benefit of:
o certificateholders of your series;
o certificateholders of other series issued by the trust; and
o the transferor.
Each series has a claim to a percentage of the trust's assets,
regardless of the total amount of receivables in the trust at any time. The
transferor holds the remaining claim to the trust's assets, which
fluctuates with the total amount of receivables in the trust. The
transferor, as the holder of that remainder, can cause the trust to issue
additional series in the future. In addition, the transferor may purchase
your certificates at any time when the outstanding amount of the Series
1999-1 certificateholders' interest in the trust is less than 10% of the
original amount of that interest.
For further information about the issuance of new series, see
"Description of the Offered Certificates-- Exchanges." For details about
the transferor's purchase option, see "Description of the Offered
Certificates--Final Payment of Principal; Termination of Trust."
IMPUTED INTEREST
The receivables do not bear interest for a specified period of time
after their creation. If a dealer sells a product during that period, the
dealer will not be required to pay interest on the receivable. During that
period, the trust imputes interest for the receivables by treating a
portion of the collections on the receivables as "yield" to the trust. The
amount of collections which will be treated as yield during each collection
period will initially be 1.5% of the total amount of receivables in the
trust, increasing to 1.75% during the accumulation periods.
INTEREST PAYMENTS
On each distribution date, the trust will pay interest on your
certificates in proportion to the principal balance of the certificates.
For more information on interest payments, see "Description of the
Offered Certificates-Interest Payments."
PRINCIPAL PAYMENTS
The trust expects to repay all principal on the Class A Certificates in
one payment on the ________ distribution date. In order to collect the
funds to pay the Class A Certificates on time, the trust will accumulate a
portion of principal collections allocable to your series in a principal
funding account during a controlled accumulation period. The controlled
accumulation period will be six months long, commencing on _______. The
controlled accumulation period will end on the expected final payment date
for the Class A Certificates, at which time the Class A Certificates will
be paid in full.
The trust also expects to repay all principal on the Class B
Certificates in one payment on the ________ distribution date. After the
Class A Certificates are paid in full, in order to collect the funds to pay
the Class B Certificates on time, the trust will accumulate all principal
collections allocable to your series in a principal funding account during
a rapid accumulation period. The rapid accumulation period will be ____
months long, commencing on ______. The rapid accumulation period will end
on the expected final payment date for the Class B Certificates, at which
time the Class B Certificates will be paid in full.
For more information on principal payments, the controlled accumulation
period and the rapid accumulation period, see "Maturity and Principal
Payment Considerations," "Description of the Offered Certificates-Principal
Payments," "--Principal Funding Account" and "--Principal Collections for
all Series."
POSSIBLE LATER PAYMENTS OF PRINCIPAL
If the trust does not fully repay your certificates on the applicable
expected final payment date, the certificates will begin to amortize by
means of monthly payments of all principal collections allocated to your
series until full repayment occurs. After the trust fully repays the Class
A Certificates, the trust will use principal collections allocated to your
series to repay the Class B Certificates.
POSSIBLE EARLIER PAYMENTS OF PRINCIPAL
The trust may repay your certificates earlier than the applicable
expected final payment date if an early amortization event occurs. In that
case, the trust will commence a monthly amortization of the certificates.
After this amortization begins, the Class A Certificates will receive
monthly payments of principal until full repayment occurs. After the Class
A Certificates are paid in full, the Class B Certificates will receive
monthly payments of principal until full repayment occurs. In that event,
your certificates will receive principal payments earlier than the
applicable expected final payment date.
For more information on early payments of principal and early
amortization events, see "Maturity and Principal Payment Considerations"
and "Description of the Offered Certificates--Early Amortization Events."
Prior to the commencement of an accumulation or early amortization
period for your series, the trust will pay principal collections to the
transferor or share them with other series that are amortizing or in an
accumulation period.
The trust will make final payments of principal and interest no later
than the _____ distribution date, which is the final series termination
date.
TAX STATUS
Giancarlo & Gnazzo, A Professional Corporation, special tax counsel to
the trust and the transferor, is of the opinion that for U.S. federal
income tax purposes:
o the Class A Certificates and the Class B Certificates will be
characterized as debt; and
o the trust will not be an association or a publicly traded partnershi
taxable as a corporation.
If you purchase the certificates, you agree to treat them as debt for
tax purposes.
For further information regarding the application of U.S. federal
income tax laws, see "Certain Federal Income Tax Considerations."
ERISA CONSIDERATIONS
The certificates are generally eligible for purchase by persons
investing assets of employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974. However, administrators of employee
benefit plans should review the matters discussed under "ERISA
Considerations" and also should consult with their legal advisors before
purchasing the certificates.
SELECTED TRUST PORTFOLIO SUMMARY DATA
[Diagram entitled "Geographic Distribution of Receivables in U.S.
Wholesale Portfolio as of ______, 199__"]
[Diagram entitled "Receivables in U.S. Wholesale Portfolio by Age of
Account as of ______, 199__"]
[Diagram entitled "Payment Data"]
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the certificates.
ABSENCE OF SECONDARY MARKET The underwriter for the certificates may assist
FOR CERTIFICATES COULD LIMIT in resales of the certificates but it is not
YOUR ABILITY TO RESELL required to do so. A secondary market for the
certificates may not develop. If a secondary
market for the certificates does develop, it
may not continue or it may not be
sufficiently liquid to allow you to resell
your certificates.
POTENTIAL LOSS ON You may suffer a loss on your certificates if
CERTIFICATES DUE TO the assets of the trust are insufficient to pay
LIMITED ASSETS OF THE TRUST the principal amount of the certificates in
full. The only source of funds for payments on
the certificates will be the assets of the
trust. The assets of the trust are limited
to the receivables and the funds on deposit
in the trust's bank accounts. Neither
Yamaha, the transferor, the trustee nor
anyone else will insure or guarantee the
certificates. Consequently, you must rely
for payment of the Class A Certificates
solely upon collections on the receivables,
funds on deposit in the trust's bank
accounts, the subordination of the Class B
Certificates, the subordination of the Class
C Certificates and the subordination of the
transferor interest up to the available
subordination amount. Similarly, you must
rely for payment of the Class B Certificates
solely upon collections on the receivables,
funds on deposit in the trust's bank
accounts, the subordination of the Class C
Certificates and the subordination of the
transferor interest up to the available
subordination amount. In addition, the
certificates have a claim only to a
percentage of the trust's assets, regardless
of the total amount of receivables in the
trust at any time. If the trust does not pay
the certificates in full on time, you may
not look to any assets of Yamaha, the
transferor, the trustee or anyone else to
satisfy your claim.
POTENTIAL LOSS ON Deutsche Financial accounts for the transfer of
CERTIFICATES DUE TO the receivables to Yamaha as a sale, and Yamaha
PRIORITY OF SOME LIENS OVER accounts for the transfer to the transferor
THE CERTIFICATES of the receivables purchased from Deutsche
Financial as a sale. Similarly, the
transferor accounts for the transfer to the
trust of the receivables purchased from
Yamaha as a sale. However, a court could
conclude that Deutsche Financial, Yamaha or
the transferor still owns the receivables
and that the trust holds only a security
interest. Deutsche Financial, Yamaha and the
transferor will take steps to give the
trustee a first priority perfected security
interest in the receivables in the event a
court concludes Deutsche Financial, Yamaha
or the transferor still owns the
receivables. If a court concludes that the
transfer to the trust is only a grant of a
security interest in the receivables and not
a sale, some liens on Yamaha's or the
transferor's property arising before new
receivables come into existence may get paid
before the trust's interest in those
receivables. Those liens include a tax or
government lien or other liens permitted
under the law without the consent of Yamaha
or the transferor.
For more information about this risk, see
"Certain Transfer, Security Interest and
Bankruptcy Considerations--Transfer of
Receivables."
In addition, the agreements between Deutsche
Financial and the dealers to provide credit
generally grant a lien to Deutsche Financial
in all of the property of the dealers. If
Deutsche Financial has not taken all legal
steps to perfect its lien in a particular
product, other creditors of the dealer who
perfected their liens prior to Deutsche
Financial may have a lien superior to
Deutsche Financial's lien. In addition,
since Deutsche Financial also provides
financing to dealers for products not made
by Yamaha's affiliates, Deutsche Financial
may have made loans to dealers that are
secured by liens in all of the property of
the dealers. Deutsche Financial has agreed
that it will not pursue remedies against any
Yamaha-brand product to repay any receivable
owed to Deutsche Financial (other than a
Yamaha-related receivable). However, if a
dealer becomes bankrupt, another creditor of
the dealer could try to claim that the
creditor has a superior lien in the product.
This could prevent the trust from realizing
the full benefit of its lien in a product.
In addition, when a dealer sells a product,
Deutsche Financial's and the trust's liens
in the product will end. Therefore, although
the dealer must pay the amount owed on the
receivable when it sells the product, and
the trust has a lien in the receivable, the
product will no longer secure the
receivable.
If the short-term debt ratings of Yamaha and
Deutsche Financial are at least "A-1" or
"P-1" while Yamaha is the servicer and
Deutsche Financial is the subservicer,
Yamaha and Deutsche Financial will, with
some limitations, be allowed to use the cash
collections for their own benefit before
each distribution date. Consequently, the
trust could lose its lien in the cash
collections in some circumstances such as
the bankruptcy of Yamaha or Deutsche
Financial. However, if Yamaha or Deutsche
Financial fails to meet this condition,
Yamaha and Deutsche Financial will be
required to deposit all cash collections in
the collection account within two business
days of receipt.
For a more detailed description of this
process, see "Description of the Offered
Certificates--Allocation of Collections;
Deposits in Collection Account."
BANKRUPTCY OF YAMAHA MOTOR If Yamaha or Deutsche Financial enters a
CORPORATION, U.S.A. OR bankruptcy proceeding, you could experience
DEUTSCHE FINANCIAL SERVICES losses or delays in the payments on your
CORPORATION COULD RESULT certificates. Deutsche Financial will sell
IN LOSSES OR DELAYS IN the receivables to Yamaha, Yamaha will sell
PAYMENTS ON THE CERTIFICATES the receivables to the transferor, and the
transferor will transfer the receivables to
the trust. Deutsche Financial, Yamaha and
the transferor treat these transactions as
absolute transfers. However, if Deutsche
Financial enters a bankruptcy proceeding,
the court has the power to conclude that the
sale of the receivables by Deutsche
Financial to Yamaha was not a "true sale"
and that Deutsche Financial still owns the
receivables. Similarly, if Yamaha enters a
bankruptcy proceeding, the court has the
power to conclude that the sale of the
receivables by Yamaha to the transferor was
not a "true sale" and that Yamaha still owns
the receivables. The court also has the
power to conclude that Yamaha and the
transferor should be consolidated for
bankruptcy purposes. If the court were to
reach any of these conclusions, you could
experience losses or delays in payments on
your certificates because:
o the trustee would not be able to
exercise remedies against Yamaha or
Deutsche Financial on your behalf
without permission from the court;
o the court might require the trustee to
accept property in exchange for the
receivables that is of less value than
the receivables;
o the transferor would no longer transfer
new receivables to the trust, and the
trustee would be required to sell the
existing receivables and allocate the
proceeds to each series;
o the court might prevent the trustee or
the certificateholders from taking some
actions such as selling the receivables
or appointing a successor servicer;
o the court might sell the receivables and
pay off the certificates before their
maturity;
o tax or government liens on Yamaha's or
Deutsche Financial's property that arose
before the transfer of the receivables to
the trust would be paid from the collection
on the receivables before the collections
were used to make payments on your
certificates; and
o the trustee might not have a perfected
security interest in the products
securing the receivables or cash
collections held by Yamaha or Deutsche
Financial at the time a bankruptcy
proceeding begins.
The transferor has taken steps in
structuring the trust to minimize the risk
that a court would conclude that the sale of
the receivables to Yamaha and the transferor
was not a true sale or that Yamaha and the
transferor should be consolidated for
bankruptcy purposes.
See "The Transferor and Related
Parties--Insolvency-Related Matters" and
"Certain Transfer, Security Interest and
Bankruptcy Considerations--Transfer of
Receivables" for a more detailed description
of these risks.
In a case decided by the U.S. Court of
Appeals for the Tenth Circuit in 1993, the
court concluded that accounts transferred by
a seller to a buyer should be included in
the bankruptcy estate of the seller even if
the transfer was a true sale. Our counsel
has advised us that the facts of that case
are distinguishable and that the reasoning
of that court appears to be inconsistent
with established precedent and the Uniform
Commercial Code. However, if Yamaha or
Deutsche Financial enters a bankruptcy
proceeding and the court in the bankruptcy
proceeding applies the reasoning of the
court in that case, you could experience
losses or delays in the payments on your
certificates.
For more information about that case, see
"The Transferor and Related
Parties--Insolvency-Related Matters."
SLOWER GENERATION OF The dealers generally must pay the receivables
RECEIVABLES BY following the sale of the related product.
DEALERS COULD REDUCE The timing of these sales is uncertain. We
COLLECTIONS cannot assure the creation of additional
receivables or that any particular pattern
of dealer repayments will occur. A
significant decline in the amount of new
receivables generated could result in
reduced collections available to the trust
as a whole. Those collections may not be
sufficient to pay your certificates in full
on the expected final payment date. If your
certificates are not paid by that time, the
average term of the certificates will
increase. You may not be able to reinvest
the delayed principal payments at a rate of
return equal to or greater than the rate of
return that would have been available on the
expected final payment date.
EARLY AMORTIZATION EVENTS If an early amortization event occurs under the
COULD RESULT IN LOSSES OR pooling and servicing agreement, it may shorten
ACCELERATION OF PAYMENTS ON the average term and date of final payment of
THE CERTIFICATES the certificates. You may not be able to
reinvest the principal repaid to you earlier
than expected at a rate of return that is
equal to or greater than the rate of return
on your certificates. You also may not be
paid the principal amount of your
certificates in full if the assets of the
trust are insufficient to pay the principal
amount of all certificates in full.
For more details about the risks associated
with early amortization events, see "The
Dealer Floorplan Financing Business,"
"Maturity and Principal Payment
Considerations" and "Description of the
Offered Certificates--Early Amortization
Events."
INCREASE IN LIBOR COULD The certificates generally bear interest at a
RESULT IN CAPPED INTEREST floating rate which is based on It is possible
PAYMENTS ON THE LIBOR. that LIBOR plus the margin E used to compute
CERTIFICATES the interest rate on your certificates will
increase above the applicable available
funds rate. If that occurs, the certificates
will bear interest only at the available
funds rate.
ECONOMIC AND SOCIAL FACTORS Payment of the receivables depends upon the sale
COULD LEAD TO SLOWER of the related products by the dealers. The
SALES OF PRODUCTS BY level of product sales may change because of a
DEALERS variety of economic and social factors.
Economic factors include interest rates,
unemployment levels, the rate of inflation
and consumer perception of general economic
conditions. The use of incentive programs
(e.g., manufacturers' rebate programs) may
also affect retail sales. Social factors
include consumer perception of Yamaha-brand
products in the marketplace and consumer
demand for motorized recreational products.
However, we cannot determine or predict
whether or to what extent economic or social
factors will affect the level of product
sales.
YAMAHA MOTOR MASTER TRUST The trust is completely dependent upon Yamaha
IS HIGHLY DEPENDENT ON and Deutsche Financial for the generation
YAMAHA AND DEUTSCHE FINANCIAL of new receivables. The ability of Yamaha and
Deutsche Financial to generate receivables
is, in turn, dependent on the sales of
Yamaha-brand products. We cannot assure that
Yamaha will continue to generate receivables
at the same rate as in past years. In
addition, if Deutsche Financial ceased
acting as subservicer, delays in processing
payments and related information on the
receivables could occur and result in delays
in payments to the certificateholders.
Yamaha and the transferor are generally not
obligated to make any payments regarding the
certificates or the receivables. However, if
Yamaha breaches any of its representations
and warranties regarding any receivables,
Yamaha will repurchase those receivables
from the transferor, and the transferor will
repurchase those receivables from the trust.
Yamaha will also be required to purchase
receivables from the trust if it breaches
its servicing obligations regarding those
receivables.
For more information about these
obligations, see "Description of the Offered
Certificates--Covenants, Representations and
Warranties" and "--Servicer Covenants."
In addition, Deutsche Financial and Yamaha
may have the ability to change the terms of
the accounts. These terms may include the
applicable interest rate, payment terms and
the particular dealer credit line, as well
as underwriting procedures.
RISKS INHERENT IN THE DEALER Yamaha has sometimes provided financial
FLOORPLAN FINANCING BUSINESS assistance to its dealers, but it is under
COULD LEAD TO LOSSES ON THE no obligation to do so. In addition, in the
RECEIVABLES past Yamaha has agreed to repurchase unsold
products from dealers who voluntary
terminate their dealerships. If Yamaha is
unable or decides not to provide this
financial assistance to its dealers, losses
on the receivables may increase. In
addition, the products sold by the dealers
are manufactured by either Yamaha Motor
Manufacturing Corporation of America, Yamaha
Motor Company, Ltd. or Tennessee Watercraft,
Inc. These products are then distributed by
Yamaha. If Yamaha, Yamaha Motor
Manufacturing Corporation of America, Yamaha
Motor Company, Ltd. or Tennessee Watercraft,
Inc. were temporarily or permanently no
longer in those businesses, the dealers'
rate of product sales would decrease. This
would lead to a decrease in the payment
rates on the receivables.
For more information about these risks, see
"The Dealer Floorplan Financing Business."
INDIVIDUAL CERTIFICATEHOLDERS Certificateholders of any series may need the
WILL HAVE LIMITED CONTROL OF consent or approval of the holders of a
TRUST ACTIONS specified percentage of the unpaid investor
interests of all outstanding series to take
some actions. These actions include:
o amending the pooling and servicing agreement
in some cases;
o directing a reassignment of the receivables
portfolio; and
o directing the trustee not to sell or
liquidate the receivables if the
transferor becomes insolvent.
The interests of the certificateholders of
any series may not coincide with yours,
making it more difficult for you or any
other particular certificateholder to
achieve the desired results from any vote.
ISSUANCE OF ADDITIONAL SERIES Yamaha Motor Master Trust, as a master trust,
BY THE TRUST COULD AFFECT THE may issue additional series of certificates
TIMING OF THE PAYMENTS ON THE from time to time. The trust may issue series
CERTIFICATES with terms that are different from your series
without the prior review or consent of any
certificateholders. It is a condition to the
issuance of each new series that each rating
agency that has rated an outstanding series
of the trust confirm that the issuance of
the new series will not result in a
reduction or withdrawal of its rating of any
class of any outstanding series. However,
the terms of a new series could affect the
timing and amounts of payments on any other
outstanding series. In addition, some
remedies require the consent of a majority
of the certificateholders of all outstanding
series. The interests of the holders of any
new series of certificates could be
different from your interests.
For more details about the issuance of new
series, see "Description of the Offered
Certificates--Exchanges."
POTENTIAL DELAYS IN PAYMENTS The payment of principal and interest on the
ON CERTIFICATES DUE certificates could be delayed if Yamaha,
TO POTENTIAL COMPUTER in its capacity as the servicer, Deutsche
PROGRAM PROBLEMS BEGINNING Financial, in its capacity as the subservicer,
IN THE YEAR 2000 or the trustee experience problems in their
computer programs relating to the year 2000.
Many existing computer programs use only two
digits to identify a year. These programs
could fail or produce erroneous results
during the transition from the year 1999 to
the year 2000 and afterwards. Yamaha and
Deutsche Financial have evaluated the impact
of preparing their systems for the year
2000. They have identified areas of
potential impact and are implementing
conversion efforts. They believe their
mission-critical applications, including
their systems for operations, collections on
the receivables and servicing the
receivables, are already year 2000
compliant, subject to further testing.
If Yamaha, in its capacity as the servicer,
does not have a computer system that is year
2000 compliant by the year 2000, Yamaha's
ability to service the receivables may be
materially and adversely affected. If
Deutsche Financial, in its capacity as the
subservicer, does not have a computer system
that is year 2000 compliant by the year
2000, Deutsche Financial's ability to
service the receivables may be materially
and adversely affected. If the trustee does
not have a computer system that is year 2000
compliant by the year 2000, the trustee's
ability to make distributions on the
certificates may be materially and adversely
affected.
THE TRANSFEROR AND RELATED PARTIES
YAMAHA MOTOR RECEIVABLES CORPORATION
Yamaha Motor Receivables Corporation ("YMRC" or the "TRANSFEROR"), a
wholly-owned subsidiary of Yamaha, was incorporated in the State of
Delaware on December 2, 1993. The Transferor was organized for limited
purposes, which include purchasing receivables from Yamaha and transferring
such receivables to third parties and any activities incidental to and
necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Transferor are located at 6555 Katella
Avenue, Cypress, California 90630. The telephone number of such offices is
(714) 761-7500.
YAMAHA MOTOR CORPORATION, U.S.A.
Yamaha Motor Corporation, U.S.A. ("YAMAHA" or, together with, as
applicable, a successor servicer, the "SERVICER") was incorporated in the
State of California on October 21, 1976, and its primary business is the
distribution in the United States of Yamaha-brand motorized products
(except golf carts) to retail dealers of such products and to manufacturers
of vessels into which motorized products are incorporated (collectively,
"DEALERS"). Yamaha's major product lines include, but are not limited to,
motorcycles, all-terrain vehicles, snowmobiles, water vehicles and outboard
motors. Only outboard motors and selected marine engine components are sold
to manufacturers of marine vessels. Yamaha also sells parts and accessories
for any such product lines to the Dealers. The principal executive offices
of Yamaha are located at 6555 Katella Avenue, Cypress, California 90630.
The telephone number of such offices is (714) 761-7300.
DEUTSCHE FINANCIAL SERVICES CORPORATION
Deutsche Financial Services Corporation ("DEUTSCHE FINANCIAL"), a
Nevada corporation formerly known as ITT Commercial Finance Corp., is a
subsidiary of Deutsche Business Services Corporation, a Missouri
corporation, which is a direct subsidiary of Deutsche Bank North America
Holding Company ("DBNA"), a Delaware corporation and the North American
subsidiary of Deutsche Bank AG. Deutsche Bank AG, headquartered in
Frankfurt, Germany, is one of the world's largest banks, with assets in
excess of $___ billion as of _________, 199__. DBNA, formed in 1992 to
coordinate and manage all of Deutsche Bank AG's activities in North
America, had total assets and shareholder equity of approximately $___
billion and $____ billion, respectively, as of _______, 199__.
Prior to May 2, 1995, all of the servicing activities of Deutsche
Financial in connection with the Receivables were conducted by Deutsche
Financial under the name ITT Commercial Finance Corp ("ITT"). On May 2,
1995, Deutsche Bank AG completed the purchase from ITT Corporation of all
of the outstanding common stock of ITT and, in connection with such
purchase, ITT's name was changed to Deutsche Financial Services
Corporation. None of the obligations of ITT under its various agreements
pertaining to the Receivables were changed or modified as a result of its
purchase and name change to Deutsche Financial Services Corporation.
Deutsche Financial provides commercial financing for over ______
manufacturers, distributors and dealers throughout the United States,
Canada, Puerto Rico and the United Kingdom, and its annual finance volume
exceeds $____ billion. Deutsche Financial's principal office is at 655
Maryville Centre Drive, St. Louis, Missouri 63141.
INSOLVENCY-RELATED MATTERS
Under the Receivables Sale Agreement (the "RECEIVABLES SALE
AGREEMENT"), Deutsche Financial, as seller, and Yamaha, as purchaser, treat
and will continue to treat the sale of the Receivables in the Accounts and
the related Product Security in existence and owned by Deutsche Financial
on and after January 31, 1994 from Deutsche Financial to Yamaha as an
absolute transfer of such Receivables to Yamaha. Under a Receivables
Purchase Agreement (the "RECEIVABLES PURCHASE AGREEMENT"), Yamaha, as
seller, and the Transferor, as purchaser, treat and will continue to treat
the sale of the Receivables and the related Product Security from Yamaha to
the Transferor as an absolute transfer of such Receivables and the related
Product Security to the Transferor. In the event of an insolvency of either
Deutsche Financial or Yamaha, such entity would be subject to Title 11 of
the United States Code (the "BANKRUPTCY CODE"). As an absolute transfer to
Yamaha, the Receivables and the related Product Security sold by Deutsche
Financial to Yamaha on and after March 24, 1994 would not be part of the
bankruptcy estate of Deutsche Financial, and such Receivables and related
Product Security would not be available to creditors of Deutsche Financial.
In addition, as an absolute transfer to the Transferor, such Receivables
and related Product Security would not be part of the bankruptcy estate of
Yamaha, and such Receivables and Product Security would not be available to
creditors of Yamaha. However, in the event of the insolvency of Yamaha or
Deutsche Financial, it is possible that the bankruptcy trustee or a
creditor of such insolvent entity, or such entity as debtor in possession,
may argue that the transactions between Deutsche Financial and Yamaha or
between Yamaha and the Transferor, as the case may be, are pledges of the
receivables rather than absolute transfers. Such a position, if accepted by
a court, could prevent timely payments due to Certificateholders.
The Transferor received an opinion of counsel, with respect to the
Transferor and Yamaha, concluding on the basis of a reasoned analysis of
analogous case law (although there is no precedent based on directly
similar facts) that subject to certain facts, assumptions and
qualifications specified therein (including matters set forth under
"Certain Transfer, Security Interest and Bankruptcy Considerations--Transfer
of Receivables"), in the event that Yamaha were to be a debtor in a case
under the Bankruptcy Code, a bankruptcy court that properly analyzed
and applied the law and facts in a properly presented and argued case would
not disregard the separate corporate existence of the Transferor and
consolidate the assets and liabilities of the Transferor with those of
Yamaha. However, if a court concluded otherwise, or a filing were made
under any bankruptcy or insolvency law by or against the Transferor, or if
an attempt were made to litigate any of the foregoing issues, delays in
distributions on the Offered Certificates (and possible reductions of such
distributions) could occur.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied, 114 S. Ct. 554 (1993), the United States Court of
Appeals for the Tenth Circuit suggested that even where a transfer of
accounts from a seller to a buyer constitutes a "true sale," the accounts
would nevertheless constitute property of the seller's bankruptcy estate in
a bankruptcy of the seller. If Yamaha or Deutsche Financial were to become
subject to a bankruptcy proceeding and a court were to follow the Octagon
court's reasoning, the registered holders of the Class A Certificates (the
"CLASS A CERTIFICATEHOLDERS") and the registered holders of the Class B
Certificates (the "CLASS B CERTIFICATEHOLDERS") might experience delays in
payment or possibly losses on their investment in the Class A Certificates
and the Class B Certificates, respectively. As part of the opinion of
counsel described above, counsel has advised Yamaha and the Transferor that
the facts of the Octagon case are distinguishable from those in the sale
transactions between, on the one hand, Deutsche Financial and Yamaha and,
on the other hand, Yamaha and the Transferor, respectively, and that the
reasoning of the Octagon case appears to be inconsistent with established
precedent. In addition, the Permanent Editorial Board of the UCC has issued
an official commentary (PEB Commentary No. 14) which characterizes the
Octagon court's interpretation of Article 9 of the UCC as erroneous. Such
commentary states that nothing in Article 9 of the UCC is intended to
prevent the transfer of ownership of accounts or chattel paper. Moreover,
because Deutsche Financial, Yamaha, the Transferor and the transactions
governed by the Receivables Sale Agreement and the Receivables Purchase
Agreement do not have any particular link to the Tenth Circuit, it is
unlikely that Deutsche Financial or Yamaha would be subject to a bankruptcy
proceeding in the Tenth Circuit. Accordingly, the Octagon case should not
be binding precedent on a court in a Deutsche Financial or Yamaha
bankruptcy proceeding. Application of Federal and state bankruptcy and
debtor relief laws would adversely affect the interests of (a) the Class A
Certificateholders in the Receivables if such laws result in any
Receivables being charged-off as uncollectible when the Class B Invested
Amount and the Class C Invested Amount are zero and (b) the Class B
Certificateholders in the Receivables if such laws result in any
Receivables being charged-off as uncollectible when the Class C Invested
Amount is zero . See "Description of the Offered Certificates-- Defaulted
Receivables; Recoveries."
THE TRUST
Yamaha Motor Master Trust (the "TRUST") was formed for this and like
transactions pursuant to a Pooling and Servicing Agreement, dated as of
March 1, 1994, among YMRC, as Transferor, Yamaha, as Servicer, and The Fuji
Bank and Trust Company, as trustee (the "TRUSTEE") (as amended,
supplemented or otherwise modified from time to time, the "POOLING AND
SERVICING AGREEMENT"), and prior to formation had no assets or obligations.
The assets of the Trust include wholesale receivables (the "RECEIVABLES")
generated from time to time in a portfolio of revolving financing
arrangements (the "ACCOUNTS") with dealers in products manufactured by
Yamaha Motor Company, Ltd., Yamaha Motor Manufacturing Corporation of
America and Tennessee Watercraft, Inc. to finance their inventory and
Collections on the Receivables. The Trust has not and will not engage in
any business activity other than to acquire and hold the Receivables and
the other assets of the Trust and proceeds therefrom, issue the
Certificates and the Exchangeable Transferor Certificate, issue additional
series of certificates (each, a "SERIES") at the direction of the
Transferor and make payments thereon and engage in related activities. As a
consequence, the Trust is not expected to have any need for, or source of,
additional capital resources other than the assets of the Trust.
THE TRANSFEROR'S OTHER ACTIVITIES
Yamaha and YMRC are also parties to a 1995 transaction (the "GOLF
CART TRANSACTION") that is separate and distinct from the transactions
described herein. Pursuant to the Golf Cart Transaction, YMRC periodically
purchases from Yamaha wholesale receivables and related security generated
in a portfolio of revolving financing agreements with dealers of products
comprised of motorized golf carts, motorized utility vehicles and selected
golf course accessory devices manufactured by Yamaha Motor Manufacturing
Corporation of America. YMRC then sells such receivables and related
security to a business trust formed pursuant to a trust agreement under the
laws of the State of Delaware. As part of the Golf Cart Transaction, that
trust has issued commercial paper notes and certificates of beneficial
interest backed by the dealer receivables attributable to sales of golf
carts, motorized utility vehicles and golf course accessory devices. The
receivables related to the Golf Cart Transaction are specifically excluded
from the Trust, and the Receivables are specifically excluded from the Golf
Cart Transaction. Under certain circumstances, YMRC's certificate of
incorporation authorizes YMRC to engage in additional securitization
transactions as well; however, any such transaction must be reviewed by the
Rating Agency prior to its effectiveness.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be
paid to the Transferor. The Transferor will use such proceeds to purchase
the Receivables from Yamaha. Yamaha will use such proceeds for general
corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
The Receivables transferred or to be transferred by the Transferor to
the Trust represent the extensions of credit made by Deutsche Financial to
Dealers (collectively, the "U.S. WHOLESALE PORTFOLIO"). The Receivables are
secured by a security interest in certain inventory of the Dealers,
including motorcycles, snowmobiles, all terrain vehicles, outboard motors,
water vehicles, parts and accessories related to the foregoing and certain
other motorized equipment manufactured by Yamaha Motor Company, Ltd.,
Yamaha Motor Manufacturing Corporation of America and Tennessee Watercraft,
Inc. and distributed in the United States by Yamaha (collectively, the
"PRODUCTS" and such security interest in such Products, the "PRODUCT
SECURITY").
Deutsche Financial is the primary source of financing for the
Dealers. In fiscal years 1996, 1997 and 1998, Deutsche Financial provided
financing for ____%, _____% and ____% of new unit sales to Dealers,
respectively. Deutsche Financial provided financing to approximately _____
and ______ domestic Dealers during fiscal years 1997 and 1998,
respectively. Deutsche Financial arranged wholesale financing for
approximately _______ units, up about ___% from the previous year. Deutsche
Financial services the U.S. Wholesale Portfolio through its national
headquarters in St. Louis, Missouri, its Yamaha program headquarters in
Newport Beach, California and four other branch offices located in the
United States.
The Products are categorized by Deutsche Financial as new or used
products. "NEW PRODUCTS" means those units which have not been previously
sold to a retail consumer, and "USED PRODUCTS" means products which have
been previously sold to a retail consumer. The categorization of New
Products and Used Products may change in the future based upon Deutsche
Financial's practices and policies; however, Receivables generated by Used
Products shall not be included as Receivables for transfer by the
Transferor to the Trust.
CREDIT UNDERWRITING PROCESS
Deutsche Financial extends credit to Dealers pursuant to lines of
credit which are established by Deutsche Financial for Dealers to finance
purchases of New Products and Used Products. Deutsche Financial may also
extend credit to a Dealer for other types of Yamaha products and for
non-Yamaha motor vehicles and products; however, such extensions of credit
are not included as Receivables for sale by Deutsche Financial to Yamaha,
by Yamaha to the Transferor, or by the Transferor to the Trust. All Dealers
of Yamaha-brand Products (except manufacturers of marine vessels) that have
a new product line in place may also be eligible for a Used Product credit
line.
A new Dealer requesting the establishment of a new product credit
line must submit an application for financing to a Deutsche Financial
branch office. After receipt of such request, the Deutsche Financial branch
office investigates the prospective Dealer by reviewing such Dealer's
credit reports and bank references and by evaluating the dealer's marketing
capabilities, start-up financing resources and credit requirements. When an
existing Dealer requests the establishment of a wholesale additional
product credit line, the Deutsche Financial branch office reviews the
Dealer's credit reports (including the experience of the Dealer's present
financing source) and bank references. Deutsche Financial also investigates
the particular Dealer's present state of operations and management and
marketing capabilities. Based on the foregoing review, the Deutsche
Financial branch office prepares a written recommendation either approving
or disapproving the Dealer's request and, depending on the amount of the
requested credit line, transmits such recommendation with the requisite
documentation to the Yamaha program office. The Deutsche Financial branch
manager can, in some cases, approve new wholesale financing requests for
amounts up to $1,000,000; for greater amounts, all such documentation will
be forwarded to the Deutsche Financial regional or national office for
approval. Deutsche Financial's ultimate decision whether to extend credit
to a new or existing Dealer is based upon its reasonable judgment.
Upon approval by both Deutsche Financial and Yamaha, Dealers execute
a series of financing agreements with Deutsche Financial. Such agreements
provide for a first priority security interest in favor of Deutsche
Financial in the Products, the receivables related to the Products and, in
certain cases, in certain other collateral (such as a stand-by letter of
credit or a guarantee). In certain cases, the financing agreements executed
between a particular Dealer and Deutsche Financial may relate to products
floorplanned by such Dealer which are not Yamaha-distributed products. See
"Risk Factors--Potential loss on certificates due to priority of some liens
over the certificates." Such agreements are generally for an unspecified
period of time and create discretionary lines of credit, which Deutsche
Financial may terminate at any time in its sole discretion, subject,
however, to prevailing standards of commercial reasonableness and good
faith, which may require commercially reasonable notice and other
accommodations by Deutsche Financial. Absent default by a particular
Dealer, the outstanding Receivables owed by such Dealer cannot be
accelerated, even if the line of credit provided by Deutsche Financial is
terminated. After the effective date of termination, Deutsche Financial is
under no obligation to continue to provide additional financing, but the
then current outstanding balance will be repayable in accordance with the
Pay-as-Sold or Scheduled Payment Plan terms of such Dealer's particular
arrangement with Deutsche Financial, as described below in "--Payment
Terms."
The size of a credit line offered to a dealer is based upon the
Dealer's sales rate or expected sales rate. The amount of a Dealer's credit
line for New Products is reviewed periodically for adjustment. The amount
advanced by Deutsche Financial for New Products is equal to the amount
invoiced with respect to New Products. As more fully described below, the
credit lines are guidelines, not limits, which Dealers are permitted to
exceed for appropriate business reasons. See "The Dealer Floorplan
Financing Business--Dealer Monitoring."
CREATION OF RECEIVABLES
Deutsche Financial finances 100% of the wholesale invoice price of
New Products, together with destination charges and a "holdback" on most
products, generally in the amount of approximately 3% of the suggested
retail price, which "holdback" amount may, if certain conditions are met,
be later returned to the Dealer directly by Yamaha with respect to products
sold at retail by the Dealer. In certain cases, and for certain Products,
the "holdback" amount may be higher. However, with respect to Products for
which there has been no retail sale at the time on which such "holdback"
amount is due, Deutsche Financial generally reduces the outstanding balance
of Receivables due and owing by the Dealer at such time by such "holdback"
amount.
Once a Dealer has commenced the floorplanning of Yamaha's products
through Deutsche Financial, Deutsche Financial will finance all purchases
of Products by such Dealer from Yamaha. Deutsche Financial may limit or
cancel this arrangement if, in Deutsche Financial's opinion, a particular
Dealer's inventory is seriously overstocked, or if a Dealer is experiencing
financial difficulties. In these circumstances, the Deutsche Financial
branch office will approve additional financing on a Product-by-Product
basis.
Receivables related to New Products are originated concurrently with
the shipment of such products to the financed Dealer and are generally
considered full-recourse obligations of such Dealer. Advances made by
Deutsche Financial for the purchase of Products by a particular Dealer from
Yamaha are most commonly arranged in the following manner: The Dealer will
contact Yamaha and make a purchase order for a shipment of Products. Yamaha
will contact Deutsche Financial to obtain approval with respect to such
purchase order when the Product is available for shipment to the Dealer.
Upon such request, Deutsche Financial will determine, in its sole
discretion, whether the particular Dealer is in compliance with its
financing program with Deutsche Financial and whether such purchase order
is within the Dealer's credit limit. If so, Deutsche Financial will approve
such order and Yamaha will then ship the Products to the Dealer and
directly submit its invoice for such purchase order to Deutsche Financial
for payment. Normally, interest or finance charges begin to accrue on the
Dealer's accounts as of the date specified by Yamaha in the related sales
program and in the invoice, although such Receivable is considered created
as of the date of invoicing by Yamaha for purposes of its inclusion in the
Trust.
PAYMENT TERMS
If a Product is sold by Yamaha to a Dealer with a specific payment
due date, Deutsche Financial generally is entitled to receive from the
particular Dealer payment in full for the financed amount on such due date.
If a Product is floored, Deutsche Financial is generally entitled to
receive payment in full for the financed amount on the date of sale of the
Product. Interest charges, if any, are billed monthly by Deutsche Financial
and are due from the Dealer upon receipt from the Dealer of the monthly
bill. Deutsche Financial submits payments received by it from Dealers to
Yamaha within two Business Days following receipt.
Deutsche Financial provides two basic payment terms to Dealers of
Products: Pay-as-Sold financing programs or Scheduled Payment Plan. As of
_______, 199__, Deutsche Financial provides approximately ___% of its
financing to Dealers through its "Pay-as-Sold" programs. Under a
"Pay-as-Sold" program, the Dealer is obligated to pay interest or finance
charges monthly, but principal repayment with respect to any particular
Product financed by Deutsche Financial is due and payable only upon the
sale of such Product by the Dealer. On occasion, Deutsche Financial may
require particular Dealers to begin repaying principal in installments if
the Product has not been sold within a specified period of time. These
payments are referred to by Deutsche Financial as "curtailments." Even if a
Product is subject to curtailment payments, the outstanding balance with
respect to such Product will remain fully payable if such Product is sold.
"SCHEDULED PAYMENT PLANS," in contrast, require that principal be
repaid in accordance with a particular schedule. Depending upon the product
line and the particular inventory turns of the individual Dealer, the
majority of these payment terms are generally no longer than 180 days.
Under a Scheduled Payment Plan, the Dealer is only obligated to make
payments in accordance with an agreed-upon schedule, regardless of when the
Product is actually sold. Under a Scheduled Payment Plan, Deutsche
Financial will remit any payments made by Dealers to Yamaha over time
immediately upon receipt.
Yamaha offers sales programs related to specific types of Products
several times a year to its Dealers (the "SALES PROGRAMS"). The Sales
Programs offer specific payment terms to the Dealers, which may include:
(1) a discount from the wholesale purchase price for payment within a
certain number of days;
(2) a period of interest-free financing;
(3) a dealer "holdback";
(4) interest at a margin over the prime rate for a period, payable
monthly; and
(5) interest at a higher margin after a period of time, payable
monthly.
BILLING AND COLLECTION PROCEDURES
A statement setting forth billing and related account information is
prepared by Deutsche Financial and distributed on the third calendar day of
each month to each Dealer. Interest and other non-principal charges are
billed in arrears, are required to be paid by Dealers to Deutsche Financial
branch offices by the end of the month in which they are billed, and
Deutsche Financial remits any such funds collected from Dealers to Yamaha
on the twentieth day of each month in immediately available funds.
Principal is payable by Dealers to Deutsche Financial branch offices in
accordance with the terms of the specific Sales Program relating to a
particular Product. Under existing arrangements, Deutsche Financial remits
such Collections to Yamaha in the form of a wire drawn on Deutsche
Financial and payable not later than two Business Days from receipt by
Deutsche Financial from Dealers. See "Description of the Offered
Certificates--Collection and Other Servicing Procedures."
INTEREST RATES
Deutsche Financial charges Dealers interest at a rate determined by
the terms of the specific program on which a product was sold. Some rates
are calculated based on a spread to the prime rate. Deutsche Financial is
currently determining the "prime rate" as designated from time to time by
certain financial institutions selected by Deutsche Financial. The interest
rate for such programs tied to the prime rate is reset by Deutsche
Financial each month and is applied to all balances for units on specified
Sales Programs outstanding during the applicable period. The actual spread
for each Dealer is determined by the type of each Sales Program.
RELATIONSHIP BETWEEN DEUTSCHE FINANCIAL AND YAMAHA
Yamaha determines whether a particular Dealer shall become, or shall
continue to be, an authorized Dealer of Yamaha-brand products. Yamaha, in
its sole discretion, determines the financing terms to be offered on every
Sales Program with respect to a particular Dealer. At times, Yamaha may
also provide financial assistance to Dealers, although it is under no
obligation to do so.
Much of such assistance is provided at the option of Yamaha, which
may terminate any such optional programs in whole or in part at any time.
If Yamaha is unable or elects not to provide such assistance, the loss
experience of Deutsche Financial in respect of the U.S. Wholesale Portfolio
may be adversely affected. In addition, because a substantial number of the
Products sold retail by the Dealers are distributed by Yamaha, if Yamaha
were temporarily or permanently no longer in such business, the rate of
sales of Yamaha-brand products would decrease, adversely affecting payment
rates and the loss experience of the U.S. Wholesale Portfolio.
Under an agreement between Deutsche Financial and Yamaha, Yamaha is
committed to repurchase unsold New Products that are recovered by Deutsche
Financial from a Dealer which has ceased business or which has been subject
to repossession by Deutsche Financial. Yamaha credits the owner of the
Dealer's receivables the full financed amount for these Products unless
they were materially damaged. Yamaha also may, by contract or state
statute, have some direct repurchase obligations for some Products if a
Dealer terminates its business. Such repurchase obligations only apply to
new, unused, undamaged Products, and are usually at the wholesale price of
the Product. In such cases, Yamaha will repurchase the owner of the
Dealer's receivables' interest in such Products.
DEALER MONITORING
The level of each Dealer's wholesale credit line is monitored on a
periodic basis. Because the wholesale lines are not limits, Dealers are
permitted to exceed such lines for certain business reasons. For example,
prior to a seasonal peak, a Dealer may purchase more Products than its
existing credit lines would otherwise indicate. Because of slow inventory
turnover, a Dealer's credit lines may be reduced until a sufficient portion
of its Product inventory is liquidated. Exception reports of Dealers that
have exceeded their credit lines by a certain percentage are reviewed on a
weekly basis. Deutsche Financial may at any time evaluate a Dealer's
financial position and may place the Dealer in a "red flag" category. See
"Red Flag" and Deutsche Financial's Write-Off Policy."
Audits of dealer product inventories are conducted on a regular basis
(normally, twelve times a year) by Deutsche Financial employees. The timing
of each visit and Deutsche Financial personnel conducting such inspection
varies, and no advance notice is given to the audited Dealer. Auditors
conduct a physical inventory of the Products on the Dealer's premises.
Through the audit process, Deutsche Financial reconciles each Dealer's
physical inventory with its records of financed Products. Audits are
intended to identify instances where a Dealer sells Products without
immediately repaying the related advances.
"RED FLAG" AND DEUTSCHE FINANCIAL'S WRITE-OFF POLICY
Under certain circumstances, Deutsche Financial will classify a
Dealer as on "red flag." Such circumstances may include failure to remit
any principal or interest payment when due, any notifications of liens,
levies or attachments or a general deterioration of its financial
condition. As of December 31, 1998, the number of Dealers assigned to "red
flag" was ___ (____% of the total number of Dealers in the U.S. Wholesale
Portfolio as of such date), and the aggregate Receivables balance of all
Receivables relating to such Dealers was $_________. As of December 31,
1997, the number of Dealers assigned to "red flag" was ___ (___% of the
total number of Dealers in the U.S. Wholesale Portfolio as of such date).
As of December 31, 1996, the number of Dealers assigned to "red flag" was
___ (____% of the total number of Dealers in the U.S. Wholesale Portfolio
as of such date). Once a Dealer is classified as red flag, any further
extension of credit is rare unless the situation is resolved.
If a Dealer is on "red flag," one of the following events usually
occurs:
(1) an orderly liquidation in which the Dealer voluntarily liquidates
its inventory through normal sales to retail customers;
(2) a forced liquidation, in which the Dealer's inventory is
repossessed by Deutsche Financial as subservicer; or
(3) a voluntary surrender of the Dealer's inventory.
Once liquidation has commenced, Deutsche Financial performs an analysis of
its position and writes-off any amounts attributable to unpaid receivables
related to inventory previously sold by Dealers and identified at such time
as uncollectible. Yamaha and Deutsche Financial share in any such
write-offs equally up to an aggregate annual amount equal to $3,000,000,
and Yamaha absorbs any loss above such amount. Deutsche Financial also
liquidates any other collateral securing the Dealer's obligations, some of
which may be repurchased by Yamaha if it consists of unsold Products.
During the course of a liquidation, Deutsche Financial may recognize
additional losses or recoveries.
THE ACCOUNTS
The Receivables arise in the Accounts. The Accounts constitute all of
the wholesale accounts in the U.S. Wholesale Portfolio on January 31, 1994,
and subject to the limitations described in "Description of the Offered
Certificates--Addition of Accounts," all dealer wholesale accounts opened
by Yamaha thereafter. See "Description of the Offered
Certificates--Covenants, Representations and Warranties."
Pursuant to the Pooling and Servicing Agreement, the Transferor, and
pursuant to the Receivables Purchase Agreement, Yamaha has conveyed and
will continue to convey to the Trust the Receivables existing as of January
31, 1994 and thereafter created in all Accounts. These Accounts must meet
the eligibility criteria set forth above as of the first date Receivables
created in such Accounts are conveyed to the Trust. In addition, with
respect to any Account created after January 31, 1994 and any Receivable
generated thereunder, Yamaha will represent and warrant to the Transferor,
and the Transferor will represent and warrant to the Trust, that such
Receivables meet the eligibility requirements set forth in the Pooling and
Servicing Agreement. See "Description of the Offered
Certificates--Conveyance of Receivables." Under certain circumstances
specified in the Pooling and Servicing Agreement, the Transferor has the
right to remove Accounts (collectively, "REMOVED ACCOUNTS"), and the
Receivables arising therefrom, from the Trust. See "Description of the
Offered Certificates--Removal of Accounts." Throughout the term of the
Trust, the Accounts from which the Receivables arise will be the Accounts
identified by the Transferor on January 31, 1994 plus, subject to the
limitations described in "Description of the Offered Certificates--Addition
of Accounts," any Accounts created thereafter minus any Accounts removed
from the Trust.
As of December 31, 1998, no Receivable generated by a single Dealer
constituted more than 1.0% of the aggregate amount of Eligible Receivables
included in the Trust (the "POOL BALANCE"). As of December 31, 1998, with
respect to the Accounts in the Trust:
o there were approximately ______ Accounts and the aggregate
Receivables balance was approximately $____ million;
o the average credit line per Account was approximately $_______,
and the average balance of Receivables per Account was $_______;
o the aggregate total Receivables balance as a percentage of the
aggregate total credit line was approximately ___%; and
o the weighted average rate charged to Dealers was _____%.
Deutsche Financial establishes new Accounts with Dealers on an ongoing
basis, and _____ Accounts were established in 1998, ____ in 1997, _____ in
1996, ____ in 1995 and 277 in 1994. As more fully described above, the
credit lines are guidelines, not limits, which Dealers are permitted to
exceed for business reasons. See "The Dealer Floorplan Financing
Business--Dealer Monitoring."
Receivables originated under the Accounts consist of amounts owed by
Dealers for the wholesale price of Products and, if the Dealer has not paid
such price within a specified period of time, interest and service charges
or fees related to such price. Collections on the Receivables, whether
consisting of the wholesale price or interest, fees or service charges
relating to such amount, will be discounted in order to provide imputed
yield to the Trust. Pursuant to the Pooling and Servicing Agreement, a
portion of the Collections on the Receivables in the Accounts received in
any calendar month (each, a "COLLECTION PERIOD"), which is equal to the
product of the Yield Factor and the Pool Balance, are treated as Yield
Collections, and the remainder of such Collections are treated as Principal
Collections.
With respect to the tabular data provided below concerning the loss
experience, age distribution, geographic distribution and distribution by
product line of the U.S. Wholesale Portfolio, Yamaha and the Transferor
believe there are no discernible trends in the historical performance of
the Receivables that are material.
LOSS EXPERIENCE
The following tables set forth Yamaha's average principal receivables
balance and loss experience for each of the periods shown with respect to
the U.S. Wholesale Portfolio. There can be no assurance that the loss
experience for the Receivables in the future will be similar to the
historical experience set forth below with respect to the U.S. Wholesale
Portfolio. In addition, the historical experience set forth below reflects
financial assistance provided by Yamaha in certain limited instances to
Yamaha-franchised dealers as described above under "The Dealer Floorplan
Financing Business--Relationship with Yamaha and Deutsche Financial" and
reflects Yamaha's repurchase of Products at the full invoiced amount
(provided such repurchase was made with respect to a Dealer which had
ceased business or which was subject to repossession by Deutsche
Financial). No Accounts from which Receivables arise in the Trust include
Accounts with any Dealer which is an affiliate of the Trust, the Transferor
or the Servicer. If Yamaha is not able to, or elects not to, provide such
assistance or repurchase in the future, the loss experience in respect of
the U.S. Wholesale Portfolio may be adversely affected. See "Risk
Factors--Risks inherent in the dealer floorplan financing business could
lead to losses on the receivables."
LOSS EXPERIENCE FOR THE U.S. WHOLESALE PORTFOLIO(1)
<TABLE>
<CAPTION>
3 Months ended 3 Months ended Fiscal Year ended March 31,
-------------- --------------- ----------------------------
____, 1999 Dec 31, 1998 1998 1997 1996
----------- ------------ ---- ---- ----
<S> <C> <C> <C> <C> <C>
Average Receivables
Balance (2) $ $ $ $ $
Gross Losses $ $ $ $ $
Gross Losses/Average
Principal Balances %(3) %(3) % % %
</TABLE>
- -------------------
(1) Dollars in thousands.
(2) Average receivables balance is the average of the monthly ending
balances for the fiscal years ended March 31 and the quarter ended ________.
(3) Annualized
AGING EXPERIENCE
The following table provides the age distribution of product
inventory for all dealers in the U.S. Wholesale Portfolio. The actual
experience of the U.S. Wholesale Portfolio may differ from historical
experience.
<TABLE>
<CAPTION>
AGE DISTRIBUTION FOR THE U.S. WHOLESALE PORTFOLIO(1)
AS OF AS OF
_____, 1999 DEC 31, 1998 As of March 31,
------------ ------------ ---------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1-90......... % % % % %
91-180....... % % % % %
181-270...... % % % % %
271-365...... % % % % %
366+......... % % - % - % - %
100. 100.00 100.00 100.00 100.00
Total........ 00 % % % % %
</TABLE>
- ------------------
(1) Dollars in thousands.
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution for all
Dealers on the basis of receivables outstanding and the number of accounts.
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF THE U.S. WHOLESALE PORTFOLIO
AS OF _____, 1999
PERCENTAGE OF TOTAL NUMBER PERCENTAGE OF
RECEIVABLES RECEIVABLES- OF TOTAL NUMBER OF
Outstanding(1) Outstanding Dealers(2) Dealers(2)
-------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
California................. $ % %
Florida.................... % %
Michigan................... % %
Other(3)................... % %
_______ _____% _______ _____%
Total...................... % %
======= ===== ======= =====%
</TABLE>
- -----------------
(1) Dollars in thousands.
(2) For purposes of this table, each Account corresponds to one Dealer.
(3) The geographic distribution of Accounts in the Trust with respect to
any state other than California, Florida and Michigan does not exceed 5%.
RECEIVABLES OUTSTANDING BY PRODUCT GROUP
AS OF ________, 1999
Percentage of
Receivables Total Receivables
Outstanding Outstanding
-------------- -----------------
Motorcycles/Scooters.......................... $ %
Water Vehicles................................ %
All-Terrain Vehicles.......................... %
Outboards..................................... %
Snowmobiles................................... %
Other(2)...................................... _____ ______%
Total......................................... $ 100.00%
===== =======
- ---------------
(1) Dollars in thousands.
(2) Includes snowblowers, generators, lawn tractors, go karts and parts for
all Products.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
The Pooling and Servicing Agreement provides that the Class A
Invested Amount is payable on ______, ____ (or if such day is not a day
other than a Saturday, Sunday or a day on which banking institutions in New
York, New York are authorized or obligated by law to be closed (such day, a
"BUSINESS Day"), on the next succeeding Business Day) (the "CLASS A
EXPECTED FINAL PAYMENT DATE"), or earlier upon the occurrence of an Early
Amortization Event, to the extent funds are available therefor from the
Fixed Allocation Percentage of Principal Collections, the Transferor
Percentage of Principal Collections allocable to the Certificates and any
Excess Principal Collections allocated to the Certificates and amounts on
deposit in the Principal Funding Account. The Pooling and Servicing
Agreement also provides that the Class B Invested Amount is payable on
______, ____ (or if such day is not a Business Day, on the next succeeding
Business Day) (the "CLASS B EXPECTED FINAL PAYMENT DATE" and, together with
the Class A Expected Final Payment Date, the "EXPECTED FINAL PAYMENT
DATES"), or earlier upon the occurrence of an Early Amortization Event, to
the extent funds are available therefor from the Fixed Allocation Percentage
of Principal Collections, the Transferor Percentage of Principal Collections
allocable to the Certificates and any Excess Principal Collections
allocated to the Certificates and amounts on deposit in the Principal
Funding Account (in either case, only after the Class A Invested Amount has
been paid in full). The Class B Certificateholders will not receive any
payments of principal until the final principal payment on the Class A
Certificates has been made, and the Class C Certificateholders will not
receive any payments of principal until the final principal payment on each
Class of Offered Certificates has been made.
Although it is anticipated that Principal Collections from such
sources will be deposited in the Principal Funding Account in an amount
sufficient to pay the Class A Invested Amount on the Class A Expected Final
Payment Date and the Class B Invested Amount on the Class B Expected Final
Payment Date, no assurance can be given in that regard. Full payment of
each Class of Offered Certificates by the applicable Expected Final Payment
Date depends on, among other things, repayment by Dealers of the
Receivables and may not occur if Dealer payments are insufficient therefor.
Because the Receivables generally are paid upon retail sale of the
underlying Product, the timing of such payments is uncertain. In addition,
there is no assurance that Yamaha will generate additional Receivables
under the Accounts or that any particular pattern of Dealer payments will
occur. See "Description of the Offered Certificates--Allocation of
Collections," "--Deposits in Collection Account," "--Principal Collections
for all Series" and "The Dealer Floorplan Financing Business."
Funds on deposit in the Principal Funding Account will be distributed
to the Class A Certificateholders on the Class A Expected Final Payment
Date. If such amounts are insufficient to pay the Class A Invested Amount
on the Class A Expected Final Payment Date, thereafter the Class A
Certificateholders will receive distributions of Class A Monthly Principal
and Class A Monthly Interest on each Distribution Date until the Class A
Invested Amount has been paid in full. Provided that the Class A Invested
Amount is paid in full on the Class A Expected Final Payment Date and the
Early Amortization Period has not commenced, funds on deposit in the
Principal Funding Account will be distributed to the Class B
Certificateholders on the Class B Expected Final Payment Date. If such
amounts are insufficient to pay the Class B Invested Amount on the Class B
Expected Final Payment Date, thereafter the Class B Certificateholders will
receive distributions of Class B Monthly Principal and Class B Monthly
Interest on each Distribution Date until the Class B Invested Amount has
been paid in full.
The amount of new Receivables generated in any month and monthly
payment rates on the Receivables may vary because of seasonal variations in
Product sales and inventory levels, retail incentive programs provided by
Yamaha and competing manufacturers and various economic factors affecting
Product sales generally. The following table sets forth the highest and
lowest monthly payments rates for the U.S. Wholesale Portfolio during any
month in the periods shown and the average of the monthly payment rates for
all months during the periods shown, in each case calculated as the
percentage equivalent of a fraction, the numerator of which is the
aggregate of all collections during the period and the denominator of which
is the average aggregate principal balance for such period. There can be no
assurance that the rate of Collections will be similar to the historical
experience set forth below and no material trends are ascertainable with
respect to such experience. Although the Accounts constitute all of the
entire U.S. Wholesale Portfolio as of ________, 1999, actual monthly
payment rates with respect to the Accounts may be different in the future.
MONTHLY PAYMENT RATES FOR THE U.S. WHOLESALE PORTFOLIO(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDING FISCAL YEAR ENDED MARCH 31,
------------------- ---------------------------
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Highest Month................. % % % %
Lowest Month.................. % % % %
Average of the Months
in the Period................. % % % %
</TABLE>
- -------------------
(1) Collections rounded to the nearest thousand. Payment Rate is calculated
as monthly collections divided by beginning portfolio balance.
Prior to the payment (or deposit in the Principal Funding Account) of
the Class A Invested Amount in full, deposits will be made to the Principal
Funding Account on each Distribution Date with respect to the period
commencing on the first day of the _______ Collection Period and continuing
until the earlier of the commencement of an Early Amortization Period and
the Class A Expected Final Payment Date (the "CONTROLLED ACCUMULATION
PERIOD"), in an amount equal to the lesser of (a) Class A Monthly Principal
and (b) the amount, if any, by which (1) the sum of the Controlled
Accumulation Amount for the Collection Period immediately preceding such
Distribution Date plus the Accumulation Shortfall, if any (the "CONTROLLED
DEPOSIT AMOUNT") exceeds (2) the amount in the Principal Funding Account
for the account of the Class A Certificateholders. In addition, Excess
Principal Collections allocable to the Certificates, together with the
Transferor Percentage of Principal Collections allocable to the
Certificates, will be deposited in the Principal Funding Account.
"CONTROLLED ACCUMULATION AMOUNT" means, with respect to the Class A
Certificates, one-sixth of the Class A Invested Amount for each Collection
Period. "ACCUMULATION SHORTFALL" means, for the Collection Period
immediately preceding the related Distribution Date, the amount by which
the Controlled Deposit Amount exceeds the amount deposited in the Principal
Funding Account on such Distribution Date.
If the amount on deposit in the Principal Funding Account equals the
Controlled Deposit Amount for the related Distribution Date, the balance of
funds remaining on deposit in the Collection Account and otherwise
allocable to Series 1999-1 will either be (a) allocated to one or more
Series which are in amortization, early amortization or accumulation
periods to cover principal payments due to the investor certificateholders
of any such Series or (b) if no such Series is then amortizing or
accumulating principal, paid to the Transferor to maintain the
Certificateholders' Interest or held as Undistributed Principal
Collections.
Following the payment (or deposit in the Principal Funding Account)
of the Class A Invested Amount in full but prior to the payment (or deposit
in the Principal Funding Account) of the Class B Invested Amount in full,
deposits will be made to the Principal Funding Account on each Distribution
Date with respect to the period commencing on the Class A Expected Final
Payment Date and continuing until the earlier of the commencement of an
Early Amortization Period and the Class B Expected Final Payment Date (the
"RAPID ACCUMULATION PERIOD" and, together with the Controlled Accumulation
Period, the "ACCUMULATION PERIODS") in an amount equal to Class B Monthly
Principal. In addition, Excess Principal Collections allocable to the
Certificates, together with the Transferor Percentage of Principal
Collections allocable to the Certificates, will be deposited in the
Principal Funding Account.
Assuming that (a) the monthly payment rate for the Accounts during
each calendar month during the Accumulation Periods is not less than the
lowest monthly payment rate for the respective calendar month during the
fiscal years 1996, 1997 and 1998, (b) the Pool Balance remains constant at
the amount outstanding as of _______, 1999 and (c) an Early Amortization
Event does not occur during either Accumulation Period, and no other Series
is in an accumulation period or early amortization period, the Transferor
expects that, on the applicable Expected Final Payment Dates, there will be
sufficient funds on deposit in the Principal Funding Account to pay the
Class A Invested Amount and the Class B Invested Amount in full. The actual
rate of accumulation and payment of principal will depend, among other
factors, on the rate of repayment, the timing of the receipt of such
repayments, the turnover rate of the Receivables and the rate of default by
Dealers.
In the event of the occurrence of an Early Amortization Event, the
Early Amortization Period will begin on the day on which such Early
Amortization Event occurs or is deemed to have occurred. In the event of a
sale, disposition or other liquidation of the Receivables following an
insolvency event as described under "Description of the Offered
Certificates--Early Amortization Events," the Class A Monthly Principal and
Class B Monthly Principal, as applicable, payable to Certificateholders on
the following Distribution Date will be equal to the Class A Invested
Amount and the Class B Invested Amount, respectively. Although the
Transferor believes that the likelihood of an Early Amortization Event
occurring is remote, there can be no assurance that an Early Amortization
Event will not occur. See "Description of the Offered Certificates--Early
Amortization Events."
Any delay in full payment of the aggregate principal amount of any
Class of Offered Certificates beyond the applicable Expected Final Payment
Date would extend the average life and date of final payment of the Offered
Certificates, in which case the Certificateholders of each Class of Offered
Certificates will bear the risk of not being able to reinvest payments at
such time at yields at least equal to the yields which would have been
available to the Certificateholders of each Class of Offered Certificates
on the applicable Expected Final Payment Date. In addition, a significant
decline in the amount of Receivables generated could cause an Early
Amortization Event, the occurrence of which may shorten the average life
and date of final payment of the Offered Certificates, and the
Certificateholders of each Class of Offered Certificates would bear the
risk of not being able to reinvest payments on the Offered Certificates
when received at yields at least equal to the yield on the Offered
Certificates.
In addition, since the Trust, as a master trust, may issue additional
Series from time to time, there can be no assurance that the issuance of
additional Series or the Principal Terms of any additional Series might not
have an impact on the timing and amount of payments received by
Certificateholders of each Class of Offered Certificates.
DESCRIPTION OF THE OFFERED CERTIFICATES
The Floating Rate Series 1999-1, Class A Asset-Backed Certificates
(the "CLASS A CERTIFICATES") and The Floating Rate Series 1999-1, Class B
Asset-Backed Certificates (the "CLASS B CERTIFICATES" and, together with
the Class A Certificates, the "OFFERED CERTIFICATES" or "SERIES 1999-1")
will be issued pursuant to the Pooling and Servicing Agreement and the
Series 1999-1 Supplement entered into between the Transferor, as the
transferor of the Receivables, Yamaha, as Servicer and The Fuji Bank and
Trust Company, as Trustee for the Certificateholders, substantially in the
form filed as exhibits to the Registration Statement of which this
Prospectus is a part. Pursuant to the Pooling and Servicing Agreement, the
Transferor may execute further Supplements thereto between the Transferor
and the Trustee in order to issue additional Series. See "--Exchanges." The
Trustee will provide a copy of the Pooling and Servicing Agreement (without
exhibits or schedules), including any Supplements, to Certificateholders of
any Class of Offered Certificates without charge upon written request at
the address of the Trustee referenced in "--The Trustee." The following
summary describes certain terms of the Pooling and Servicing Agreement.
INTERESTS IN THE TRUST
The Offered Certificates will represent undivided interests in the
Trust, including the right to receive the Floating Allocation Percentage
and the Fixed Allocation Percentage (collectively, the "INVESTED
PERCENTAGE") of all Collections received with respect to the Receivables in
the Trust up to (but not in excess of) amounts required to make payments of
interest at the Class A Certificate Rate or the Class B Certificate Rate,
as the case may be, and the Class A Invested Amount on the Class A Expected
Final Payment Date or the Class B Invested Amount on the Class B Expected
Final Payment Date, as applicable, or earlier or later in certain
circumstances. The property of the Trust consists of the Receivables
generated under the Accounts existing on and after January 31, 1994, all
funds to be collected from Dealers in respect of Receivables (including
Recoveries), all of the Transferor's right, title and interest in, to and
under the Receivables Purchase Agreement, the related Product Security, all
moneys on deposit in the Collection Account, the Principal Funding Account,
the Special Funding Account or any other accounts established for the
benefit of any other Series (which other accounts will not be available to
Certificateholders), and payments made in respect of Enhancements issued
with respect to any other Series (the drawing on or payment of such
Enhancement not being available to Certificateholders). The term
"ENHANCEMENT" is defined in the Pooling and Servicing Agreement as any
letter of credit, guaranteed rate agreement, maturity guaranty facility,
cash collateral account or guaranty, tax protection agreement, interest
rate swap or other contract or agreement for the benefit of any Series
issued by the Trust. The Trust does not include the Receivables arising
from any Removed Accounts. As of the Closing Date, the Class A Invested
Amount will be $_________ (the "CLASS A INITIAL INVESTED AMOUNT"), the
Class B Invested Amount will be $_____________ (the "CLASS B INITIAL
INVESTED AMOUNT") and the Class C Invested Amount will be $_________ (the
"CLASS C INITIAL INVESTED Amount").
The Transferor or a designated affiliate will own the interest (the
"TRANSFEROR INTEREST") not represented by the Certificates and any other
Series of certificates to be issued. The Transferor Interest will be
evidenced by a certificate (the "EXCHANGEABLE TRANSFEROR CERTIFICATE")
representing an undivided interest in the Trust, including the right to the
Transferor Percentage, which may vary from month to month, of all
Collections on the Receivables in the Trust, subject to allocation to the
Offered Certificates and any other Series of certificates in their
accumulation or early amortization periods and to allocation to the Offered
Certificates and other Series of certificates if so provided in the
applicable Supplement upon the occurrence of a Transferor Subordination
Event.
INTEREST PAYMENTS
Interest will accrue on the respective unpaid principal amount of
each Class of Offered Certificates at a per annum rate equal to the
applicable Certificate Rate (as defined below) and, except as otherwise
provided herein, be distributed to the Class A Certificateholders and the
Class B Certificateholders monthly on the 15th day of each month (or, if
any such day is not a Business Day, on the next succeeding Business Day)
and on the applicable Expected Final Payment Date (each a "DISTRIBUTION
DATE"), commencing _________, 1999. Interest for any Distribution Date will
include interest at the applicable Certificate Rate from and including the
preceding Distribution Date or, in the case of the first Distribution Date,
from and including _______, 1999 (the "CLOSING DATE"), to but excluding
such Distribution Date (each an "INTEREST ACCRUAL PERIOD"). Interest will
be calculated on the basis of the actual number of days in the related
Interest Accrual Period and a 360-day year.
Interest on the unpaid principal amount of the Class A Certificates
will accrue for each Interest Accrual Period at a rate per annum equal to
the lesser of (1) one-month LIBOR determined as of the second London
Banking Day prior to such Interest Accrual Period (or, in the case of the
first Distribution Date, determined as of _________, 1999 for the period
from _________, 1999 up to but excluding __________, 1999) plus ___% per
annum or (2) the Available Funds Rate (the "CLASS A CERTIFICATE RATE").
Interest on the unpaid principal amount of the Class B Certificates will
accrue for each Interest Accrual Period at a rate per annum equal to the
lesser of (1) one-month LIBOR determined as of the second London Banking
Day prior to such Interest Accrual Period (or, in the case of the first
Distribution Date, determined as of _________, 1999 for the period from
_________, 1999 up to but excluding __________, 1999) plus ___% per annum
or (2) the Available Funds Rate (the "CLASS B CERTIFICATE RATE"). Interest
on the unpaid principal amount of the Class C Certificates will accrue for
each Interest Accrual Period at a rate per annum equal to the lesser of (1)
one-month LIBOR determined as of the second London Banking Day prior to
such Interest Accrual Period (or, in the case of the first Distribution
Date, determined as of _________, 1999 for the period from _________, 1999
up to but excluding __________, 1999) plus ___% per annum or (2) the
Available Funds Rate (the "CLASS C CERTIFICATE RATE" and, together with the
Class A Certificate Rate and the Class B Certificate Rate, the "CERTIFICATE
RATES"). The "AVAILABLE FUNDS RATE" for a Distribution Date is the product
of (a) the Yield Factor for such Distribution Date and (b) twelve, less the
Servicing Fee Percentage.
On the second London Banking Day preceding the first day of an
Interest Accrual Period (a "LIBOR DETERMINATION DATE"), until the Final
Series Termination Date, the Trustee will determine the rate for deposits
in United States dollars having a one-month maturity, commencing on the
first day of such Interest Accrual Period, which appears on Telerate Page
3750 as of 11:00 A.M., London time, on such LIBOR Determination Date. If
such rate does not appear on Telerate Page 3750, the rate for such LIBOR
Determination Date will be determined on the basis of rates at which
deposits in United States dollars having a one-month maturity are offered
by the Reference Banks at approximately 11:00 A.M., London time, on that
day to prime banks in the London interbank market. The Trustee will request
the principal London office in each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the
rate for such LIBOR Determination Date will be the arithmetic mean of the
quotations (rounded upward to the nearest 0.015625%). If fewer than two
quotations are provided as requested, the rate for such LIBOR Determination
Date will be the arithmetic mean (rounded upward to the nearest 0.015625%)
of the rates quoted by major banks in The City of New York, selected by the
Servicer, at approximately 11:00 a.m., New York time, on such date for
loans in United States dollars having a one-month maturity to leading
European banks; provided, however, that if the Trustee is unable to
determine a rate in accordance with one of the procedures described above,
LIBOR shall be LIBOR as determined on the most recent LIBOR Determination
Date. The Class A Certificate Rate and the Class B Certificate Rate
applicable to the then current and preceding Interest Accrual Period may be
obtained be telephoning the Trustee at (212) _____________. For purposes of
calculating LIBOR, "LONDON BANKING DAY" means any business day on which
dealings in deposits in United States dollars are transacted in the London
interbank market, "TELERATE PAGE 3750" means the display page currently so
designated on the Dow Jones Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying comparable
rates or prices) and "REFERENCE BANKS" means three major banks in the
London interbank market selected by the Servicer.
On each Distribution Date, Class A Monthly Interest and Class B
Monthly Interest will be paid to the Class A Certificateholders and the
Class B Certificateholders, respectively, of record on the last Business
Day of the immediately preceding month (the "RECORD DATE").
PRINCIPAL PAYMENTS
No principal payments will be made to the Class A Certificateholders
until the Class A Expected Final Payment Date or upon the occurrence of an
Early Amortization Event as described herein. See "--Early Amortization
Events." No principal payments will be made to the registered holders of
Class B Certificates until the final principal payment has been made to the
Class A Certificateholders. No principal payments will be made to the
registered holders of Class C Certificates (the "CLASS C
CERTIFICATEHOLDERS" and, together with the Class A Certificateholders and
the Class B Certificateholders, the "CERTIFICATEHOLDERS") until the final
principal payment has been made to the Certificateholders of each Class of
Offered Certificates. With respect to the period beginning on ______, 1999
and ending (1) on the day prior to the day on which the Controlled
Accumulation Period commences or (2) on the day prior to the day on which
the Early Amortization Period commences (the "REVOLVING PERIOD"), Principal
Collections allocable to the Certificateholders' Interest will either be
(a) allocated to one or more Series which are in amortization, early
amortization or accumulation periods to cover principal payments due to the
investor certificateholders of any such Series or (b) if no such Series is
then amortizing or accumulating principal, paid to the Transferor to
maintain the Certificateholders' Interest or held as Undistributed
Principal Collections.
Unless and until an Early Amortization Event shall have occurred, on
each Distribution Date occurring during the Controlled Accumulation Period
on or prior to the Class A Expected Final Payment Date, all Principal
Collections allocable to the Class A Certificateholders, the Class B
Certificateholders and the Class C Certificateholders (the
"CERTIFICATEHOLDERS' INTEREST") and the Transferor Interest and certain
other amounts comprising Class A Monthly Principal and Excess Principal
Collections allocated to the Certificates will no longer be paid for the
benefit of other Series or to the Transferor as described above but instead
will be deposited in the Principal Funding Account in an amount not to
exceed the Controlled Deposit Amount. Unless and until an Early
Amortization Event shall have occurred, on each Distribution Date occurring
during the Rapid Accumulation Period on or prior to the Class B Expected
Final Payment Date, all Principal Collections allocable to the
Certificateholder's Interest and the Transferor Interest and certain other
amounts comprising Class B Monthly Principal and Excess Principal
Collections allocated to the Certificates will no longer be paid for the
benefit of other Series or to the Transferor as described above but instead
will be deposited in the Principal Funding Account. The funds deposited in
the Principal Funding Account will be used to pay the Class A Invested
Amount on the Class A Expected Final Payment Date and the Class B Invested
Amount on the Class B Expected Final Payment Date. Amounts on deposit in
the Principal Funding Account shall be invested at the direction of the
Servicer. Earnings, net of losses and investment expenses, in excess of the
Class B Certificate Rate will be paid to the Transferor. See "--Principal
Funding Account." Although the Principal Funding Account will be an
Eligible Deposit Account and invested in Eligible Investments, the
Certificateholders of each Class of Offered Certificates will bear the risk
of loss of any amounts of principal on deposit therein. Prior to the Class
A Expected Final Payment Date, the amount on deposit in the Principal
Funding Account subject to such risk could reach a maximum of $_________,
which is the Class A Initial Invested Amount. During the period commencing
on the Class A Expected Final Payment Date until the Class B Expected Final
Payment Date, the amount on deposit in the Principal Funding Account
subject to such risk could reach a maximum of $_________, which is the
Class B Initial Invested Amount. Even if the funds on deposit in the
Principal Funding Account at such applicable time are insufficient to pay
the Class A Invested Amount or the Class B Invested Amount, as the case may
be, in full, all such funds will be distributed to the Certificateholders
of such Class of Offered Certificates on the applicable Expected Final
Payment Date. On each Distribution Date thereafter the Certificateholders
of such Class of Offered Certificates will receive, as applicable,
distributions of Class A Monthly Principal and Class A Monthly Interest
until the Class A Invested Amount has been paid in full or distributions of
Class B Monthly Principal and Class B Monthly Interest until the Class B
Invested Amount has been paid in full.
Interest payments on the Offered Certificates will be made on each
Distribution Date and interest and principal payments on the Offered
Certificates will be made on the applicable Expected Final Payment Date
(or, if an Early Amortization Event occurs, on each Distribution Date
thereafter) to the Certificateholders in whose names the Offered
Certificates were registered (expected to be Cede, as nominee of DTC) at
the close of business on the Record Date. The final payment on the Offered
Certificates will be made only upon presentation and surrender of the
Offered Certificates. Distributions will be made to DTC in immediately
available funds.
REGISTRATION OF THE OFFERED CERTIFICATES IN THE NAME OF CEDE AS NOMINEE OF DTC
The interests of holders of beneficial interests in the Offered
Certificates ("CERTIFICATE OWNERS") will be offered for purchase in minimum
denominations of $1,000 (representing 1/________th of the undivided
interest of the Class A Certificateholders in the Trust and 1/________th of
the undivided interest of the Class B Certificateholders in the Trust) and
integral multiples thereof and will be represented initially by one or more
physical certificates registered in the name of Cede & Co. ("CEDE") as
nominee of The Depository Trust Company ("DTC"). No Certificate Owner will
be entitled to receive a definitive certificate representing such person's
beneficial ownership interest in the Offered Certificates except in the
event that Definitive Certificates are issued under the limited
circumstances described herein. Unless and until Definitive Certificates
are issued, all references to actions by Certificateholders of any Class of
Offered Certificates shall refer to actions taken by DTC upon instructions
from its participating organizations ("DIRECT PARTICIPANTS") and all
references to distributions, notices, reports and statements to
Certificateholders of any Class of Offered Certificates shall refer to
distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Offered Certificates, for payment or distribution
to Certificate Owners in accordance with DTC's procedures with respect
thereto. See "--Book-Entry Registration of the Offered Certificates" and
"-Issuance of Definitive Certificates Upon the Occurrence of Certain
Circumstances."
BOOK-ENTRY REGISTRATION OF THE OFFERED CERTIFICATES
Certificateholders of any Class of Offered Certificates may hold
their Offered Certificates through DTC (in the United States) or Cedel
Bank, societe anonyme ("CEDEL") or Euroclear (in Europe) if they are
participants of such systems, or indirectly through organizations that are
participants in such systems.
DTC is a limited purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code (the "UCC")
as in effect in the State of New York and a "clearing agency" registered
pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Direct Participants and to facilitate the clearance and
settlement of securities transactions between Direct Participants through
electronic book-entries, thereby eliminating the need for physical movement
of certificates. Direct Participants include securities brokers and
dealers, banks, trust companies and clearing corporations, and may include
certain other organizations. Indirect access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("INDIRECT PARTICIPANTS" and,
together with Direct Participants, "DTC PARTICIPANTS").
To facilitate subsequent transfers, all Offered Certificates
deposited with DTC will be registered in the name of DTC's nominee, Cede.
The deposit of Offered Certificates with DTC and their registration in the
name of Cede will effect 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 Direct Participants to whose
accounts such Offered Certificates are credited, which may or may not be
the Certificate Owners. The DTC Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Certificate Owners will receive all distributions of principal of,
and interest on, the Offered Certificates from the Trustee, as paying
agent, or its successor in such capacity (the "PAYING AGENT"), through
Direct Participants or Indirect Participants. Under a book-entry format,
Certificate Owners may experience some delay in their receipt of payments,
since such payments will be forwarded by the Paying Agent to Cede, as
nominee of DTC. DTC will forward such payments to its Direct Participants
which thereafter will forward them to Indirect Participants or Certificate
Owners. Certificate Owners will not be recognized by the Trustee as
Certificateholders of any Class of Offered Certificates, as such term is
used in the Pooling and Servicing Agreement or any Supplement. Certificate
Owners will be permitted to exercise the rights of Certificateholders of
any Class of Offered Certificates only indirectly through DTC and its
Direct Participants and Indirect Participants.
Because DTC can act only on behalf of Direct Participants, who in
turn act on behalf of Indirect Participants, and on behalf of certain
banks, trust companies and other persons approved by it, the ability of a
Certificate Owner to pledge the Offered Certificates to persons or entities
that do not participate in the DTC system, or to otherwise act with respect
to such Offered Certificates, may be limited due to the absence of physical
certificates for such Offered Certificates.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Certificate Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments by DTC
Participants to Certificate Owners will be governed by standing
instructions and customary practices, as is the case with securities held
for the accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such DTC Participant and not of DTC, the
Trustee, the Transferor or the Servicer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Paying Agent,
disbursement of such payments to Direct Participants shall be the
responsibility of DTC and disbursement of such payments to Certificate
Owners shall be the responsibility of Direct Participants and Indirect
Participants.
Purchases of Offered Certificates under the DTC system must be made
by or through Direct 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 Direct
Participants' and Indirect Participants' records. Certificate Owners will
not receive written confirmation from DTC of their purchase, but
Certificate Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct 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 physical certificates
representing their ownership interest in the Offered Certificates, except
in the event that use of the book-entry system for the Offered Certificates
is discontinued.
Neither DTC nor Cede will consent or vote with respect to the Offered
Certificates. DTC has advised the Transferor that it will take any action
permitted to be taken by a Certificateholder of any Class of Offered
Certificates under the Pooling and Servicing Agreement or any Supplement
only at the direction of one or more Direct Participants to whose accounts
with DTC the Offered Certificates are credited. Additionally, DTC has
advised the Transferor that to the extent that the Pooling and Servicing
Agreement or any Supplement requires that any action may be taken only by
Certificateholders of each Class of Offered Certificates representing a
specified percentage of the Class A Invested Amount or the Class B Invested
Amount, respectively, DTC will take such action only at the direction of
and on behalf of Direct Participants whose holdings include undivided
interests that satisfy such specified percentage. Under its usual
procedures, DTC will mail an "OMNIBUS PROXY" to the Trustee as soon as
possible after any applicable record date with respect to a consent or
vote. The Omnibus Proxy will assign Cede's consenting or voting rights to
those Direct Participants to whose accounts the Offered Certificates will
be credited on that record date (identified on a listing attached to the
Omnibus Proxy).
DTC may discontinue providing its services as securities depository
with respect to the Offered Certificates at any time by giving reasonable
notice to the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates
are required to be printed and delivered. The Transferor 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 Certificateholders of each Class of Offered
Certificates. See "-Issuance of Definitive Certificates Upon the Occurrence
of Certain Circumstances."
Cedel and Euroclear will hold omnibus positions on behalf of the
Cedel Participants and the Euroclear Participants, respectively, through
customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries (each, a "DEPOSITARY" and
collectively, the "DEPOSITARIES") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of
DTC.
Transfers between Direct Participants will occur in accordance with
DTC rules. Transfers between Cedel Participants and Euroclear Participants
will occur in the ordinary way in accordance with their applicable rules
and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or
indirectly through Cedel or Euroclear, on the other, will be effected
through DTC in accordance with DTC rules through the relevant European
international clearing system through its Depositary; however, such
cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its
established deadlines (European time). The relevant European international
clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its Depositary to take action to effect final
settlement on its behalf by delivering or receiving securities through DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and
Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing day, dated the
business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing day will be
reported to the relevant Cedel Participant or Euroclear Participant on such
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 with value on the DTC settlement date
but will be available in the relevant Cedel or Euroclear cash account only
as of the business day following settlement through DTC.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations
("CEDEL PARTICIPANTS") and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic
book-entry changes in accounts of Cedel Participants, thereby eliminating
the need for physical movement of certificates. Transactions may be settled
in Cedel in any of 36 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedel interfaces
with domestic markets in several countries. As a professional depository,
Cedel is subject to regulation by the Luxembourg Monetary Institute. Cedel
Participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the Underwriter. Indirect access to Cedel is also available to
others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Cedel Participant,
either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("EUROCLEAR PARTICIPANTS") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk
from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 34 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. The Euroclear System is operated by
Morgan Guaranty Trust Company of New York, Brussels, Belgium office (the
"EUROCLEAR OPERATOR" or "EUROCLEAR"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the
"COOPERATIVE"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries and may include the Underwriter. Indirect access to the
Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "TERMS AND CONDITIONS"). The
Terms and Conditions govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear
System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a
fungible basis without attribution of specific securities to specific
securities clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Payments on 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. Such payments will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Considerations" and Annex A.
Cedel or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by Certificateholders of any Class of Offered
Certificates under the related agreement on behalf of a Cedel Participant
or Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depositary's ability to effect such actions
on its behalf through DTC.
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 such procedures and such procedures may be
discontinued at any time.
The information in this section concerning DTC, Cedel and Euroclear
and their respective book-entry systems has been obtained from sources that
the Transferor believes to be reliable, but the Transferor takes no
responsibility for the accuracy thereof.
DTC'S YEAR 2000 EFFORTS
DTC's management is aware that some computer applications, systems
and the like for processing data ("SYSTEMS") that are dependent upon
calendar dates, including dates before, on and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed the DTC Participants and
other members of the financial community (the "INDUSTRY") that it has
developed and is implementing a program so that its Systems, as the same
relate to the timely payment of distributions (including principal and
interest payments) to securityholders, book-entry deliveries and settlement
of trades within DTC, continue to function appropriately. This program
includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and
their agents, as well as third party vendors from whom DTC licenses
software and hardware, and third party vendors on whom DTC relies for
information and the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (a) impress upon them the
importance of such services being Year 2000 compliant and (b) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has
been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of
any kind.
ISSUANCE OF DEFINITIVE CERTIFICATES UPON THE OCCURRENCE OF CERTAIN CIRCUMSTANCES
The Offered Certificates will be issued in fully registered,
certificated form in denominations of $1,000 and integral multiples thereof
to Certificate Owners of such Class or their nominees (the "DEFINITIVE
CERTIFICATES"), rather than to DTC or its nominee or a successor clearing
agency, only if:
(1) the Transferor advises the Trustee in writing that DTC (or
such successor clearing agency) is no longer willing or able to
discharge properly its responsibilities as depository with respect to
the Offered Certificates, and the Trustee or the Transferor is unable
to locate a qualified successor;
(2) the Transferor, at its option, advises the Trustee in
writing that it elects to terminate the registration of the Offered
Certificates on the book-entry system through DTC (or such successor
clearing agency); or
(3) after the occurrence of a Servicer Default, Certificate
Owners representing in the aggregate more than 50% of the Invested
Amount of such Class advise the Trustee and DTC (or such successor
clearing agency) in writing that the continuation of a book-entry
system through DTC (or such successor clearing agency) is no longer
in the best interest of the Certificate Owners of such Class.
Upon the occurrence of any event described in the immediately
preceding paragraph, DTC is required to notify all Direct Participants of
the availability through DTC of Definitive Certificates. Upon surrender by
DTC of the definitive certificates representing the Offered Certificates of
the affected Class and receipt by the Trustee of instructions for
re-registration, the Trustee will reissue the Offered Certificates of such
Class as Definitive Certificates, and thereafter the Trustee will recognize
the holders of such Definitive Certificates as holders under the Pooling
and Servicing Agreement (collectively, "HOLDERS").
Distributions of principal of, and interest on, the Definitive
Certificates will be made by the Paying Agent directly to Holders in
accordance with the procedures set forth herein and in the Pooling and
Servicing Agreement. Interest payments on each Distribution Date and
interest and principal payments on the applicable Expected Final Payment
Date will be made to Holders in whose names the Definitive Certificates
were registered at the close of business on the preceding Record Date. Such
payments will be made by check mailed to the address of such Holder as it
appears on the certificate register. The final payment on any Definitive
Certificate, however, will be made only upon presentation and surrender of
such Definitive Certificate at the office or agency specified in the notice
of final distribution mailed to Certificateholders of each affected Class
of Offered Certificates. The Trustee will provide such notice to registered
Certificateholders of each affected Class of Offered Certificates not later
than the fifth day of the month of such final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the Transfer Agent and Registrar, which shall initially be the
Trustee. No service charge will be imposed for any registration of transfer
or exchange, but the Transfer Agent and Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.
RATING OF THE OFFERED CERTIFICATES
It is a condition to the issuance of the Class A Certificates that
they be rated in the highest rating category by at least one nationally
recognized rating agency (the rating agency or rating agencies selected by
the Transferor to rate the certificates of a Series is herein referred to
as the "RATING AGENCY"). The rating of the Class A Certificates is based
primarily on the credit quality of the Receivables, the level of
subordination of the Class B Certificates and the Class C Certificates and
the limited subordination of the Transferor Interest up to the Available
Subordinated Amount. It is a condition to the issuance of the Class B
Certificates that they be rated at least "A3" or" A" by the Rating Agency,
as applicable. The rating of the Class B Certificates is based primarily on
the credit quality of the Receivables, the level of subordination of the
Class C Certificates and the limited subordination of the Transferor
Interest up to the Available Subordinated Amount. There is no assurance
that such ratings will remain for any given period of time or that such
ratings will not be lowered or withdrawn entirely by the Rating Agency, if
in its judgment circumstances in the future so warrant. The ratings are not
a recommendation to purchase, hold or sell the Offered Certificates,
inasmuch as such ratings does not comment as to market price or suitability
for a particular investor. The rating of each Class of Offered Certificates
addresses the likelihood of the ultimate payment of principal and interest
on such Class of Offered Certificates. However, the Rating Agency does not
evaluate, and the ratings of the Offered Certificates do not address, the
likelihood that the outstanding principal amount of each Class of Offered
Certificates will be paid by the applicable Expected Final Payment Date.
CONVEYANCE OF RECEIVABLES
On March 24, 1994, the Transferor transferred and assigned to the
Trust all of its right, title and interest in, to and under Receivables in
the Accounts outstanding as of January 31, 1994, all of the Receivables
thereafter created under the Accounts then in existence or subsequently
added to the Trust and the proceeds and related Product Security of all of
the foregoing. Prior to such transfer and assignment, pursuant to the
Receivables Sale Agreement, Deutsche Financial sold to Yamaha all its
right, title and interest in, to and under all Receivables owned by it and
existing as of January 31, 1994 under the Accounts, together with any
related Product Security, and, pursuant to the Receivables Purchase
Agreement, Yamaha sold to the Transferor all its right, title and interest
in, to and under the Receivables existing under the Accounts as of January
31, 1994 and all Receivables arising under such Accounts, together with any
related Product Security, from time to time thereafter. On the Closing
Date, the Trustee will authenticate each Class of Offered Certificates and
the Series 1999-1, Class C Asset-Backed Certificates (the "CLASS C
CERTIFICATES," and together with the Offered Certificates, the
"CERTIFICATES" and each such class of Certificates, a "CLASS") and deliver
such Offered Certificates to the Transferor which will, in turn, deliver
them to Chase Securities Inc. (the "UNDERWRITER") against payment of the
net proceeds of the sale of the Offered Certificates. The Trustee will also
deliver the Class C Certificates and the Exchangeable Transferor
Certificate to the Transferor.
In connection with the sale of the Receivables and related Product
Security owned by Deutsche Financial and existing on or after January 31,
1994 to Yamaha pursuant to the Receivables Sale Agreement, and the sale of
the Receivables and related Product Security by Yamaha to the Transferor
pursuant to the Receivables Purchase Agreement, and the transfer of the
Receivables by the Transferor to the Trust pursuant to the Pooling and
Servicing Agreement, Yamaha has caused and will continue to cause Deutsche
Financial to indicate in its records, including any computer files, that
such Receivables have been sold by Deutsche Financial to Yamaha and then
resold by Yamaha to the Transferor and then transferred to the Trust, and
the Transferor has indicated and will continue to indicate in its records,
including any computer files, that the Receivables have been transferred
from the Transferor to the Trust. In addition, the Transferor provides and
will continue to provide monthly to the Trustee a computer file or a
microfiche list containing a true and complete list showing for each
Account, (a) its account number and (b) the amount of Receivables in such
Account. Deutsche Financial, acting on behalf of Yamaha as initial
subservicer, will retain and will not deliver to the Trustee any other
records or agreements relating to the Accounts or the Receivables. Except
as set forth above, the records and agreements relating to the Accounts and
the Receivables are not and will not be segregated from those relating to
other dealer accounts and receivables, and neither the computer files nor
the physical documentation relating to the Accounts or Receivables have
been or will be stamped or marked to reflect the transfer of Receivables to
the Trust. The Trustee will have reasonable access to such records and
agreements as required by applicable law or to enforce the rights of the
Certificateholders. Deutsche Financial and Yamaha have filed one or more
UCC-1 financing statements in accordance with the UCC to perfect Yamaha's
and the Transferor's interest in the Receivables, as applicable. The
Transferor, in turn, has filed one or more UCC-1 financing statements in
accordance with California state law to perfect the Trust's interest in the
Receivables. See "Risk Factors" and "Certain Transfer, Security Interest
and Bankruptcy Considerations--Transfer of Receivables."
EXCHANGES
The Pooling and Servicing Agreement provides for the Trustee to issue
two types of certificates: (a) one or more Series of certificates which are
transferable and have the characteristics described below and (b) the
Exchangeable Transferor Certificate, a certificate which evidences the
Transferor Interest, which is held by the Transferor or a designated
affiliate and is generally not transferable. The Pooling and Servicing
Agreement also provides that, pursuant to any one or more supplements to
the Pooling and Servicing Agreement (each, a "SUPPLEMENT"), the Transferor
may tender the Exchangeable Transferor Certificate, or the Exchangeable
Transferor Certificate and the certificates evidencing any Series of
certificates, to the Trustee in exchange for one or more newly issued
Series and a reissued Exchangeable Transferor Certificate (any such tender,
an "EXCHANGE"). Under the Pooling and Servicing Agreement, the Transferor
may define, with respect to any newly issued Series:
(1) its name or designation;
(2) its initial principal amount (or method for calculating such
amount);
(3) its certificate rate (or formula for the determination thereof);
(4) the interest payment date or dates and the date or dates from
which interest shall accrue;
(5) the method for allocating collections to certificateholders;
(6) the names of any accounts to be used by such Series and the terms
governing the operation of any such accounts;
(7) the percentage used to calculate monthly servicing fees;
(8) the Minimum Transferor Percentage;
(9) the minimum amount of Trust Principal Component required to be
maintained;
(10) the issuer and terms of any Enhancement with respect thereto;
(11) the base rate for such Series, if applicable;
(12) the terms on which the certificates of such Series may be
repurchased at the Transferor's option or remarketed to other investors;
(13) the series termination date;
(14) any deposit into any account maintained for the benefit of
certificateholders;
(15) the number of classes of such Series, and if more than one
class, the rights and priorities of each such class;
(16) the extent to which the certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depository 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);
(17) whether the certificates of such Series may be issued in bearer
form and any limitations imposed thereon;
(18) the priority of any Series with respect to any other Series;
(19) the rights of the holder of the Exchangeable Transferor
Certificate that have been transferred to the holders of such Series; and
(20) any other relevant terms (all such terms, the "PRINCIPAL TERMS"
of such Series).
None of the Transferor, the Servicer, the Trustee or the Trust is required
or intends to obtain the consent of any Certificateholder to issue any
additional Series. However, as a condition of an Exchange, the Transferor
will deliver to the Trustee written confirmation that the Exchange will not
result in the applicable Rating Agency reducing or withdrawing its rating
of any outstanding Series, including each Class of Offered Certificates.
The Transferor may offer any Series to the public or other investors under
a prospectus or other disclosure document in transactions either registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT") or
exempt from registration thereunder directly, through the Underwriter or
one or more other underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise. Any such Series may
be issued in fully registered or book-entry form in minimum denominations
determined by the Transferor. The Trust has previously issued:
o the 6.25% Series 1994-1, Class A Asset-Backed Certificates;
o the 6.45% Series 1994-1, Class B Asset-Backed Certificates;
o the 6.20% Series 1995-1, Class A Asset-Backed Certificates;
o the 6.45% Series 1995-1, Class B Asset-Backed Certificates;
o the Variable Funding Series 1998-1, Class A Asset-Backed Certificate;
and
o the Variable Funding Series 1998-1, Class B Asset-Backed Certificate.
The Certificates are the fourth Series to be issued by the Trust. The
Transferor may offer, from time to time, additional Series.
The Pooling and Servicing Agreement provides that the Transferor may
perform Exchanges and define Principal Terms such that each Series has a
period during which amortization of the principal amount thereof is
intended to occur which may have a different length and begin on a
different date than such period for any other Series. Further, one or more
Series may be in their revolving periods while other Series are not. Thus,
certain Series may not be amortizing, while other Series are amortizing.
Each Series may have the benefits of a form of Enhancement issued by
issuers different from the issuers of the form of Enhancement with respect
to any other Series. Under the Pooling and Servicing Agreement, the Trustee
shall hold any such Enhancement only on behalf of the Series with respect
to which each relates. Likewise, with respect to each such Enhancement, the
Transferor may deliver a different form of Enhancement agreement. The
Pooling and Servicing Agreement also provides that the Transferor may
specify different certificate rates and monthly servicing fees with respect
to each Series. Yield Collections not used to pay interest on the
certificates, the monthly servicing fee, the investor default amount or
investor charge-offs with respect to any Series will be allocated as
provided in the form of the Enhancement agreement for such Series, if
applicable. The Transferor also has the option under the Pooling and
Servicing Agreement to vary between Series the terms upon which a Series
may be repurchased at the Transferor's option or remarketed to other
investors. Additionally, certain Series may be subordinated to other
Series, or classes within a Series may have different priorities. No
current or future Series of certificates may be senior to this Series of
Certificates. The Class B Certificates will be subordinate to the Class A
Certificates, and the Class C Certificates will be subordinate to the
Offered Certificates, but not to any other Series of certificates. There is
no limit to the number of Exchanges that the Transferor may perform under
the Pooling and Servicing Agreement. The Trust will terminate only as
provided in the Pooling and Servicing Agreement.
Under the Pooling and Servicing Agreement and pursuant to a
Supplement, an Exchange may only occur upon the satisfaction of certain
conditions provided in the Pooling and Servicing Agreement. Under the
Pooling and Servicing Agreement, the Transferor may perform an Exchange by
notifying the Trustee, at least three Business Days in advance of the date
upon which the Exchange is to occur. Under the Pooling and Servicing
Agreement, the notice will state the designation of any Series to be issued
on the date of the Exchange and, with respect to each such Series: (a) its
initial invested amount (or method for calculating such amount) and (b) its
certificate rate (or the method for allocating interest payments or other
cash flow to such Series). On the date of the Exchange, the Pooling and
Servicing Agreement provides that the Trustee will issue any such Series
only upon delivery to it of the following:
(1) a Supplement in form satisfactory to the Trustee signed by the
Transferor and specifying the Principal Terms of such Series;
(2) the form of Enhancement and the Enhancement agreement, if any,
with respect thereto executed by the Transferor and the provider of the
form of Enhancement;
(3) an opinion of counsel to the effect that certificates of such
Series will be characterized either as indebtedness or an interest in a
partnership under existing law for Federal income tax purposes and that the
issuance of such Series will not affect the Federal income tax
characterization of any outstanding Series;
(4) written confirmation from the applicable Rating Agency that the
Exchange will not result in such Rating Agency reducing or withdrawing its
rating on any outstanding Series; and
(5) the existing Exchangeable Transferor Certificate and the
applicable certificates of the Series to be exchanged, if applicable.
Upon satisfaction of such conditions, the Trustee will cancel the existing
Exchangeable Transferor Certificate and the certificates of the exchanged
Series, if applicable, and issue the new Series and new Exchangeable
Transferor Certificate.
COVENANTS, REPRESENTATIONS AND WARRANTIES
The Transferor covenants to the Trustee for the benefit of all
certificateholders of all Series which from time to time may have an
interest in the Trust that, as to the Receivables and the Accounts, the
Transferor will from time to time accept the transfer of any Receivable
which is charged off as uncollectible or any Receivable the proceeds of
which are unavailable to the Trust, if:
(1) such Receivable is not an Eligible Receivable;
(2) such Receivable or any Product Security relating thereto was not
conveyed to the Trust free and clear of all liens (except such liens as may
be permitted by the Pooling and Servicing Agreement) or in compliance in
all material respects with all requirements of law;
(3) all material information with respect to the Receivables, and the
Accounts related thereto, in the list provided to the Trustee was not true
and correct in all material respects;
(4) the Transferor did not obtain all consents, licenses, approvals
or authorizations required in connection with the conveyance of the
Receivables to the Trust; or
(5) as of, and from time to time after, March 24, 1994, the computer
file or list of Accounts in existence at such time provided by the
Transferor to the Trustee was not an accurate and complete listing of all
such Accounts in all material respects or the information contained therein
with respect to the identity of such Accounts and the Receivables existing
thereunder was not true and correct in all material respects as of, and
from time to time after, January 31, 1994, unless cured within 30 days or
any longer period agreed upon by the Trustee (not to exceed an additional
60 days) from the earlier to occur of the discovery of any such event by
the Transferor or the Servicer, or receipt by the Transferor or the
Servicer of written notice of any such event given by the Trustee.
Additionally, the Transferor covenants in the Pooling and Servicing
Agreement to accept, under certain conditions, the retransfer of each
Receivable which is subject to certain specified liens immediately upon the
discovery of such liens.
The Transferor shall accept the reassignment of any Receivable as
described above (an "INELIGIBLE RECEIVABLE") by deducting the amount of
such Receivables from the Transferor Interest on or prior to the end of the
Collection Period in which such reassignment obligation exists, unless such
deduction would cause the Transferor Amount to be less than the Minimum
Transferor Percentage of the product of the Pool Balance and one minus the
Yield Factor (the "TRUST PRINCIPAL COMPONENT"), in which case the
Transferor shall deposit funds in such amount to the Collection Account
within two Business Days of such reassignment obligation arising (the
"TRANSFEROR DEPOSIT AMOUNT"). Any Transferor Deposit Amount paid in
connection with the reassignment of an Ineligible Receivable shall be
deemed a payment in full of the Ineligible Receivable and will be treated
under the Pooling and Servicing Agreement in the same manner as are
payments received by the Servicer from Dealers under the Accounts.
Transferor Deposit Amounts paid by the Transferor shall be allocated in
respect of Yield Collections and Principal Collections as provided in the
Pooling and Servicing Agreement. Notwithstanding the foregoing, no such
reassignment shall be considered to occur unless such payment is made.
The obligation of the Transferor to accept reassignment of any
Ineligible Receivable as described above is the sole remedy with respect to
such Receivable available to certificateholders of all Series outstanding
or the Trustee on behalf of certificateholders of all Series outstanding.
Pursuant to the Receivables Purchase Agreement, Yamaha will make covenants
with respect to Ineligible Receivables substantially similar to those
described above with respect to the Transferor. As a result, in the event
that a Receivable sold to the Transferor by Yamaha becomes an Ineligible
Receivable, Yamaha will be required to repurchase such Receivable from the
Transferor.
In the Pooling and Servicing Agreement, the Transferor has
represented and warranted to the Trustee for the benefit of all holders of
all Series which from time to time may have an interest in the Trust, that:
(1) the Transferor is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization, has the
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 the Pooling and Servicing Agreement and the Receivables
Purchase Agreement and to execute and deliver to the Trustee the
Certificates pursuant to the Pooling and Servicing Agreement;
(2) the Pooling and Servicing Agreement and the Receivables Purchase
Agreement constitute legal, valid, binding and enforceable obligations of
the Transferor; and
(3) the Pooling and Servicing Agreement constitutes a valid transfer
to the Trust of all right, title and interest of the Transferor in, to and
under the Receivables and the related Product Security, whether then
existing or thereafter created in the Accounts, and the proceeds thereof
(which amount shall include amounts in any of the accounts established for
the benefit of the Certificateholders or the grant of a first priority
perfected security interest in such Receivables and with certain exceptions
made for certain limited time periods the proceeds thereof (which amount
shall include amounts in any of the accounts established for the benefit of
the Certificateholders), which is effective as to each Receivable upon the
transfer thereof to the Trust or upon its creation, as the case may be),
and that the Receivables Purchase Agreement constitutes a valid transfer to
the Transferor of all right, title and interest of Yamaha in, to and under
the Receivables, whether then existing or thereafter created in the
applicable Accounts, and the proceeds and the related Product Security
thereof.
In the event that (a) any of the representations and warranties described
in clauses (1) through (3) above are not true and correct or (b) a material
amount of Receivables are not Eligible Receivables, and in either case such
event has a material adverse effect on the interests of holders of the
certificates of all Series, either the Trustee or the holders of
certificates evidencing undivided interests in the Trust aggregating more
than 50% of the outstanding invested amount of all Series, by written
notice to the Transferor (and to the Trustee and the Servicer, if given by
the certificateholders), may direct the Transferor to accept reassignment
of all Receivables within 30 days of such notice or any longer period
agreed upon by the Trustee (not to exceed an additional 60 days). The
Transferor will be obligated to accept reassignment of all such Receivables
on a Distribution Date occurring within such applicable period, unless the
representations and warranties shall then be true and correct in all
material respects or there shall no longer be a material amount of such
Receivables which are not Eligible Receivables, as the case may be. The
price for such transfer of Receivables shall be equal to the sum of the
aggregate invested amounts of all Series on the Record Date related to the
applicable payment date on which the transfer is scheduled to be made (less
the aggregate principal amount on deposit in any principal funding account)
plus an amount equal to all interest accrued but unpaid on all Series at
the applicable certificate rates through the end of the interest accrual
periods of such Series. The payment of such amount into the Collection
Account in immediately available funds will be considered a prepayment in
full of all such Receivables and will be paid in full to the
certificateholders. The obligations described above shall be the sole
remedies respecting the foregoing representations, warranties and events
available to the Trustee or the certificateholders.
Pursuant to the Receivables Purchase Agreement, Yamaha makes
representations and warranties with respect to the Receivables sold by it
to the Transferor pursuant to the Receivables Purchase Agreement
substantially similar to those described above with respect to the
Transferor. As a result, in the event that the Transferor breaches a
representation and warranty described above with respect to a Receivable
sold to the Transferor by Yamaha, Yamaha will be required to repurchase
from the Transferor the Receivables retransferred to the Transferor for an
amount of cash equal to the amount the Transferor is required to deposit
under the Pooling and Servicing Agreement in connection with such
retransfer.
An "ELIGIBLE RECEIVABLE" is defined to mean each Receivable:
(1) which has arisen under an Account and is payable in United States
dollars;
(2) which was created in compliance with all requirements of law and
pursuant to a dealer agreement which complies with all requirements of law
in either case the failure to comply with which would have a material
adverse effect upon certificateholders;
(3) with respect to which all material consents, licenses, approvals
or authorizations of, or registrations with, any governmental authority
required to be obtained or given by Yamaha or the Transferor in connection
with the creation or transfer of such Receivable or the execution, delivery
and performance by Deutsche Financial of the related dealer agreement have
been duly obtained or given and are in full force and effect as of such
date of creation;
(4) as to which at the time of the transfer of such Receivable to the
Trust, the Transferor or the Trust will have good and marketable title,
free and clear of all liens, encumbrances, charges and security interests
(except those permitted by the Pooling and Servicing Agreement);
(5) which has been the subject of either a valid transfer and
assignment from the Transferor to the Trust of all of the Transferor's
right, title and interest therein or the grant of a first priority
perfected security or ownership interest therein (and in the proceeds
thereof), effective until the termination of the Trust;
(6) which will at all times be the legal, valid and binding payment
obligation of the Dealer thereof enforceable against such Dealer in
accordance with its terms, subject to certain bankruptcy and equity related
exceptions;
(7) which constitutes either an "account," "chattel paper" or a
"general intangible" under and as defined in Article 9 of the UCC as then
in effect in the State of California;
(8) which represents the obligation of a Dealer to repay an extension
of credit made to such Dealer by Deutsche Financial to finance such
Dealer's acquisition of Products from Yamaha;
(9) 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 by the Dealer, at the time of
transfer to the Trust is secured by a perfected security or ownership
interest in the Product relating thereto;
(10) as to which at all times following the transfer of such
Receivable by the Transferor 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 (except for liens not of the same or higher priority than the lien
of the Trust), other than liens permitted by the Pooling and Servicing
Agreement;
(11) which, at the time of its transfer to the Trust, has not been
waived or modified except in accordance with the policies and procedures of
Yamaha relating to the operation of its business;
(12) which is not subject to any right of rescission, setoff,
counterclaim or other defense (including the defense of usury), other than
certain bankruptcy and equity related defenses;
(13) as to which Yamaha, Deutsche Financial and the Transferor have
satisfied all obligations to be fulfilled at the time it is transferred to
the Trust; and
(14) as to which Yamaha, Deutsche Financial and the Transferor have
done nothing, at the time of its transfer to the Trust, to impair the
rights of the Trust or certificateholders therein.
It is not required or anticipated that the Trustee will make any
initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with the Transferor's representations and
warranties or for any other purpose. In addition, it is not anticipated or
required that the Trustee will make any initial or periodic general
examination of the Servicer for the purpose of establishing the compliance
by the Servicer with its representations or warranties or the performance
by the Servicer of its obligations under the Pooling and Servicing
Agreement for any other purpose. The Servicer, however, is required to
deliver to the Trustee on or before May 31 of each year an opinion of
counsel with respect to the validity of the security interest of the Trust
in, to and under the Receivables and certain other components of the Trust.
ADDITION OF ACCOUNTS
Receivables created in all Accounts established with Dealers which
have purchased existing dealerships ("DEALER REPLACEMENT ACCOUNTS") shall
be added automatically to the Trust. Subject to the limitations described
herein and in "--Subordination of Transferor Interest in Certain
Circumstances," the Transferor shall, on an ongoing basis, automatically
add Receivables created in new Accounts which do not constitute Dealer
Replacement Accounts ("NEW ACCOUNTS") to the Trust subject to the following
conditions:
(1) if either (a) on an annual basis, the percentage derived by
dividing the number of New Accounts added to the Trust during any
fiscal year of the Transferor by the number of Accounts in the Trust
at the beginning of such year exceeds 8% or (b) on a quarterly basis,
the percentage derived by dividing the number of New Accounts added
to the Trust during such calendar quarter by the number of Accounts
in the Trust at the beginning of such calendar quarter exceeds 5%,
then the Transferor may continue to add Receivables created in New
Accounts to the Trust only if (x) the Available Subordinated Amount
is adjusted each Collection Period thereafter by the aggregate amount
of Receivables in those New Accounts included in the Trust which New
Accounts resulted in such percentage to exceed the specified
percentages therein or (y) the Transferor obtains a letter from each
of the Rating Agencies that such action will not result in a
downgrade or withdrawal of the then current ratings assigned by each
of them to each Class of Offered Certificates;
(2) if the annualized rate (averaged for a period of three
consecutive Collection Periods) of (a) Defaulted Receivables minus
recoveries plus the repossession value of all Products repossessed
during such period to (b) the beginning Pool Balance for the related
Collection Period exceeds 7.5%, then the Transferor may continue to
add Receivables created in any New Accounts and Dealer Replacement
Accounts to the Trust only if (x) the Available Subordinated Amount
is increased by the aggregate amount of Receivables in New Accounts
and Dealer Replacement Accounts, or (y) the Transferor obtains a
letter from each of the Rating Agencies that such action will not
result in a downgrade or withdrawal of the then current ratings
assigned by each of them to each Class of Offered Certificates; and
(3) if either (a) on an annual basis, the percentage derived by
dividing the number of New Accounts and Dealer Replacement Accounts
added to the Trust during any fiscal year of the Transferor by the
number of Accounts in the Trust at the beginning of such year exceeds
15% or (b) on a quarterly basis, the percentage derived by dividing
the number of New Accounts and Dealer Replacement Accounts added to
the Trust during such calendar quarter by the number of Accounts in
the Trust at the beginning of such calendar quarter exceeds 5%, then
the Transferor may continue to add any Accounts to the Trust only if
the Transferor obtains a letter from each of the Rating Agencies that
such action will not result in a downgrade or withdrawal of the then
current ratings assigned by each of them to each Class of Offered
Certificates.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding sentence,
on the second Business Day preceding each Distribution Date (each a
"DETERMINATION DATE") with respect to which the sum of the Trust Principal
Component, the Special Funding Account and the Principal Funding Account
minus the sum of the invested amounts (or adjusted invested amounts) for
all Series, the Available Subordinated Amount and the amount of all ten-day
drafts submitted but unpaid as of such date of determination (the
"TRANSFEROR AMOUNT") as a percentage of the Trust Principal Component
exceeds 10% at the end of the related Collection Period, the Transferor has
the right to accept Removed Accounts and accept the conveyance of all the
Receivables in the Removed Accounts, without notice to the
certificateholders. The Transferor may, at its sole discretion, accept such
offer in an aggregate amount equal to an amount not greater than the excess
of the Transferor Amount over 10% of the Trust Principal Component as of
the end of the related Collection Period. The Transferor is permitted to
designate and require reassignment to it of the Receivables from Removed
Accounts only upon satisfaction of the following conditions:
(1) the Transferor shall have delivered to the Trustee for execution
a written instrument of reassignment and a computer file or microfiche list
containing a true and complete list of all Accounts in the Trust after such
removal, the Accounts to be identified by account number and aggregate
amount of Receivables;
(2) the Transferor shall represent and warrant that no selection
procedure used by the Transferor which is adverse to the interests of the
certificateholders or any provider of Enhancements was utilized in
selecting the Removed Accounts;
(3) the removal of any Receivables of any Removed Accounts shall not,
after giving effect thereto in the reasonable belief of the Transferor,
cause an Early Amortization Event to occur and would not cause the
Transferor Amount as a percentage of the Trust Principal Component to be
less than the Minimum Transferor Percentage;
(4) the Transferor shall have delivered prior written notice of the
removal to each Rating Agency which has been selected by the Transferor to
rate any outstanding Series and, prior to the date on which such
Receivables are to be removed, shall have received notice from each Rating
Agency that such removal will not cause the reduction or withdrawal of its
rating of any Series of certificates; and
(5) the Transferor shall have delivered to the Trustee and each
Rating Agency officers' certificates confirming the items set forth in
clauses (1) through (4) above.
In addition, the Pooling and Servicing Agreement provides that no
Receivables arising in Accounts created after the date of any such removal
may be conveyed by the Transferor to the Trust without the prior approval
of each Rating Agency and without delivery to the Trustee of a favorable
opinion of counsel that such removal will not adversely affect the first
priority security interest of the Trust in the Receivables.
COLLECTION ACCOUNT
The Trustee has caused to be established and maintained, in the name
of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the
"COLLECTION ACCOUNT") for the benefit of the Certificateholders and the
holders of certificates of any other Series. An "ELIGIBLE DEPOSIT ACCOUNT"
shall mean either a segregated account with an Eligible Institution or a
segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States or any
one of the states thereof, including the District of Columbia (or any
domestic branch of a foreign bank), and acting as a trustee for funds
deposited in such account, for so long as any of the securities of such
depository institution or its parent shall have a credit rating from each
Rating Agency in one of its generic rating categories which signifies
investment grade. An "ELIGIBLE INSTITUTION" means a depository institution,
which may include the Trustee organized under the laws of the United States
or any one of the States thereof including the District of Columbia (or any
domestic branches of foreign banks), which at all times has a short-term
unsecured debt or certificate of deposit rating of at least "A-1+" and
"P-1" by the applicable Rating Agency; provided, however, that no such
rating shall be required of an institution which shall have corporate trust
powers and which maintains the Collection Account, any principal funding
account, any special funding account or any other account maintained for
the benefit of Certificateholders as a fully segregated trust account with
the trust department of such institution. Funds in the Collection Account
may be invested, at the direction of the Servicer, in:
(1) direct obligations of the United States of America and its
agencies and obligations fully guaranteed as to the timely payment of
principal and interest by the full faith and credit of the United States of
America or its agencies;
(2) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States of America
or any state thereof or domestic branches of foreign banks subject to the
supervision and examination by federal or state banking authorities and
certain depository institutions or trust companies having ratings in the
highest rating categories from each applicable Rating Agency;
(3) commercial paper or other short-term obligations having, at the
time of the Trust's investment, a rating in the highest rating category
from each applicable Rating Agency;
(4) demand deposits, time deposits and certificates of deposit which
are fully insured by the Federal Deposit Insurance Corporation, with a
person the commercial paper of which has a credit rating from each Rating
Agency in its highest investment category;
(5) notes or bankers' acceptances (having original maturities of no
more than 365 days) issued by any depository institution or trust company
referred to in (2) above;
(6) investments in money market funds rated in the highest investment
category by each Rating Agency or otherwise approved in writing by each
Rating Agency;
(7) time deposits, other than as referred to in clause (4) above,
with a Person the commercial paper of which has a credit rating from each
Rating Agency in its highest investment category; and
(8) any other investments as may be approved in writing by each
applicable Rating Agency prior to the Trust's investment therein
(collectively, the "ELIGIBLE INVESTMENTS").
Any such investment shall be held to maturity. Any earnings (net of losses
and investment expenses) on funds in the Collection Account shall be paid
monthly to the Transferor unless an Early Amortization Event occurs, in
which event such funds will remain on deposit in the Collection Account.
The Servicer will have the revocable power to withdraw funds from the
Collection Account and to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purpose of carrying out the
Servicer's or the Trustee's duties under the Pooling and Servicing
Agreement. So long as no Servicer Default has occurred and the Servicer (or
Deutsche Financial, for so long as Deutsche Financial is acting as
subservicer) maintains certain short-term credit ratings, or obtains a
guaranty from an entity with such short term credit ratings or written
confirmation of the ratings on each Class of Offered Certificates from each
Rating Agency, the Servicer need not deposit funds into the Collection
Account until the Business Day preceding the following Distribution Date
and may use such funds for its own purposes during such period. See
"--Allocation of Collections; Deposits in Collection Account."
PRINCIPAL FUNDING ACCOUNT
The Trustee has caused to be established and maintained, for the
benefit of the Certificateholders, an Eligible Deposit Account in the name
of the Trustee on behalf of the Certificateholders of each Class of Offered
Certificates (the "PRINCIPAL FUNDING ACCOUNT"). During the Controlled
Accumulation Period, Class A Monthly Principal plus Excess Principal
Collections, if any, from other Series allocable to the Certificates plus
the Transferor Percentage of Principal Collections allocable to the
Certificates will be deposited in the Principal Funding Account on each
Distribution Date in an amount not to exceed the Controlled Deposit Amount,
and during the Rapid Accumulation Period, Class B Monthly Principal plus
Excess Principal Collections, if any, from other Series allocable to the
Certificates plus the Transferor Percentage of Principal Collections
allocable to the Certificates will be deposited in the Principal Funding
Account on each Distribution Date, all as provided below under
"--Distributions from the Collection Account" and "--Distributions to
Certificateholders"; provided, that if an Early Amortization Event occurs
during either of the Accumulation Periods, the amounts on deposit in the
Principal Funding Account shall be paid on the next succeeding Distribution
Date first to the Class A Certificateholders up to the outstanding
principal amount and then, to the extent of any remaining funds, to the
Class B Certificateholders. All amounts deposited into the Principal
Funding Account prior to the Expected Final Payment Dates will be invested
by the Trustee at the direction of the Servicer in certain eligible
investments (which are substantially similar to the Eligible Investments
described above). On each Distribution Date, all investment income earned
(net of losses and investment expenses) on amounts in the Principal Funding
Account since the preceding Distribution Date will be withdrawn from the
Principal Funding Account and deposited into the Collection Account.
SPECIAL FUNDING ACCOUNT
If, on any date, the Transferor Amount, as a percentage of the Trust
Principal Component, is less than or equal to 10% (the "MINIMUM TRANSFEROR
PERCENTAGE"), or the amount of the Trust Principal Component is less than
the initial Invested Amount plus any amounts established with respect to
other outstanding Series (the "MINIMUM TRUST PRINCIPAL COMPONENT"), the
Servicer shall not distribute to the Transferor any Principal Collections
in the Collection Account that otherwise would be distributed to the
Transferor, but shall, on the next succeeding Distribution Date, deposit
such funds into an Eligible Deposit Account established and maintained by
the Servicer for the benefit of the Certificateholders of all Series, in
the name of the Trustee, on behalf of the Trust, and bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders of all Series (the "SPECIAL FUNDING
ACCOUNT"). Funds on deposit in the Special Funding Account will be
withdrawn and paid to the Transferor on any Distribution Date to the extent
that, after giving effect to such payment, the Transferor Amount, as a
percentage of the Trust Principal Component, exceeds the Minimum Transferor
Percentage; provided, however, that if an accumulation period or early
amortization period commences with respect to any Series, any funds on
deposit in the Special Funding Account will be released from the Special
Funding Account, deposited in the Collection Account and treated as
Principal Collections to the extent needed to cover principal payments due
to or for the benefit of such Series.
Funds on deposit in the Special Funding Account will be invested by
the Trustee, at the direction of the Servicer, in Eligible Investments. Any
earnings (net of losses and investment expenses) earned on amounts on
deposit in the Special Funding Account during the Revolving Period or the
Accumulation Periods will be withdrawn from the Special Funding Account and
paid to the Transferor, and during an Early Amortization Period, shall be
treated as Yield Collections of Receivables with respect to the related
Collection Period.
SERVICER CASH COLLATERAL ACCOUNT
On the Closing Date, the Servicer shall establish and maintain an
Eligible Deposit Account for the benefit of the Certificateholders, in the
name of the Trustee, bearing a designation clearly indicating that the
funds on deposit therein are held for the benefit of the Certificateholders
(the "SERVICER CASH COLLATERAL ACCOUNT"). On the Closing Date, the Servicer
shall deposit the sum of an amount equal to the sum of (a) the product of
one-twelfth of the Class A Invested Amount times the Class A Certificate
Rate and (b) the product of one-twelfth of the Class B Invested Amount
times the Class B Certificate Rate into the Servicer Cash Collateral
Account. The Trustee shall possess all right, title and interest in and to
all funds on deposit in the Servicer Cash Collateral Account and in all
proceeds thereof. If for any reason the Servicer fails to deposit to the
Collection Account Yield Collections it has received for any Collection
Period by the Business Day immediately preceding the related Distribution
Date (the "TRANSFER DATE"), the Trustee shall, on the related Distribution
Date, withdraw from the Servicer Cash Collateral Account an amount equal to
the shortfall required for payment of the Class A Monthly Interest and/or
the Class B Monthly Interest, as applicable, for such Collection Period and
shall deposit such amount to the Collection Account. The Servicer shall be
required to remit such amount to the Collection Account immediately upon
notice from the Trustee that the Trustee has made a withdrawal and if no
such remittance has been made, by the fifth Business Day after the
Distribution Date for such Collection Period, an Early Amortization Event
shall occur on such fifth Business Day. If the Servicer does remit such
amount to the Collection Account by the fifth Business Day after the
Distribution Date for such Collection Period, the Trustee shall withdraw
such amount from the Collection Account and deposit it into the Servicer
Cash Collateral Account.
On each Distribution Date, all funds on deposit in the Servicer Cash
Collateral Account shall be invested in Eligible Investments with
maturities not exceeding the succeeding Transfer Date, and all earnings
(net of losses and investment expenses) on such Eligible Investments shall
be paid to the Servicer on the next succeeding Distribution Date (provided
that if the Servicer is obligated to remit funds to the Servicer Cash
Collateral Account pursuant to the foregoing sentence, such earnings shall
be retained in the Servicer Cash Collateral Account). Upon the termination
of the Trust, the funds on deposit in the Servicer Cash Collateral Account
shall be remitted to the Servicer. The Servicer Cash Collateral Account may
be terminated at the direction of the Servicer at any time after which any
of the following occurs:
(1) the Servicer elects to remit Collections to the Collection Account
on a daily basis;
(2) the ratings assigned by each of Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("STANDARD &
POOR'S") and Moody's Investors Service, Inc. ("MOODY'S") to the short-term
debt obligations of each of Deutsche Financial or Yamaha shall be no lower
than "A-1" and "P-1", respectively;
(3) the Servicer provides a letter of credit, surety bond or other
similar instrument meeting the requirements of the Rating Agencies; or
(4) the Servicer obtains written confirmation from each of the Rating
Agencies that other arrangements satisfactory to such Rating Agencies have
been put into place.
Upon such termination, any funds remaining in the Servicer Cash Collateral
Account will be remitted to the Servicer.
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, during each
Collection Period the Servicer will allocate among the Certificateholders'
Interest, any other Series of certificates issued by the Trust and the
Transferor Interest all Yield Collections, all Principal Collections and
the amount of all Defaulted Receivables. Yield Collections and the amount
of Defaulted Receivables will be allocated at all times, and Principal
Collections will be allocated during the Revolving Period, to the
Certificateholders based on the percentage equivalent of the ratio of the
sum of the Class A Adjusted Invested Amount, the Class B Adjusted Invested
Amount and the Class C Invested Amount on the last day of the immediately
preceding Collection Period to the Trust Principal Component plus amounts
on deposit in the Special Funding Account on the last day of the
immediately preceding Collection Period (the "FLOATING ALLOCATION
PERCENTAGE"). During the initial Collection Period, the Floating Allocation
Percentage will equal the percentage equivalent of the ratio which the
amount of the sum of the Class A Initial Invested Amount, the Class B
Initial Invested Amount and the Class C Initial Invested Amount bears to
the Trust Principal Component on _______, ____. To maintain the
Certificateholders' Interest during the Revolving Period, subject to
certain limitations, the Floating Allocation Percentage of all Principal
Collections will be reinvested in the Trust or treated as Excess Principal
Collections and applied as described below in "--Principal Collections for
all Series," and the Transferor Percentage of such Collections will be paid
to the Transferor. During the Accumulation Periods and during any Early
Amortization Period, Principal Collections will be allocated to the
Certificateholders based on the percentage equivalent of the ratio which
the Invested Amount as of the last day of the Revolving Period bears to the
greater of (a) the Trust Principal Component on the last day of the prior
Collection Period and (b) the sum of the numerators used to calculate the
Invested Percentage with respect to Principal Collections for all Series of
certificates outstanding for the current Distribution Date (the "FIXED
ALLOCATION PERCENTAGE"). During the Accumulation Periods and any Early
Amortization Period, the Transferor Percentage of Principal Collections
(after giving effect to any allocation required upon the occurrence of a
Transferor Subordination Event) and any Excess Principal Collections
available from other Series will be allocated pro rata to the Certificates
and the investor certificates of any other Series in its amortization
period or accumulation period, if any, if so provided in the applicable
Supplement with any excess remaining after such application paid to the
Transferor.
"CLASS A INVESTED AMOUNT" for any date means an amount equal to (1)
the initial principal balance of the Class A Certificates, minus (2) the
amount of principal payments made to Class A Certificateholders prior to
such date, minus (3) the aggregate amount of Class A Investor Charge-Offs
for the current and all prior Distribution Dates, and plus (4) the
aggregate amount of Yield Collections and the aggregate amount of Principal
Collections applied in respect of the Available Subordinated Amount applied
on all prior Distribution Dates and to be applied on the current
Distribution Date for the purpose of reimbursing amounts deducted pursuant
to the foregoing clause (3).
"CLASS A ADJUSTED INVESTED AMOUNT" for any date means an amount equal
to the Class A Invested Amount minus the aggregate principal amount on
deposit in the Principal Funding Account allocable to the Class A
Certificates.
"CLASS B INVESTED AMOUNT" for any date means an amount equal to (1)
the initial principal balance of the Class B Certificates, minus (2) the
amount of principal payments made to Class B Certificateholders prior to
such date, minus (3) the aggregate amount of Class B Investor Charge-Offs
for the current and all prior Distribution Dates, and plus (4) the
aggregate amount of Yield Collections and the aggregate amount of Principal
Collections applied in respect of the Available Subordinated Amount applied
on all prior Distribution Dates and to be applied on the current
Distribution Date for the purpose of reimbursing amounts deducted pursuant
to the foregoing clause (3).
"CLASS B ADJUSTED INVESTED AMOUNT" for any date means an amount equal
to the Class B Invested Amount minus the aggregate principal amount on
deposit in the Principal Funding Account allocable to the Class B
Certificates.
"CLASS C INVESTED AMOUNT" for any date means an amount equal to (1)
the initial principal balance of the Class C Certificates, minus (2) the
amount of principal payments made to Class C Certificateholders prior to
such date, minus (3) the aggregate amount of Class C Investor Charge-Offs
for the current and all prior Distribution Dates, and plus (4) the
aggregate amount of Yield Collections and the aggregate amount of Principal
Collections applied in respect of the Available Subordinated Amount applied
on all prior Distribution Dates and to be applied on the current
Distribution Date for the purpose of reimbursing amounts deducted pursuant
to the foregoing clause (3).
"INVESTED AMOUNT" means the sum of the Class A Invested Amount, the
Class B Invested Amount and the Class C Invested Amount.
"TRANSFEROR PERCENTAGE" means (1) when used with respect to Yield
Collections and the amount of Defaulted Receivables, 100% minus the sum of
the applicable Floating Allocation Percentages with respect to all Series
of certificates then issued and outstanding and (2) when used with respect
to Principal Collections during any Early Amortization Period, 100% minus
the sum of the Fixed Allocation Percentages with respect to all Series of
certificates then issued and outstanding.
As a result of the Floating Allocation Percentage, Yield Collections
and the portion of Defaulted Receivables allocated to the
Certificateholders' Interest will change each Collection Period based on
the relationship of the sum of the Class A Adjusted Invested Amount, the
Class B Adjusted Invested Amount and the Class C Invested Amount to the
Trust Principal Component on the last day of the immediately preceding
Collection Period. As a result of the Fixed Allocation Percentage, the
percentage of Principal Collections allocable to the Certificateholders'
Interest during the Accumulation Periods or during any Early Amortization
Period will exceed the percentage of Principal Collections which would have
been allocable using the Floating Allocation Percentage.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
By the second Business Day following the date of processing of a
payment on a Receivable, the Servicer deposits and will continue to deposit
Collections on such Receivables and payments made by the Transferor in
respect of Ineligible Receivables allocable to the Certificateholders'
Interest into the Collection Account, except as described below. So long as
a Servicer Default has not occurred and the Servicer (or Deutsche Financial
if Deutsche Financial is acting as subservicer) (a) maintains a short-term
credit rating of at least "A-1" and "P-1" by the applicable Rating Agency,
(b) obtains a guarantee pursuant to the Pooling and Servicing Agreement
with respect to its deposit and payment obligations thereunder so long as
the guarantor maintains a short-term credit rating of at least "A-1" and
"P-1" by the applicable Rating Agency or (c) obtains a written notification
from each Rating Agency to the effect that such Rating Agency does not
intend to downgrade or withdraw its then current rating of any outstanding
Series of certificates despite its inability to satisfy the rating
requirement specified in clause (a), and for the two Business Day period
following any reduction of either such rating or failure to satisfy the
conditions of either clause (b) or (c), the Servicer need not deposit
Collections and, in addition, payments made by the Transferor in respect of
Ineligible Receivables allocable to the Certificateholders' Interest into
the Collection Account on the day indicated in the preceding sentence but
may use for its own benefit all such Collections and payments until the
Transfer Date, at which time the Servicer must deposit such amounts (net of
the Monthly Servicing Fee and net of any amounts to be distributed to the
Transferor) into the Collection Account. Until such Collections and
payments are deposited in the Collection Account, such amounts will not be
segregated from the assets of the Servicer, and the proceeds of any short
term investment of such proceeds will accrue to the Servicer. While the
Servicer holds Collections and payments made by the Transferor in respect
of Ineligible Receivables and is permitted to use such Collections and
payments for its own benefit, the Certificateholders of any Class of
Offered Certificates are subject to risk of loss, including risk resulting
from the bankruptcy or insolvency of the Servicer. The Servicer pays no fee
to the Trust or the Certificateholders for use of Collections and payments
made by the Transferor in respect of Ineligible Receivables. See "Risk
Factors--Potential loss on certificates due to priority of some liens over
the certificates." Collections on the Receivables allocable to the
Transferor Interest will be remitted by the Servicer on each day to the
Transferor.
For each Collection Period, all Collections received will be treated
as Yield Collections until the amount of such Collections equals an amount
equal to the product of the Yield Factor and the Pool Balance as of the
beginning of such Collection Period. If the Servicer is required to deposit
Collections on the Receivables for the related Collection Period allocable
to the Certificates into the Collection Account within two Business Days
following the date of processing:
(1) the Floating Allocation Percentage of Yield Collections received
each day will be deposited by the Servicer into the Collection Account
within two Business Days following the date of processing;
(2) during the Revolving Period, the Floating Allocation Percentage
of Principal Collections received each day will first be deposited into the
Collection Account as Excess Principal Collections to the extent required
to be distributed to other Series on the next succeeding Distribution Date
and then will be remitted by the Servicer to the Transferor within two
Business Days following the date of processing, unless such Principal
Collections would reduce the Transferor Amount as a percentage of the Trust
Principal Component below 10% (after giving effect to any new Receivables
transferred to the Trust), in which case such amount will be retained in
the Collection Account as Undistributed Principal Collections and any such
Undistributed Principal Collections remaining on the next succeeding
Distribution Date will be deposited in the Special Funding Account as
Undistributed Principal Collections, and the Floating Allocation Percentage
of Yield Collections received each day will be deposited by the Servicer
into the Collection Account within two Business Days following the date of
processing;
(3) during the Accumulation Periods, the Fixed Allocation Percentage
of Principal Collections received each day allocable to Certificateholders
(up to the Controlled Deposit Amount, in the case of the Controlled
Accumulation Period), the Transferor Percentage of Principal Collections
allocable to the Certificates and the Excess Principal Collections
allocable to the Certificates, will be deposited by the Servicer into the
Principal Funding Account for the benefit of the Certificateholders of each
Class of Offered Certificates within two Business Days following the date
of processing; thereafter, the Fixed Allocation Percentage of Principal
Collections received each day will first be deposited into the Collection
Account as Excess Principal Collections to the extent required to be
distributed to other Series on the next succeeding Distribution Date, and
then will be remitted by the Servicer to the Transferor within two Business
Days following the date of processing, unless such distribution of
Principal Collections would reduce the Transferor Amount as a percentage of
the Trust Principal Component below 10% (after giving effect to any new
Receivables transferred to the Trust), in which case such amount will be
retained in the Collection Account as Undistributed Principal Collections,
to the extent necessary to increase the Transferor Amount as a percentage
of the Trust Principal Component to 10%, and any such Undistributed
Principal Collections remaining in the Collection Account on the next
succeeding Distribution Date will be deposited into the Special Funding
Account; and
(4) after the applicable Expected Final Payment Date and during an
Early Amortization Period, all Principal Collections received each day
allocable to the Certificateholders' Interest, the Transferor Percentage of
Principal Collections allocable to the Certificates and the Excess
Principal Collections allocable to the Certificates, will be deposited by
the Servicer into the Collection Account within two Business Days following
the date of processing until such deposits equal the amount of principal
required to be paid to Certificateholders.
YIELD FACTOR; YIELD COLLECTIONS
The Receivables originated under the Accounts are not subject to a
monthly finance charge for a certain period of time after their creation.
As a result, in order to provide yield to the Trust on such Receivables,
pursuant to the Pooling and Servicing Agreement a portion of Collections
received in any period equal to the product of the Pool Balance and the
Yield Factor will be treated as "YIELD COLLECTIONS" and the remainder will
be treated as "PRINCIPAL COLLECTIONS" (Principal Collections and Yield
Collections are collectively sometimes referred to herein as
"COLLECTIONS"). The "YIELD FACTOR" will initially be equal to 1.5% and will
increase to 1.75% during the Accumulation Periods. Recoveries will be
utilized as an offset to Defaulted Receivables and will only be considered
Collections to the extent they exceed Defaulted Receivables in any
Collection Period.
PRINCIPAL COLLECTIONS FOR ALL SERIES
The Fixed Allocation Percentage of Principal Collections for any
Collection Period will first be used to cover, with respect to the
Accumulation Periods, required deposits to the Principal Funding Account
or, with respect to any Early Amortization Period, payments to the
Certificateholders. The Servicer will determine the amount of Principal
Collections for any Collection Period allocated to the Certificates
remaining after covering required deposits to the Principal Funding
Account, if any, and required payments to the Certificateholders and any
similar amount remaining for any other Series ("EXCESS PRINCIPAL
COLLECTIONS"). During the Revolving Period, all Principal Collections
allocable to the Certificates will be treated as Excess Principal
Collections. The Servicer will allocate the Excess Principal Collections to
cover any scheduled or permitted principal distributions to
certificateholders and deposits to principal funding accounts for any
Series which have not been covered out of the Principal Collections
allocable to such other Series and certain other amounts for such Series
("PRINCIPAL SHORTFALLS"). Excess Principal Collections will not be used to
cover investor charge-offs for any Series. If Principal Shortfalls exceed
Excess Principal Collections for any Collection Period, Excess Principal
Collections will be allocated pro rata among the applicable Series based on
the relative amounts of Principal Shortfalls. To the extent that Excess
Principal Collections exceed Principal Shortfalls, the balance will,
subject to certain limitations, be paid to the Transferor.
The Transferor Percentage of Principal Collections, after giving
effect to any required application in respect of the Available
Subordination Amount as described in "--Subordination of the Transferor
Interest in Certain Circumstances," shall be allocated pro rata to the
Certificates if an Accumulation Period or Early Amortization Period has
occurred and as to any other Series then in an accumulation period or early
amortization period if required, and then any remaining amount shall be
paid to the Transferor.
APPLICATION OF COLLECTIONS
Any Principal Collections not distributed to the Transferor from the
Collection Account because such Principal Collections would reduce the
Transferor Amount as a percentage of the Trust Principal Component below
10% (after giving effect to any new Receivables transferred to the Trust
for the related Collection Period, "UNDISTRIBUTED PRINCIPAL COLLECTIONS")
will, on the next succeeding Distribution Date, be deposited into the
Special Funding Account until distributable to the Transferor or, if an
Accumulation Period or an Early Amortization Period has commenced, on each
Distribution Date all (or a pro rata portion thereof if an accumulation
period or an early amortization period has commenced with respect to any
series) will be treated as part of Class A Monthly Principal or Class B
Monthly Principal, as applicable. Any proceeds from any repurchase of the
Certificates occurring in connection with a Service Transfer and the
proceeds of any sale, disposition or liquidation of Receivables following
the occurrence of an Early Amortization Event as a result of the bankruptcy
or insolvency of Deutsche Financial, Yamaha or the Transferor will also be
deposited into the Collection Account immediately upon receipt and will be
allocated as Principal Collections or Yield Collections, as applicable.
SUBORDINATION OF TRANSFEROR INTEREST IN CERTAIN CIRCUMSTANCES
A "TRANSFEROR SUBORDINATION EVENT" with respect to the Offered
Certificates shall mean the occurrence of any of the following events at
any time other than during an Early Amortization Period:
(1) the average payment rate determined by dividing the
aggregate amount of Collections for each Collection Period by the
beginning Pool Balance for each such Collection Period, averaged for
any three consecutive Collection Periods, is less than (x) with
respect to the Collection Periods included in the period from each
November through the next succeeding April, 10% and (y) with respect
to the Collection Periods included in the period from each May
through the next succeeding October, 13%;
(2) as of the last day of any Collection Period, the aggregate
balance of Receivables with respect to Products constituting
all-terrain vehicles, calculated as a percentage of the Pool Balance,
exceeds 33%;
(3) as of the last day of any Collection Period, the aggregate
balance of Receivables with respect to all Products other than
motorcycles/scooters, water vehicles, all-terrain vehicles, outboards
and snowmobiles, calculated as a percentage of the Pool Balance,
exceeds 10%;
(4) the sum of (x) the aggregate amount of all dealer
"holdbacks" with respect to Products for which there has been no
retail sale by the Dealer, plus (y) the aggregate amount of all
discounts available to Dealers pursuant to Sales Programs on Products
owed by Yamaha to the Dealers, exceeds 5% of the Pool Balance;
(5) either (x) on an annual basis, the percentage derived by
dividing the number of New Accounts added to the Trust during any
fiscal year of the Transferor by the number of Accounts in the Trust
at the beginning of such year exceeds 8% or (y) on a quarterly basis,
the percentage derived by dividing the number of New Accounts added
to the Trust during such calendar quarter by the number of Accounts
in the Trust at the beginning of such calendar quarter exceeds 5%;
(6) the annualized rate (averaged for a period of three
consecutive Collection Periods) of (x) Defaulted Receivables minus
recoveries plus the repossession value of all Products repossessed
during each such Collection Period to (y) the beginning Pool Balance
for the related Collection Period exceeds 7.5%; or
(7) as of the last day of any Collection Period, the aggregate
balance of Receivables due from a single Dealer, as a percentage of
the Pool Balance, exceeds 1%.
In the event that, on any Determination Date, a Transferor
Subordination Event shall have occurred and be continuing, then the
Transferor's right to the Transferor Percentage of Principal Collections
received during the related Collection Period shall be subordinated to the
extent of the applicable Available Subordinated Amount. The amount of the
Transferor Percentage of Principal Collections equal to the Available
Subordinated Amount allocable to the Certificates and the certificates of
any other Series shall be applied in the same manner as the Floating
Allocation Percentage of Yield Collections, and the remaining amount of the
Transferor Percentage of Principal Collections shall then be applied pro
rata to the investor certificates of all Series then in their amortization
periods or accumulation periods, if any, with any excess remaining after
such applications paid to the Transferor.
In the event that on any subsequent Determination Date such
Transferor Subordination Event shall no longer be continuing, provided that
no Early Amortization Event shall have occurred, the right of the
Transferor to receive the Transferor Percentage of Principal Collections
during the related Collection Period shall no longer be subordinated, and
the Available Subordinated Amount shall be deemed to be zero again;
provided that the Transferor's right to receive the Transferor Percentage
of Principal Collections shall remain subject to reallocation to the
Certificates if any Accumulation Period or any Early Amortization Period
has commenced and reallocation to the certificates of any other Series then
in an accumulation or amortization period.
In the case of the event described in clause (1) above, the
"AVAILABLE SUBORDINATED AMOUNT" will be equal to 1% of the sum of the Class
A Adjusted Invested Amount and the Class B Adjusted Invested Amount as of
the last day of such Collection Period. In the case of any event described
in clause (2), (3) or (7) above, the Available Subordinated Amount will be
equal to the dollar amount by which the aggregate balance of such
Receivables exceeds the specified percentage therein. In the case of the
event described in clause (4) above, the Available Subordinated Amount will
be equal to the dollar amount by which such sum exceeds the specified
percentage therein. In the case of the event described in clause (5) above,
the Available Subordinated Amount will be adjusted each Collection Period
thereafter by the aggregate amount of Receivables in those New Accounts
included in the Trust which caused such percentage to exceed the specified
percentages therein, or alternatively, will not be so adjusted in the event
the Transferor provides to the Trustee a letter from each of the Rating
Agencies then providing a rating for the Offered Certificates at the
Transferor's request that such event will not result in a downgrade or
withdrawal of the then current ratings assigned by each of them to each
Class of Offered Certificates. In the case of the event described in clause
(6) above, the Available Subordinated Amount will be increased by the
aggregate amount of Receivables in New Accounts and Dealer Replacement
Accounts, or alternatively, will not be so adjusted in the event the
Transferor provides to the Trustee a letter from each of the Rating
Agencies then providing a rating for the Offered Certificates at the
Transferor's request that such event will not result in a downgrade or
withdrawal of the then current ratings assigned by each of them to each
Class of Offered Certificates. Should any increase in the Available
Subordinated Amount resulting from the occurrence of an event described in
clauses (2) through (7) above cause the Transferor Amount as a percentage
of the Trust Principal Component to be less than 10%, then the Transferor
shall deposit funds in such amount to the Collection Account. Any such
deposit by the Transferor shall be allocated in respect of Yield
Collections and Principal Collections as provided in the Pooling and
Servicing Agreement. Unless otherwise indicated, the Available Subordinated
Amount at any time shall be the sum of all Available Subordinated Amounts
described above at such time. The Available Subordinated Amount will not
increase following the occurrence of an Early Amortization Event.
The Available Subordinated Amount shall be reduced on any
Distribution Date by the amount of the Transferor Percentage of Principal
Collections which are applied as Yield Collections and shall be reinstated
by the amount of the Floating Allocation Percentage of Yield Collections
(including such Principal Collections treated as Yield Collections in the
related or prior Collection Periods) distributed to the Transferor as
provided in clause (a)(8) under "--Distributions from the Collection
Account."
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT
The Servicer shall apply or shall cause the Trustee to apply the
funds on deposit in the Collection Account with respect to each
Distribution Date to make the following distributions for such
Distribution Date:
(a) An amount equal to the Floating Allocation Percentage of Yield
Collections, plus an amount equal to the Transferor Percentage of
Principal Collections allocable to the Certificates equal to the
Available Subordinated Amount, plus any investment income with
respect to the Principal Funding Account deposited in the Collection
Account for the Collection Period immediately preceding such
Distribution Date will be allocated in the following priority:
(1) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not paid to Class A Certificateholders on a
prior Distribution Date, plus any additional interest at the Class
A Certificate Rate with respect to interest amounts that were due
but not paid on a prior Distribution Date, will be paid to the
Class A Certificateholders;
(2) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not paid to Class B Certificateholders on a
prior Distribution Date, plus any additional interest at the Class
B Certificate Rate with respect to interest amounts that were due
but not paid on a prior Distribution Date, will be paid to Class B
Certificateholders;
(3) an amount equal to Class C Monthly Interest for such
Distribution Date, plus the amount of any Class C Monthly Interest
previously due but not paid to Class C Certificateholders on a
prior Distribution Date, plus any additional interest at the Class
C Certificate Rate with respect to interest amounts that were due
but not paid on a prior Distribution Date, will be paid to Class C
Certificateholders;
(4) an amount equal to the Monthly Servicing Fee for such
Distribution Date plus any Monthly Servicing Fee that was due but
not paid on a prior Distribution Date will be distributed to the
Servicer (unless such amount has been previously netted against
deposits to the Collection Account);
(5) an amount equal to unreimbursed Class A Investor
Charge-Offs, if any, will be treated as Excess Principal
Collections during the Revolving Period and will be allocated to
the Class A Certificateholders to the extent included in Class A
Monthly Principal during any Accumulation Period or any Early
Amortization Period;
(6) an amount equal to unreimbursed Class B Investor
Charge-Offs, if any, will be treated as Excess Principal
Collections during the Revolving Period and will be allocated to
the Class B Certificateholders to the extent included in Class B
Monthly Principal during any Accumulation Period or any Early
Amortization Period;
(7) an amount equal to the aggregate Investor Default Amount
for such Distribution Date will be treated as Excess Principal
Collections during the Revolving Period and will be allocated
first to the Class A Certificateholders to the extent included in
Class A Monthly Principal and then to the Class B
Certificateholders to the extent included in Class B Monthly
Principal during any Accumulation Period or any Early Amortization
Period;
(8) an amount equal to the amount of interest which has accrued
with respect to the outstanding aggregate principal amount of the
Class C Certificates at the Class C Certificate Rate but has not
been paid to the Class C Certificateholders either on such
Distribution Date or on a prior Distribution Date, plus any
additional interest at the Class C Certificate Rate with respect
to such interest amounts that were due but not paid to Class C
Certificateholders on any previous Distribution Date, will be paid
to the Class C Certificateholders;
(9) an amount equal to unreimbursed Class C Investor
Charge-Offs, if any, will be treated as Excess Principal
Collections during the Revolving Period and will be distributed
first to the Class A Certificateholders to the extent included in
Class A Monthly Principal, then to the Class B Certificateholders
to the extent included in Class B Monthly Principal and then to
the Class C Certificateholders to the extent included in Class C
Monthly Principal during any Accumulation Period or Early
Amortization Period; and
(10) during the Revolving Period any Yield Collections
allocated to the Certificateholders' Interest remaining after
making the above described distributions will be distributed
to the Transferor.
(b) For each Distribution Date with respect to the applicable
Accumulation Period or any Early Amortization Period, the remaining
funds on deposit in the Collection Account with respect to such
Distribution Date including Yield Collections remaining after the
application described in clause (a)(1) through (10) above, the Fixed
Allocation Percentage of Principal Collections, Excess Principal
Collections if any, from other Series allocable to the Certificates
and the Transferor Percentage of Principal Collections allocable to
this Series, if any, will be allocated in the following priority:
(1) an amount up to the Controlled Deposit Amount for the Class
A Expected Final Payment Date or any Distribution Date during the
Controlled Accumulation Period, or an amount up to Class A Monthly
Principal for any Distribution Date during any Early Amortization
Period, plus any Yield Collections remaining after the application
described in clause (a)(1) through (10) above, plus Excess
Principal Collections, if any, from other Series allocable to the
Certificates plus the Transferor Percentage of Principal
Collections allocable to the Certificates (excluding such
collections allocable in respect of the Available Subordinated
Amount) will be deposited in the Principal Funding Account;
(2) an amount up to Class B Monthly Principal for the Class B
Expected Final Payment Date or any Distribution Date during the
Rapid Accumulation Period or any Early Amortization Period, plus
any Yield Collections remaining after the application described in
clause (a)(1) through (10) above, plus Excess Principal
Collections, if any, from other Series allocable to the
Certificates plus the Transferor Percentage of Principal
Collections allocable to the Certificates (excluding such
collections allocable in respect of the Available Subordinated
Amount) will be deposited in the Principal Funding Account;
(3) an amount up to the Class C Invested Amount for any
Distribution Date on and after the Offered Certificates have been
paid in full, plus Excess Principal Collections, if any, from
other Series allocable to the Certificates, will be distributed to
the holders of the Class C Certificates; and
(4) an amount equal to the balance of any such remaining funds
on deposit in the Collection Account will be treated as Excess
Principal Collections and distributed to other Series or to the
Transferor as provided in the Agreement.
"CLASS A MONTHLY INTEREST" with respect to any Distribution Date will
equal one-twelfth of the product of (a) the Class A Certificate Rate and
(b) the Class A Invested Amount; provided, however, with respect to the
first Distribution Date, Class A Monthly Interest will be equal to
$____________.
"CLASS B MONTHLY INTEREST" with respect to any Distribution Date will
equal one-twelfth of the product of (a) the Class B Certificate Rate and
(b) the Class B Invested Amount; provided, however, with respect to the
first Distribution Date, Class B Monthly Interest will be equal to
$___________.
"CLASS C MONTHLY INTEREST" with respect to any Distribution Date will
equal one-twelfth of the product of (a) the Class C Certificate Rate and
(b) the Class C Invested Amount; provided, however, with respect to the
first Distribution Date, Class C Monthly Interest will be equal to
$___________.
"CLASS A MONTHLY PRINCIPAL" with respect to the Class A Expected
Final Payment Date or any Distribution Date during the Controlled
Accumulation Period or any Early Amortization Period will equal the sum of
(a) an amount equal to the Fixed Allocation Percentage of all Principal
Collections received during the Collection Period immediately preceding
such Class A Expected Final Payment Date or, in the case of a Distribution
Date during the Controlled Accumulation Period or the first Distribution
Date during any Early Amortization Period, all Principal Collections
received during the preceding Collection Period or the period from the day
an Early Amortization Event occurred, respectively, to the end of such
Collection Period, (b) the amount, if any, equal to the product of (x) a
fraction, the numerator of which is equal to the Invested Amount and the
denominator of which is equal to the sum of the invested amount of all
Series then accumulating or amortizing principal (less any amounts on
deposit in any principal funding accounts) and (y) Undistributed Principal
Collections on deposit in the Special Funding Account on such Expected
Final Payment Date ("SERIES UNDISTRIBUTED PRINCIPAL COLLECTIONS") and (c)
the Investor Default Amount with respect to any Distribution Date during
the Controlled Accumulation Period or any Early Amortization Period or on
the Class A Expected Final Payment Date and any reimbursements of
unreimbursed Class A Investor Charge-Offs, Class B Investor Charge-Offs and
Class C Investor Charge-Offs; provided, however, that with respect to any
Distribution Date, Class A Monthly Principal will not exceed the Class A
Adjusted Invested Amount.
"CLASS B MONTHLY PRINCIPAL" with respect to each Distribution Date
beginning with the Distribution Date on which the Class A Certificates are
paid in full will equal the sum of (a) an amount equal to the Fixed
Allocation Percentage of all Principal Collections received during the
Collection Period immediately preceding such Distribution Date, (b) the
amount, if any, of Series Undistributed Principal Collections for such
Distribution Date, (c) the Investor Default Amount with respect to such
Distribution Date and any reimbursements of unreimbursed Class A Investor
Charge-Offs, Class B Investor Charge-Offs and Class C Investor Charge-Offs,
minus (d) Class A Monthly Principal, if any, with respect to such
Distribution Date; provided, however, that with respect to any Distribution
Date, Class B Monthly Principal will not exceed the Class B Invested
Amount.
"CLASS C MONTHLY PRINCIPAL" with respect to each Distribution Date
beginning with the Distribution Date on which each Class of Offered
Certificates is paid in full will equal the sum of (a) an amount equal to
the Fixed Allocation Percentage of all Principal Collections received
during the Collection Period immediately preceding such Distribution Date,
(b) the amount, if any, of Series Undistributed Principal Collections for
such Distribution Date, (c) the Investor Default Amount with respect to
such Distribution Date and any reimbursements of unreimbursed Class A
Investor Charge-Offs, Class B Investor Charge-Offs and Class C Investor
Charge-Offs, minus (d) Class A Monthly Principal and Class B Monthly
Principal, if any, with respect to such Distribution Date; provided,
however, that with respect to any Distribution Date, Class C Monthly
Principal will not exceed the Class C Invested Amount.
DISTRIBUTIONS TO CERTIFICATEHOLDERS
Payments to Certificateholders of each Class of Offered Certificates
will be made with respect to interest from the Collection Account and, with
respect to principal, from the Principal Funding Account and, if principal
is not fully paid on the applicable Expected Final Payment Date and during
any Early Amortization Period, from the Collection Account. In addition to
the amounts deposited in the Collection Account or Principal Funding
Account as described above, the proceeds of any optional repurchase of the
Offered Certificates by the Transferor will be deposited in the Collection
Account, on the Distribution Date on which such purchase occurs.
The Servicer shall instruct the Trustee or the Paying Agent to:
(a) on each Distribution Date, including the Class A Expected
Final Payment Date, distribute the amount described in clause (a)(1)
under "Description of the Offered Certificates--Distributions from
the Collection Account" to the Class A Certificateholders;
(b) on each Distribution Date, including the Class B Expected
Final Payment Date, distribute the amount described in clause (a)(2)
under "Description of the Offered Certificates--Distributions from
the Collection Account" to the Class B Certificateholders;
(c) on the Class A Expected Final Payment Date, distribute all
amounts on deposit in the Principal Funding Account to the Class A
Certificateholders up to a maximum amount on any such date equal to
the unpaid Class A Invested Amount on such date;
(d) on the Class B Expected Final Payment Date, distribute all
amounts on deposit in the Principal Funding Account to the Class B
Certificateholders up to a maximum amount on any such date equal to
the unpaid Class B Invested Amount on such date;
(e) if the Class A Invested Amount is not paid in full on the
Class A Expected Final Payment Date, on each Distribution Date
thereafter until the Class A Certificateholders have been paid in
full, distribute the amount described in clause (b)(1) under
"Description of the Offered Certificates--Distributions from the
Collection Account" to the Class A Certificateholders; and
(f) if the Class B Invested Amount is not paid in full on the
Class B Expected Final Payment Date, on each Distribution Date
thereafter until the Class B Certificateholders have been paid in
full, distribute the amount described in clause (b)(2) under
"Description of the Offered Certificates--Distributions from the
Collection Account" to the Class B Certificateholders.
The Paying Agent shall have the revocable power to withdraw funds
from the Collection Account and the Principal Funding Account for the
purpose of making distributions to the Certificateholders of any Class of
Offered Certificates.
On each Distribution Date with respect to the Revolving Period, the
Servicer will pay to the Transferor any investment earnings (net of losses
and investment expenses) with respect to the Collection Account. On any
Distribution Date with respect to any Accumulation Period or Early
Amortization Period, such investment earnings (net of losses and investment
expenses) will be considered Yield Collections under the Pooling and
Servicing Agreement.
DEFAULTED RECEIVABLES; RECOVERIES, ADJUSTMENT PAYMENTS
"DEFAULTED RECEIVABLES" for any Collection Period are Receivables
which were written off by Deutsche Financial as uncollectible in such
Collection Period. The amount of Defaulted Receivables for any Collection
Period will be an amount (not less than zero) equal to the product of one
minus the Yield Factor and an amount equal to the result of (a) the amount
of the Receivables that were written off by Deutsche Financial in such
Collection Period less (b) the amount of Recoveries received by Deutsche
Financial or the Servicer in such Collection Period and less
(c) the full amount of any Defaulted Receivables as to which the Transferor
or the Servicer becomes obligated to accept reassignment for such
Collection Period unless certain events of bankruptcy, insolvency or
receivership have occurred with respect to the Transferor or the Servicer
and plus (d) any amount by which the Class A Adjusted Invested Amount, the
Class B Adjusted Investment Amount and the Class C Invested Amount and any
similar invested amounts from other Series exceeds the Trust Principal
Component. A portion of all Defaulted Receivables (the "INVESTOR DEFAULT
AMOUNT") will be allocated to the Certificateholders' Interest for each
Collection Period in an amount equal to the product of (a) the Floating
Allocation Percentage applicable during the immediately preceding
Collection Period and (b) the amount of Defaulted Receivables for such
Collection Period.
If the Servicer makes a downward adjustment of the amount of any
Receivable because of a rebate, refund, billing error or certain other
noncash items, or if the Servicer or Deutsche Financial otherwise adjusts
downward the amount of any Receivable without receiving collections
therefor or charging off such amount as uncollectible, or any Receivable is
discovered as having been created through a fraudulent or counterfeit
action or the balance of any Receivable is reduced by any "holdback" amount
due and owing to such Dealer by Yamaha, the Pool Balance will be reduced by
the amount of such adjustment. To the extent that such reduction in the
Trust Principal Component would cause the Transferor Amount as a percentage
of the Trust Principal Component to be less than 10%, the Transferor shall
deposit an amount into the Collection Account sufficient to cause the
Transferor Amount as a percentage of the Trust Principal Component to be at
least equal to 10% (such deposit, an "ADJUSTMENT PAYMENT"). Any such
deposit shall be deemed to be a Collection.
INVESTOR CHARGE-OFFS
If on any Distribution Date, the Investor Default Amount, if any, for
such Distribution Date exceeds the amount of Yield Collections which are
allocated and available to fund such amount as described under clause
(a)(7) of "--Distributions from the Collection Account" and
"--Subordination of the Transferor Interest in Certain Circumstances," then
the Class C Invested Amount shall be reduced by the aggregate amount of
such excess, but not more than the Investor Default Amount for such
Distribution Date (a "CLASS C INVESTOR CHARGE-OFF"). The Class C Invested
Amount will thereafter be increased (but not in excess of the unpaid
principal balance of the Class C Certificates) on any Distribution Date by
the amount of Yield Collections allocated and available for that purpose as
described under clause (a)(9) of "--Distributions from the Collection
Account."
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 reduced to zero, and the Class B Invested Amount
will be reduced by the amount by which the Class C Invested Amount would
have been reduced below zero, but not more than the Investor Default Amount
for such Distribution Date (a "CLASS B INVESTOR CHARGE-OFF"), which will
have the effect of slowing or reducing the return of principal to the Class
B Certificateholders. If the Class B Invested Amount has been reduced by
the amount of any Class B Investor Charge-Offs, it will be increased on any
Distribution Date (but not by an amount in excess of the aggregate Class B
Investor Charge-Offs) by the amount of Yield Collections allocated and
available for such purpose as described under clause (a)(6) of
"--Distributions from the Collection Account."
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 reduced to zero, and the Class A Invested Amount
will be reduced by the amount by which the Class B Invested Amount would
have been reduced below zero, but not more than the Investor Default Amount
for such Distribution Date (a "CLASS A INVESTOR CHARGE-OFF"), which will
have the effect of slowing or reducing the return of principal to the Class
A Certificateholders. If the Class A Invested Amount has been reduced by
the amount of any Class A Investor Charge-Offs, it will be increased on any
Distribution Date (but not by an amount in excess of the aggregate Class A
Investor Charge-Offs) by the amount of Yield Collections allocated and
available for such purpose as described under clause (a)(5) of
"--Distributions from the Collection Account."
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
Each Class of Offered Certificates will be subject to optional
repurchase by the Transferor on any Distribution Date on or after which the
Invested Amount is reduced to an amount less than or equal to $________
(10% of the sum of the Class A Initial Invested Amount, the Class B Initial
Invested Amount and the Class C Initial Invested Amount), unless certain
events of bankruptcy, insolvency or receivership have occurred with respect
to the Transferor. The repurchase price will be equal to the sum of the
Class A Invested Amount plus accrued and unpaid interest on the Class A
Certificates, the Class B Invested Amount plus accrued and unpaid interest
on the Class B Certificates and the Class C Invested Amount plus accrued
and unpaid interest on the Class C Certificates through the day preceding
the Distribution Date with respect to which the repurchase occurs.
Subject to prior termination as provided above, the Pooling and
Servicing Agreement provides that the final distribution of principal and
interest on the Offered Certificates will be made no later than the
________ Distribution Date (the "FINAL SERIES TERMINATION DATE"). In the
event that the Invested Amount of the Certificates is greater than zero on
the Final Series Termination Date, the Trustee will sell or cause to be
sold, and apply the proceeds to the extent necessary to pay such remaining
amounts to all Certificateholders pro rata as final payment of the
Certificates, an amount of Receivables up to 110% of the Invested Amount of
the Certificates at the close of business on such date, but not more than
the total amount of Receivables allocable to the Certificates. The proceeds
of any such sale will be treated as collections on the Receivables and
applied as provided above in "--Application of Collections." Such proceeds
will be allocated first to pay amounts due to the Class A
Certificateholders and then to pay amounts due to the Class B
Certificateholders.
Unless the Transferor instructs the Trustee otherwise, the Trust will
only terminate on the earlier to occur of: (a) the day following the day on
which the aggregate invested amounts of all Series is zero or (b) March 1,
2094 (the "FINAL TERMINATION DATE"). Upon the termination of the Trust and
the surrender of the Exchangeable Transferor Certificate, the Trustee shall
convey to the Transferor all right, title and interest of the Trust in and
to the Receivables and other funds of the Trust (other than amounts in the
accounts maintained by the Trust for the final payment of principal and
interest to Certificateholders).
EARLY AMORTIZATION EVENTS
The Revolving Period will continue through the end of the Collection
Period unless an Early Amortization Event occurs. An "EARLY AMORTIZATION
PERIOD" will commence (a) on the day on which an Early Amortization Event
occurs or is deemed to occur, (b) on the Class A Expected Final
Payment Date if the Class A
Invested Amount is not paid in full on such date or (c) on the Class B
Expected Final Payment Date if the Class B Invested Amount is not paid in
full on such date. An "EARLY AMORTIZATION EVENT" with respect to the
Certificates refers to any of the following events:
(1) failure on the part of (a) the Transferor or Yamaha to make
any payment or deposit on the date required under the Pooling and
Servicing Agreement or the Receivables Purchase Agreement, as
applicable (or within the applicable grace period which will not
exceed five Business Days), (b) the Transferor to duly observe or
perform in any material respect the covenant of the Transferor not to
sell, pledge, assign or transfer to any person, or grant any
prohibited lien on, any Receivable or (c) the Transferor to duly
observe or perform in any material respect any other covenants or
agreements of the Transferor in the Pooling and Servicing Agreement
or, to the extent assigned to the Trust, in the Receivables Purchase
Agreement, which in the case of subclause (c) hereof, continues
unremedied for a period of 60 days after written notice to the
Transferor or Yamaha, as applicable, and continues to affect
materially and adversely the interests of the Certificateholders for
such period (or, with respect to a failure arising out of the
creation of certain liens upon the Receivables or the failure by the
Transferor or the Servicer to comply with certain covenants specified
in the Pooling and Servicing Agreement, immediately); provided,
however, that an Early Amortization Event described in clause (b) or
(c) shall not be deemed to occur if the Transferor has accepted the
transfer of the related Receivable during such period (or such longer
period as the Trustee may specify not to exceed an additional 60
days) in accordance with the provisions of the Pooling and Servicing
Agreement;
(2) any representation or warranty made by the Transferor in the
Pooling and Servicing Agreement or any representation or warranty
made by Yamaha in the Receivables Purchase Agreement or any
information required to be given by the Transferor or the Servicer to
the Trustee 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 of which the interests of the Certificateholders are
materially and adversely affected and which continues to materially
and adversely affect the interests of the Certificateholders for such
period; provided, however, that an Early Amortization Event described
in this clause (2) shall not be deemed to occur if the Transferor has
accepted the transfer of the related Receivable or all such
Receivables, if applicable, during such period (or such longer period
as the Trustee may specify not to exceed an additional 60 days) in
accordance with the provisions of the Pooling and Servicing
Agreement;
(3) certain events of bankruptcy or insolvency relating to the
Transferor, Yamaha or Deutsche Financial;
(4) there will have been three consecutive Distribution Dates on
which the Class C Invested Amount is less than the Initial Class C
Invested Amount;
(5) the Trust becomes an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(6) any Servicer Default occurs which would have a material
adverse effect on the Certificateholders;
(7) on any Determination Date, the Class C Invested Amount is less
than ___% of the sum of the Class A Invested Amount, the Class B
Invested Amount and the Initial Class C Invested Amount;
(8) Undistributed Principal Collections remain in the Special
Funding Account for twelve consecutive Collection Periods;
(9) on any Determination Date, the Transferor Amount, as of the
last day of the prior Collection Period, was less than ___% of the
Trust Principal Component as of the last day of the prior Collection
Period, and such condition shall have continued unremedied for ten
consecutive days or more;
(10) the average payment rate determined by dividing the aggregate
amount of Collections for each Collection Period by the beginning
Pool Balance for each such period, averaged for any three consecutive
Collection Periods, shall be less than (a) with respect to the
Collection Periods included in the period from each November through
the next succeeding April, 8% and (b) with respect to the Collection
Periods included in the period from each May through the next
succeeding October, 11%; provided that this clause (10) may be
amended with the consent of the Transferor and the Rating Agencies;
(11) the annualized rate (averaged for a period of any three
consecutive Collection Periods) of (a) Defaulted Receivables minus
recoveries plus the repossession value of all Products repossessed
during each such Collection Period to (b) the beginning Pool Balance
for such Collection Period exceeds 10%; provided that this clause
(11) shall not constitute an Early Amortization Event if, upon the
occurrence of such event, the Available Subordinated Amount is
increased by an amount equal to 1% of the sum of the Class A Adjusted
Invested Amount and the Class B Adjusted Invested Amount (to the
extent such increase does not result in the Transferor Amount as a
percentage of the Trust Principal Component, to fall below the
Minimum Transferor Percentage), in which case an Early Amortization
Event under this clause (11) shall not occur until such time as such
annualized rate equals or exceeds 11%; provided, further, that this
clause (11) may be amended with the consent of the Transferor and the
Rating Agencies; or
(12) on any Determination Date, the Transferor Amount, as of the
last day of the prior Collection Period, shall be less than 12% of
the Trust Principal Component and the annualized rate (averaged for a
period of any two consecutive Collection Periods) determined by
dividing (a) the amount of interest, fees and service charges owed by
Dealers in respect of Receivables collected in the related Collection
Period by (b) the Pool Balance at the beginning of the related
Collection Period shall be less than 6%.
In the case of any event described in clause (1), (2) or (6), an
Early Amortization Event will be deemed to have occurred with respect to
any Series only if, after any applicable grace period described in such
clauses, either the Trustee or certificateholders of such Series evidencing
undivided interests aggregating more than 50% of the invested amount of
such Series, by written notice to the Transferor and the Servicer (and to
the Trustee, if given by such certificateholders) declare that an Early
Amortization Event has occurred as of the date of such notice. In the case
of any event described in clause (3), (5), (8) or (9) an Early Amortization
Event with respect to all Series, and in the case of any event described in
clause (4), (7), (10), (11) or (12) an Early Amortization Event with
respect to only the Certificates, will be deemed to have occurred without
any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately
upon the occurrence of such event. The Early Amortization Period will
commence on the day on which an Early Amortization Event occurs or is
deemed to occur. Monthly distributions of principal to the
Certificateholders will begin (if they have not already) on the first
Distribution Date following the Collection Period in which an Early
Amortization Event occurs or is deemed to have occurred. Thus,
Certificateholders may begin receiving distributions of principal earlier
than they otherwise would have, which may shorten the final maturity of the
Certificates. If the only Early Amortization Event to occur is either the
insolvency of the Transferor or the appointment of a receiver or bankruptcy
trustee for the Transferor, the receiver or bankruptcy trustee for the
Transferor may have the power to delay or prevent commencement of the Early
Amortization Period.
In addition to the consequences of an Early Amortization Event
discussed above, if Yamaha, the Transferor or Deutsche Financial
voluntarily files a bankruptcy petition or goes into liquidation or any
person is appointed a receiver or bankruptcy trustee of Yamaha or the
Transferor or Deutsche Financial, on the day of such appointment Yamaha
will immediately cease to sell Receivables to the Transferor under the
Receivables Purchase Agreement and promptly give notice to the Trustee of
such appointment or if the Transferor voluntarily files for bankruptcy or a
receiver or bankruptcy trustee is appointed for the Transferor, on the day
of such appointment the Transferor will immediately cease to transfer
Receivables to the Trust and the Transferor will promptly give notice to
the Trustee of such appointment. Within 15 days, the Trustee will publish a
notice of the liquidation or the appointment stating that the Trustee
intends to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and to the best of its ability. Unless
otherwise instructed within a specified period by the certificateholders
representing undivided interests aggregating more than 50% of the aggregate
principal amount of each of the Offered Certificates and the Class C
Certificates, the Trustee will sell, dispose of or otherwise liquidate the
portion of the Receivables allocated to the Certificates and the
Receivables allocable to other Series that did not vote to continue the
Trust in accordance with the Pooling and Servicing Agreement in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds from the sale, disposition or liquidation of the Receivables will
be treated as collections allocable to certificateholders and such proceeds
will be distributed to Certificateholders and the certificateholders of
other Series. If the portion of such proceeds allocable to the
Certificateholders' Interest and the proceeds of any Collections in the
Collection Account are not sufficient to pay in full the remaining amount
due on the Offered Certificates, the Certificateholders of such Class of
Offered Certificates will suffer a corresponding loss. If the Trustee is
instructed not to sell a portion of the Receivables allocable to the
Certificateholders, as described above, then the Trust shall continue with
respect to the Certificates pursuant to the terms of the Pooling and
Servicing Agreement and the applicable Supplement. See "Certain Transfer,
Security Interest and Bankruptcy Considerations--Certain Matters Relating
to Bankruptcy."
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust, for the benefit of certificateholders, and the
Trustee, including its officers, directors and employees, from and against
any loss, liability, expense, damage or injury arising out of or relating
to any claims, actions or proceedings brought or asserted by third parties
which are suffered or sustained by reason of any acts or omissions of the
Servicer pursuant to the Pooling and Servicing Agreement and any
Supplement; provided, however, that the Servicer shall not indemnify the
Trust or the certificateholders for any liabilities, costs or expenses with
respect to U.S. Federal, state or local income or franchise taxes required
to be paid by the Trust or the certificateholders. However, in the Pooling
and Servicing Agreement, the Servicer has agreed to indemnify The Fuji Bank
and Trust Company in its individual capacity for any such tax liabilities,
costs or expenses arising in connection with the performance of its
obligations under the Pooling and Servicing Agreement.
Under the Pooling and Servicing Agreement, the Transferor will
indemnify an injured party for the entire amount of any losses, claims,
damages or liabilities arising out of or based on the Pooling and Servicing
Agreement or the actions of the Servicer taken pursuant to the Pooling and
Servicing Agreement as though the Pooling and Servicing Agreement created a
partnership under the Uniform Partnership Act. The Transferor will also
indemnify each certificateholder for any such losses, claims, damages or
liabilities (other than those incurred by a certificateholder in the
capacity of an investor in the certificates) except to the extent that they
arise from any action by any certificateholder. In the event of a Service
Transfer, the successor Servicer will indemnify the Transferor for any
losses, claims, damages and liabilities of the Transferor as described in
this paragraph arising from the actions or omissions of such successor
Servicer.
The Pooling and Servicing Agreement provides that none of the
Transferor, the Servicer, Yamaha, Deutsche Financial or any of their
directors, officers, employees or agents will be under any other liability
to the Trust, the Trustee, the certificateholders, any Enhancement provider
or any other person for any action taken, or for refraining from taking any
action, in good faith pursuant to the Pooling and Servicing Agreement.
However, none of the Transferor, the Servicer, Yamaha or any of their
directors, officers, employees or agents will be protected against any
liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence of any such person in the
performance of their duties or by reason of reckless disregard of their
obligations and duties thereunder.
In addition, the Pooling and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its servicing responsibilities
under the Pooling and Servicing Agreement. The Servicer may, in its sole
discretion, undertake any such legal action which it may deem necessary or
desirable for the benefit of certificateholders with respect to the Pooling
and Servicing Agreement and the rights and duties of the parties thereto
and the interest of the certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer,
whether acting itself, through Deutsche Financial or through another
subservicer, is responsible for servicing, collecting, enforcing and
administering the Receivables in accordance with the policies and
procedures and the degree of skill and care applied or exercised with
respect to dealer receivables owned or serviced by the Servicer, Deutsche
Financial or any other subservicer.
Pursuant to the Pooling and Servicing Agreement, the Servicer is not
required to remit Collections to the Collection Account within two Business
Days following the date of processing, but is permitted to remit on a
periodic basis, and is permitted to remit Collections of principal in the
form of a draft drawn on Deutsche Financial payable not later than ten days
from the date of receipt by Deutsche Financial from the Dealer. Upon the
receipt of a ten-day draft by the Servicer, the Transferor Amount shall be
reduced by the amount of such draft, and the Servicer shall hold such draft
until the date on which funds are scheduled to be made available thereon,
and, within two Business Days following such date, such funds will be
remitted by the Servicer to the Trustee for deposit into the Collection
Account. The Transferor Amount is increased by the amount of such draft on
the date funds with respect to such draft become available and are
deposited into the Collection Account. If, at any time, the Transferor
Amount is equal to or less than the Minimum Transferor Percentage of the
Trust Principal Component, Deutsche Financial shall remit Collections to
the Servicer in immediately available funds within two Business Days
following the date of processing until such time as the Transferor Amount
is greater than the Minimum Transferor Percentage of the Trust Principal
Component.
Servicing activities performed by the Servicer with respect to the
Accounts include collecting and recording payments, communicating with
Dealers, investigating payment delinquencies, providing billing records to
Dealers and maintaining internal records. Managerial and custodial services
performed by the Servicer on behalf of the Trust include providing
assistance in any inspections of the documents and records relating to the
Accounts and Receivables by the Trustee pursuant to the Pooling and
Servicing Agreement, maintaining the agreements, documents and files
relating to the Accounts and Receivables as custodian for the Trust and
providing related data processing and reporting services for
Certificateholders and on behalf of the Trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement, the Servicer covenants to the
Certificateholders and the Trustee as to each Receivable and related
Account that:
(1) it will duly fulfill all obligations on its part to be fulfilled
under or in connection with the Receivable or Account, and will maintain in
effect all qualifications required in order to service the Receivable or
Account and will comply 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 Certificateholders;
(2) it will not permit any rescission or cancellation of the
Receivable, except as ordered by a court of competent jurisdiction or
except in accordance with the Servicer's usual and customary servicing
practices; and
(3) it will do nothing to impair the rights of the Certificateholders
in the Receivables and will not reschedule, revise or defer payments due on
the Receivables, except in accordance with the Servicer's usual and
customary servicing practices.
Under the terms of the Pooling and Servicing Agreement, the Servicer
is obligated to accept the transfer of any Receivable if it discovers, or
receives written notice from the Trustee, that (a) any covenant of the
Servicer set forth above has not been complied with respect to such
Receivable or (b) the Servicer has not complied in all material respects
with all requirements of law applicable to the Receivables or Accounts, and
in either case such noncompliance has not been cured within 30 days
thereafter and the Receivable has been charged off as uncollectible or the
proceeds of the Receivables are not available to the Trust; provided,
however, that such obligation will not create recourse to the Servicer on
account of the financial inability of a Dealer to pay pursuant to the terms
of a Receivable. Such assignment and transfer will be made when the
Servicer deposits an amount equal to the amount of such Receivable in the
Collection Account on the Business Day preceding the Distribution Date
following the Collection Period during which such obligation arises;
provided, that if the Servicer is then required to make deposits to the
Collection Account more frequently than monthly, the Servicer shall make
such deposits not later than two Business Days after such obligation
arises. The amount of such deposit shall be deemed a payment in respect of
the related Receivable and will be treated under the Pooling and Servicing
Agreement in the same manner as are payments received by the Servicer from
Dealers under the Accounts. Any amounts so paid by the Servicer shall be
allocated in respect of Yield Collections and Principal Collections as
provided in the Pooling and Servicing Agreement. This reassignment or
transfer and assignment to the Servicer constitutes the sole remedy
available to the Certificateholders if such covenant or warranty of the
Servicer is not satisfied and the Trust's interest in any such reassigned
Receivables shall be automatically assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities is a monthly
servicing fee (the "SERVICING FEE") in an amount, on any Distribution Date,
equal to the sum of, with respect to all Series, one-twelfth of the sum for
each Series of the product of (a) the applicable servicing fee percentages
with respect to each Series and (b) the sum of an allocable portion of the
amount of the Transferor Interest and the aggregate invested amount with
respect to each Series with respect to the related Collection Period.
The Servicing Fee will be allocated among the Transferor Interest,
the Certificateholders and certificateholders of all of the other Series.
The portion of the Servicing Fee allocable to the Certificateholders'
Interest on each Distribution Date (the "MONTHLY SERVICING FEE") generally
will be equal to one-twelfth of the product of 2% per annum (the "SERVICING
FEE PERCENTAGE") and the amount of the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount, on the last day of the
second preceding Collection Period or, in the case of the first
Distribution Date, one-twelfth of the product of the Servicing Fee
Percentage and the initial principal amount of the Certificates. The
remainder of the Servicing Fee, which is allocable to the Transferor
Interest, is paid directly by the holder of the Exchangeable Transferor
Certificate from Yield Collections allocated to the Transferor Interest and
neither the Trust nor the Certificateholders have any obligations to pay
such portion of the Servicing Fee. The Monthly Servicing Fee will be paid
with respect to each Collection Period from the Collection Account (unless
such amount has been netted against deposits to the Collection Account) as
described under "--Distributions from the Collection Account" above. The
Servicer pays from its servicing compensation certain expenses incurred in
connection with servicing the Accounts and the Receivables including,
without limitation, expenses related to enforcement of the Receivables,
payment of fees and disbursements of the Trustee and independent
accountants and all other fees and expenses which are not expressly stated
in the Pooling and Servicing Agreement to be payable by the Trust or the
Certificateholders other than Federal, state and local income and franchise
taxes, if any, of the Trust.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except, among other reasons, (a) upon
determination that such duties are impermissible under applicable law,
regulation or order or (b) upon the satisfaction of the following
conditions:
(1) the assumption of the duties and obligations of the Servicer under
the Pooling and Servicing Agreement by a proposed successor Servicer;
(2) the written confirmation by the applicable Rating Agency that the
rating of any Series of certificates then outstanding will not, solely as a
result of such transfer, be reduced or withdrawn;
(3) the delivery to the Trustee of an opinion of counsel to the
effect that such transfer will not materially adversely affect the
treatment of any Series of certificates then outstanding after such
transfer as debt for Federal income tax purposes and that such transfer
will not have any material adverse impact on the Federal income taxation of
the Trust or any Certificateholder or any Certificate Owner; and
(4) the proposed successor Servicer has a net worth of not less than
$50,000,000 and its regular business includes the servicing of dealer
accounts.
No such resignation described in clause (a) above 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.
Yamaha, as Servicer, is permitted under the Pooling and Servicing
Agreement to delegate certain of its servicing obligations to a designated
subservicer. Pursuant to the Servicing Agreement, dated as of March 1,
1994, between Yamaha and Deutsche Financial, and related agreements (as
amended, supplemented or otherwise modified and in effect, the "SERVICING
AGREEMENT"), Deutsche Financial has agreed to act as the initial
subservicer of the Receivables on behalf of Yamaha. Notwithstanding any
such delegation, Yamaha, as Servicer, will continue to be liable for all of
its obligations as Servicer under the Pooling and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, any of the Transferor or the Servicer may be merged or
consolidated or any person resulting from any merger or consolidation to
which any of the Transferor or the Servicer is a party, or any person
succeeding to the business of any of the Transferor or the Servicer, will
be the successor to the Transferor or the Servicer, as the case may be,
under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event of any unremedied Servicer Default (as defined below),
either the Trustee or certificateholders evidencing undivided interests
aggregating more than 50% of the aggregate principal amount of all Series,
by written notice to the Servicer (and to the Trustee, if given by the
certificateholders), may terminate all of the rights
and obligations of the Servicer, in its capacity as servicer under the
Pooling and Servicing Agreement, with respect to all of the Receivables
held by the Trust with respect to all Series, and the proceeds thereof, and
the Trustee shall thereafter appoint a new Servicer (a "SERVICE TRANSFER").
The rights and interests of the Transferor under the Pooling and Servicing
Agreement in the Transferor Interest will not be affected by any Service
Transfer. The Transferor shall have the right exercisable at any time
within 60 days of the giving of the notice of termination as described
above, to nominate to the Trustee the name of a potential successor
Servicer. The Trustee shall as promptly as possible appoint the entity
nominated by the Transferor if such entity meets certain eligibility
criteria set forth in the Pooling and Servicing Agreement. If the
Transferor does not nominate an entity to be successor Servicer within such
60-day period, the Trustee shall as promptly as possible appoint a
successor Servicer, and if no successor Servicer has been appointed by the
Trustee and has accepted such appointment by the time the Servicer ceases
to act as Servicer, all 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 Service Transfer, the Trustee will seek to obtain
bids from potential Servicers meeting certain eligibility requirements set
forth in the Pooling and Servicing Agreement to serve as a successor
Servicer for servicing compensation not in excess of the Servicing Fee. If
the Trustee is unable to obtain any bids from eligible servicers and the
Servicer delivers an officer's certificate to the effect that it cannot in
good faith cure the related Servicer Default, then the Trustee will offer
the Transferor the right to accept the retransfer of all of the
Receivables. The deposit amount of such a retransfer for this Series of
Certificates shall be equal to the sum of the Class A Invested Amount, the
Class B Invested Amount and the Class C Invested Amount plus accrued and
unpaid interest on the Certificates (together with interest on interest
amounts that were due and not paid on a prior Distribution Date) at the
respective Certificate Rates through the day preceding such Distribution
Date.
A "SERVICER DEFAULT" refers to any of the following events:
(1) failure by the Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make any
withdrawal, on the date the Servicer is required to do so under the
Pooling and Servicing Agreement or any Supplement (upon expiration of
a five day grace period); provided, however, that any such failure
caused by a nonwillful act of the Servicer shall not constitute a
Servicer Default if the Servicer promptly remedies such failure
within five Business Days after receiving notice thereof;
(2) failure on the part of the Servicer to duly observe or perform
any other covenants or agreements of the Servicer in the Pooling and
Servicing Agreement or any Supplement which has a material adverse
effect on the certificateholders, which continues unremedied for a
period of 60 days after written notice and which continues to
materially adversely affect the rights of the certificateholders of
any Series then outstanding for such period, or the Servicer assigns
its duties under the Pooling and Servicing Agreement, except as
specifically permitted thereunder;
(3) any representation, warranty or certification made by the
Servicer in the Pooling and Servicing Agreement or any Supplement or
in any certificate delivered pursuant to the Pooling and Servicing
Agreement or any Supplement proves to have been incorrect when made,
which has a material adverse effect on the rights of the
certificateholders, and which material adverse effect continues for
the certificateholders for a period of 60 days after written notice
and which continues to materially adversely affect the rights of the
certificateholders of any Series then outstanding for such period; or
(4) the occurrence of certain events of bankruptcy or insolvency
relating to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (1) above for a period of 10 Business Days after
the applicable grace period or a delay in or failure of performance
referred to under clauses (2) or (3) for a period of 60 Business Days after
the applicable grace period shall not constitute a Servicer Default, if
such delay or failure could not have been prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused
by an act of God or other similar occurrence. Upon the occurrence of any
such event, the Servicer shall not be relieved from using its best efforts
to perform its obligations in a timely manner in accordance with the terms
of the Pooling and Servicing Agreement or any Supplement and the Servicer
shall provide the Trustee, the issuer of any irrevocable letter of credit
or provider of other form of Enhancement, if any, applicable to any other
Series, the Transferor and the certificateholders prompt notice of such
failure or delay by it, together with a description of its efforts to so
perform its obligations. The Servicer will immediately notify the Trustee
in writing of any Servicer Default.
REPORTS TO CERTIFICATEHOLDERS
Prior to each Distribution Date, the Servicer will forward to the
Trustee a statement (the "MONTHLY SERVICER REPORT") prepared by the
Servicer setting forth certain information with respect to the Trust and
the Certificates, including, but not limited to:
(a) the aggregate amount of Collections, the aggregate amount of
Yield Collections and the aggregate amount of Principal Collections
processed during the immediately preceding Collection Period;
(b) the Floating Allocation Percentage for such Collection Period
and, during any Accumulation Period and any Early Amortization Period, the
Fixed Allocation Percentage;
(c) an inventory aging report which shall set forth the aggregate
account balances which represent Products having been invoiced for 90 days,
180 days, 270 days and 365 days or more as of the billing date for each
such Account occurring in the Collection Period immediately preceding such
Distribution Date;
(d) the Investor Default Amount for such Distribution Date;
(e) the amount of Class A Investor Charge-Offs, Class B Investor
Charge-Offs and Class C Investor Charge-Offs and the amount of
reimbursements thereof for such Distribution Date;
(f) the amount of the Monthly Servicing Fee for such Distribution
Date;
(g) the aggregate amount of Receivables in the Trust at the close of
business on the last day of the Collection Period preceding such
Distribution Date;
(h) the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount at the close of business on the last day of the
Collection Period immediately preceding such Distribution Date;
(i) the amount of any Available Subordinated Amount and the amount of
any reimbursements thereof for such Distribution Date; and
(j) whether a Transferor Subordination Event on Early Amortization
Event shall have occurred.
The Trustee will make such statement available to the Certificateholders of
any Class of Offered Certificates and Certificate Owners upon request at
the offices of the Trustee referenced in "--The Trustee."
On each Distribution Date (including the applicable Expected Final
Payment Date), the Paying Agent, on behalf of the Trustee, will forward to
each Certificateholder of any Class of Offered Certificates of record a
statement (the "PAYMENT DATE STATEMENT") prepared by the Servicer setting
forth the information with respect to the Certificates set forth in the
Monthly Servicer Report supplied to the Trustee as described in the
preceding paragraph since the immediately preceding Distribution Date, and
the following additional information (which, in the case of (1) through (5)
below, will be stated on the basis of an original principal amount of
$1,000 per Offered Certificate, as applicable):
(1) the total amount distributed;
(2) the amount of such distribution allocable to principal on the
Class A Certificates;
(3) the amount of such distribution allocable to principal on the
Class B Certificates;
(4) the amount of such distribution allocable to interest on the
Class A Certificates;
(5) the amount of such distribution allocable to interest on the
Class B Certificates;
(6) the amount, if any, by which the principal balance of the Class A
Certificates exceeds the Class A Invested Amount as of the Record Date with
respect to such Distribution Date;
(7) the amount, if any, by which the principal balance of the Class B
Certificates exceeds the Class B Invested Amount as of the Record Date with
respect to such Distribution Date;
(8) the "series factor" as of the end of the Record Date with respect
to such Distribution Date (consisting of an eight-digit decimal expressing
the Class A Invested Amount as of such Record Date (determined after taking
into account any increase or decrease in the Invested Amount which will
occur on the following Distribution Date) as a proportion of the Class A
Initial Invested Amount); and
(9) the "series factor" as of the end of the Record Date with respect
to such Distribution Date (consisting of an eight-digit decimal expressing
the Class B Invested Amount as of such Record Date (determined after taking
into account any increase or decrease in the Invested Amount which will
occur on the following Distribution Date) as a proportion of the Class B
Initial Invested Amount).
On or before January 31 of each calendar year, beginning with January
31, 2000, the Paying Agent, on behalf of the Trustee, will furnish or cause
to be furnished to each person who at any time during the preceding
calendar year was a Certificateholder of record of any Class of Offered
Certificates (or, if so provided in applicable Treasury regulations, make
available to Certificate Owners) a statement prepared by the Servicer
containing the information required to be provided by an issuer of
indebtedness under the Code for such calendar year or the applicable
portion thereof during which such person was a Certificateholder of any
Class of Offered Certificates, together with such other customary
information as the Servicer deems necessary or desirable to enable the
Certificateholders of Offered Certificates to prepare their tax returns.
See "Certain Federal Income Tax Considerations."
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before May 31
of each calendar year the Servicer will cause a firm of nationally
recognized independent accountants to furnish a report to the effect that
such firm has applied procedures, as agreed upon between such firm and the
Servicer, to certain documents and records relating to the servicing of the
Receivables and that, based upon such agreed-upon procedures, no matters
came to their attention that caused them to believe that such servicing was
not conducted in compliance with certain applicable terms and conditions
set forth in the Pooling and Servicing Agreement except for such exceptions
or errors as shall be set forth in such statement. In addition, on or
before May 31 of each calendar year such accountants will compare the
mathematical calculations of the amounts contained in the Monthly Servicer
Reports and other certificates delivered during such year with the computer
reports of the Servicer and statements of any agents engaged by the
Servicer to perform servicing activities which were the source of such
amounts and deliver a certificate to the Trustee stating that such amounts
are in agreement except for such exceptions which shall be set forth in
such report.
The Pooling and Servicing Agreement provides for delivery to the
Trustee on or before May 31 of each calendar year of a statement signed by
an officer of the Servicer to the effect that the Servicer has, or has
caused to be, fully performed its obligations in all material respects
under the Pooling and Servicing Agreement throughout the preceding year or,
if there has been a default in the performance of any such obligation,
specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee at
the offices of the Trustee referenced in "--The Trustee."
AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended
by the Transferor, the Servicer and the Trustee, without certificateholder
consent, to cure any ambiguity, to correct or supplement any provision
therein which may be inconsistent with any other provision therein and to
add any other provisions with respect to matters or questions arising under
the Pooling and Servicing Agreement or any Supplement which are not
inconsistent with the provisions of the Pooling and Servicing Agreement or
any Supplement. In addition, the Pooling and Servicing Agreement and any
Supplement may be amended from time to time by the Transferor, the Servicer
and the Trustee, without certificateholder consent, for the purpose of
adding any provisions to, 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 of any Series then
issued and outstanding; provided that (1) the Servicer must provide an
opinion of counsel to the Trustee to the effect that such amendment will
not materially and adversely affect the interests of the certificateholders
of any outstanding Series (or 100% of the class of certificateholders so
affected shall have consented), (2) such amendment shall not, as evidenced
by an opinion of counsel, cause the Trust to be characterized for Federal
income tax purposes as an association taxable as a corporation or otherwise
have any material adverse impact on the Federal income taxation of any
outstanding Series of certificates or any Certificate Owner and (3) the
applicable rating agency shall confirm that such amendment shall not cause
a reduction or withdrawal of the rating of any outstanding Series of
certificates. Any Supplement and any amendments regarding the addition or
removal of Receivables from the Trust will not require certificateholder
consent under the provisions of the Pooling and Servicing Agreement or any
Supplement.
The Pooling and Servicing Agreement and any Supplement may also be
amended by the Transferor, the Servicer and the Trustee with the consent of
the holders of certificates evidencing undivided interests aggregating not
less than 66 2/3% of the principal amount of all Series adversely affected
for the purpose of adding any provisions to, 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 of any Series then issued and outstanding. No such
amendment, however, may (1) reduce in any manner the amount of, or delay
the timing of, distributions required to be made on such Series, (2) change
the definition or the manner of calculating the invested amount, invested
percentage, the applicable available amount under any Enhancement or the
investor default amount of such Series or (3) reduce the aforesaid
percentage of undivided interests the holders of which are required to
consent to any such amendment, in each case without the consent of all
certificateholders of all Series adversely affected.
Promptly following the execution of any amendment to the Pooling and
Servicing Agreement or any Supplement, the Trustee will furnish written
notice of the substance of such amendment to each certificateholder in any
Series (or with respect to an amendment of a Supplement, to the applicable
Series).
LIST OF CERTIFICATEHOLDERS
Upon written request of three or more Certificateholders of any Class
of Offered Certificates of record or any Certificateholder or group of
Certificateholders of any Class of Offered Certificates of record
representing undivided interests in the Trust aggregating not less than 10%
of the Class A Invested Amount or the Class B Invested Amount,
respectively, the Trustee will afford such Certificateholders access during
business hours to the current list of Certificateholders of such Class of
Offered Certificates of the Trust for purposes of communicating with other
Certificateholders of such Class of Offered Certificates with respect to
their rights under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement generally does not provide for
any annual or other meetings of Certificateholders of any Class of Offered
Certificates.
THE TRUSTEE
The Fuji Bank and Trust Company is Trustee under the Pooling and
Servicing Agreement. The Transferor, 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, the
Transferor, the Servicer and any of their respective affiliates may hold
Offered Certificates in their own names; however, any Offered Certificates
so held shall not be entitled to participate in any decisions made or
instructions given to the Trustee by the Certificateholders as a group. The
Trustee's address is The Fuji Bank and Trust Company, Two World Trade
Center, 81st Floor, New York, New York 10048, Attention: Trust
Administration Department.
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 any part of the Trust. In the event of such
appointment, all rights, powers, duties and obligations conferred or
imposed upon the Trustee will be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly,
or, in any jurisdiction in which the Trustee will be incompetent or
unqualified to perform certain acts, singly upon such separate trustee or
co-trustee who shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event a successor
Trustee will be appointed as provided in the Pooling and Servicing
Agreement. The Servicer may also remove the Trustee, if the Trustee ceases
to be eligible to continue as such under the Pooling and Servicing
Agreement or if the Trustee becomes insolvent. In such circumstances, a
successor Trustee will be appointed as provided in the Pooling and
Servicing Agreement. Any resignation or removal of the Trustee and
appointment of a successor Trustee does not become effective until
acceptance of the appointment by the successor Trustee.
DESCRIPTION OF THE RECEIVABLES SALE AGREEMENT
Yamaha has entered into a Receivables Sale Agreement, dated as of
March 1, 1994 between Yamaha, as purchaser, and Deutsche Financial, as
seller. Pursuant to the Receivables Sale Agreement, Deutsche Financial has
sold and will sell to Yamaha, without recourse, all of its right, title and
interest in, to and under all Receivables arising in Accounts established
by Deutsche Financial with Dealers and has assigned and will assign all of
its interests in the related Product Security to Yamaha. Deutsche Financial
has represented and warranted to Yamaha that, among other things:
(1) it is duly organized and validly existing in good standing under
the laws of the State of Nevada and is duly qualified to do business and is
in good standing in all jurisdictions in which such qualification is
necessary;
(2) it has the full corporate power, authority and legal right to own
its properties and conduct its business as such properties are presently
owned and as such business is presently conducted, and to execute, deliver
and perform its obligations under the Receivables Sale Agreement;
(3) the Receivables Sale Agreement constitutes a legal, valid and
binding obligation of Deutsche Financial; and
(4) its transfer of Receivables and related Product Security is a
valid sale of such interests to Yamaha, and that Deutsche Financial has
taken and will take all action required under the UCC (including, but not
limited to, the filing of any financing statements on Form UCC-1) to
perfect such sale to Yamaha.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables originated under the Accounts transferred to the
Trust by the Transferor have been and will continue to be purchased by the
Transferor from Yamaha pursuant to the Receivables Purchase Agreement
entered into between the Transferor, as purchaser, and Yamaha, as seller. A
copy of the Receivables Purchase Agreement is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summary describes certain terms of the Receivables Purchase Agreement.
SALE OF RECEIVABLES
Under the Receivables Purchase Agreement, Yamaha sells to the
Transferor all its right, title and interest in, to and under the
Receivables originated under the Accounts existing on January 31, 1994 and
thereafter created. Pursuant to the Pooling and Servicing Agreement, all
such Receivables will be immediately transferred by the Transferor to the
Trust, and the Transferor will assign its rights in, to and under the
Receivables Purchase Agreement, together with any related Product Security
with respect to such Receivables to the Trust. The purchase price of the
purchased Receivables will be payable by the Transferor in cash or, at the
election of the Transferor, as a capital contribution by Yamaha, the
Transferor's parent, or a combination thereof.
In connection with the Receivables Purchase Agreement, Yamaha causes
Deutsche Financial, and will continue itself, to indicate in its records,
including any computer files, that the Receivables arising under the
Accounts have been sold to the Transferor by Yamaha and that such
Receivables have been transferred by the Transferor to the Trust. In
addition, Yamaha causes to be provided to the Transferor a computer file or
a microfiche list containing a true and complete list showing each Account
identified by account number and by total outstanding balance on January
31, 1994 and monthly thereafter. The records and agreements relating to
such Accounts and Receivables are not segregated by Yamaha or Deutsche
Financial from other documents and agreements relating to other charge
accounts and receivables and are not stamped or marked to reflect the sale
thereof to the Transferor. Yamaha and Deutsche Financial have filed UCC
financing statements meeting the requirements of state law in California
with respect to such Receivables. See "Risk Factors--Potential loss on
certificates due to priority of some liens over the certificates" and
"Certain Transfer, Security Interest and Bankruptcy Considerations."
Pursuant to the Receivables Purchase Agreement, the Transferor may
require Yamaha to repurchase Receivables existing or to be created in
Accounts designated as Removed Accounts pursuant to the Pooling and
Servicing Agreement. See "Description of the Offered Certificates--Removal
of Accounts."
REPRESENTATIONS AND WARRANTIES
Yamaha represents and warrants to the Transferor to the effect, among
other things, that as of March 24, 1994:
(1) Yamaha is duly organized and validly existing in good standing
under the laws of the jurisdiction of its organization, has the 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 the Receivables Purchase Agreement;
(2) the Receivables Purchase Agreement constitutes a legal, valid and
binding obligation of Yamaha; and
(3) the Receivables Purchase Agreement constitutes a valid sale to
the Transferor of all right, title and interest of Yamaha in, to and under
the Receivables and the related Product Security, whether then existing or
thereafter created in the Accounts and the proceeds thereof which is
effective as to each such Receivable upon the creation thereof.
Upon the breach of certain of the representations and warranties described
in this paragraph or if a material amount of the Receivables are determined
not to be Eligible Receivables, Yamaha will repurchase all such Receivables
from the Transferor for an amount of cash equal to the amount of cash which
the Transferor is required to deposit under the Pooling and Servicing
Agreement in connection with such breach.
Yamaha covenants to the Transferor for the benefit of all
certificateholders of all Series which from time to time may have an
interest in the Trust that, as to the Receivables and the Accounts subject
to the Receivables Purchase Agreement, unless cured within 60 days from
receipt of notice from the Transferor or the Trustee, it will accept the
transfer of any Receivable which is charged off as uncollectible or any
such Receivable the proceeds of which are unavailable to the Trust, if:
(1) such Receivable is not an Eligible Receivable;
(2) such Receivable was not conveyed to the Transferor free and clear
of all liens (except such liens as may be permitted by the Pooling and
Servicing Agreement) or in compliance in all material respects with all
requirements of law;
(3) all material information with respect to the Receivables and the
Accounts related thereto, in the list provided to the Transferor was not
true and correct in all material respects;
(4) Yamaha did not obtain all consents, licenses, approvals or
authorizations required in connection with the conveyance of the
Receivables to the Trust; or
(5) as of March 24, 1994 and monthly thereafter, the computer file or
list of Accounts in existence at such time, provided by Yamaha to the
Transferor was not an accurate and complete listing of all such Accounts in
all material respects or the information contained therein with respect to
the identity of such Accounts and the Receivables existing thereunder was
not true and correct in all material respects as of March 24, 1994 or the
applicable date thereafter.
Additionally, Yamaha covenants in the Receivables Purchase Agreement to
repurchase, under certain conditions, each Receivable sold by it to the
Transferor which is subject to certain specified liens immediately upon the
discovery of such liens. Yamaha shall repurchase any such Receivable, if
the Transferor is required to accept the retransfer of such Receivable
under the Pooling and Servicing Agreement. The purchase price for such
Ineligible Receivable shall be the balance of such Receivable.
Yamaha has also agreed to indemnify the Transferor and to hold the
Transferor harmless from and against any and all losses, damages and
expenses (including reasonable attorneys' fees) suffered or incurred by the
Transferor if the foregoing representations and warranties are materially
false.
CERTAIN COVENANTS
In the Receivables Purchase Agreement, Yamaha covenants to perform
its obligations under the dealer agreements relating to the Accounts and
Yamaha's policies and procedures relating to the Accounts unless the
failure to do so would not have a material adverse effect on the rights of
the Trust, as assignee of the Receivables existing or arising thereunder,
or the certificateholders. In that regard, Yamaha may change the terms and
provisions of such dealer agreements or policies and procedures in any
respect, so long as any such changes are made applicable to all Accounts
and to any Dealer accounts owned and serviced by Yamaha which have
characteristics the same as, or substantially similar to, the Accounts.
In addition, Yamaha expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the interests sold by
Yamaha under the Receivables Purchase Agreement to the Trustee for the
benefit of the certificateholders. Yamaha also agrees, for the benefit of
the Trustee and any provider of any Enhancement, that any amounts payable
by Yamaha to the Transferor pursuant to the Pooling and Servicing Agreement
that are to be paid by the Transferor to the Trustee for the benefit of the
certificateholders will be paid by Yamaha on behalf of the Transferor
directly to the Trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after
the Trust terminates. In addition, if pursuant to certain provisions of
Federal law, Yamaha or Deutsche Financial becomes party to any bankruptcy
or similar proceeding (other than as a claimant) and, if such proceeding is
not voluntary, it is not dismissed within 90 days of its institution, or if
a bankruptcy trustee is appointed for Yamaha or Deutsche Financial, Yamaha
will immediately cease to sell Receivables to the Transferor and will
promptly give notice of such event to the Transferor and to the Trustee.
CERTAIN TRANSFER, SECURITY INTEREST AND
BANKRUPTCY CONSIDERATIONS
TRANSFER OF RECEIVABLES
Pursuant to the Receivables Sale Agreement, Deutsche Financial sells
and will continue to sell to Yamaha, without recourse, all of its right,
title and interest in, to and under the Receivables existing in the
Accounts established by Deutsche Financial with Dealers, together with the
particular Product Security relating thereto, and Deutsche Financial
warrants in the Receivables Sale Agreement that such transfer is a valid
sale of such interest. In turn, pursuant to the Receivables Purchase
Agreement, Yamaha has sold and will sell to the Transferor all of its
right, title and interest in, to and under the Receivables and the related
Product Security to the Transferor, which Receivables were immediately
transferred and conveyed without recourse by the Transferor to the Trust
pursuant to the Pooling and Servicing Agreement. The Transferor has
represented and warranted that such conveyance to the Trust either
constitutes a valid transfer and assignment to the Trust of all right,
title and interest of the Transferor in, to and under the Receivables and
the related Product Security, or a grant of a security interest to the
Trust in, to and under the Receivables and the related Product Security.
The Transferor also covenants and warrants to the Trust in the Pooling and
Servicing Agreement that, in the event the transfer of Receivables and
related Product Security is deemed to create a security interest under the
UCC, there exists a valid, subsisting and enforceable first priority
perfected ownership interest in the Receivables and related Product
Security (except for the interest of the Transferor as holder of the
Exchangeable Transferor Certificate), in existence at the time of or after
the formation of the Trust, in favor of the Trust and a valid, subsisting
and enforceable first priority perfected ownership interest in the
Receivables and related Product Security created thereafter in favor of the
Trust on and after their creation. For a discussion of the Trust's rights
arising from these covenants and warranties not being satisfied, see
"Description of the Offered Certificates--Covenants, Representations and
Warranties."
Each of Yamaha and the Transferor has represented that the
Receivables are "accounts", "chattel paper" or "general intangibles" for
purposes of the UCC as in effect in the State of California. If the
Receivables are deemed to be chattel paper and the transfer thereof by
either Yamaha to the Transferor or by the Transferor to the Trust is deemed
either to be a sale or to create a security interest, the UCC applies and
the transferee must either take possession of the chattel paper or file an
appropriate financing statement or statements in order to perfect its
interest therein. Financing statements covering the Receivables will be
filed under the UCC by both the Transferor and the Trust to perfect their
respective interests in the Receivables, and continuation statements will
be filed as required to continue the perfection of such interests. The
Receivables will not be stamped to indicate the interest of the Transferor
or the Trustee.
There are certain limited circumstances under the UCC and applicable
federal law in which prior or subsequent transferees of Receivables and
related Product Security could have an interest in such Receivables and
related Product Security with priority over the Trust's interest. A tax or
other government lien on property of Yamaha or the Transferor arising prior
to the time a Receivable and related Product Security is conveyed to the
Trust may also have priority over the interest of the Trust in such
Receivable and related Product Security. Under the Receivables Purchase
Agreement, Yamaha has warranted to the Transferor, and under the Pooling
and Servicing Agreement the Transferor has warranted to the Trust, that the
Receivables and the related Product Security have been transferred free and
clear of the lien of any third party. Each of Yamaha and the Transferor has
also covenanted that it will not sell, pledge, assign, transfer or grant
any lien on any Receivable and the related Product Security or the
Exchangeable Transferor's Certificate (or any interest therein) other than
to the Trust. In addition, while Yamaha is the Servicer, cash Collections
on the Receivables may, under certain circumstances, be commingled with the
funds of Yamaha prior to each Distribution Date and, in the event of the
bankruptcy of Yamaha, neither the Trust nor the Transferor may have a
perfected interest in such Collections.
Because the Trust's interest in the Receivables is dependent upon the
Transferor's interest in such Receivables, any adverse change in the
priority or perfection of the Transferor's ownership or security interest
would correspondingly affect the Trust's interest in the affected
Receivables.
As set forth under "Risk Factors--Potential loss on certificates due
to priority of some liens over the certificates," cash Collections of
Receivables will, except in certain circumstances, be available for use by
the Servicer (or Deutsche Financial as subservicer) until deposited into
the Collection Account on each Distribution Date. In the event of
insolvency or receivership of the Servicer (or Deutsche Financial as
subservicer) or, as the case may be, in certain circumstances, the lapse of
certain time periods, neither the Trust nor the Transferor may have a
perfected interest in such cash Collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
The Pooling and Servicing Agreement provides that, upon the
appointment of a receiver or bankruptcy trustee for the Transferor or
Yamaha, such party will promptly give notice thereof to the Trustee, and an
Early Amortization Event with respect to all Series will occur. Under the
Pooling and Servicing Agreement, no new Receivables will be transferred to
the Trust and, unless otherwise instructed within a specified period by the
holders of certificates representing undivided interests aggregating more
than 50% of the aggregate principal amount of each class of each Series or
unless otherwise required by the receiver or bankruptcy trustee for the
Transferor, Yamaha or Deutsche Financial, the Trustee will proceed to sell,
dispose of or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from
the sale of the Receivables would then be treated by the Trustee as
Collections on the Receivables. If the only Early Amortization Event to
occur is either the insolvency of the Transferor, Yamaha or Deutsche
Financial or the appointment of a receiver or bankruptcy trustee for the
Transferor, Yamaha or Deutsche Financial, such receiver or bankruptcy
trustee may have the power to require Yamaha to continue to transfer new
Receivables to the Transferor or require the Transferor to continue to
transfer new Receivables to the Trust, as applicable, and to prevent the
early sale, liquidation or disposition of the Receivables and the
commencement of the Early Amortization Period. See "Description of the
Offered Certificates--Early Amortization Events."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a discussion of certain Federal income tax
consequences to Certificate Owners who purchase any Class of Offered
Certificates at original issuance and hold the Offered Certificates as
capital assets under the Internal Revenue Code of 1986, as amended (the
"CODE"). This discussion does not purport to be complete or to deal with
all aspects of Federal income taxation that may be relevant to Certificate
Owners in light of their particular circumstances or to certain types of
Certificate Owners subject to special treatment under the Federal income
tax laws (for example, banks and life insurance companies). This discussion
is based upon provisions of the Code, the regulations promulgated
thereunder and judicial and ruling authorities as currently in effect, all
of which are subject to change, possibly retroactively. PROSPECTIVE
INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE
FEDERAL TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP OR DISPOSITION OF
INTERESTS IN THE OFFERED CERTIFICATES, AS WELL AS THE TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY OR OTHER TAXING
JURISDICTION.
CHARACTERIZATION OF THE OFFERED CERTIFICATES AS INDEBTEDNESS
The Transferor, the Trustee and each Certificate Owner express in the
Pooling and Servicing Agreement their intent that, for financial accounting
and tax purposes, the Offered Certificates will be indebtedness secured by
the Receivables. The Transferor and each Certificate Owner, by acquiring an
interest in any Class of Offered Certificates, agree to treat the Offered
Certificates as indebtedness for Federal, state and local tax purposes.
Based upon the application of existing law to the facts of the
transaction as set forth in the Pooling and Servicing Agreement and other
relevant documents, Giancarlo & Gnazzo, A Professional Corporation, special
tax counsel to the Transferor ("TAX COUNSEL"), has advised the Transferor
that the Offered Certificates will be treated for Federal income tax
purposes as having created secured indebtedness. However, opinions of
counsel are not binding on the Internal Revenue Service (the "IRS"), and
there can be no assurance that the IRS could not successfully challenge
this conclusion.
In general, the characterization of a transaction for Federal income
tax purposes is based upon economic substance, and the substance of the
transaction in which the Offered Certificates are issued is consistent with
the treatment of the Offered Certificates as debt for Federal income tax
purposes. Although there are certain judicial precedents holding that under
appropriate circumstances a taxpayer should be required to treat a
transaction in accordance with the form chosen by the taxpayer, regardless
of the transaction's substance, the operative provisions of the transaction
and the Pooling and Servicing Agreement are at worst ambiguous but are not
inconsistent with treating the Offered Certificates as debt and
accordingly, these authorities would not be applied to require sale
characterization. Based on the foregoing, Tax Counsel has concluded that
the characterization of the Offered Certificates, for Federal income tax
purposes, would be governed by the substance of the transaction, which is
the issuance of secured debt.
FUTURE LEGISLATION
On ____, 1999, the Clinton Administration submitted to the House of
Representatives its 1999 revenue proposals. The revenue proposals included
a proposal (the "PROPOSAL") limiting the circumstances in which a corporate
taxpayer could, for Federal income tax purposes, characterize a transaction
according to the substance, rather than the form, of the transaction. If
the Proposal were enacted in its present form, it might prevent Certificate
Owners that are corporations from characterizing the Offered Certificates
as debt for Federal income tax purposes. The Federal income tax
characterization of the Offered Certificates by corporate Certificate
Owners might affect the Federal income tax characterization of the Trust,
which might adversely affect the Federal income taxation of any outstanding
Series of certificates held by investors. It is unclear whether the
Proposal will be enacted, to what extent its provisions will be modified
prior to enactment, and whether its provisions, as enacted, would affect
the Federal income tax characterization of the Offered Certificates.
TAXATION OF INTEREST INCOME
Assuming that the Certificate Owners are owners of debt obligations
for Federal income tax purposes, interest generally will be taxable as
ordinary income for Federal income tax purposes when received by the
Certificate Owners utilizing the cash method of accounting and when accrued
by Certificate Owners utilizing the accrual method of accounting. Interest
received on the Offered Certificates may also constitute "investment
income" for purposes of certain limitations of the Code concerning the
deductibility of investment interest expense.
Generally, a debt instrument will not be treated for Federal income
tax purposes as issued with original issue discount ("OID"), if the debt
instrument is not issued at greater than a de minimis discount from par and
all stated interest payments on the debt instrument are "qualified stated
interest" payments. While it is not anticipated that the Offered
Certificates will be issued at a greater than de minimis discount from par,
under Treasury regulations (the "OID REGULATIONS"), it is possible that the
stated interest payments on Offered Certificates could be treated for
Federal income tax purposes as other than "qualified stated interest"
payments. Under the OID Regulations, interest payments on the Offered
Certificates may not be "qualified stated interest" payments because the
Offered Certificates may be treated (a) as not having reasonable legal
remedies to compel timely payment of interest and (b) as not having terms
and conditions that make the likelihood of late payment (other than a late
payment that occurs within a reasonable grace period) or nonpayment a
remote contingency. Although the Pooling and Servicing Agreement does not
contain provisions expressly denominated as default provisions, it does
contain provisions intended to provide assurances that interest and
principal on the Offered Certificates will be paid even if certain adverse
events occur. Moreover, the OID Regulations provide that, for purposes of
the foregoing test, the possibility of nonpayment due to default,
insolvency, or similar circumstances, is ignored. The Transferor intends to
take the position that, because nonpayment can occur only as a result of
events beyond the control of the Trust and the Trustee (principally, loss
rates and payment delays on the Receivables substantially in excess of
those anticipated), nonpayment is a remote contingency.
If the Offered Certificates are in fact issued at a greater than de
minimis discount or payments of stated interest are treated as other than
"qualified stated interest," the following general rules will apply. The
excess of the "stated redemption price at maturity" of the Offered
Certificates (generally equal to their principal amount as of the date of
original issuance plus all interest other than "qualified stated interest"
payments payable prior to or at maturity) over their original issue price
(the initial offering price at which a substantial amount of the Offered
Certificates are sold) will constitute OID. A Certificate Owner must
include OID in income over the term of the Offered Certificate under a
constant yield method. Inclusion of OID under a constant yield method would
not significantly affect Certificate Owners utilizing the accrual method of
accounting, but it would accelerate the inclusion of income by Certificate
Owners utilizing the cash method of accounting. Interest included in income
as OID would not be includible again when received. Under the OID
Regulations, a holder of an Offered Certificate issued without OID but
issued at a de minimis discount from par must include such discount in
income proportionately as principal payments are made on such Offered
Certificate.
Certificate Owners should be aware that the resale of any Class of
Offered Certificates may be affected by the market discount rules of the
Code. These rules generally provide that, subject to a de minimis
exception, if a holder of an Offered Certificate acquires the Offered
Certificate at a market discount (i.e. at a price below its stated
redemption price at maturity or its "revised issue price" if it was issued
with OID) and thereafter recognizes gain upon a disposition of the Offered
Certificate, the lesser of such gain or the portion of the market discount
that accrued while the Offered Certificate was held by such holder will be
treated as ordinary interest income realized at the time of the
disposition.
Each Certificate Owner should consult his own tax advisor regarding
the impact of the original issue discount and market discount rules.
SALES OF OFFERED CERTIFICATES
In general, a Certificate Owner will recognize gain or loss upon the
sale, exchange, redemption or other taxable disposition of any Class of
Offered Certificates measured by the difference between (a) the amount of
cash and the fair market value of any property received (other than amounts
attributable to, and taxable as, accrued stated interest) and (b) the
owner's tax basis in the Offered Certificate (as increased by any OID or
market discount previously included in income by the holder and decreased
by any deductions previously allowed for amortizable bond premium and by
any payments reflecting principal or OID received with respect to such
Offered Certificate). Subject to the market discount rules discussed above
and to the one-year holding requirement for long-term capital gain
treatment, any such gain or loss generally will be long-term capital gain,
provided that the Offered Certificate was held as a capital asset. The
federal income tax rates applicable to capital gains for taxpayers other
than individuals, estates and trusts are currently the same as those
applicable to ordinary income; however, the maximum ordinary income rate
for individuals, estates and trusts is 39.6%, whereas the maximum long-term
capital gains rate for such taxpayers is 28%. Moreover, capital losses
generally may be used only to offset capital gains.
TAX CHARACTERIZATION OF THE TRUST
Certificates may be issued by the Trust which are treated for Federal
income tax purposes either as indebtedness or as an interest in a
partnership. Accordingly, the Trust could be characterized either as (a) a
security device to hold Receivables securing the repayment of the
certificates of all Series, (b) an entity whose existence is disregarded or
(c) a partnership in which the Transferor and certain certificateholders
are partners, and which has issued debt represented by other certificates
(including the Offered Certificates). In connection with the issuance of
certificates of any Series, Tax Counsel will render an opinion to the
Underwriter, based on the assumptions and qualifications set forth therein,
that under then current law, the issuance of the certificates of such
Series will not cause the Trust to be characterized for Federal income tax
purposes as a corporation or as an association taxable as a "publicly
traded partnership," as defined in Section 7704(b) of the Code, taxable as
a corporation or otherwise have any material adverse impact on the Federal
income taxation of any outstanding Series of certificates held by
investors.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP
If the Offered Certificates are not treated as debt obligations for
Federal income tax purposes, the arrangement among the Transferor and the
Certificate Owners could be classified, for Federal income tax purposes, as
a partnership. Because, in the opinion of Tax Counsel, the Offered
Certificates will be characterized as debt for Federal income tax purposes,
no attempt will be made to comply with any reporting or tax payment
requirements which might be applicable if the arrangement among the
Transferor and the Certificate Owners were treated as creating a
partnership. No IRS ruling on the Federal income tax characterization of
the arrangement among the Transferor and the Certificate Owners will be
sought.
If the arrangement created by the Pooling and Servicing Agreement
were characterized as a partnership (but not a "publicly traded
partnership" taxable as a corporation) among the Transferor and the
Certificate Owners, such a partnership would not be subject to Federal
income tax, but each item of income, gain, loss, deduction and credit
generated through the ownership of the Receivables by such a partnership
would generally be passed through to the Transferor and the Certificate
Owners as partners in such a partnership according to their respective
interests therein. The amount, timing and character of income reportable by
the Certificate Owners as partners could differ materially from the income
reportable by the Certificate Owners if the Offered Certificates are
characterized as debt. Moreover, unless the partnership were treated as
engaged in a trade or business, an individual'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 2% of
the individual's adjusted gross income and would be subject to reduction
under Section 68 of the Code if the individual's adjusted gross income
exceeded certain limits. As a result, the individual might be taxed on a
greater amount of income than the stated rate on the Offered Certificates.
In addition, assuming the partnership is a "publicly traded partnership"
(as defined in Section 469(k)(2) of the Code), even if it qualifies for
exemption from taxation as a corporation, all or a portion of any taxable
income allocated to a Certificate Owner that is a pension, profit-sharing
or employee benefit plan or other tax-exempt entity (including an
individual retirement account) may, under certain circumstances, constitute
"unrelated business taxable income" which generally would be taxable to the
holder under the Code. Finally, if the Pooling and Servicing Agreement were
to create a partnership, the partnership might be required to withhold
Federal income tax at a rate of up to 39.6% on the income allocable to
Foreign Investors. See "--Federal Income Tax Consequences to Foreign
Investors."
If the arrangement created by the Pooling and Servicing Agreement
were characterized as a partnership, it would be treated as a "publicly
traded partnership" if ownership interests in the partnership were traded
on an "established securities market" or "readily tradable on a secondary
market (or the substantial equivalent thereof)." A "publicly traded
partnership" is taxable as a corporation unless it satisfies certain income
requirements. The Trust will not be a "publicly traded partnership" taxable
as a corporation if 90% of the gross income of the Trust is interest other
than interest from a "financial business" and certain other requirements
are met. Because Treasury regulations do not clarify the meaning of a
"financial business" for this purpose, it is unclear whether the Trust will
meet such income requirements. If the arrangement were treated as a
publicly traded partnership taxable as a corporation, it would be subject
to Federal income tax at corporate tax rates on its taxable income
generated by ownership of the Receivables. Such a tax could result in
reduced distributions to Certificate Owners. Distributions to the
Transferor and, unless the Offered Certificates were treated as debt of
such corporation, to the Certificate Owners, would not be deductible in
computing the taxable income of the corporation. In addition, if the
Offered Certificates were not treated as debt of the corporation, all or a
portion of any such distributions would, to the extent of the current and
accumulated earnings and profits of such corporation, be treated as
dividend income to the Certificate Owners, and in the case of Certificate
Owners that are non-United States persons, might be subject to withholding
tax.
FEDERAL INCOME TAX CONSEQUENCES TO FOREIGN INVESTORS
Tax Counsel has advised that the Offered Certificates will be
classified as debt for Federal income tax purposes. The following
information describes the U.S. Federal income tax treatment of Foreign
Investors if the Offered Certificates are treated as debt. The term
"FOREIGN INVESTOR" means any Certificate Owner other than (1) a citizen or
resident of the United States, (2) a corporation, partnership or other
entity (other than an estate or trust) organized in or under the laws of
the United States or any political subdivision thereof, (3) an estate the
income of which is includible in gross income for U.S. Federal income tax
purposes, regardless of its source or (4) a trust (A) the primary
supervision over the administration of which, a court within the United
States is able to exercise and (B) all substantial decisions of which, one
or more U.S. persons have the authority to control.
Interest, including OID, if any, paid to a Foreign Investor will be
subject to U.S. withholding taxes at a rate of 30% unless (a) the income is
"effectively connected" with the conduct by such Foreign Investor of a
trade or business in the United States or (b) 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 Certificate Owner
and the U.S. person otherwise required to withhold the U.S. tax, complies
with applicable identification requirements (and the Certificate Owner does
not actually or constructively own 10% or more of the voting stock of
Yamaha, is not a bank receiving interest described in Section 881(c)(3)(A)
of the Code and is not a controlled foreign corporation with respect to
Yamaha). Applicable identification requirements will be satisfied if there
is delivered to a securities clearing organization (1) IRS Form W-8 signed
under penalties of perjury by the Certificate Owner stating that the
Certificate Owner is not a U.S. person and providing such Certificate
Owner's name and address, (2) IRS Form 1001 signed by the Certificate Owner
or such Certificate Owner's agent claiming exemption from withholding under
an applicable tax treaty, or (3) IRS Form 4224 signed by the Certificate
Owner or such owner's agent claiming exemption from withholding of tax on
income effectively connected with the conduct of a trade or business in the
United States; provided that in any such case (x) the applicable form is
delivered pursuant to applicable procedures and is properly transmitted to
the United States entity otherwise required to withhold tax and (y) none of
the entities receiving the form has actual knowledge that the Certificate
Owner is a U.S. person or that any certification on that form is false.
A Foreign Investor will not be subject to U.S. Federal income tax on
gain realized on the sale, exchange or redemption of such Offered
Certificate (other than amounts attributable to, and taxable as, accrued
stated interest) provided that (a) such gain is not effectively connected
with a trade or business carried on by the Certificate Owner in the United
States and (b) in the case of a Certificate Owner that is an individual,
such Certificate Owner is not present in the United States for 183 days or
more during the taxable year in which such sale, exchange or redemption
occurs.
If the IRS were to contend successfully that the Offered Certificates
are interests in a partnership (not taxable as a corporation), a
Certificate Owner that is 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 U.S. rates, including the branch profits tax in the case
of a Foreign Investor that is a foreign corporation, and would be subject
to withholding tax at a rate of up to 39.6% on its share of partnership
income. If the Offered Certificates were recharacterized as interests in a
"publicly traded partnership" taxable as a corporation, to the extent
distributions on the Offered Certificates were treated as dividends a
Foreign Investor would generally be subject to withholding tax on the gross
amount of such dividends at the rate of 30% unless such rate were reduced
by an applicable treaty.
BACKUP WITHHOLDING
Each Certificate Owner (other than an exempt holder such as a
corporation, tax exempt organization, qualified pension and profit sharing
trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide,
under penalty of perjury, a certificate containing the holder's name,
address, correct federal taxpayer identification number and a statement
that the holder is not subject to backup withholding. Should a nonexempt
Certificate Owner fail to provide the required certification, the Trust
will be required to withhold 31% of the amount otherwise payable to the
holder, as interest or OID, and remit the withheld amount to the IRS as a
credit against the holder's federal income tax liability. Information
returns will be sent annually to the IRS and to each Certificateholder of
any Class of Offered Certificates setting forth the amount of interest paid
(or OID accrued, if any) on the Offered Certificates held by nonexempt
Certificate Owners and the amount of tax withheld thereon.
NEW WITHHOLDING REGULATIONS
Recently, the Treasury Department issued new regulations (the "NEW
Regulations") which make certain modifications to the backup withholding
and information reporting rules described above. The New Regulations
attempt to unify certification requirements and modify reliance standards.
The New Regulations will generally be effective for payments made after
December 31, 1999, subject to certain transition rules. Each Certificate
Owner should consult his own tax advisor regarding the impact of the New
Regulations.
STATE, LOCAL AND FOREIGN TAXATION
The discussion above does not address the tax treatment of the Trust,
the Offered Certificates or the Certificate Owners under state and local
tax laws or foreign tax laws. Prospective investors are urged to consult
their own tax advisors regarding the state and local tax treatment of the
Trust and the Offered Certificates, and the consequences of purchase,
ownership or disposition of the Offered Certificates under any state or
local tax law or any foreign tax law, if applicable.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and Section 4975 of the Code prohibit a pension,
profit-sharing, or other employee benefit plan from engaging in certain
transactions involving "plan assets" with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to the plan. ERISA also imposes certain duties on persons who are
fiduciaries of plans subject to ERISA and prohibits certain transactions
between a plan and parties in interest with respect to such plans. Under
ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of a plan is considered to be a
fiduciary of such plan (subject to certain exceptions not here relevant). A
violation of these "prohibited transaction" rules may generate excise tax
and other liabilities under ERISA and the Code for such persons.
Pursuant to a regulation (the "PLAN ASSET REGULATION") issued by the
Department of Labor ("DOL") concerning the definition of what constitutes
the "plan assets" of an employee benefit plan subject to ERISA or the Code,
or an individual retirement account (an "IRA") (collectively referred to as
"BENEFIT PLANS"), the assets and properties of certain entities in which a
Benefit Plan makes an equity investment could be deemed to be assets of the
Benefit Plan in certain circumstances. Accordingly, if Benefit Plans
purchase Offered Certificates, the Trust could be deemed to hold plan
assets unless an exception under the Plan Asset Regulation is applicable to
the Trust.
Under the terms of the Plan Asset Regulation, if the Trust were
deemed to hold "plan assets" by reason of a Benefit Plan's investment in an
Offered Certificate, such "plan assets" would include an undivided interest
in the assets of the Trust. In addition, the persons providing services
with respect to the assets of the Trust, including the Servicer and the
Trustee, may be subject to the fiduciary responsibility provisions of Title
I of ERISA and be subject to the prohibited transaction provisions of ERISA
and Section 4975 of the Code with respect to transactions involving such
assets. Certain exemptions from the prohibited transaction rules may be
applicable, however.
The DOL granted to Chase Securities, Inc. an administrative exemption
(Prohibited Transaction Exemption 90-31) (such exemption to be hereinafter
referred to as the "EXEMPTION") from certain of the prohibited transaction
rules of ERISA with respect to the initial purchase, the holding, and the
subsequent resale by Benefit Plans of certificates in asset backed
pass-through trusts that consist of certain receivables, loans, and other
obligations that meet the conditions and requirements of the Exemption. The
Transferor believes that the assets covered by the Exemption include
receivables such as the Receivables. The Exemption will apply to the
acquisition, holding and resale of the Offered Certificates by a Benefit
Plan, provided that specified conditions (certain of which are described
below) are met. The Transferor believes that the Exemption will apply to
the acquisition and holding of Offered Certificates by Benefit Plans and
that all conditions of the Exemption other than those with the control of
the investors have been or will be met.
Among the conditions which must be satisfied for the Exemption to
apply to the acquisition by a Benefit Plan of the Offered Certificates are
the following (each of which the Transferor believes has been or will be
met in connection with the Offered Certificates):
(1) The acquisition of the Offered Certificates by a Benefit Plan
is on terms (including the price for the Offered Certificates) that
are at least as favorable to the Benefit Plan as they would be in an
arm's-length transaction with an unrelated party;
(2) The rights and interests evidenced by the Offered Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the Trust;
(3) The Offered Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of
the three highest generic rating categories from either Standard &
Poor's, Moody's, Duff & Phelps Inc. or Fitch IBCA, Inc.; and
(4) The sum of all payments made to the Underwriter in connection
with the distribution of the Offered Certificates represents not more
than reasonable compensation for underwriting the Offered
Certificates. The sum of all payments made to and retained by the
Transferor pursuant to the sale of the Receivables to the Trust
represents not more than the fair market value of such Receivables.
The sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's
services under the Pooling and Servicing Agreement and reimbursement
of the Servicer's reasonable expenses in connection therewith.
In addition, it is a condition that the Benefit Plan investing in the
Offered Certificates be an "accredited investor" as defined in Rule
501(a)(1) of Regulation D of the Commission under the Securities Act.
The Exemption does not apply to the acquisition and holding of
Offered Certificates by Benefit Plans sponsored by the Transferor, the
Underwriter, the Trustee, the Servicer, any obligor with respect to
Receivables included in the Trust constituting more than 5% of the
aggregate unamortized principal balance of the assets in the Trust, or any
affiliate of such parties. As of the date hereof, no obligor with respect
to Receivables included in the Trust constitutes more than 5% of the
aggregate unamortized principal balance of the Trust.
Any Benefit Plan fiduciary that proposes to cause a Benefit Plan to
purchase any Class of Offered Certificates should consult with its counsel
with respect to the potential applicability of ERISA and the Code to such
investments and whether the Plan Asset Regulation or the Exemption or any
statutory or administrative exemption would be applicable and determine on
its own whether all conditions have been satisfied.
Moreover, each Benefit Plan fiduciary should determine whether, under
the general fiduciary standards of investment prudence and diversification,
an investment in the Offered Certificates is appropriate for the Benefit
Plan, taking into account the overall investment policy of the Benefit Plan
and the composition of the Benefit Plan's investment portfolio.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "UNDERWRITING AGREEMENT"), the Transferor has agreed to sell
to the Underwriter, and the Underwriter has agreed to purchase from
the Transferor, the Offered Certificates.
Under the terms and conditions of the Underwriting Agreement, the
Underwriter is committed to take and pay for all the Offered Certificates
if any are taken.
The Transferor has been advised by the Underwriter that it proposes
initially to offer the Offered Certificates to the public at the public
offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of _____% of
the principal amount of the Offered Certificates. The Underwriter may allow
and such dealers may reallow to other dealers a discount not in excess of
____% of such principal amount. After the initial public offering, such
public offering price, concession and reallowance may be changed. The
Underwriter has agreed to reimburse the Transferor for certain expenses
incurred by the Transferor in connection with the issuance of the Offered
Certificates. The transaction expenses payable by the Transferor are
estimated to be $__________.
Until the distribution of the Offered Certificates is completed,
rules of the Commission may limit the ability of the Underwriter and
certain selling group members to bid for and purchase the Offered
Certificates. As an exception to these rules, the Underwriter is permitted
to engage in certain transactions that stabilize the price of the Offered
Certificates. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Offered
Certificates.
If the Underwriter creates a short position in the Offered
Certificates in connection with this offering, (i.e., the Underwriter sells
more Offered Certificates than are set forth on the cover page of this
Prospectus), the Underwriter may reduce that short position by purchasing
Offered Certificates in the open market.
The Underwriter may also impose a penalty bid on certain selling
group members. This means that if the Underwriter purchases Offered
Certificates in the open market to reduce the Underwriter's short position
or to stabilize the price of the Offered Certificates, the Underwriter may
reclaim the amount of the selling concession from any selling group member
who sold those Offered Certificates as part of the offering.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. The imposition of
a penalty bid might also have an effect on the price of a security to the
extent that it were to discourage resales of the security.
Neither the Transferor nor the Underwriter makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Offered
Certificates. In addition, neither the Transferor nor the Underwriter makes
any representation that the Underwriter will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.
In the ordinary course of business, the Underwriter and its
affiliates have engaged and may engage in investment banking and commercial
banking transactions with the Servicer and its affiliates.
The Underwriting Agreement provides that YMRC will indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act, or contribute to payments the Underwriter may be required
to make in respect thereof.
Upon receipt of a request by an investor who has received an
electronic Prospectus from the Underwriter or a request by such investor's
representative within the period during which there is an obligation to
deliver a Prospectus, the Transferor or the Underwriter will promptly
deliver, or cause to be delivered, without charge, a paper copy of the
Prospectus.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed
upon for the Transferor and the Servicer by Giancarlo & Gnazzo, A
Professional Corporation, San Francisco, California, and for the
Underwriter by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York. Certain federal income tax and other matters will be passed upon for
the Transferor, the Servicer and the Trust by Giancarlo & Gnazzo, A
Professional Corporation, San Francisco, California.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued under the limited
circumstances described under "Description of the Offered
Certificates--Issuance of Definitive Certificates Upon the Occurrence of
Certain Circumstances," all notices, reports and statements to
Certificateholders, including any monthly and annual reports containing
information concerning the Trust and the Receivables, will be prepared by
the Servicer and sent on behalf of the Trust only to DTC or Cede, as
nominee of DTC and registered holder of the Offered Certificates, pursuant
to the Pooling and Servicing Agreement. See "Description of the Offered
Certificates--Reports to Certificateholders," "--Evidence as to
Compliance," "--Book Entry Registration of the Offered Certificates" and "-
- -Issuance of Definitive Certificates Upon the Occurrence of Certain
Circumstances." Such notices, reports and statements will not contain
audited financial statements with respect to the Trust. The Servicer also
does not intend to send any financial reports of the Servicer or the
Transferor to Certificateholders. The Trust will file or cause to be filed
with the Commission such periodic reports with respect to the Trust as may
be required under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the rules and regulations of the Commission
thereunder.
WHERE YOU CAN FIND MORE INFORMATION
The Transferor filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement (the "REGISTRATION STATEMENT") under
the Securities Act relating to the Offered Certificates. This prospectus is
part of the registration statement, but the registration statement
includes additional information.
The Trust will file or cause to be filed with the Commission such
periodic reports with respect to the Trust as may be required under the
Exchange Act, and the rules and regulations of the Commission thereunder.
You may read and copy any notices, reports, statements or other
information the Trust or the Servicer files or causes to be filed at the
Commission's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can request copies of these documents, upon payment of a
duplicating fee, by writing to the Commission. Please call the Commission
at (800) SEC-0330 for further information on the operation of the public
reference rooms. Our filings with the Commission are also available to the
public on the Commission's Internet site (http://www.sec.gov), which
contains reports, proxy and information statements, and other information
regarding issuers that file publicly with the Commission.
INDEX OF PRINCIPAL TERMS
PAGE
Accounts.................................................................17
Accumulation Periods.....................................................26
Accumulation Shortfall...................................................26
Adjustment Payment.......................................................54
Available Subordinated Amount............................................49
Available Funds Rate.....................................................28
Bankruptcy Code..........................................................16
Benefit Plans............................................................73
Business Day.............................................................25
Cede.....................................................................30
Cedel....................................................................30
Cedel Participants.......................................................32
Certificateholders.......................................................29
Certificateholders' Interest.............................................29
Certificate Owners.......................................................30
Certificate Rates........................................................28
Certificates.............................................................35
Class....................................................................35
Class A Adjusted Invested Amount.........................................45
Class A Certificate Rate.................................................28
Class A Certificateholders...............................................17
Class A Certificates.....................................................27
Class A Expected Final Payment Date......................................25
Class A Initial Invested Amount..........................................27
Class A Invested Amount..................................................45
Class A Adjusted Invested Amount.........................................45
Class A Investor Charge-Off..............................................54
Class A Monthly Interest.................................................52
Class A Monthly Principal................................................52
Class B Certificate Rate.................................................28
Class B Certificateholders...............................................17
Class B Certificates.....................................................27
Class B Expected Final Payment Date......................................25
Class B Initial Invested Amount..........................................28
Class B Invested Amount..................................................46
Class B Adjusted Invested Amount.........................................46
Class B Investor Charge-Off..............................................54
Class B Monthly Interest.................................................52
Class B Monthly Principal................................................52
Class C Certificate Rate.................................................28
Class C Certificateholders...............................................29
Class C Certificates.....................................................35
Class C Initial Invested Amount..........................................28
Class C Invested Amount..................................................46
Class C Investor Charge-Off..............................................54
Class C Monthly Interest.................................................52
Class C Monthly Principal................................................52
Closing Date.............................................................28
Code.....................................................................68
Collection Account.......................................................42
Collection Period........................................................23
Collections..............................................................47
Commission...............................................................76
Controlled Accumulation Amount...........................................26
Controlled Accumulation Period...........................................26
Controlled Deposit Amount................................................26
Cooperative..............................................................32
DBNA.....................................................................16
Dealer Replacement Accounts..............................................41
Dealers..................................................................16
Defaulted Receivables....................................................53
Definitive Certificates..................................................34
Depositary...............................................................32
Determination Date.......................................................41
Deutsche Financial.......................................................16
Direct Participants......................................................30
Distribution Date........................................................28
DOL......................................................................73
DTC......................................................................30
DTC Participants.........................................................30
Early Amortization Event.................................................55
Early Amortization Period................................................55
Eligible Deposit Account.................................................42
Eligible Institution.....................................................42
Eligible Investments.....................................................43
Eligible Receivable......................................................40
Enhancement..............................................................27
ERISA....................................................................73
Euroclear................................................................32
Euroclear Operator.......................................................32
Euroclear Participants...................................................32
Excess Principal Collections.............................................48
Exchange.................................................................36
Exchange Act.............................................................76
Exchangeable Transferor Certificate......................................28
Exemption................................................................73
Expected Final Payment Dates.............................................25
Final Termination Date...................................................55
Final Series Termination Date............................................55
Fixed Allocation Percentage..............................................45
Floating Allocation Percentage...........................................45
Foreign Investor.........................................................72
Golf Cart Transaction....................................................17
Holders..................................................................34
Indirect Participants....................................................30
Industry.................................................................33
Ineligible Receivable....................................................38
Interest Accrual Period..................................................28
Invested Amount..........................................................46
Invested Percentage......................................................27
Investor Default Amount..................................................53
IRA......................................................................73
IRS......................................................................69
ITT......................................................................16
LIBOR Determination Date.................................................28
London Banking Day.......................................................29
Minimum Transferor Percentage............................................44
Minimum Trust Principal Component........................................44
Monthly Servicer Report..................................................61
Monthly Servicing Fee....................................................59
Moody's..................................................................45
New Accounts.............................................................41
New Products.............................................................18
New Regulations..........................................................73
Offered Certificates.....................................................27
OID......................................................................69
OID Regulations..........................................................70
Omnibus Proxy............................................................30
Paying Agent.............................................................31
Payment Date Statement...................................................62
Pool Balance.............................................................22
Pooling and Servicing Agreement..........................................17
Plan Asset Regulation....................................................73
Principal Collections....................................................47
Principal Funding Account................................................43
Principal Shortfalls.....................................................48
Principal Terms..........................................................36
Products.................................................................18
Product Security.........................................................18
Proposal.................................................................69
Rapid Accumulation Period................................................26
Rating Agency............................................................34
Receivables..............................................................17
Receivables Purchase Agreement...........................................16
Receivables Sale Agreement...............................................16
Record Date..............................................................29
Reference Banks..........................................................29
Registration Statement...................................................76
Removed Accounts.........................................................22
Revolving Period.........................................................29
Sales Programs...........................................................20
Scheduled Payment Plans..................................................20
Securities Act...........................................................37
Series...................................................................17
Series 1999-1............................................................27
Series Undistributed Principal Collections...............................52
Service Transfer.........................................................60
Servicer.................................................................15
Servicer Cash Collateral Account.........................................44
Servicer Default.........................................................60
Servicing Agreement......................................................60
Servicing Fee............................................................59
Servicing Fee Percentage.................................................59
Special Funding Account..................................................44
Standard & Poor's........................................................45
Supplement...............................................................36
Systems..................................................................33
Tax Counsel..............................................................69
Telerate Page 3750.......................................................29
Terms and Conditions.....................................................33
Transfer Date............................................................44
Transferor...............................................................15
Transferor Amount........................................................42
Transferor Deposit Amount................................................38
Transferor Interest......................................................28
Transferor Percentage....................................................46
Transferor Subordination Event...........................................48
Trust....................................................................17
Trust Principal Component................................................38
Trustee..................................................................17
UCC......................................................................30
Undistributed Principal Collections......................................48
Underwriter..............................................................35
Underwriting Agreement...................................................74
U.S. Person..............................................................83
U.S. Wholesale Portfolio.................................................18
Used Products............................................................18
Yamaha...................................................................15
YMRC.....................................................................15
Yield Collections........................................................47
Yield Factor.............................................................48
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A
Certificates and Class B Certificates will be available only in book-entry
form. Investors in the Offered Certificates may hold such Offered
Certificates through any of DTC, Cedel or Euroclear. The Offered
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 Offered
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 (i.e., seven calendar day
settlement).
Secondary market trading between investors holding Offered
Certificates directly 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 Offered Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedel
and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Offered Certificates will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement
All Offered Certificates will be held in book-entry form by DTC in
the name of Cede & Co. as nominee of DTC. Investors' interests in the
Offered Certificates will be represented through financial institutions
acting on their behalf as DTC Participants. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts
as DTC Participants.
Investors electing to hold their Offered Certificates through DTC
will follow the settlement practices applicable to U.S. corporate debt
obligations. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Offered 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. Offered 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.
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
Offered Certificates are to be transferred from the account of a DTC
Participant to the accounts 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 prior to settlement. Cedel or Euroclear, as the case may be, will
instruct the respective Depositary to receive the Offered Certificates
against payment. Payment will include interest accrued on the Offered
Certificates from and including the last coupon payment date to and
excluding the settlement date, which will be on the basis of a 360-day year
and the actual number of days elapsed. Payment will then be made by the
Depositary to the DTC Participant's account against delivery of the Offered
Certificates. After settlement has been completed, the Offered 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 Offered Certificates credit will
appear the next day (European time) and the cash debit will be back-valued
to, and the interest on the Offered Certificates will accrue from, the
value date (which would be the preceding day when settlement occurred in
New York). If settlement is not completed on the intended value date (i.e.,
the trade fails), the Cedel or Euroclear cash debit will be valued instead
as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
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 Offered 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 allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedel Participants or Euroclear
Participants purchasing Offered Certificates would incur overdraft charges
for one day, assuming they cleared the overdraft when the Offered
Certificates were credited to their accounts. However, interest on the
Offered Certificates would accrue from the value date. Therefore, in many
cases the investment income on the Offered Certificates earned during that
one-day period may substantially reduce or offset the amount of such
overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Offered
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 Participants 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 Offered 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 prior to settlement. In
these cases, Cedel or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Offered Certificates to the DTC Participant's
account against payment. Payment will include interest accrued on the
Offered Certificates from and including the last coupon payment date to and
excluding the settlement date, which will be on the basis of a 360-day year
and the actual number of days elapsed. The payment will then be reflected
in the account of the Cedel Participant or Euroclear Participant the
following day, and receipt of the cash proceeds in the Cedel Participant's
or Euroclear Participant's account would be back-valued to the value date
(which would be the preceding day, when settlement occurred in New York).
Should the Cedel Participant or Euroclear Participant have a line of credit
with its respective clearing system and elect to be in debt in anticipation
of receipt of the sale proceeds in its account, the back-valuation will
extinguish any overdraft charges incurred over that one-day period. If
settlement is not completed on the intended value date (i.e., the trade
fails), receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Offered 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 Offered Certificates in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the Offered 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.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Offered Certificates holding securities through
Cedel or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original 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 such beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (b) such beneficial
owner takes one of the following steps to obtain an exemption or reduced
tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Offered Certificates that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate
of Foreign Status). If the information shown on Form W-8 changes, a new
Form W-8 must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at
that rate unless the filer alternatively files Form W-8. Form 1001 may be
filed by the Certificate Owner or his agent.
Exemption 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 Certificate Owner
or, in the case of a Form 1001 or a Form 4224 filer, his agent, files by
submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. PERSON" means (a) a citizen or resident of the United
States, (b) a corporation or partnership (including an entity treated as a
corporation or partnership) organized in or under the laws of the United
States or any state or the District of Columbia (unless, in the case of a
partnership, Treasury regulations provide otherwise), (c) an estate the
income of which is includible in gross income for United States tax
purposes, regardless of its source, or (d) a trust if a U.S. court is able
to exercise primary supervision over the administration of such trust and
one or more U.S. persons has 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 Offered Certificates. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of
the Offered Certificates.
Recent Treasury regulations could affect the procedures to be
followed by a non-U.S. Person in complying with the United States federal
withholding, backup withholding and information reporting rules. The
regulations generally will be effective for payments made after December
31, 1999. Prospective investors are advised to consult their own tax
advisors regarding the effect, if any, of the regulations on the purchase,
ownership and disposition of the Offered Certificates.
PRINCIPAL OFFICE OF
YAMAHA MOTOR RECEIVABLES CORPORATION
6555 Katella Avenue
Cypress, CA 90630
TRUSTEE
The Fuji Bank and Trust Company
Two World Trade Center
81st Floor
New York, New York 10048
LEGAL ADVISOR TO THE TRANSFEROR
AS TO UNITED STATES LAW
Giancarlo & Gnazzo,
A Professional Corporation
625 Market Street
11th Floor
San Francisco, California 94105
LEGAL ADVISOR TO THE UNDERWRITER
AS TO UNITED STATES LAW
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS TO THE TRANSFEROR
PriceWaterhouseCoopers LLP
575 Anton Boulevard
Suite 1100
Costa Mesa, California 92626
YAMAHA MOTOR MASTER TRUST
ISSUER
SERIES 1999-1
$_________
FLOATING RATE CLASS A
ASSET-BACKED CERTIFICATES
$_________
FLOATING RATE CLASS B
ASSET-BACKED CERTIFICATES
YAMAHA MOTOR RECEIVABLES CORPORATION
TRANSFEROR
YAMAHA MOTOR CORPORATION, U.S.A.
SERVICER
CHASE SECURITIES INC.
UNDERWRITER
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THESE CERTIFICATES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS AS OF
ANY DATE OTHER THAN THE DATE STATED ON THE COVER OF THIS PROSPECTUS.
DEALERS WILL DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS OF THESE
CERTIFICATES AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
IN ADDITION, ALL DEALERS SELLING THESE CERTIFICATES WILL DELIVER A
PROSPECTUS UNTIL ___________, 1999.
---------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fee............................................. $ *
Printing and Engraving....................................... $ *
Trustee's Fee................................................ $ *
Legal Fees and Expenses...................................... $ *
Blue Sky Fees and Expenses.................................. $ *
Accountant's Fees and Expenses............................... $ *
Rating Agency Fees........................................... $ *
Miscellaneous Fees and Expenses.............................. $ *
Total Expenses....................................... $
=============
- -----------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware provides as
follows:
145 Indemnification of Officers, Directors, Employees and Agents;
Insurance.
(a) A corporation shall have power 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 (other than an action by or
in the right of the corporation) by reason of the fact that the
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 actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted
in good faith and in a manner the person 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 the person's 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 the person 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 reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power 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 or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact
that the 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) actually and reasonably
incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a
manner the person 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 present or former director or officer of
a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (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 present or former director, officer, employee
or agent is proper in the circumstances because the person has met
the applicable standard of conduct set forth in subsections (a) and
(b) of this section. Such determination shall be made, with respect
to a person who is a director or officer at the time of
determination, (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a
quorum, (2) by a committee of such directors designated by majority
vote of such directors, even though less than a quorum, (3) if there
are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (4) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative 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 an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions,
if any, as the corporation deems appropriate.
(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
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office.
(g) A 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 such person and
incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have
the power to indemnify such person against such liability under this
section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under this section
with respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer, employee
or agent with respect to an employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests
of the corporation" as referred to in this section.
(j) 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 a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a
corporation's obligation to advance expenses (including attorneys'
fees).
Article XII of the Certificate of Incorporation of Yamaha Motor
Receivables Corporation provides as follows:
(a) 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 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,
shall be indemnified and held harmless by the Corporation to the
fullest extent legally permissible under the General Corporation Law
of the State of Delaware, as amended from time to time, against all
expenses, liabilities and losses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding.
(b) 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 paragraph
(a) of this Article XII, or in defense of any claim, issue or matter
therein, he shall be indemnified by the Corporation against expenses
(including attorneys' fees) actually and reasonably incurred by him
in connection therewith without the necessity of any action being
taken by the Corporation other than the determination, in good faith,
that such defense has been successful. In all other cases wherein
indemnification is provided by this Article, unless ordered by a
court, indemnification 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 specified in this Article XII. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (ii) 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 (iii) by the
holders of a majority of the shares of capital stock of the
Corporation entitled to vote thereon.
(c) The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or
its shall not, of itself, create a presumption that the person
seeking indemnification did not act in good faith and in a manner
which 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 reasonable cause to believe that his
conduct was unlawful. Entry of a judgment by consent as part of a
settlement shall not be deemed a final adjudication of liability for
negligence or misconduct in the performance of duty, nor of any other
issue or matter.
(d) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit
or proceeding as authorized by the Board of Directors in the specific
case upon receipt of an undertaking by or on behalf of such director
or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation.
Expenses (including attorneys' fees) incurred by other employees or
agents of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be
paid by the Corporation upon such terms and conditions, if any, as
the Board of Directors deems appropriate.
(e) No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary
duty by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or
repeal of this Section (e) to Article XII shall apply to or have any
effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
(f) The indemnification and advancement of expenses provided by
this Article XII shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement may be entitled
under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an official capacity and
as to action in another capacity while holding such office, and shall
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.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
NUMBER DESCRIPTION
1.1 -- Form of Underwriting Agreement*
3.1 -- Certificate of Incorporation of the Transferor**
3.2 -- Bylaws of the Transferor***
4.1 -- Form of Master Pooling and Servicing Agreement among the
Transferor, the Servicer and the Trustee****
4.2 -- Form of Series 1999-1 Supplement to the Master Pooling and
Servicing Agreement*
5.1 -- Opinion of Giancarlo & Gnazzo, A Professional Corporation,
re: Legality*
8.1 -- Opinion of Giancarlo & Gnazzo, A Professional Corporation,
re: Tax Matters*
10.1 -- Form of Receivables Purchase Agreement between Yamaha Motor
Corporation, U.S.A. and the Transferor*****
10.2 -- Form of Servicing Agreement between Yamaha Motor Corporation,
U.S.A. and ITT Commercial Finance Corp.******
23.1 -- Consent of Giancarlo & Gnazzo, A Professional Corporation
(contained in Exhibit 5.1)*
23.2 -- Consent of Giancarlo & Gnazzo, A Professional Corporation
(contained in Exhibit 8.1)*
24. -- Powers of Attorney*
- --------------
* To be filed by amendment.
** Incorporated by reference to Exhibit 3.1 of Registration Statement
No. 33-72806.
*** Incorporated by reference to Exhibit 3.2 of Registration Statement
No. 33-72806.
**** Incorporated by reference to Exhibit 4.1 of Registration Statement
No. 33-72806.
***** Incorporated by reference to Exhibit 10.1 of Registration Statement
No. 33-72806.
****** Incorporated by reference to Exhibit 10.2 of Registration Statement
No. 33-72806.
(b) Financial Statement Schedules
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriter at the closing specified in
the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit
prompt delivery to each
purchaser.
(b) 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.
(c) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the
Securities Act of 1933, each post effective amendment that contains a
form of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(e) (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; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Cypress, State of California, on March 8, 1999.
YAMAHA MOTOR RECEIVABLES
CORPORATION
By: /s/ Yoshio Mabuchi
-------------------------------
Yoshio Mabuchi
Director and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ Yoshio Mabuchi Director and President March 8, 1999
--------------------- (principal executive
Yoshio Mabuchi officer)
/s/ Daisuke Ijuin Director, Secretary and March 8, 1999
--------------------- Treasurer (principal
Daisuke Ijuin financial officer and
principalaccounting
officer)
/s/ Russell D. Jura Director and Assistant March 8, 1999
---------------------- Secretary
Russell D. Jura
/s/ Alan Harnisch Director March 8, 1999
----------------------
Alan Harnisch
/s/ Walter G. Pettey Director March 8, 1999
----------------------
Walter G. Pettey
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of the Transferor**
3.2 Bylaws of the Transferor***
4.1 Form of Master Pooling and Servicing Agreement among the
Transferor, the Servicer, and the Trustee****
4.2 Form of Series 1999-1 Supplement to the Master Pooling and
Servicing Agreement*
5.1 Opinion of Giancarlo & Gnazzo, A Professional Corporation,
re: Legality*
8.1 Opinion of Giancarlo & Gnazzo, A Professional Corporation,
re: Tax Matters*
10.1 Form of Receivables Purchase Agreement between Yamaha Motor
Corporation, U.S.A. and the Transferor*****
10.2 Form of Servicing Agreement between Yamaha Motor Corporation,
U.S.A. and ITT Commercial Finance Corp.******
23.1 Consent of Giancarlo & Gnazzo, A Professional Corporation
(contained in Exhibit 5.1)*
23.2 Consent of Giancarlo & Gnazzo, A Professional Corporation
(contained in Exhibit 8.1)*
24. Powers of Attorney*
- ----------------
* To be filed by amendment.
** Incorporated by reference to Exhibit 3.1 of Registration Statement
No. 33-72806.
*** Incorporated by reference to Exhibit 3.2 of Registration Statement
No. 33-72806.
**** Incorporated by reference to Exhibit 4.1 of Registration Statement
No. 33-72806.
***** Incorporated by reference to Exhibit 10.1 of Registration Statement
No. 33-72806.
****** Incorporated by reference to Exhibit 10.2 of Registration Statement
No. 33-72806.
