AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 2000
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 2000-1
(Issuer With Respect To Certificates)
--------------------------------
YAMAHA MOTOR RECEIVABLES CORPORATION
(Originator Of The Trust Described Herein)
(Exact Name Of Registrant As Specified In Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 33-0592719
(State or other jurisdiction of (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
incorporation or organization) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>
6555 KATELLA AVENUE
CYPRESS, CALIFORNIA 90630
(714) 761-7500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------------------
RUSSELL D. JURA, ESQ.
SENIOR COUNSEL
6555 KATELLA AVENUE, SUITE A
CYPRESS, CALIFORNIA 90630
(714) 761-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------------
Copies To:
MELANIE GNAZZO, ESQ. KENNETH A. WRIGHT, ESQ.
GNAZZOTHILL, P.C. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
625 MARKET STREET, 11TH FLOOR FOUR TIMES SQUARE
SAN FRANCISCO, CALIFORNIA 94105 NEW YORK, NEW YORK 10036
---------------------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
---------------------------------
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, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement number for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. |_|
---------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
FLOATING RATE SERIES 2000-1
ASSET-BACKED CERTIFICATES.. $1,000,000 100% $1,000,000 $264.00
========================== ================ ================ ================ ================
(1) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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
(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, 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 present or former 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, such person shall be indemnified
by the Corporation against expenses (including attorneys' fees)
actually and reasonably incurred by such person 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 present or former director, officer, employee
or agent is proper in the circumstances because the person has met
the applicable standard of conduct specified in this Article XII.
Such determination shall be made, with respect to a person who is a
director or officer at the time of such 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, or (2) by a
committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no
such directors, or if such directors so direct, 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 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. 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 such person is entitled to be indemnified by the
Corporation. Expenses (including attorneys' fees) incurred by former
directors and officers or 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 Corporation 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.
(g) Notwithstanding the foregoing provisions of this Article
XII, amounts payable by the Corporation in accordance with this
Article XII shall be payable solely to the extent of funds actually
received by the Corporation that are in excess of funds necessary to
satisfy the obligations of the Corporation pursuant to the Agreement.
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 (1)
3.1 -- Amended and Restated Certificate of Incorporation of the
Transferor (2)
3.2 -- Bylaws of the Transferor (3)
4.1 -- Form of Amended and Restated Master Pooling and Servicing
Agreement among the Transferor, the Servicer and the Trustee (4)
4.2 -- Form of Series 2000-1 Supplement to the Master Pooling and
Servicing Agreement (1)
5.1 -- Opinion of GnazzoThill, P.C. re: Legality (1)
8.1 -- Opinion of GnazzoThill, P.C. re: Tax Matters (1)
10.2 -- Form of Receivables Sale Agreement between Yamaha Motor
Corporation, U.S.A. and Deutsche Financial Services Corporation (6)
10.3 -- Form of Receivables Purchase Agreement between Yamaha Motor
Corporation, U.S.A. and the Transferor (7)
23.1 -- Consent of GnazzoThill, P.C. (contained in Exhibit 5.1) (1)
23.2 -- Consent of GnazzoThill, P.C. (contained in Exhibit 8.1) (1)
24. -- Powers of Attorney (included on page II- )
----
(1) To be filed by amendment.
(2) Incorporated by reference to Exhibit 3.1 of Registration
Statement No. 333-74069.
(3) Incorporated by reference to Exhibit 3.2 of Registration
Statement No. 33-72806.
(4) Incorporated by reference to Exhibit 4.1 of Registration
Statement No. 333-74069.
(5) Incorporated by reference to Exhibit 10.1 of Registration
Statement No. 33-72806.
(6) Incorporated by reference to Exhibit 10.2 of Registration
Statement No. 333-74069.
(7) Incorporated by reference to Exhibit 10.3 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 September 11, 2000.
YAMAHA MOTOR RECEIVABLES
CORPORATION
By: /s/ Shohei Kato
------------------------------
Shohei Kato
Director and President
Each person whose signature appears below hereby constitutes and
appoints Russell D. Jura his true and lawful attorney-in-fact and agent,
with full powers of substitution, for him and in his name, place and stead,
in any and all capacities, to sign and to file any and all amendments,
including post-effective amendments, to this Registration Statement with
the Securities and Exchange Commission, granting to said attorney-in-fact
full power and authority to perform any other act on behalf of the
undersigned required to be done in connection therewith.
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/ Shohei Kato Director and President September 11, 2000
----------------- (principal executive officer)
Shohei Kato (principal financial officer
and principal accounting officer)
/s/ Russel D. Jura Director and Assistant September 11, 2000
------------------- Secretary
Russell D. Jura
/s/ Alan Harnish Director September 11, 2000
------------------
Alan Harnisch
/s/ Walter G. Pettey Director September 11, 2000
-------------------
Walter G. Pettey
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
1.1 Form of Underwriting Agreement (1)
3.1 Amended and Restated Certificate of Incorporation
of the Transferor (2)
3.2 Bylaws of the Transferor (3)
4.1 Form of Amended and Restated Master Pooling and
Servicing Agreement among the
Transferor, the Servicer, and the Trustee (4)
4.2 Form of Series 2000-1 Supplement to the Master
Pooling and Servicing Agreement (1)
5.1 Opinion of GnazzoThill, P.C. re: Legality (1)
8.1 Opinion of GnazzoThill, P.C. re: Tax Matters (1)
10.1 Form of Receivables Purchase Agreement between
Yamaha Motor Corporation, U.S.A. and the
Transferor (5)
10.2 Form of Receivables Sale Agreement between
Yamaha Motor Corporation, U.S.A. and Deutsche
Financial Services Corporation. (6)
10.3 Form of Servicing Agreement between Yamaha
Motor Corporation, U.S.A. and Deutsche
Financial Services Corporation (7)
23.1 Consent of GnazzoThill, P.C. (contained in
Exhibit 5.1) (1)
23.2 Consent of GnazzoThill, P.C. (contained in
Exhibit 8.1) (1)
24. Powers of Attorney (included on page II-9)
(1) To be filed by amendment.
(2) Incorporated by reference to Exhibit 3.1 of Registration
Statement No. 333-74069.
(3) Incorporated by reference to Exhibit 3.2 of Registration
Statement No. 33-72806.
(4) Incorporated by reference to Exhibit 4.1 of Registration
Statement No. 333-74069.
(5) Incorporated by reference to Exhibit 10.1 of Registration
Statement No. 33-72806.
(6) Incorporated by reference to Exhibit 10.2 of Registration
Statement No. 333-74069.
(7) Incorporated by reference to Exhibit 10.3 of Registration
Statement No. 33-72806.
[Flag]
The information in this prospectus is not complete and may be changed. We
cannot sell these certificates until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these certificates and is not soliciting an offer to buy
these certificates in any state where the offer of sale is not permitted.
SUBJECT TO COMPLETION, DATED ________________, 2000
Prospectus
$_______________ [fin.yamaha]logo.eps
YAMAHA MOTOR MASTER TRUST
FLOATING RATE SERIES 2000-1, CLASS A ASSET-BACKED CERTIFICATES
FLOATING RATE SERIES 2000-1, CLASS B ASSET-BACKED CERTIFICATES
YAMAHA MOTOR RECEIVABLES CORPORATION, Transferor
YAMAHA MOTOR CORPORATION, U.S.A., Servicer
<TABLE>
<CAPTION>
THE TRUST IS OFFERING: Class A Certificates Class B Certificates
-------------------- --------------------
<S> <C> <C>
Principal Amount $ ___________ $ __________
Price $___________ (______%) $__________ (_______%)
Underwriter's Commissions $ _______ (____%) $ ______ (____%)
Proceeds to the Issuer $___________ (___%) $__________ (_____%)
Interest Rate (subject to cap) one-month LIBOR + one-month LIBOR +
Interest Distribution Dates _____% p.a. _____% p.a.
monthly on the 15th monthly on the 15th
or the first business or the first business
day after the 15th day after the 15th
First Interest Distribution Date _____________, 2000 _____________, 2000
Expected Final Payment Date __________________ __________________
distribution date distribution date
o The trust is also issuing $__________ principal amount of Class C Certificates.
The Class C Certificates are not being offered by this prospectus.
</TABLE>
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 OR ANY OTHER ENTITY.
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 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 ______________, 2000.
TABLE OF CONTENTS
WHERE TO FIND INFORMATION IN THIS PROSPECTUS.................................5
SUMMARY OF TERMS.............................................................6
STRUCTURAL SUMMARY...........................................................7
SELECTED TRUST PORTFOLIO SUMMARY DATA.......................................10
RISK FACTORS................................................................11
THE TRANSFEROR AND TRANSACTION PARTIES......................................16
YAMAHA MOTOR RECEIVABLES CORPORATION................................16
YAMAHA MOTOR CORPORATION, U.S.A.....................................16
THE TRUST ..........................................................16
USE OF PROCEEDS.............................................................17
THE DEALER FLOORPLAN FINANCING BUSINESS.....................................17
CREDIT UNDERWRITING PROCESS.........................................17
CREATION OF RECEIVABLES.............................................18
PAYMENT TERMS.......................................................19
BILLING AND COLLECTION PROCEDURES...................................19
INTEREST RATES......................................................19
RELATIONSHIP BETWEEN DEUTSCHE FINANCIAL AND
YAMAHA....................................................20
DEALER MONITORING...................................................20
"RED FLAG" AND DEUTSCHE FINANCIAL'S
WRITE-OFF POLICY..........................................20
THE ACCOUNTS................................................................21
LOSS EXPERIENCE.....................................................21
AGING EXPERIENCE....................................................22
GEOGRAPHIC DISTRIBUTION.............................................23
INTERESTS IN THE TRUST..............................................24
INTEREST PAYMENTS...................................................25
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS...............................26
REGISTRATION OF THE OFFERED CERTIFICATES IN
THE NAME OF CEDE AS NOMINEE OF
DTC.......................................................29
BOOK-ENTRY REGISTRATION OF THE OFFERED
CERTIFICATES..............................................29
ISSUANCE OF DEFINITIVE CERTIFICATES UPON THE
OCCURRENCE OF CERTAIN
CIRCUMSTANCES ............................................32
RATING OF THE OFFERED CERTIFICATES .................................32
ISSUANCE OF CERTIFICATES............................................33
ADDITIONAL SERIES OF CERTIFICATES ..................................33
COVENANTS, REPRESENTATIONS AND WARRANTIES...........................35
ADDITION OF ACCOUNTS................................................38
REMOVAL OF ACCOUNTS.................................................38
COLLECTION ACCOUNT..................................................39
PRINCIPAL FUNDING ACCOUNT ..........................................40
SPECIAL FUNDING ACCOUNT.............................................40
SERVICER CASH COLLATERAL ACCOUNT ...................................41
ALLOCATION PERCENTAGES .............................................42
ALLOCATION OF COLLECTIONS; DEPOSITS IN
COLLECTION ACCOUNT .......................................43
YIELD FACTOR; YIELD COLLECTIONS ....................................44
PRINCIPAL COLLECTIONS FOR ALL SERIES ...............................44
APPLICATION OF COLLECTIONS .........................................45
SUBORDINATION OF TRANSFEROR INTEREST IN
CERTAIN CIRCUMSTANCES ....................................45
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT ..........................46
DISTRIBUTIONS TO CERTIFICATEHOLDERS.................................48
DEFAULTED RECEIVABLES; RECOVERIES,
ADJUSTMENT PAYMENTS ......................................49
INVESTOR CHARGE-OFFS ...............................................50
FINAL PAYMENT OF PRINCIPAL; TERMINATION
OF TRUST .................................................50
EARLY AMORTIZATION EVENTS ..........................................50
INDEMNIFICATION ....................................................52
COLLECTION AND OTHER SERVICING PROCEDURES ..........................53
SERVICER COVENANTS .................................................53
SERVICING COMPENSATION AND PAYMENT OF
EXPENSES .................................................54
CERTAIN MATTERS REGARDING THE SERVICER .............................54
SERVICER DEFAULT ...................................................55
REPORTS TO CERTIFICATEHOLDERS ......................................56
EVIDENCE AS TO COMPLIANCE ..........................................57
AMENDMENTS .........................................................58
LIST OF CERTIFICATEHOLDERS .........................................58
THE TRUSTEE ........................................................58
DESCRIPTION OF THE RECEIVABLES SALE AGREEMENT...............................59
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT ..........................59
SALE OF RECEIVABLES ................................................59
REPRESENTATIONS AND WARRANTIES .....................................60
CERTAIN COVENANTS ..................................................61
TERMINATION ........................................................61
CERTAIN TRANSFER, SECURITY INTEREST AND
BANKRUPTCYCONSIDERATIONS ...........................................61
SECURITY INTEREST MATTERS...........................................61
OTHER MATTERS RELATING TO BANKRUPTCY ...............................63
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS ..................................63
CHARACTERIZATION OF THE OFFERED CERTIFICATES
AS INDEBTEDNESS ..........................................64
TAXATION OF INTEREST INCOME ........................................64
SALES OF OFFERED CERTIFICATES ......................................65
TAX CHARACTERIZATION OF THE TRUST ..................................65
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS
A PARTNERSHIP ............................................65
FEDERAL INCOME TAX CONSEQUENCES TO FOREIGN
INVESTORS ................................................66
BACKUP WITHHOLDING .................................................67
NEW WITHHOLDING REGULATIONS ........................................67
STATE, LOCAL AND FOREIGN TAXATION ..................................67
ERISA CONSIDERATIONS .......................................................67
REGULATION UNDER THE TAX CODE.......................................67
FINAL REGULATION ISSUED BY THE DOL..................................68
THE CERTIFICATES ...................................................68
SPECIAL CONSIDERATIONS FOR INSURANCE COMPANIES......................68
PLANS NOT SUBJECT TO ERISA OR THE CODE..............................69
UNDERWRITING................................................................69
LEGAL MATTERS...............................................................70
REPORTS TO CERTIFICATEHOLDERS...............................................70
WHERE YOU CAN FIND MORE INFORMATION ........................................70
INDEX OF DEFINED TERMS TERM ................................................71
ANNEX A ....................................................................77
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES .........................................................77
CERTAIN U.S. FEDERAL INCOME TAX
DOCUMENTATION REQUIREMENTS ...............................78
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 74 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, Suite A, Cypress, CA 90630
Transferor's
Telephone Number: (714) 761-7500
Servicer of the
Receivables: Yamaha Motor Corporation, U.S.A.
Trustee: _______________________
Clearance and
Settlement: The Depository Trust Company, Clearstream
Banking, societe anonyme and the Euroclear
System
Assets of the Trust: The assets of the trust include:
o wholesale receivables generated from
accounts representing revolving financing
arrangements and other inventory
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 for the benefit
of certificateholders of another series;
and
o security interests in the inventory of
the dealers financed by the receivables
----------------------------- -----------------------------------------------
<TABLE>
<CAPTION>
The Terms of the Series:
CLASS A CLASS B CLASS C
CERTIFICATES CERTIFICATES CERTIFICATES
(not offered by
this prospectus)
<S> <C> <C> <C>
Principal Amount: $___________ $__________ $__________
Interest Rate (subject to cap): 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: ______________ ______________ ______________
Commencement of Accumulation Period: none
Expected Final Payment Date: ______________ ______________ ______________
distribution date distribution date distribution date
Anticipated Ratings (Moody's/S&P):* ______________ ______________ not rated
Credit Enhancement: subordination of subordination of limited
Class B and Class C Certificates subordination of
Class C Certificates and limited transferor interest
and limited subordination of
subordination of transferor interest
transferor interest
CUSIP Number: ______________ ______________ none
ISIN: ______________ ______________ none
Common Code: ______________ ______________ none
----------------
* It is a condition to the offering of each of the Class A and the Class B Certificates that at least one of these
ratings be obtained. However, a rating agency in its discretion may lower or withdraw its rating in the future.
</TABLE>
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 discussion of the risk of investing in the
certificates.
THE RECEIVABLES
The receivables supporting your certificates consist of rights to payment
arising out of wholesale floorplan 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 the process, see "The Dealer Floorplan
Financing Business--Creation of Receivables," "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 first, thereby making up for
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 consists of the Class A Certificates, the Class B Certificates
and the Class C Certificates (which are not being offered by this
prospectus). 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 2000-1 certificateholders'
interest in the trust is equal to or 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--Additional Series of Certificates." 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. In addition, the
amount of collection for this series which will be treated as yield will
increase to 2% during any collection period when one- month LIBOR exceeds
15%. If one-month LIBOR subsequently decreases to 15% or below, the amount
of collections which will be treated as yield will decrease to 1.5% or
1.75%, as applicable.
INTEREST PAYMENTS
Interest will accrue on the unpaid principal amount of each class of
Certificates at a per annum rate equal to the applicable certificate rate
and will be distributed to certificate holders on each distribution date.
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 _______________
and ending on _______________. The Class A Certificates will then be paid
in full on the expected final payment date for the Class A Certificates.
The trust also expects to repay all principal on the Class B Certificates
in one payment on the ______________ distribution date. In order to collect
the funds to pay the Class B Certificates on time, after all funds have
been collected to pay the Class A Certificates, 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 one month long, commencing on _____________ and ending on___
________. The Class B Certificates will then be paid in full on the
expected final payment date for the Class B Certificates.
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 Payment 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
GnazzoThill, 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 characterized as an
association or a publicly traded
partnership 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
It is not anticipated that either the Class A Certificates or the Class B
Certificates will meet any of the exceptions in the regulations issued by
the Department of Labor regarding plan assets. Accordingly, employee
benefit and other plans subject to ERISA or Section 4975 of the U.S.
Internal Revenue Code cannot acquire the Certificates. Prohibited investors
include:
o "employee benefit plans" as defined in
Section 3(3) of ERISA;
o any "plan" as defined in Section 4975 of
the U.S. Internal Revenue Code; and
o any entity whose underlying assets may be deemed to
include "plan assets" under ERISA by reason of any such
plan's investment in the entity, including insurance
company general accounts.
By purchasing any Class A or Class B Certificates, you will certify that
you are not within any of those categories.
For more information regarding the application of ERISA, see "ERISA
Considerations".
SELECTED TRUST PORTFOLIO SUMMARY DATA
GEOGRAPHIC DISTRIBUTION OF RECEIVABLES IN U.S. WHOLESALE PORTFOLIO
AS OF _________________, 2000
[GRAPH]
The chart above shows the geographic distribution of the
receivables in the U.S. wholesale portfolio among the 50 states and the
District of Columbia. Other than the states specifically shown in the
chart, no state accounts for more than 3% of the receivables in the U.S.
wholesale portfolio.
AGE DISTRIBUTION OF RECEIVABLES IN U.S. WHOLESALE
PORTFOLIO AS OF ______________, 2000
(DAYS)
[GRAPH]
The chart above shows the percentages of the
receivables in the U.S. wholesale
portfolio within the age brackets shown.
PAYMENT RATE DATA
[GRAPH]
The chart above shows the payment rate for the U.S. wholesale
portfolio for each month from ______________ 1998 to ________________ 2000.
The "payment rate" for any month is the aggregate amount collected on the
receivables during the month, expressed as a percentage of total
outstanding receivables for that period.
RISK FACTORS
You should consider the following risk factors in deciding whether
to purchase the certificates.
ABSENCE OF SECONDARY MARKET You may be unable to resell your
FOR CERTIFICATES COULD certificates due to the absence of a
LIMIT YOUR ABILITY TO RESELL secondary market for the certificates. The
underwriter for the certificates may assist
in resales of the certificates but it is
not 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.
LIMITED ASSETS OF THE You may suffer a loss on your certificates
TRUST COULD RESULT IN if the assets of the trust are insufficient
LOSSES ON THE CERTIFICATES to pay 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. 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. 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.
PRIORITY OF SOME LIENS You may suffer a loss on your certificates
OVER THE CERTIFICATES if some liens on Yamaha's or the
COULD RESULT IN LOSSES transferor's property have priority over
ON THE CERTIFICATES the certificates. 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, as is intended, 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."
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 including
the product related to the receivable. When
a dealer sells a product, Deutsche
Financial's and the trust's liens on 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 on the receivable, the
product will no longer secure the
receivable. In addition, 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 provides financing to
dealers for products not made by yamaha's
affiliates, Deutsche Financial may have
made other loans to dealers that are
secured by liens in all of the property of
the dealers. Therefore, 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.
If the short-term debt ratings of either
Yamaha or Deutsche Financial are at
least"A-1" or "P-1" while Yamaha is the
servicer or Deutsche Financial is the
subservicer, or the rating agencies
otherwise agree, 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
either Yamaha or Deutsche Financial fails
to meet these ratings, or the rating
agencies otherwise withdraw their approval,
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 If Yamaha or Deutsche Financial enters a
OR DEUTSCHE FINANCIAL bankruptcy proceeding, you could experience
COULD RESULT IN LOSSES losses or delays in the payments on your
OR DELAYS IN PAYMENTS certificates. Deutsche Financial sells the
ON THE CERTIFICATES receivables to Yamaha, Yamaha sells the
receivables to the transferor, and the
transferor transfers 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 collections 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.
SLOWER GENERATION OF Each receivable is generally payable by a
RECEIVABLES BY DEALERS dealer upon sale of the related product and
COULD REDUCE COLLECTIONS is expected to have an average life that is
much shorter than the average life of the
certificates. Absent an amortization event,
the proceeds of current receivables will be
reinvested in new receivables or used to
pay other series of certificates, and the
certificates of this series will generally
be repaid from collections on receivables
that have not yet been created. As a
result, payment of the certificates in full
on the expected final payment date is
dependent on the ability of Yamaha and
Deutsche Financial to general new
receivables. If your certificates are not
paid by the expected final payment date,
the average term of the certificates will
increase. You may not be able to reinvest
any such delayed principal payments at a
rate of return equal to or would have been
available on the expected final payment
date.
EARLY AMORTIZATION EVENTS If an early amortization event occurs under
COULD RESULT IN LOSSES OR the pooling and servicing agreement, it may
ACCELERATION OF PAYMENTS shorten the average term and date of final
ON THE CERTIFICATES payment of 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 An increase in LIBOR could result in a cap
RESULT IN CAPPED INTEREST on interest payments on the certificates at
PAYMENTS ON THE CERTIFICATES a maximum rate. The certificates generally
bear interest at a floating rate which is
based on LIBOR. It is possible that LIBOR
plus the margin used to compute the
interest rate on your certificates will
increase above an applicable maximum rate.
If that occurs, the certificates will bear
interest only at a maximum rate.
ECONOMIC AND SOCIAL FACTORS Payment of the receivables depends upon the
COULD LEAD TO SLOWER SALES sale of the related products by the
OF PRODUCTS BY DEALERS AND dealers. The level of product sales may
LOWER COLLECTIONS WITH WHICH change because of a variety of economic and
TO PAY THE CERTIFICATES social factors. Economic factors include
interest rates, unemployment levels, the
rate of inflation, increases in regulations
on use of the products 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.
We cannot determine or predict whether or
to what extent economic or social factors
will affect the level of product sales.
THE PERFORMANCE OF THE While Yamaha is generally not obligated to
TRUST IS ULTIMATELY make payments with respect to the
DEPENDENT ON YAMAHA certificates or the receivables, its
financial condition and operations are
likely to affect the rate and amount of
collections on the receivables and the
generation of new receivables in a number
of ways.
First, if Yamaha is unable to satisfy its
obligation to repurchase receivables as a
result of (1) the material breach of
certain representations and warranties in
the receivables transfer agreement, or (2)
breach of certain servicing obligations,
payments on such receivables could be
delayed, reduced or eliminated. This could
delay or reduce collections available for
payment of the certificates.
For more information concerning these
warranty obligations, see "Description of
the Offered Certificates - Covenants,
Representations and Warranties" and
"Servicer Covenants."
Second, the products that secure the
receivables are manufactured by either
Yamaha Motor Manufacturing Corporation of
America, Yamaha Motor Company, Ltd., or
Tennessee Watercraft, Inc. Yamaha
distributes these products to dealers. If
Yamaha, Yamaha Motor Manufacturing
Corporation of America, Yamaha Motor
Company, Ltd. or Tennessee Watercraft, Inc.
were temporarily or permanently to cease
operation of their businesses, the dealers'
rate of product financing and sales would
decrease, slowing generation of new
receivables and possibly slowing payment
rates on existing receivables, thereby
delaying cash flow into the trust.
Third, Yamaha has sometimes provided
marketing and administrative assistance to
its dealers that is unrelated to the
receivables, but is under no obligation to
do so. Yamaha generally makes optional
repurchases of unsold products from dealers
that cease doing business or are no longer
authorized Yamaha dealers. If Yamaha is
unable to or decides not to provide this
financial assistance or make these optional
repurchases, losses on the receivables
would likely increase.
Fourth, 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 which materially
and adversely affects the interests of the
certificateholders, 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. In
addition, Yamaha has the ability in some
cases to change the terms of the
receivables and the accounts after
creation. These terms may include the
applicable interest rate, payment terms and
the amount of the dealer's credit line, as
well as underwriting procedures.
For more information about these risks, see
"The Dealer Floorplan Financing Business."
TERMINATION OF DEUTSCHE Deutsche Financial is not obligated to
FINANCIAL'S SERVICES COULD continue underwriting or servicing Yamaha
DELAY THE TRUST'S ABILITY receivables. If Deutsche Financial ceases
TO COLLECT ON RECEIVABLES such activities, delays in originating
AND/OR GENERATE NEW processing payments and related information
RECEIVABLES, DELAYING on the receivables receivables and/or could
OR REDUCING PAYMENTS occur and result in delayed in payments to
ON CERTIFICATES the certificateholders. In addition,
Deutsche Financial has the ability, in some
instances to change the terms of the
receivables on the accounts after creation.
These terms may include the applicable
interest rate, payment terms and the amount
of the dealer's credit line, as well as
underwriting procedures.
For more information about these risks, see
"The Dealer Floorplan Financing Business."
INDIVIDUAL Certificateholders of any series may need
CERTIFICATEHOLDERS WILL the consent or approval of the holders of a
HAVE LIMITED CONTROL OF specified percentage of the unpaid investor
TRUST ACTIONS 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
another 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 Yamaha Motor Master Trust, is a master
SERIES BY THE TRUST trust, that may issue additional series of
COULD AFFECT THE TIMING certificates from time to time. The trust
OF THE PAYMENTS ON may issue series with terms that are
THE CERTIFICATES 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.
Even so, 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--additional Series of
Certificates."
CLASS B CERTIFICATES BEAR The Class B Certificates bear more credit
ADDITIONAL CREDIT RISK risk than the Class A Certificates. Because
the Class B Certificates are subordinated
to the Class A Certificates, principal
payments on the Class B Certificates will
not begin until the Class A Certificates
are repaid. Additionally, if yield
collections allocated to your series are
insufficient to cover amounts due on the
Class A Certificates, the invested amount
for the class b certificates may be
reduced. This would reduce the amount of
yield collections available to the Class B
Certificates in future periods and could
cause a possible delay or reduction in
principal and interest payments on the
Class B Certificates. Additionally, if the
trustee has to sell receivables, the net
proceeds of the sale available to pay
principal would be paid first to the Class
A Certificates before any remaining
proceeds would be paid to the Class B
Certificates.
For more information about these credit
risks, see "Maturity and Principal Payment
Considerations" and "Description of the
Offered Certificates--investor Charge
Offs."
THE TRANSFEROR AND TRANSACTION PARTIES
YAMAHA MOTOR RECEIVABLES CORPORATION
Yamaha Motor Receivables Corporation (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, Suite A, Cypress, California 90630. The telephone number of such
offices is (714) 761-7500. Under certain circumstances, the Transferor's
certificate of incorporation authorizes the Transferor to engage in
additional securitization transactions as well; however, any such
transaction must be reviewed by the Rating Agency prior to its
effectiveness.
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 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, is a subsidiary of Deutsche Bank Americas Holding
Corp., 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 $840 billion and
shareholder equity in excess of $23 billion as of December 31, 1999.
Deutsche Bank AG is exploring opportunities to reduce its equity interest
in DFS. There can be no assurance that any transaction or other opportunity
will occur or be pursued, and there can be no assurance as to what form any
transaction or other opportunity may take or as to the timing of any such
transaction or other opportunity.
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 and its affiliates provide commercial financing for
thousands of manufacturers, distributors and dealers throughout the United
States, Canada, and Western Europe. Deutsche Financial's principal office
is at 655 Maryville Centre Drive, St. Louis, Missouri 63141
As of date of this prospectus, none of the dealers were affiliates
of the Deutsche Financial and none of the products being financed by the
receivables were made or distributed by affiliates of Deutsche Financial.
We cannot assure you that Deutsche Financial will continue to underwrite or
service Yamaha Dealer Accounts.
THE TRUST
Yamaha Motor Master Trust (the "TRUST") was formed for this and
like transactions pursuant to a Master Pooling and Servicing Agreement,
originally dated as of March 1, 1994 and amended and restated as of May 1,
1999, among the Transferor, Yamaha, as Servicer, and ____________ (as
successor trustee to The Fuji Bank and Trust Company), as trustee (together
with its permitted successors and assigns in such capacity, 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 and other inventory financing arrangements (the
"ACCOUNTS") with dealers in motorized 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.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be
used by the Transferor to pay down the Series 1998-1 Asset-Backed
Certificates in part or in full. Any excess proceeds will be used by the
Transferor 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 to purchase Products (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 principal source of inventory financing
for the Dealers to purchase Products. In calendar years 1997, 1998 and
1999, and through ____________ , 2000, Deutsche Financial provided
financing in the amount of $1,179,425,474, $1,296,708,288, $2,606,904,452
and $____________ of new unit sales to Dealers, respectively. Deutsche
Financial arranged wholesale financing for approximately $____________
million of units as of September 30, 2000, up approximately ____________%
from the previous fiscal year. Deutsche Financial services the U.S.
Wholesale Portfolio through its national headquarters in St. Louis,
Missouri, its Yamaha program headquarters in Irvine, California and three
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 are not eligible 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 eligible as Receivables for sale by Deutsche Financial to Yamaha,
by Yamaha to the Transferor, or by the Transferor to the Trust. All Dealers
of Products (except manufacturers of marine vessels) that have a New
Product credit 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 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. 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 regional vice president can approve new
wholesale financing requests for amounts up to $2,500,000; for greater
amounts, all such documentation will be forwarded to the Deutsche Financial
division, group or home office for approval. Deutsche Financial's ultimate
decision whether to extend credit to a new or existing Dealer is based upon
its reasonable judgment. If a Dealer has been denied credit by Deutsche
Financial, Yamaha may, in its discretion, make other arrangements.
Upon approval by both Deutsche Financial and Yamaha, Dealers
execute a series of financing agreements with Deutsche Financial and
dealership agreements with Yamaha. Such agreements provide for a purchase
money security interest in favor of Deutsche Financial in the Products and
typically in the receivables related thereto. Deutsche Financial will often
also obtain a security interest in all other then-owned or thereafter
acquired personal property of such Dealer as additional collateral. In
addition, in certain cases, Deutsche Financial obtains additional credit
enhancement (such as a stand-by letter of credit or a guarantee) or other
collateral. 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, although Deutsche
Financial may request that the Dealer begin to make principal payments
earlier than such payments would otherwise be due. 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." In certain cases, the financing
agreements executed between a particular Dealer and Deutsche Financial may
relate to products floorplanned by such Dealer that are not
Yamaha-distributed products. See "Risk Factors--Priority of some liens over
the certificates could result in losses on the certificates."
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, in
certain circumstances the credit lines may be exceeded by up to 10% without
Deutsche Financial consent and may be revised for appropriate business
reasons.
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). Although holdback arrangements vary from year to year,
Yamaha is currently using the following arrangements: Yamaha pays an amount
(determined at the time of invoicing) to the Dealer on a date certain in
the future if the related Product has been sold by such date. If such date
passes without the sale of the Product by the Dealer, the holdback is
forfeited. This type of holdback arrangement is designed to provide an
incentive to the Dealer to take early or off-season delivery of seasonal
Products. The holdback payment may take the form of a credit against the
receivable due from the Dealer.
Once a Dealer has commenced the floorplanning of Products through
Deutsche Financial, Deutsche Financial will generally 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 are originated concurrently with the shipment of New
Products to the Dealer and are generally considered full-recourse
obligations of such Dealer. Advances made by Deutsche Financial for a
Dealer's purchase of Products from Yamaha are usually arranged by the
Dealer placing a purchase order with Yamaha for a shipment of Products, and
by Yamaha checking the computer records that it shares with Deutsche
Financial to confirm that the Dealer is within its credit limit and that no
hold has been placed on such Dealer's credit line (any such hold, a "CREDIT
HOLD"). If the Dealer is not subject to a Credit Hold and if, after giving
effect to the requested advance, the Dealer will be within 110% of its
credit limit, Yamaha will ship the requested Product to the Dealer and
submit its invoice for the purchase order directly to Deutsche Financial
for payment. If, on the other hand, such advance would cause the Dealer to
exceed 110% of its credit line, Yamaha will contact Deutsche Financial
prior to shipping the Product. As described in "--Credit Underwriting
Process" and "--Dealer Monitoring," Deutsche Financial may increase the
credit line after such a request by Yamaha and after ascertaining that the
particular Dealer is otherwise in compliance with Deutsche Financial's
financing program. If such conditions are satisfied, Deutsche Financial
will generally approve the request for a credit increase, and Yamaha will
ship the Product to the Dealer.
A Credit Hold may be placed on a Dealer for a variety of reasons,
many of which are easily resolved or temporary, but some of which are
serious and permanent. A Credit Hold may indicate that a payment due by a
Dealer to Deutsche Financial has not been made in the time allowed, that a
check from a Dealer has been returned to Deutsche Financial for
insufficient funds or that the Dealer has not provided Deutsche Financial
with its periodic financial reports in a timely manner. A Credit Hold is
also placed on a Dealer if Deutsche Financial determines that the Dealer's
financial condition is deteriorating or that the Dealer is insolvent.
Deutsche Financial updates the computer system that it shares with Yamaha
daily to reflect any changes in the Credit Hold status of Dealers. If and
when a Dealer is removed from Credit Hold, Yamaha will ship the requested
Products to the Dealer. In contrast to the procedure described above for
increasing a Dealer's credit line, Yamaha does not request Deutsche
Financial to override any Credit Hold notation, and Yamaha does not ship
Products or create Receivables with respect to any Dealer that is on Credit
Hold.
For purposes of including a Receivable in the Trust, Yamaha
considers a Receivable to have been created as of the date of invoicing.
Normally, interest or finance charges begin to accrue on such Receivable as
of the date specified by Yamaha in the Sales Program for the related
Product, which is usually later than the date of invoicing.
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 floorplanned, 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
statement. 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 Plans. As of
September 30, 2000, 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
request that particular Dealers 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 remaining outstanding
balance with respect to such Product will be fully payable if such Product
is sold.
"SCHEDULED PAYMENT PLANS," in contrast, require that principal and
interest 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's marketing programs to Dealers with respect to the various
Products vary throughout the year and by Product (the "Sales Programs").
The Sales Programs offer specific payment terms to the Dealers, which may
include (in addition to specifying whether the Product is eligible for a
Pay-as-Sold program or a Scheduled Payment Plan):
(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 business day
of each month to each Dealer. Interest and other non-principal charges are
billed in arrears and are required to be paid by Dealers to Deutsche
Financial by the end of the calendar month in which they are billed.
Principal is payable by Dealers to Deutsche Financial 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 Sales Program under which a Product was sold.
Often, the advance includes a period of interest-free financing during
which no interest accrues on the Receivables. Interest that is charged is
computed and accrues as follows: generally, interest rates are adjusted
monthly according to a formula that adds a fixed amount to the prime rate,
as such prime rate is reported at month end by certain financial
institutions selected by Deutsche Financial. The spread above the prime
rate depends on the Sales Program under which a Product is sold and may
also depend on the length of time the Dealer has held the Product. Interest
for the next month accrues at the rate so calculated on the outstanding
principal balance owed by the Dealer under the related 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 Products. Yamaha, in its sole
discretion, determines the financing terms to be offered under every Sales
Program.
At times, Yamaha may provide marketing or administrative assistance
to Dealers (unrelated to the Receivables), although it is under no
obligation to do so. In addition, in certain circumstances, Yamaha makes
optional repurchases of unsold Products from Dealers who cease doing
business or are no longer authorized Yamaha Dealers. Yamaha may terminate
any such optional programs in whole or in part at any time. If Yamaha is
unable or elects not to provide such financial assistance or make such
optional repurchases, the loss experience of Deutsche Financial and thus
the Trust in respect of the U.S. Wholesale Portfolio will likely be
adversely affected. In addition, because substantially all of the Products
sold in the retail market by the Dealers are distributed by Yamaha, if
Yamaha were temporarily or permanently to cease operation of such business,
the rate of sales of Yamaha-brand Products would decrease, adversely
affecting generation of new Receivables, payment rates and the loss
experience on the existing U.S. Wholesale Portfolio.
Yamaha also has certain mandatory obligations under an agreement
between Deutsche Financial and Yamaha whereby Yamaha repurchases unsold
Products that are recovered by Deutsche Financial through repossession or
otherwise. Yamaha credits Deutsche Financial the fair market value for
these Products. Yamaha also, by contract or state statute, has certain
direct repurchase obligations for some Products if a Dealer terminates its
business. Such Dealer repurchase obligations generally apply only to new,
unused, undamaged Products, and are usually at the wholesale price of the
Product.
DEALER MONITORING
The level of each Dealer's wholesale credit line is monitored on a
periodic basis. Dealers may be specifically permitted by Deutsche Financial
to exceed such credit limits in order to accommodate seasonal adjustments
or for other approved 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. Deutsche Financial has historically authorized
Yamaha to ship products in amounts that can exceed the credit limits by up
to 10%. 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 on Credit Hold. See "--Creation of Receivables" and "--'Red Flag'
and Deutsche Financial's Write-Off Policy."
On site audits of Dealer Product inventories are conducted on a
regular basis (normally, every 30-45 days) 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
Deutsche Financial prepares a monthly report called a "red flag
report" detailing the status of certain Dealers and the related Accounts
and inventory. This monthly red flag report generally includes information
regarding whether the Dealer has voluntarily surrendered its inventory to
Deutsche Financial or whether a liquidation of the Dealer's inventory is in
progress. If a liquidation has occurred, the red flag report indicates
whether such liquidation was orderly and voluntary, resulting in normal
sales to retail customers by the Dealer (which are monitored by Deutsche
Financial), or whether such liquidation was forced, resulting in
repossession of the inventory by Deutsche Financial. Should litigation
occur against such Dealer, the red flag report describes its progress and
outcome.
Once liquidation has commenced, Deutsche Financial will write off
any amounts attributable to unpaid Receivables with respect to inventory
previously sold by the related Dealer and identified at such time as
uncollectible. Yamaha and Deutsche Financial share equally the amounts
written off up to an aggregate annual amount equal to $3,000,000 (i.e.,
$1,500,000 per entity) in respect of all receivables (other than those
pertaining to Products consisting of parts and accessories) originated by
Deutsche Financial to finance the purchase of Yamaha products by Dealers,
without regard for whether such receivables are Receivables in the Trust.
The Trust absorbs any losses related to defaulted Receivables in the Trust
to the extent that such losses are not covered by this loss sharing
arrangement and net of recoveries attributable to the defaulted
Receivables. Deutsche Financial also liquidates any other collateral
securing the Dealer's obligations, some of which are repurchased at fair
market value by Yamaha if it consists of unsold Products. Shortfalls on any
such repurchases are generally not eligible for reimbursement under the
loss sharing arrangement described above.
THE ACCOUNTS
The Receivables arise in the Accounts. The Accounts are those
specified in the Receivables Sale Agreement and generally constitute all of
the wholesale accounts in the U.S. Wholesale Portfolio. See "Description of
the Offered Certificates--Covenants, Representations and Warranties."
Pursuant to the Receivables Purchase Agreement, Yamaha has conveyed
and will continue to convey to the Transferor, and pursuant to the Pooling
and Servicing Agreement, the Transferor has conveyed and will continue to
convey to the Trust, the Receivables created in all Accounts. New Accounts
must meet the eligibility criteria set forth in "Description of the Offered
Certificates--Addition of Accounts" 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 therein, 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 in the Receivables Sale Agreement, subject to the limitations
described in "Description of the Offered Certificates-Addition of Accounts"
and "Removal of Accounts".
As of September 30, 2000, 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 September 30,
2000, 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 _____%.
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, are 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 table sets forth Yamaha's average principal
receivables balance and loss experience for each of the periods shown with
respect to the U.S. Wholesale Portfolio. This table is for illustrative
purposes only, and 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 the likely benefit of
marketing and administrative assistance provided by Yamaha in certain
limited instances to the Dealers as described above under "The Dealer
Floorplan Financing Business--Relationship between Yamaha and Deutsche
Financial" and reflects Yamaha's prior practice of repurchasing Products at
the full invoiced amount (provided such repurchase was made with respect to
a Dealer which had ceased business or from 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 will likely be adversely affected. See "Risk
Factors--Risks inherent in the dealer floorplan financing business could
lead to losses on the receivables."
<TABLE>
<CAPTION>
LOSS EXPERIENCE FOR THE U.S. WHOLESALE PORTFOLIO(1)
NINE MONTHS
ENDED
SEPTEMBER 30, FISCAL YEAR ENDED MARCH 31,
2000 2000 1999 1998
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Average Receivables
Balance(2)............... $ $ $ 473,708 $ 503,556
Charge-off Net
of Recoveries............ $ $ $ 134 $ 489
Charge-off Net
of Recoveries/
Average Receivables
Balance(2)....... % % 0.028% 0.097%
----------------
(1) Dollars in thousands.
(2) Average receivables balance is the average of the monthly ending balances for the period specified.
</TABLE>
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.
AGE DISTRIBUTION FOR THE U.S. WHOLESALE PORTFOLIO(1)
AS OF SEPTEMBER 30, 2000
PERCENTAGE OF
RECEIVABLES RECEIVABLES
OUTSTANDING(2) OUTSTANDING
------------------ ----------------------
1-90........................... $ _______ _____%
91-180......................... $ _______ _____%
181-270........................ $ _______ _____%
271-365........................ $ _______ _____%
366+........................... $ _______ _____%
TOTAL.................. $ 100.00% (3)
================== ================
----------------
(1) Ages in days.
(2) Dollars in thousands.
(3) Percentages may not add to 100% due to rounding.
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 SEPTEMBER 30, 2000
RECEIVABLES PERCENTAGE OF TOTAL NUMBER OF PERCENTAGE OF TOTAL
OUTSTANDING(1) RECEIVABLES ACCOUNTS(2) NUMBER OF ACCOUNTS(2)
OUTSTANDING
--------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
California................................. $______ ___.__% ____ %
Florida.................................... ______ ___.__% ____ %
Texas...................................... ______ ___.__% ____ %
Michigan................................... ______ ___.__% ____ %
New York................................... ______ ___.__% ____ %
Pennsylvania............................... ______ ___.__% ____ %
Ohio....................................... ______ ___.__% ____ %
North Carolina............................. ______ ___.__% ____ %
Illinois................................... ______ ___.__% ____ %
Minnesota.................................. ______ ___.__% ____ %
Other(3)................................... ______ ___.__% ____ %
TOTAL.............................. $______ 100.00%(4) _____ 100.00%(4)
=============== ================ ================ ===================
----------------------------------
(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 as set forth above does not exceed 3%.
(4) Percentages may not add to 100% due to rounding.
</TABLE>
<TABLE>
<CAPTION>
COMPOSITION OF RECEIVABLES IN THE U.S. WHOLESALE PORTFOLIO BY ACCOUNT BALANCE
AS OF SEPTEMBER 30, 2000
(DOLLARS IN MILLIONS)
PERCENTAGE OF NUMBER OF PERCENTAGE OF
RECEIVABLES RECEIVABLES ACCOUNTS NUMBER OF
ACCOUNT BALANCE RANGE BALANCE BALANCES ACCOUNTS
--------------------- ------------------ ------------------ ----------------- --------------------
<S> <C> <C> <C> <C>
$0 to $499,999.............................. $
$500,000 to $999, 999.99....................
$1,000,000 to $1,499,999.99.................
$1,500,000 to $1,999,999.99.................
Over $2,000,000.00..........................
------------------ ------------------ ----------------- --------------------
100.00% 100.00%
================== ================== ================= ====================
</TABLE>
PRODUCT DISTRIBUTION
The following table provides the distribution of Products for all Dealers
on the basis of Receivables outstanding.
<TABLE>
<CAPTION>
RECEIVABLES OUTSTANDING BY PRODUCT GROUP FOR THE U.S. WHOLESALE PORTFOLIO
AS OF SEPTEMBER 30, 2000
PERCENTAGE OF
RECEIVABLES(1) TOTAL RECEIVABLES
OUTSTANDING OUTSTANDING
--------------------- -------------------------
<S> <C> <C>
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 carts and parts for all Products.
</TABLE>
DESCRIPTION OF THE OFFERED CERTIFICATES
The Floating Rate Series 2000-1, Class A Asset-Backed Certificates
(the "CLASS A CERTIFICATES") and the Floating Rate Series 2000-1, Class B
Asset-Backed Certificates (the "CLASS B CERTIFICATES" and, together with
the Class A Certificates, the "OFFERED CERTIFICATES") will be issued
pursuant to the Pooling and Servicing Agreement and the Series 2000-1
Supplement entered into between the Transferor, as the transferor of the
Receivables, Yamaha, as Servicer and ____________, as Trustee for the
Certificateholders, substantially in the forms 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 "--Additional Series of Certificates." The
Trustee will provide a copy of the Pooling and Servicing Agreement (without
exhibits or schedules), including any Supplements, to holders 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 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 on and after January 31, 1994 under
the Accounts, 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 and 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," as defined in the Pooling and
Servicing Agreement, includes 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 in
the Trust (the "TRANSFEROR INTEREST") not represented by the Certificates
or any other Series of certificates issued or 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 Certificates and any other Series of certificates then in its
accumulation or early amortization period and further subject to allocation
to the 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 unpaid principal amount of each Class
of Offered Certificates at a per annum rate equal to the applicable
Certificate Rate and, except as otherwise provided herein, will 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 ____ 15, 2000. Interest accrued 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 ____________, 2000 (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, based on ____________ LIBOR determined as of ____________, 2000 for
the period from ___________, 2000 up to but excluding _____________, 2000)
plus _____% per annum or (2) the Maximum 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, based on ____________ LIBOR determined as of
________, 2000 for the period from up to but excluding ) plus ____________%
per annum or (2) the Maximum 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, based on ____________ LIBOR determined as of
____________, 2000 for the period from ___________, 2000 up to but
excluding _________, 2000) plus _____% per annum or (2) the Maximum Rate
(the "CLASS C CERTIFICATE RATE" and, together with the Class A Certificate
Rate and the Class B Certificate Rate, the "CERTIFICATE RATES"). The
"MAXIMUM RATE" for a Distribution Date is (1) the product of (a) the Yield
Factor for such Distribution Date and (b) twelve minus (2) 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 __________. 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 earlier of 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 Class B Certificateholders until the final principal payment
has been made to the Class A Certificateholders. No principal payments will
be made to the holders of record 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 holders of each Class of Offered
Certificates. With respect to the period beginning on ____________, 2000
and ending on the earlier of (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 undivided interests of the Class A
Certificateholders, the Class B Certificateholders and the Class C
Certificateholders in the Trust (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, will be withdrawn from the Principal Funding Account and
deposited in the Collection Account. See "--Principal Funding Account."
Although the Principal Funding Account will be an Eligible Deposit Account
and amounts therein will be invested in Eligible Investments, the holders
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 holders of such Class of
Offered Certificates on the applicable Expected Final Payment Date and the
Early Amortization Period will commence. On each Distribution Date
thereafter the holders 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 holders in whose names the Offered Certificates were
registered (expected to be Cede, as nominee of DTC) at the close of
business on the related 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.
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, 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, 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 Class A Invested Amount has been paid in
full, and the Class C Certificateholders will not receive any payments of
principal until the Class A Invested Amount and the Class B Invested Amount
have been paid in full.
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. The Receivables
existing today are not likely to be the source of repayment for the
Certificates, and, full payment of each Class of Offered Certificates by
the applicable Expected Final Payment Date depends on, among other things,
generation of new Receivables and repayment by Dealers of such Receivables.
This may not occur if Dealer sales or 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 Products will continue to sell at current
rates or that any particular pattern of Dealer sales or 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, an Early Amortization
Event will occur and 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, an Early Amortization
Event will occur and 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, competition from other manufacturers and various economic factors
affecting Product sales generally. The following table sets forth the
highest and lowest monthly payment rates for the U.S. 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 there are no
discernible trends with respect to such experience that are material.
Although the Accounts constitute the entire U.S. Wholesale Portfolio as of
September 30, 2000, actual monthly payment rates with respect to the
Accounts may be different in the future.
<TABLE>
<CAPTION>
MONTHLY PAYMENT RATES FOR THE U.S. WHOLESALE PORTFOLIO(1)
NINE MONTHS
ENDED FISCAL YEAR ENDED MARCH 31,
SEPTEMBER 30, ---------------------------------------------------
2000 2000 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Highest Monthly Payment Rate............ % ___.__% 29.43% 25.51%
Lowest Monthly Payment Rate............. % ___.__% 18.25% 13.46%
Twelve Month Average.................... % ___.__% 23.93% 19.17%
----------------------------------
(1) MONTHLY PAYMENT RATE IS CALCULATED AS MONTHLY COLLECTIONS DIVIDED BY
THE AVERAGE AGGREGATE PRINCIPAL BALANCE FOR SUCH PERIOD.
</TABLE>
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 LAST DAY OF THE ________________ COLLECTION
PERIOD (THE "CONTROLLED ACCUMULATION PERIOD"), in an amount equal to the
lesser of (a) Class A Monthly Principal and (b) the sum of the Controlled
Accumulation Amount for the Collection Period immediately preceding such
Distribution Date plus any unpaid Accumulation Shortfall related to any
prior Collection Period (the "CONTROLLED DEPOSIT AMOUNT"). In addition,
Excess Principal Collections allocable to the Certificates will be
deposited in the Principal Funding Account during the Controlled
Accumulation Period in an amount not to exceed the Controlled Deposit
Amount when aggregated with the amounts in the preceding sentence.
"CONTROLLED ACCUMULATION AMOUNT" means, with respect to the Class A
Certificates, one-sixth of the Class A Invested Amount as of the Controlled
Accumulation Date. "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.
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 the 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 last day of the
____________ Collection Period (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 will be
deposited in the Principal Funding Account during the Rapid Accumulation
Period in an amount not to exceed the Class B Invested Amount when
aggregated with the amounts in the preceding sentence.
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 your Series 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.
Assuming that (a) the monthly payment rate for the Receivables
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 1997, 1998 and 1999, (b) the Pool Balance remains constant
at the amount outstanding as of September 30, 2000 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 holders 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 holders 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 holders 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.
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 ____________ of the undivided
interest of the Class A Certificateholders in the Trust and ____________ 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 holders 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 holders 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
Certificate Owners may hold their Offered Certificates through DTC
(in the United States) or Clearstream Banking, societe anonyme
("CLEARSTREAM") 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 banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the 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 securities certificates. Direct Participants include securities brokers
and dealers (including the Underwriter), banks, trust companies and
clearing corporations, and 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").
The rules applicable to DTC and DTC Participants are on file with the
Commission.
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; DTC's records reflect only the
identity of the Direct Participants to whose accounts the 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, as such term is used in the Pooling and Servicing
Agreement or any Supplement.
Certificate Owners will be permitted to exercise the rights of
holders 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 holder 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 holders of each Class of Offered Certificates. See
"--Issuance of Definitive Certificates Upon the Occurrence of Certain
Circumstances."
Clearstream and Euroclear will hold omnibus positions on behalf of
the Clearstream Customers and the Euroclear Participants, respectively,
through customers' securities accounts in Clearstream 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 Clearstream Customers and Euroclear
Participants will occur 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 Clearstream Customers or Euroclear Participants, on
the other, will be effected through DTC in accordance with DTC rules
through Clearstream or Euroclear through its Depositary; however, such
cross-market transactions will require delivery of instructions to
Clearstream or Euroclear by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines
(European time). Clearstream or Euroclear 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.
Clearstream Customers and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in
Clearstream 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 Clearstream Customer or
Euroclear Participant on such business day. Cash received in Clearstream or
Euroclear as a result of sales of securities by or through a Clearstream
Customer 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
Clearstream or Euroclear cash account only as of the business day following
settlement through DTC.
Clearstream is incorporated under the laws of Luxembourg as a
professional depository. Clearstream holds securities for its participating
organizations ("CLEARSTREAM CUSTOMERS") and facilitates the clearance and
settlement of securities transactions between Clearstream Customers through
electronic book-entry changes in accounts of Clearstream Customers, thereby
eliminating the need for physical movement of certificates. Transactions
may be settled in Clearstream in any of 36 currencies, including United
States dollars. Clearstream provides to its Clearstream Customers, among
other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream interfaces with domestic markets in several
countries. As a professional depository, Clearstream is subject to
regulation by the Luxembourg Commission for the Supervision of the
Financial Sector, which supervises Luxembourg banks. Clearstream has
established an electronic bridge with Morgan Guaranty's Brussels, Belgium
office, acting as Euroclear operator, to facilitate settlement of trades
between Clearstream and Euroclear. Clearstream currently accepts over
110,000 securities issues on its books. Clearstream Customers 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; and in the U.S. are limited to securities brokers, dealers and
banks. Indirect access to Clearstream is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Clearstream Customer, 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 securities 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 Clearstream or
Euroclear will be credited to the cash accounts of Clearstream Customers 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. Clearstream or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by holders of any Class of Offered
Certificates under the related agreement on behalf of a Clearstream
Customer 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, Clearstream and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Offered
Certificates among participants of DTC, Clearstream 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, Clearstream 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.
ISSUANCE OF DEFINITIVE CERTIFICATES UPON THE OCCURRENCE OF
CERTAIN CIRCUMSTANCES
Each Class of the Offered Certificates will be issued in fully
registered, certificated form (the "DEFINITIVE CERTIFICATES") in
denominations of $1,000 and integral multiples thereof to the related
Certificate Owners or their nominees, 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 neither the Trustee nor
the Transferor is able 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 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.
Upon the occurrence of any event described in the immediately
preceding paragraph, the Trustee shall notify all Certificate Owners,
through DTC, of the availability through DTC of Definitive Certificates.
Upon surrender by DTC of the definitive certificates representing the
Offered Certificates and receipt by the Trustee of instructions for
re-registration, the Trustee will reissue the Offered Certificates 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 or otherwise 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 statistical rating organization (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 in the "A" category for long-term
debt obligations or the equivalent 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 do 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 the
timely payment of 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.
ISSUANCE OF CERTIFICATES
On the Closing Date, the Trustee will authenticate each Class of
Offered Certificates and the Series 2000-1, Class C Asset-Backed
Certificates (the "CLASS C CERTIFICATES," and together with the Offered
Certificates, the "CERTIFICATES" or "SERIES 2000-1" and each such class of
Certificates, a "CLASS") and deliver such Offered Certificates to the
Transferor which will, in turn, deliver them to or upon the order of 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 to the Transferor.
ADDITIONAL SERIES OF CERTIFICATES
The Pooling and Servicing Agreement provides for the Trustee to
issue two types of certificates: (a) one or more Series of investor
certificates which are generally 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 by written request to the Trustee, and
fulfillment of the conditions set forth in the Pooling and Servicing
Agreement, cause the Trustee to issue one or more new Series of
certificates. 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) the priority of any Series with respect to any other
Series; and
(18) any other relevant terms (all such terms, the
"PRINCIPAL TERMS" of such Series).
None of the Transferor, the Servicer, the Trustee and the Trust is required
or intends to obtain the consent of any Certificateholder to issue any
additional Series. However, as a condition to the issuance of a new Series,
the Transferor will deliver to the Trustee written confirmation from the
Rating Agencies that such proposed issuance 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 (which have been repaid);
o the 6.45% Series 1994-1, Class B Asset-Backed
Certificates (which have been repaid);
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 Certificates;
o the Variable Funding Series 1998-1, Class B
Asset-Backed Certificates;
o the Floating Rate Series 1999-1 Class A
Asset-Backed Certificates; and
o the Floating Rate Series 1999-1 Class B
Asset-Backed Certificates.
The Certificates are the fifth 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 cause new Series to be issued 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 it 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 may be
allocated pursuant to the terms of an 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. Under the
terms of Series 2000-1, 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 no Class of Certificates
will be subordinate to any other Series of certificates. There is no limit
to the number of new Series that the Transferor may cause the Trust to
issue under the Pooling and Servicing Agreement. The Trust will terminate
only as provided in the Pooling and Servicing Agreement.
New Series may only be issued upon the satisfaction of certain
conditions provided in the Pooling and Servicing Agreement. The Transferor
may cause such a new issuance by notifying the Trustee, at least three
Business Days in advance of the date upon which the issuance is to occur.
The notice must state the designation of any Series to be issued on the
date of the issuance 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 issuance, 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 have a
material adverse impact on the Federal income tax characterization
of any outstanding Series;
(4) written confirmation from each applicable Rating
Agency that the issuance of such Series will not result in such
Rating Agency reducing or withdrawing its rating on any outstanding
Series; and
(5) a copy of a certified report of the Servicer setting
forth certain factual matters.
Upon satisfaction of such conditions, the Trustee will issue the new
Series.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Under the Pooling and Servicing Agreement, the Transferor
represents and warrants as of the date of any Supplement and the date of
the initial issuance of any related certificates that, among other things,
(1) it has the power and authority to carry out its obligations with
respect to the transactions contemplated by the Pooling and Servicing
Agreement and related agreements and cause the issuance of the certificates
and (2) the Pooling and Servicing Agreement constitutes a valid conveyance,
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 and the proceeds thereof.
If any of the representations and warranties described in the
preceding paragraph is not true and, as a result, there is a material
adverse effect on the interests of the investor certificateholders, then
either the Trustee or holders of investor certificates evidencing not less
than a majority of the aggregate unpaid principal amount of all outstanding
investor certificates may direct the Transferor to purchase the
certificateholders' interest in such Receivables on a Distribution Date
within thirty (30) days of such notice (or such longer period as may be
allowed). However, no such purchase is required if, by the end of such
period, such representations and warranties are satisfied in all material
respects and any material adverse effect on the certificateholders'
interests has been cured.
To effect such a purchase, the Transferor must deposit into the
Collection Account, in immediately available funds on the Business Day
preceding the applicable Distribution Date, an amount equal to the sum of
the amounts specified in the Supplement related to each outstanding Series,
which must then be distributed to the investor certificateholders on such
Distribution Date. Unless the Transferor is required to repurchase all of
the Receivables as described herein, the obligation of the Transferor to
purchase the certificateholders' interest as set forth above is the sole
remedy available to the investor certificateholders (or the Trustee on
their behalf) in the event of a breach of the representations and
warranties described above.
Additionally, with respect to the Receivables, the Transferor
represents and warrants under the Pooling and Servicing Agreement that,
among other things:
(1) each Receivable and all related Product Security has
been or will have been conveyed to the Trust free and clear of any
security interest or lien (except for those liens not of equal or
higher priority than the lien of the Trust);
(2) on the applicable transfer date, each Receivable
conveyed to the Trust is an Eligible Receivable or, if such
Receivable is not an Eligible Receivable, such Receivable is
conveyed to the Trust in accordance with the terms of the Pooling
and Servicing Agreement;
(3) all applicable consents, licenses, approvals and
authorizations have been obtained with respect to the conveyance of
the Receivables;
(4) each of the Pooling and Servicing Agreement, any
Supplement and the Receivables Purchase Agreement constitutes a
legal, valid and binding obligation of the Transferor, enforceable
against the Transferor in accordance with its terms;
(5) the Pooling and Servicing Agreement constitutes
either a valid transfer and assignment, or the grant of a security
interest, to the Trust in all of the right, title and interest of
the Transferor in, to and under the Receivables, all related
Product Security and all proceeds of the foregoing; and
(6) certain specified information provided to the Trustee
with respect to the Receivables, the Accounts and the Dealers is
true and correct in all material respects.
If any of the representations and warranties described in the
preceding paragraph is not true and correct, and such breach has a material
adverse effect on the certificateholders interest in any Receivable or
Account, then, within thirty (30) days (or such longer period not to exceed
sixty (60) days) of the earlier to occur of (A) the discovery of such event
by the Transferor or the Servicer and (B) receipt by the Transferor or the
Servicer of written notice of any such event given by the Trustee, Deutsche
Financial or any Enhancement provider, the Transferor must accept the
reassignment of the affected Receivables (or, in the case of an untrue
representation or warranty with respect to an Account, all Receivables in
such Account). However, no such reassignment is required if, by the end of
such period, the breached representation or warranty is true and correct in
all material respects and any material adverse effect caused by such breach
has been cured. The Transferor accepts the reassignment of any Receivables
described above (each, an "INELIGIBLE RECEIVABLE") by directing the
Servicer to deduct the aggregate principal amount of such Receivables from
the Pool Balance (if the amount is otherwise included in the Pool Balance)
on or prior to the end of the Collection Period in which the reassignment
obligation arises. If, following such deduction, the Transferor Amount is
less than the product of (A) 10% (the "MINIMUM TRANSFEROR PERCENTAGE") and
(B) the product of (1) the Pool Balance and (2) the result of one minus the
Yield Factor (the "Trust Principal Component") on the immediately preceding
Determination Date, then the Transferor must deposit into the Collection
Account in immediately available funds the amount of such shortfall (the
"Transfer Deposit Amount"). If the Transfer Deposit Amount is not so
deposited, then the principal amount of such Receivables may only be
deducted from the Pool Balance if the Transferor Amount is not reduced
below the Minimum Transferor Percentage of the Trust Principal Component,
and the Receivables, the aggregate principal amounts of which have not been
so deducted, will not be reassigned to the Transferor but will remain part
of the Trust. Upon reassignment of any such Receivable (but only if the
Transfer Deposit Amount, if any, is paid), the Trust will automatically be
deemed to transfer to the Transferor, without recourse, representation or
warranty, all of the right, title and interest of the Trust in, to and
under such Receivable, all related Product Security and all proceeds of the
foregoing. Unless the Transferor is required to repurchase all of the
Receivables as described herein, the obligation of the Transferor to accept
the reassignment of any such Receivable and to pay any related Transfer
Deposit Amount is the sole remedy available to the investor
certificateholders (or the Trustee on their behalf) respecting the event
giving rise to such obligation.
Under the Pooling and Servicing Agreement, if (A) a breach of any
of the Transferor's representations or warranties described above occurs or
(B) a material amount of Receivables are not Eligible Receivables, and in
either case such event has a material adverse effect on the investor
certificateholders, then either the Trustee or the holders of investor
certificates evidencing undivided interests aggregating more than 50% of
the aggregate invested amount of all outstanding Series may direct the
Transferor to accept reassignment of all Receivables on a Distribution Date
within sixty (60) days (or such longer period not to exceed an additional
sixty (60) days). However, no such reassignment is required if, on the
Business Day prior to such Distribution Date, the applicable
representations and warranties are then true and correct in all material
respects or there is no longer a material amount of Receivables which are
not Eligible Receivables, as applicable.
To effect such a reassignment, the Transferor must deposit into the
Collection Amount on the Business Day prior to the applicable Distribution
Date an amount equal to the reassignment deposit amount for such
Receivables for distribution to the investor certificateholders. The
deposit amount for such reassignment is equal to the aggregate invested
amount of all outstanding Series on the Record Date related to the
applicable Distribution Date on which such deposit is made (less the
aggregate principal amount on deposit in any principal funding account)
plus an amount equal to all accrued but unpaid interest on the certificates
of all Series at the applicable certificate rates through the end of the
interest accrual periods for such Series. Any payment of the reassignment
deposit amount and all other amounts in the Collection Account in respect
of the preceding Collection Period is considered a prepayment in full of
all such Receivables. On the Distribution Date with respect to which such
amount has been deposited into the Collection Account, the Receivables, any
related Product Security and all proceeds of the foregoing will be released
to the Transferor without recourse, representation or warranty. If the
Trustee or the investor certificateholders direct the Transferor to accept
the reassignment of all Receivables, the obligation of the Transferor to
accept such reassignment is the sole remedy respecting the breach of the
representations and warranties described above or the existence of a
material amount of Receivables which are not Eligible Receivables.
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," as defined in the Pooling and Servicing
Agreement, refers to each Receivable:
(1) which has arisen under an eligible Account and is
payable in United States dollars;
(2) which was created in compliance with all applicable
requirements of law and pursuant to a dealer agreement which
complies with all applicable requirements of law;
(3) with respect to which all 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;
(4) which was originated or acquired by Yamaha in the
ordinary course of business;
(5) which has been the subject of a valid transfer and
assignment from the Transferor to the Trust of all of the
Transferor's right, title and interest therein (and in the proceeds
thereof);
(6) which will at all times be the legal, valid, binding
and assignable 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 of lesser priority than the lien of the Trust), other than
liens permitted by the Pooling and Servicing Agreement;
(11) which was owned by Yamaha at the time of its sale by
Yamaha to the Transferor;
(12) which, at the time of its transfer to the Trust, is
not subject to any right of rescission, setoff, counterclaim or
other defense (including the defense of usury) of the Dealer;
(13) as to which Yamaha, Deutsche Financial and the
Transferor have satisfied all obligations to be fulfilled at the
time of its transfer to the Trust;
(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; and
(15) which, effective as of the last day of any
Collection Period commencing after the Series 1995-1 Asset- Backed
Certificates and the Series 1998-1 Asset-Backed Certificates have
been retired, when aggregated with the balance of all other
Receivables due from such Dealer, does not exceed 1% of the Pool
Balance.
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 or 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 Series;
(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 Series;
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 ___% 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 ___%, then the Transferor may
continue to add any 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 Series;
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 and the Available Subordinated Amount 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 designate Removed Accounts and
accept the reassignment of all the Receivables in the Removed Accounts,
without notice to the certificateholders. The Transferor may, in its sole
discretion, accept such reassignment 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
Removed Accounts identified by account number and aggregate amount
of Receivables;
(2) the Transferor shall represent and warrant that no
selection procedure believed by the Transferor to be materially
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 on the date of removal;
(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
investor certificates;
(5) the Transferor shall have delivered to the Trustee
and each applicable Rating Agency an officer's certificate
confirming the items set forth in clauses (1) through (4) above;
and
(6) the Transferor shall have delivered to the Trustee
and the Rating Agencies a favorable opinion of counsel that such
removal will not adversely affect the first priority security
interest of the Trust in the Receivables.
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 written
confirmation of each Rating Agency and without delivery to the Trustee of a
favorable opinion of counsel regarding the continuing perfection and
priority of the security interest in the Receivables in existing Accounts
and in the Receivables in Accounts created on or after the effective date
of such reassignment.
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, which at all
times (1) has itself, or has a parent which has, either (A) a long-term
unsecured debt rating of "A2" or better by Moody's or (B) a certificate of
deposit rating of "P-1" by Moody's, (2) has itself, or has a parent which
has, either (A) a long-term unsecured debt rating of "AAA" by Standard &
Poor's or (B) a certificate of deposit rating of "A-1+" by Standard &
Poor's and (3) is a member of the FDIC. 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 obligations fully guaranteed as to the timely payment of
principal and interest by the full faith and credit of the United
States of America;
(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) and subject to the supervision
and examination by federal or state banking authorities or
depository institution authorities and having short-term debt
ratings in the highest investment category from each Rating Agency;
(3) commercial paper or other short-term obligations
having, at the time of the Trust's investment, a rating in the
highest investment category from each Rating Agency;
(4) demand deposits, time deposits and certificates of
deposit which are fully insured by the Federal Deposit Insurance
Corporation, with an entity 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) 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 an entity the commercial paper of which has a
credit rating from each Rating Agency in its highest investment
category; and
(8) any other investments approved in writing by each
Rating Agency prior to the Trust's investment therein
(collectively, the "ELIGIBLE INVESTMENTS").
Generally, any such investment must 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 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 or before 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 an amount equal to
$____________ (the "INITIAL SERVICER CASH COLLATERAL DEPOSIT") 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, on any Determination Date, one-month LIBOR (as calculated by
the Trustee on the preceding LIBOR Determination Date) exceeds 15% per
annum, then, in such event, the Servicer will be required to remit all
Collections to the Collection Account on a daily basis. After such time,
the Servicer Cash Collateral Account will be terminated and the Trustee
will release all funds on deposit in such account to the Servicer, net of
any amount not already in the Collection Account required to pay all
accrued and unpaid interest on the Certificates, which amount will be
deposited by the Trustee into the Collection Account.
In the event that one-month LIBOR (as calculated by the Trustee) is
equal to or less than 15% per annum on any Determination Date after the
Servicer Cash Collateral Account has been terminated, the Servicer may, but
need not, reestablish and maintain the Servicer Cash Collateral Account. If
the Servicer so elects, the Servicer must deposit an amount equal to the
Initial Servicer Cash Collateral Deposit into the Servicer Cash Collateral
Account. Once such deposit has been made, for all Series then outstanding,
the Servicer will no longer be required to deposit Collections into the
Collection Account on a daily basis and the Servicer may, but need not,
deposit such Collections on a less frequent basis as provided in
"--Allocations of Collections; Deposits in Collection Account."
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 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 Yamaha shall be
no lower than "A-1" and "P-1", respectively;
(3) the ratings assigned by each of Standard & Poor's and
Moody's to the short-term debt obligations of Deutsche Financial
shall be no lower than "A-1" and "P-1" and Yamaha and Deutsche
Financial shall have agreed in a document satisfactory to the
Rating Agencies that Deutsche Financial shall remit Collections
directly to the Collection Account rather than to Yamaha;
(4) the Servicer provides a letter of credit, surety bond
or other similar instrument meeting the requirements of the Rating
Agencies; or
(5) 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 Investor
Default 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 __________, 2000. 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 new Receivables conveyed to the Trust or
treated as Excess Principal Collections and applied as described below in
"--Principal Collections for all Series." The Transferor Percentage of such
Collections will be paid to the Transferor unless required to be allocated
in respect of the Available Subordinated Amount. 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, as
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 during the
Controlled Accumulation Period means an amount equal to the Class A
Invested Amount minus the aggregate principal amount on deposit in the
Principal Funding Account and for any other date, means the Class A
Invested Amount.
"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 during the Rapid
Accumulation Period means an amount equal to the Class B Invested Amount
minus the aggregate principal amount on deposit in the Principal Funding
Account and for any other date, means the Class B Invested Amount.
"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" generally 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 (a) maintains a
short-term credit rating of at least "A-1" and "P-1" (express or implied)
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 and the guarantor maintains a short-term credit
rating (express or implied) of at least "A-1" and "P-1" by the applicable
Rating Agency, (c) has appointed Deutsche Financial as subservicer pursuant
to the Servicing Agreement and Deutsche Financial maintains a short-term
credit rating (express or implied) of "P-1" and "A-1" by the applicable
Rating Agency and Yamaha and Deutsche Financial shall have agreed pursuant
to a document satisfactory to the Rating Agencies that Deutsche Financial
shall remit collections directly to the Collection Account rather than to
Yamaha or (d) 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 or payments made by the
Transferor in respect of Ineligible Receivables allocable to the
Certificateholders' Interest into the Collection Account on the second
Business Day after processing 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) 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 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, and neither entity currently has such express ratings, but
instead is relying on implied ratings and approvals from the applicable
Rating Agencies. See "Risk Factors--Priority of some liens over the
certificates could result in losses on the certificates."
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 any excess 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,
if any, 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 holders 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 any excess 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, if any, 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
Most 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. In addition, the Yield
Factor will increase to 2% with respect to Series 1999-1 and Series 2000-1
during any Collection Period for which one-month LIBOR (as calculated by
the Trustee on the preceding LIBOR Determination Date) exceeds 15% per
annum. During such period, the amount of Collections treated as Yield
Collections allocable to the Certificates will be increased accordingly and
the amount of such increase will not be treated as Principal Collections
allocable to the Certificates. After such time, if one-month LIBOR (as
calculated by the Trustee on any subsequent LIBOR Determination Date)
decreases to a rate equal to or less than 15% per annum, the Yield Factor
will be reduced from 2% to 1.5% or 1.75%, as applicable. 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 other
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 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 such Undistributed Principal Collections (or a pro
rata portion thereof if an accumulation period or an early amortization
period has commenced with respect to any other 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:
(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___%;
(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 ___% 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 ___%;
(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%;
(7) either (x) 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 ___% or (y) 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 ____%; or
(8) as of the last day of any Collection Period prior to
the repayment in full of the Series 1995-1 Asset-Backed
Certificates and the Series 1998-1 Asset-Backed Certificates, 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 included in Available Yield Funds and applied as
such, 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 a Transferor Subordination 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 a Transferor Subordination Event described in clause (2), (3) or (8)
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 a Transferor Subordination 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 a Transferor Subordination 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 a
Transferor Subordination Event described in clause (6) or (7) 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 a Transferor Subordination Event described in clauses (2)
through (8) 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 an amount equal to such deficiency into 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 shall be reduced on any
Distribution Date by the amount of the Transferor Percentage of Principal
Collections which are applied as Available Yield Funds and shall be
reinstated (up to the required Available Subordinated Amount) by the amount
of the Available Yield Funds distributed to the Transferor as provided in
clause (a)(9) 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 net investment
income with respect to the Principal Funding Account, plus the
Floating Allocation Percentage of net investment income on the
Collection Account, plus the Floating Allocation Percentage of net
investment income on the Special Funding Account (the "AVAILABLE
YIELD FUNDS") 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 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 or, if applicable, will be set
aside and retained in the Collection Account and be
applied as part of Class C Monthly Principal;
(6) an amount equal to unreimbursed Class A
Investor Charge-Offs, if any, 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;
(7) 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;
(8) 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
(9) 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 any Available Yield
Funds remaining after the application described in clause (a)(1)
through (9) 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, excluding
such Principal Collections allocable in respect of the Available
Subordinated Amount (the "AVAILABLE PRINCIPAL FUNDS") will be
allocated in the following priority:
(1) on the Class A Expected Final Payment Date
or on any Distribution Date during the Controlled
Accumulation Period, an amount up to the Controlled
Deposit Amount will be deposited in the Principal Funding
Account, and on any Distribution Date during an Early
Amortization Period, an amount up to Class A Monthly
Principal plus any other remaining Available Principal
Funds will be distributed to the holders of the Class A
Certificates;
(2) on the Class B Expected Final Payment Date
or on the Distribution Date during the Rapid Accumulation
Period, an amount up to Class B Monthly Principal plus
any other remaining Available Principal Funds will be
deposited in the Principal Funding Account, and on any
Distribution Date during an Early Amortization Period, an
amount up to Class B Monthly Principal plus any remaining
Available Principal Funds will be distributed to the
holders of the Class B Certificates;
(3) an amount up to Class C Monthly Principal
for such Distribution Date on and after the Offered
Certificates have been paid in full, plus any other
remaining Available Principal Funds, will be distributed
to the holders of the Class C Certificates; and
(4) an amount equal to the balance of any
remaining Available Principal 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 Pooling and Servicing
Agreement.
"CLASS A MONTHLY INTEREST" with respect to any Distribution Date
will equal the product of (a) the Class A Certificate Rate, (b) the actual
number of days in the related Interest Accrual Period divided by 360 and
(c) the Class A Invested Amount; provided, however, with respect to the
first Distribution Date, Class A Monthly Interest will equal the product of
(a) the Class A Certificate Rate, (b) ___ divided by 360 and (c) the Class
A Initial Invested Amount.
"CLASS B MONTHLY INTEREST" with respect to any Distribution Date
will equal the product of (a) the Class B Certificate Rate, (b) the actual
number of days in the related Interest Accrual Period divided by 360 and
(c) the Class B Invested Amount; provided, however, with respect to the
first Distribution Date, Class B Monthly Interest will equal the product of
(a) the Class B Certificate Rate, (b) ___ divided by 360 and (c) the Class
B Initial Invested Amount.
"CLASS C MONTHLY INTEREST" with respect to any Distribution Date
will equal the product of (a) the Class C Certificate Rate, (b) the actual
number of days in the related Interest Accrual Period divided by 360 and
(c) the Class C Invested Amount; provided, however, with respect to the
first Distribution Date, Class C Monthly Interest will equal the product of
(a) the Class C Certificate Rate, (b) ___ divided by 360 and (c) the Class
C Initial Invested Amount.
"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; 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 B Investor
Charge-Offs, and if during an Early Amortization Period, 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 C
Investor Charge-Offs, and if during an Early Amortization Period, 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, 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 holders of any Class of Offered
Certificates.
On each Distribution Date during 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 during 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 aggregate amount of Defaulted Receivables for any
Collection Period will be an amount (not less than zero) equal to the
product of (1) one minus the Yield Factor and (2) the aggregate amount of
the Receivables that were written off by Deutsche Financial in such
Collection Period. 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 less the amount of Recoveries received by the Servicer in
such Collection Period and less the full amount of any Defaulted
Receivables as to which the Transferor or Servicer became obligated to
accept reassignment for such Collection Period, unless certain events of
bankruptcy, insolvency or receivership have occurred with respect to the
Transferor, the Servicer or Deutsche Financial.
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
"--Subordination of the Transferor Interest in Certain Circumstances" and
clause (a)(5) of "--Distributions from the Collection Account," 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)(8) 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)(7) 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)(6) of
"--Distributions from the Collection Account."
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
The Certificates will be subject to optional repurchase, in whole
but not in part, 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 Initial 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 10%
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, 10% and (b) with respect to the
Collection Periods included in the period from each May through the
next succeeding October, 13%; 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;
(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%; or
(13) the Trustee makes a withdrawal from the Servicer
Cash Collateral Account and the Servicer fails to remit Collections
to the Collection Account in the amount of such withdrawal by the
fifth Business Day after the Distribution Date for such Collection
Period. 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), (12) or (13) 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 of the receipt of such
notice, the Trustee will (1) publish a notice of the liquidation or the
appointment requesting instructions from the investor certificateholders
whether to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and (2) send written notice to the investor
certificateholders describing the relevant provisions of the Pooling and
Servicing Agreement and requesting such certificateholders to elect whether
the Trustee should instruct the Servicer to sell, dispose of or otherwise
liquidate the Receivables. Unless otherwise instructed within a specified
period by the certificateholders representing undivided interests
aggregating more than 50% of the aggregate principal amount of each class
of each Series, 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 the administration of the Pooling and Servicing Agreement or any
Supplement and the performance of the Trustee's duties thereunder;
provided, however, that the Servicer shall not indemnify the Trust or the
certificateholders for any liabilities, costs or expenses incurred by the
Trustee through its own negligence or willful misconduct or 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 ____________ 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 (other than those incurred by a certificateholder in
the capacity of an investor in the investor certificates) 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 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.
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 makes various
representations, warranties and covenants for the benefit of the
Certificateholders and the Trustee including that, as to each Receivable
and related Account:
(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 applicable floorplan financing policies and
procedures.
In the event any of the covenants described above is not true and
correct in any material respect as of the date specified therein with
respect to any Receivable or Account, and such breach has a material
adverse effect on the certificateholders' interest in such Receivable, then
the Servicer will purchase such Receivable or, in the case of an untrue
representation with respect to an Account, all Receivables in such Account;
provided, however, that no such purchase is required with respect to such
Receivable if, by the end of the applicable grace period, the breached
representation or warranty is true and correct in all material respects and
any material adverse effect caused thereby has been cured. The Servicer
will effect such purchase by depositing into the Collection Account the
principal amount of such Receivables. 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 and the allocable portion
of the amount of the Transferor Interest, 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 portion of the Servicing Fee
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
or the Certificateholders.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under
the Pooling and Servicing Agreement, except (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 wholesale 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 if such subservicer agrees to conduct such duties in accordance
with the applicable floorplan financing policies and procedures. Pursuant
to the Servicing Agreement, dated as of March 1, 1994, as amended as of May
1, 1999, 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.
In the event that Yamaha terminates Deutsche Financial as
subservicer under the Servicing Agreement, Yamaha will promptly appoint a
successor subservicer that has a short-term credit rating (which may be an
implied rating) of at least "P-1" by Moody's and of "A-1" by Standard &
Poor's. Yamaha will provide notice of any such appointment to the
applicable Rating Agencies. If Yamaha has not appointed a successor
subservicer (which has accepted such appointment) at the time that Deutsche
Financial ceases to act as subservicer, Yamaha will serve as the successor
subservicer. If Yamaha is legally unable to serve as the subservicer,
Yamaha will petition a court to appoint an established financial
institution having a net worth of not less than $50,000,000 and whose
regular business includes the servicing of wholesale dealer receivables as
the successor subservicer.
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, 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 and in and
to the Receivables 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 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 or notice to the Trustee to
make such payment, transfer or deposit, on the date the Servicer is
required to do so under the Pooling and Servicing Agreement or any
Supplement; 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 to affect the certificateholders for a period of 60 days
after written notice; 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 provider of any 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) the Investor Default Amount for such Distribution
Date;
(d) 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;
(e) the amount of the Monthly Servicing Fee for such
Distribution Date;
(f) 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;
(g) 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; and
(h) whether an Early Amortization Event shall have occurred.
The Trustee will make such statement available to the holders 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
holder 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 (7)
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
principal on the Class C Certificates;
(5) the amount of such distribution allocable to interest
on the Class A Certificates;
(6) the amount of such distribution allocable to interest
on the Class B Certificates;
(7) the amount of such distribution allocable to interest
on the Class C Certificates;
(8) 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;
(9) 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;
(10) the amount, if any, by which the principal balance
of the Class C Certificates exceeds the Class C Invested Amount as
of the Record Date with respect to such Distribution Date;
(11) the "series factor" as of the end of the related
Collection Period (consisting of an eight-digit decimal expressing
the Class A Invested Amount as of such 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);
(12) the "series factor" as of the end of the related
Collection Period (consisting of an eight-digit decimal expressing
the Class B Invested Amount as of such 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); and
(13) the "series factor" as of the end of the related
Collection Period (consisting of an eight-digit decimal expressing
the Class C Invested Amount as of such 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 C Initial Invested Amount).
On or before January 31 of each calendar year, beginning with
January 31, 2001, 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 holder 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 holder of any Class of
Offered Certificates, together with such other customary information as the
Servicer deems necessary or desirable to enable the holders 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
in the opinion of such firm, the servicing and administration of the
Accounts was conducted in compliance with certain applicable terms and
conditions set forth in the Pooling and Servicing Agreement except for such
exceptions or errors they believe to be material and such other exceptions
as shall be set forth in such statement. In addition, on or before May 31
of each calendar year such accountants will compare certain 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 report 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, to the best of such
officer's knowledge, 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 such Supplement; provided, however, that such
action does not have a material adverse effect on the interests of the
certificateholders. 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 such
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 to such amendment), (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 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 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 assignment or reassignment 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 holders of any Class of
Offered Certificates or any Certificateholder or group of holders of any
Class of Offered Certificates 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 holders access
during business hours to the current list of holders of such Class of
Offered Certificates of the Trust for purposes of communicating with other
holders 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.
THE TRUSTEE
The ____________ 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 may hold Offered Certificates in its own
name. The Trustee's address is ____________, Attention: ____________.
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 (THE
"RECEIVABLES SALE AGREEMENT"), dated as of March 1, 1994, as amended as of
May 1, 1999, between Yamaha, as purchaser, and Deutsche Financial, as
seller. Pursuant to the Receivables Sale Agreement, Deutsche Financial has
sold and will sell to Yamaha, from time to time, without recourse, all of
its right, title and interest in, to and under all Receivables arising on
or after January 31, 1994 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, (the "RECEIVABLES
PURCHASE AGREEMENT") Yamaha sells to the Transferor all its right, title
and interest in, to and under the Receivables existing on January 31, 1994
and thereafter created under the Accounts. 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 (generally to the extent of Principal Collections
released to the Transferor) with the excess credited as a capital
contribution by Yamaha, the Transferor's parent.
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 from time to time 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 believed to meet the requirements of state
law in California with respect to such Receivables. See "Risk
Factors--Priority of some liens over the certificates could result in
losses on 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 and each date on which new
Accounts are created and Receivables arising therein are sold to the
Transferor:
(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;
(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; and
(4) as of March 24, 1994 and from time to time
thereafter, the computer file or list of Accounts in existence at
such time, provided by Yamaha to the Transferor is an accurate and
complete listing of all such Accounts in all material respects and
the information contained therein with respect to the identity of
such Accounts and the Receivables existing thereunder is true and
correct in all material respects as of March 24, 1994 or the
applicable date thereafter.
Upon the breach of certain of the representations and warranties described
in this paragraph giving rise to the Transferor's obligation to repurchase
Receivables under the Pooling and Servicing Agreement, 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 the Transferor is obligated to repurchase
under the Pooling and Servicing Agreement, if:
(1) such Receivable is not an Eligible Receivable or the
related Account is not an eligible Account;
(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; or
(3) Yamaha did not obtain all consents, licenses,
approvals or authorizations required in connection with the
conveyance of the Receivables to the Transferor.
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 any of the foregoing representations and warranties are
materially false.
CERTAIN COVENANTS
In the Receivables Purchase Agreement, Yamaha covenants to cause
compliance with the servicing obligations relating to the Accounts and the
Receivables 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 permitted by the
Pooling and Servicing Agreement.
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.
RECORDS REGARDING RECEIVABLES
In connection with the sale of the Receivables and related Product
Security pursuant to the Receivables Sale Agreement, and the subsequent
sale of the Receivables and related Product Security 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 to the Trustee upon request 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.
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
SECURITY INTEREST MATTERS
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 are 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 represents 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, the Trustee (on behalf of the certificateholders) possesses a first
priority perfected security interest (subject only to permitted liens) in
the Receivables and related Product Security upon the creation of such
Receivables and the transfer of such Receivables and the related Product
Security to the Trust. 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 have been
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. For example, 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, except as otherwise permitted by the Pooling and Servicing
Agreement. 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--Priority of some liens over the
certificates could result in losses on the certificates," cash Collections
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.
TRUE SALE MATTERS
Under 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 related product security and the
related Product Security from Deutsche Financial to Yamaha as an absolute
transfer of such Receivables and related Product Security to Yamaha. Under
a 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
should not be part of the bankruptcy estate of Deutsche Financial, and such
Receivables and related Product Security should not be available to
creditors of Deutsche Financial. In addition, as an absolute transfer to
the Transferor, such Receivables and related Product Security should not be
part of the bankruptcy estate of Yamaha, and such Receivables and Product
Security should 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 has received, and will receive on the Closing Date,
opinions 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, 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 holders of record of the Class A Certificates (the
"CLASS A CERTIFICATEHOLDERS") and the holders of record 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 could adversely affect the interests of all
certificateholders by delaying payments to the trust and 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, Adjustment Payments."
OTHER 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 (by
acquiring an interest in any Class of Offered Certificates) 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, GnazzoThill, A Professional Corporation, special tax
counsel to the Transferor ("TAX COUNSEL"), will render its opinion that the
Offered Certificates will be treated for Federal income tax purposes as
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.
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 providing Certificate Owners
with 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 its 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 an Offered
Certificate 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
Certificate 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
Transferor, the Trustee, any underwriters or purchasers and any applicable
Rating Agency, 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 an association taxable as a corporation or 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 Foreign Investors, might be subject to withholding tax.
FEDERAL INCOME TAX CONSEQUENCES TO FOREIGN INVESTORS
Tax Counsel will render its opinion 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 (unless, in the case
of a partnership, Treasury regulations provide otherwise), (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 holder of an Offered
Certificate setting forth the amount of interest paid (or OID accrued, if
any) on such Offered Certificate 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, 2000, subject to certain transition rules. Each Certificate
Owner should consult its 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
A plan fiduciary considering an investment in the
securities should consider, among other things, whether such an investment
might constitute or give rise to a prohibited transaction under the
Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
the Code or any substantially similar federal, state or local law. ERISA
and the Code impose restrictions on:
o employee benefit plans as defined in Section 3(3) of ERISA,
o plans described in Section 4975(e)(1) of the Code,
including retirement accounts and Keogh Plans,
o entities whose underlying asset include plan assets by
reason of a plan's investment in such entities, and
o persons who have certain specified relationships to a plan
described as "parties in interest" under ERISA and
"disqualified persons" under the Code ("PARTIES IN
INTEREST").
REGULATION UNDER ERISA AND THE TAX CODE
ERISA imposes certain duties on persons who are fiduciaries of a
plan. Under ERISA, any person who exercises any authority or control over
the management or disposition of a plan's assets is considered to be a
fiduciary of that plan. Both ERISA and the Code prohibit certain
transactions involving "plan assets" between a plan and parties in interest
or disqualified persons. Violations of these rules may result in the
imposition of an excise tax or penalty.
The term "plan assets" is not defined by ERISA or the Code.
However, a plan's assets may be deemed to include an interest in the
underlying assets of the trust if the plan acquires an "equity interest" in
the trust such as the securities. In that event, the operation of the trust
may result in a prohibited transaction under ERISA and the Code.
FINAL REGULATION ISSUED BY THE DOL
The Department of Labor ("DOL") issued a final regulation which
provides exceptions to a plan which acquires an equity interest in the
trust ("PLAN ASSET REGULATION"). One exception provides that, if a plan
acquires a "publicly-offered security," the issuer of the security is not
deemed to hold plan assets. A publicly-offered security is a security that:
o is freely transferable,
o is part of a class of securities that is owned by 100 or
more investors independent of the issuer and of one
another, and
o is either:
- part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act, or
- sold to the plan as part of an offering of
securities to the public pursuant to an
effective registration statement under the
Securities Act and the class of securities of
which such security is part is registered
under the Exchange Act within the requisite
time.
THE CERTIFICATES
The Underwriter anticipates that each Class of Certificates will
not be held by at least 100 persons. Consequently, it is not anticipated
that interests in either Class of Certificates will meet the criteria of
publicly-offered securities. If interests in the Class A Certificates or
the Class B Certificates fail to meet the criteria of publicly-offered
securities, the trust assets may be deemed to include assets of plans that
are certificateholders of that Class. In that event, transactions involving
the trust and parties in interest or disqualified persons with respect to
such plans might be prohibited under ERISA and the Code. In addition, if
the transferor or any underwriter of such series is a party in interest or
a disqualified person with respect to an investing plan, the purchase of an
interest in Class A Certificates or Class B Certificates by such plan could
constitute a prohibited transaction. Thus, an investment by a plan in
certificates could result in liability under ERISA and the Code unless a
statutory or administrative exemption exist and the plan satisfies all
conditions for such exemptive relief.
Accordingly, neither the Class A Certificates nor the Class B
Certificates may be acquired or held by (a) any employee benefit plan that
is subject to ERISA, (b) any plan or other arrangement (including an
individual retirement account or Keogh plan) that is subject to Section
4975 of the Code, or (c) any entity whose underlying assets include
acceptance of a Certificate.
EACH CERTIFICATEHOLDER WILL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT IT IS NOT AND WILL NOT BE SUBJECT TO THE FOREGOING
LIMITATION.
SPECIAL CONSIDERATIONS FOR INSURANCE COMPANIES
An insurance company considering an investment should consider
whether its general account may be deemed to include assets of the plans
investing in the general account. In John Hancock Mutual Life Insurance Co.
v. Harris Trust and Savings Bank, 114 S. Ct. 517 (1993), the United States
Supreme Court held that assets held in an insurance company's general
account may be deemed to be plan assets under certain circumstances. In
that event, the insurance company might be treated as a party in interest
under such plans. Therefore, insurance company investors should analyze
whether John Hancock may have an impact with respect to their purchase of
the certificates of any series.
Any purchaser that is an insurance company using the assets of an
insurance company general account should note that the Small Business Job
Protection Act of 1996 added new Section 401(c) of ERISA relating to the
status of the assets of insurance company general accounts under ERISA and
Section 4975 of the Code. Pursuant to Section 401(c), the Department of
Labor issued final regulations effective January 5, 2000 (the "General
Account Regulations") with respect to insurance policies issued on or
before December 31, 1998 that are supported by an insurer's general
account. As a result of these regulations, assets of an insurance company
general account will not be treated as "plan assets" for purposes of the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code
to the extent such assets relate to contracts issued to employee benefit
plans on or before December 31, 1998 and the insurer satisfies various
conditions. Section 401(c) also provides that, except in the case of
avoidance of the General Account Regulation and actions brought by the
Secretary of Labor relating to certain breaches of fiduciary duties that
also constitute breaches of state or federal criminal law, until June 5,
2001 (the date that is 18 months after the General Account Regulations
became final), no liability under the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code may
result on the basis of a claim that the assets of the general account of an
insurance company constitute the "plan assets" of any such plan. It should
be noted that the plan asset status of insurance company's separate accounts
is unaffected by new Section 401(c) of ERISA. Separate account assets
continue to be treated as the plan assets of any plan invested in a
separate account. Potential investors considering the purchase of
certificates of any series on behalf of an insurance company's general
account should consult their legal advisors regarding the effect of these
regulations on such investment.
PLANS NOT SUBJECT TO ERISA OR THE CODE
Certain employee benefit plans, such as governmental
plans and certain church plans are not subject to the provisions of Title I
of ERISA and Section 4975 of the Code. Accordingly, assets of such plans
may be invested in the certificates of each series without regard to the
ERISA considerations described here, subject to the provisions of any other
applicable federal and state law. It should be noted that any such plan
that is qualified and exempt from taxation under the Code is subject to the
prohibited transaction rules set forth in the Code.
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 respective
public offering prices set forth on the cover page of this Prospectus, and
to certain dealers at such prices less a concession not in excess of, in
the case of (1) the Class A Certificates, _____% of the principal amount of
such Certificates and (2) the Class B Certificates, _____% of the principal
amount of such 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
prices, concession and reallowance may be changed. 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 the Transferor 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 Offered Certificates will be
passed upon for the Transferor and the Servicer by GnazzoThill, 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 GnazzoThill, 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 DEFINED TERMS
TERM PAGE
ACCOUNT ..........................................................37
ACCOUNTS ..........................................................16
ACCUMULATION PERIODS........................................................28
ACCUMULATION SHORTFALL......................................................28
ADJUSTMENT PAYMENT..........................................................49
AVAILABLE PRINCIPAL FUNDS...................................................47
AVAILABLE SUBORDINATED AMOUNT...............................................46
AVAILABLE YIELD FUNDS.......................................................46
BANKRUPTCY CODE ..........................................................62
CEDE ..........................................................29
CEDEL ..........................................................29
CEDEL PARTICIPANTS..........................................................31
CERTIFICATE OWNERS..........................................................29
CERTIFICATE RATES ..........................................................25
CERTIFICATEHOLDERS..........................................................26
CERTIFICATEHOLDERS' INTEREST................................................26
CERTIFICATES ..........................................................33
CHATTEL PAPER ..........................................................37
CLASS ..........................................................33
CLASS A ADJUSTED INVESTED AMOUNT............................................42
CLASS A CERTIFICATE RATE....................................................25
CLASS A CERTIFICATEHOLDERS..................................................63
CLASS A CERTIFICATES........................................................24
CLASS A INITIAL INVESTED AMOUNT.............................................24
CLASS A INVESTED AMOUNT.....................................................42
CLASS A INVESTOR CHARGE-OFF.................................................50
CLASS A MONTHLY INTEREST....................................................48
CLASS A MONTHLY PRINCIPAL...................................................48
CLASS B ADJUSTED INVESTED AMOUNT............................................42
CLASS B CERTIFICATE RATE....................................................25
CLASS B CERTIFICATEHOLDERS..................................................63
CLASS B CERTIFICATES........................................................24
CLASS B EXPECTED FINAL PAYMENT DATE.........................................27
CLASS B INITIAL INVESTED AMOUNT.............................................24
CLASS B INVESTED AMOUNT.....................................................42
CLASS B INVESTOR CHARGE-OFF.................................................50
CLASS B MONTHLY INTEREST....................................................48
CLASS B MONTHLY PRINCIPAL...................................................48
CLASS C CERTIFICATE RATE....................................................25
CLASS C CERTIFICATEHOLDERS..................................................26
CLASS C CERTIFICATES........................................................33
CLASS C INITIAL INVESTED AMOUNT.............................................24
CLASS C INVESTED AMOUNT.....................................................42
CLASS C INVESTOR CHARGE-OFF.................................................50
CLASS C MONTHLY INTEREST....................................................48
CLASS C MONTHLY PRINCIPAL...................................................48
CLOSING DATE ..........................................................25
CODE ..........................................................63
COLLECTION ACCOUNT..........................................................39
COLLECTION PERIOD ......................................................... 26
COLLECTIONS ..........................................................44
COMMISSION ..........................................................70
CONTROLLED ACCUMULATION AMOUNT..............................................28
CONTROLLED ACCUMULATION PERIOD..............................................28
CONTROLLED DEPOSIT AMOUNT...................................................28
COOPERATIVE ..........................................................31
CREDIT HOLD ..........................................................18
DEALERS ..........................................................16
DEFAULTED RECEIVABLES.......................................................49
DEFINITIVE CERTIFICATES.....................................................32
DEPOSITARIES ..........................................................30
DEPOSITARY ..........................................................30
DETERMINATION DATE..........................................................38
DIRECT PARTICIPANTS.........................................................29
DISTRIBUTION DATE ..........................................................25
DTC ..........................................................29
DTC PARTICIPANTS ..........................................................29
EARLY AMORTIZATION EVENT....................................................51
EARLY AMORTIZATION PERIOD...................................................50
ELIGIBLE DEPOSIT ACCOUNT....................................................39
ELIGIBLE INSTITUTION........................................................39
ELIGIBLE INVESTMENTS........................................................40
ELIGIBLE RECEIVABLE.........................................................37
ENHANCEMENT ..........................................................24
EUROCLEAR ..........................................................31
EUROCLEAR OPERATOR..........................................................31
EXCHANGE ACT ..........................................................70
EXCHANGEABLE TRANSFEROR CERTIFICATE.........................................25
EXPECTED FINAL PAYMENT DATES................................................27
FINAL SERIES TERMINATION DATE...............................................50
FINAL TERMINATION DATE......................................................50
FIXED ALLOCATION PERCENTAGE.................................................42
FLOATING ALLOCATION PERCENTAGE..............................................42
FOREIGN INVESTOR ..........................................................66
GENERAL INTANGIBLE..........................................................37
HOLDBACKS ..........................................................45
HOLDERS ..........................................................32
INDIRECT PARTICIPANTS.......................................................29
INELIGIBLE RECEIVABLE.......................................................36
INITIAL SERVICER CASH COLLATERAL DEPOSIT....................................41
INTEREST ACCRUAL PERIOD.....................................................25
INVESTED AMOUNT ..........................................................43
INVESTMENT COMPANY..........................................................51
INVESTOR DEFAULT AMOUNT.....................................................49
IRS ..........................................................64
LIBOR DETERMINATION DATE....................................................25
LONDON BANKING DAY..........................................................25
MAXIMUM RATE ..........................................................25
MINIMUM TRANSFEROR PERCENTAGE...............................................36
MINIMUM TRUST PRINCIPAL COMPONENT"..........................................40
MONTHLY SERVICER REPORT.....................................................56
MONTHLY SERVICING FEE.......................................................54
MOODY'S ..........................................................41
NEW PRODUCTS ..........................................................17
NEW REGULATIONS ..........................................................67
OFFERED CERTIFICATES........................................................24
OID ..........................................................64
OID REGULATIONS ..........................................................64
OMNIBUS PROXY ..........................................................30
PAYING AGENT ..........................................................29
PAYMENT DATE STATEMENT......................................................56
POOL BALANCE ..........................................................21
POOLING AND SERVICING AGREEMENT.............................................16
PRINCIPAL COLLECTIONS.......................................................44
PRINCIPAL FUNDING ACCOUNT...................................................40
PRINCIPAL TERMS ..........................................................34
PRODUCT SECURITY ..........................................................17
RAPID ACCUMULATION PERIOD...................................................28
RATING AGENCY ..........................................................32
RECEIVABLES ..........................................................16
RECORD DATE ..........................................................25
REFERENCE BANKS ..........................................................25
REGISTRATION STATEMENT......................................................70
REMOVED ACCOUNTS ..........................................................21
REVOLVING PERIOD ..........................................................26
SECURITIES ACT ..........................................................34
SERIES ..........................................................16
SERIES 1999-1 ..........................................................33
SERIES UNDISTRIBUTED PRINCIPAL COLLECTIONS..................................48
SERVICE TRANSFER ..........................................................55
SERVICER ..........................................................16
SERVICER CASH COLLATERAL ACCOUNT............................................41
SERVICER DEFAULT ..........................................................55
SERVICING AGREEMENT.........................................................55
SERVICING FEE ..........................................................54
SERVICING FEE PERCENTAGE....................................................54
SPECIAL FUNDING ACCOUNT.....................................................40
STANDARD & POOR'S ..........................................................41
SUPPLEMENT ..........................................................33
TAX COUNSEL ..........................................................64
TELERATE PAGE 3750..........................................................25
TERMS AND CONDITIONS........................................................31
TRANSFER DATE ..........................................................41
TRANSFEROR ..........................................................16
TRANSFEROR AMOUNT ..........................................................38
TRANSFEROR INTEREST.........................................................25
TRANSFEROR PERCENTAGE.......................................................43
TRANSFEROR SUBORDINATION EVENT..............................................45
TRUST ..........................................................16
TRUSTEE ..........................................................16
U.S. WHOLESALE PORTFOLIO....................................................17
UCC ..........................................................29
UNDERWRITER ..........................................................33
UNDERWRITING AGREEMENT......................................................69
UNDISTRIBUTED PRINCIPAL COLLECTIONS.........................................45
USED PRODUCTS ..........................................................17
YAMAHA ..........................................................16
YIELD COLLECTIONS ..........................................................44
YIELD FACTOR ..........................................................44
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, Clearstream 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 Clearstream 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 Clearstream or Euroclear and
DTC Participants holding Offered Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of
Clearstream 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, Clearstream 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 Clearstream
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
book-entry securities in same-day funds.
Trading between Clearstream Customers and Euroclear Participants.
Secondary market trading between Clearstream Customers or Euroclear
Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Clearstream or Euroclear purchaser.
When Offered Certificates are to be transferred from the account of a DTC
Participant to the accounts of a Clearstream Customer or a Euroclear
Participant, the purchaser will send instructions to Clearstream or
Euroclear through a Clearstream Customer or Euroclear Participant at least
one business day prior to settlement. Clearstream 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 Clearstream
Customer'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 Clearstream or Euroclear cash debit will
be valued instead as of the actual settlement date.
Clearstream Customers 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
Clearstream or Euroclear. Under this approach, they may take on credit
exposure to Clearstream or Euroclear until the Offered Certificates are
credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line
of credit to them, Clearstream Customers 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, Clearstream Customers 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 Clearstream
Customer'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
Clearstream Customers 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 Clearstream or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, Clearstream Customers 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 Clearstream or Euroclear
through a Clearstream Customer or Euroclear Participant at least one
business day prior to settlement. In these cases, Clearstream 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
Clearstream Customer or Euroclear Participant the following day, and
receipt of the cash proceeds in the Clearstream Customer'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
Clearstream Customer 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 Clearstream Customer's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Clearstream or Euroclear and that
purchase Offered Certificates from DTC Participants for delivery to
Clearstream Customers 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 Clearstream or Euroclear for one
day (until the purchase side of the day trade is reflected in their
Clearstream 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 Clearstream 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 Clearstream Customer or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Offered Certificates holding securities
through Clearstream 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 its 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, its 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, 2000. 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, Suite A
Cypress, CA 90630
TRUSTEE
LEGAL ADVISOR TO THE TRANSFEROR
AS TO UNITED STATES LAW
GnazzoThill, 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
Four Times Square
New York, New York 10036-6522
INDEPENDENT ACCOUNTANTS TO THE
TRANSFEROR
PriceWaterhouseCoopers LLP
575 Anton Boulevard
Suite 1100
Costa Mesa, California 92626
YAMAHA MOTOR MASTER TRUST
ISSUER
SERIES 2000-1
$--------------
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 ____________________.
