<PAGE>
As Filed Pursuant to Rule 424b4
Registration No. 333-45516
$183,000,000
[LOGO]
YAMAHA MOTOR MASTER TRUST
Issuer
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
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Class A Certificates Class B Certificates
-------------------- --------------------
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THE TRUST IS OFFERING:
Principal Amount $171,000,000 $12,000,000
Price $171,000,000 (100.00%) $12,000,000 (100.00%)
Underwriter's Commissions $ 513,000 (0.30%) $ 60,000 (0.50%)
Proceeds to the Issuer $170,487,000 (99.70%) $11,940,000 (99.50%)
Interest Rate (subject to cap) one-month LIBOR + one-month LIBOR +
0.26% p.a. 0.70% p.a.
monthly on the 15th monthly on the 15th
or the first business or the first business
day day
Interest Distribution Dates after the 15th after the 15th
First Interest Distribution Date January 15, 2001 January 15, 2001
Expected Final Payment Date November 2005 December 2005
distribution date distribution date
</TABLE>
- The trust is also issuing $17,000,000 principal amount of Class C
Certificates. The Class C Certificates are not being offered by this
prospectus.
CREDIT ENHANCEMENT:
Credit enhancement for the Class A Certificates is provided by:
- subordination of the Class B Certificates;
- subordination of the Class C Certificates; and
- subordination of the transferor interest in the trust up to the
available subordination amount.
Credit enhancement for the Class B Certificates is provided by:
- subordination of the Class C Certificates; and
- 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 12 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 November 30, 2000.
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TABLE OF CONTENTS
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WHERE TO FIND INFORMATION IN THIS
PROSPECTUS........................... 4
SUMMARY OF TERMS....................... 5
STRUCTURAL SUMMARY..................... 6
SELECTED TRUST PORTFOLIO SUMMARY
DATA................................. 10
RISK FACTORS........................... 12
THE TRANSFEROR AND TRANSACTION
PARTIES.............................. 18
Yamaha Motor Receivables
Corporation.......................... 18
Yamaha Motor Corporation, U.S.A...... 18
Deutsche Financial Services
Corporation.......................... 18
The Trust............................ 19
FORWARD-LOOKING STATEMENTS............. 19
USE OF PROCEEDS........................ 19
THE DEALER FLOORPLAN FINANCING
BUSINESS............................. 19
Credit Underwriting Process.......... 20
Creation of Receivables.............. 21
Payment Terms........................ 22
Billing and Collection Procedures.... 23
Interest Rates....................... 23
Relationship between Deutsche
Financial and Yamaha................. 23
Dealer Monitoring.................... 24
"Red Flag" and Deutsche Financial's
Write-Off Policy..................... 24
THE ACCOUNTS........................... 25
Loss Experience...................... 26
Aging Experience..................... 26
Geographic Distribution.............. 27
Product Distribution................. 28
DESCRIPTION OF THE OFFERED
CERTIFICATES......................... 28
Interests in the Trust............... 28
Interest Payments.................... 29
Principal Payments................... 30
Maturity and Principal Payment
Considerations....................... 31
Registration of the Offered
Certificates in the Name of Cede as
Nominee of DTC....................... 34
Book-Entry Registration of the
Offered Certificates................. 35
Issuance of Definitive Certificates
Upon the Occurrence of Certain
Circumstances........................ 38
Rating of the Offered Certificates... 39
Issuance of Certificates............. 39
Additional Series of Certificates.... 40
Covenants, Representations and
Warranties........................... 42
Addition of Accounts................. 45
Removal of Accounts.................. 46
Collection Account................... 47
Principal Funding Account............ 48
Special Funding Account.............. 49
Servicer Cash Collateral Account..... 49
Allocation Percentages............... 51
Allocation of Collections; Deposits
in Collection Account................ 52
Yield Factor; Yield Collections...... 54
Principal Collections for All
Series............................... 54
Application of Collections........... 55
Subordination of Transferor Interest
in Certain Circumstances............. 55
Distributions from the Collection
Account.............................. 57
Distributions to
Certificateholders................... 60
Defaulted Receivables; Recoveries,
Adjustment Payments.................. 61
Investor Charge-Offs................. 61
Final Payment of Principal;
Termination of Trust................. 62
Early Amortization Events............ 62
Indemnification...................... 65
Collection and Other Servicing
Procedures........................... 66
Servicer Covenants................... 66
Servicing Compensation and Payment of
Expenses............................. 67
Certain Matters Regarding the
Servicer............................. 68
Servicer Default..................... 68
Reports to Certificateholders........ 70
Evidence as to Compliance............ 71
Amendments........................... 72
List of Certificateholders........... 72
The Trustee.......................... 73
DESCRIPTION OF THE RECEIVABLES SALE
AGREEMENT............................ 73
DESCRIPTION OF THE RECEIVABLES PURCHASE
AGREEMENT............................ 74
Sale of Receivables.................. 74
Representations and Warranties....... 74
Certain Covenants.................... 75
Records Regarding Receivables........ 76
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2
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Termination.......................... 76
CERTAIN TRANSFER, SECURITY INTEREST AND
BANKRUPTCY CONSIDERATIONS............ 76
Security Interest Matters............ 76
True Sale Matters.................... 77
Other Matters Relating to
Bankruptcy........................... 79
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS....................... 80
Characterization of the Offered
Certificates as Indebtedness......... 80
Taxation of Interest Income.......... 80
Sales of Offered Certificates........ 81
Tax Characterization of the Trust.... 82
Possible Classification of the
Transaction as a Partnership......... 82
Federal Income Tax Consequences to
Foreign Investors.................... 83
Backup Withholding................... 84
New Withholding Regulations.......... 84
State, Local and Foreign Taxation.... 84
ERISA CONSIDERATIONS................... 84
Regulation Under ERISA and the Tax
Code................................. 85
Final Regulation Issued by the DOL... 85
The Certificates..................... 85
Special Considerations for Insurance
Companies............................ 86
Plans Not Subject to ERISA or the
Code................................. 86
UNDERWRITING........................... 87
LEGAL MATTERS.......................... 88
REPORTS TO CERTIFICATEHOLDERS.......... 88
WHERE YOU CAN FIND MORE INFORMATION.... 88
OTHER SERIES ISSUED AND OUTSTANDING.... 89
INDEX OF DEFINED TERMS................. 90
ANNEX A................................ A-1
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES............. A-1
CERTAIN U.S. FEDERAL INCOME TAX
DOCUMENTATION REQUIREMENTS........... A-3
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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:
- SUMMARY OF TERMS provides important amounts, dates and other terms of your
series;
- STRUCTURAL SUMMARY gives a brief introduction of the key structural
features of your series and directions for locating further information;
- SELECTED TRUST PORTFOLIO SUMMARY DATA provides financial information about
the assets of the trust; and
- 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 90 in this prospectus.
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TO UNDERSTAND THE STRUCTURE OF THESE SECURITIES, YOU
MUST READ CAREFULLY THIS PROSPECTUS IN ITS ENTIRETY.
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4
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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.
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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: The Chase Manhattan Bank
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:
- 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.;
- collections on the receivables;
- funds in the accounts of the trust;
- any enhancements issued for the benefit of
certificateholders of another series; and
- security interests in the inventory of the dealers
financed by the receivables
</TABLE>
THE TERMS OF THE SERIES:
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CLASS C CERTIFICATES
(NOT OFFERED
CLASS A CERTIFICATES CLASS B CERTIFICATES BY THIS PROSPECTUS)
-------------------- -------------------- --------------------
<S> <C> <C> <C>
PRINCIPAL AMOUNT: $171,000,000 $12,000,000 $17,000,000
INTEREST RATE (SUBJECT TO CAP): one-month LIBOR plus one-month LIBOR plus one-month LIBOR plus
0.26% p.a. 0.70% p.a. 0.70% p.a.
PERCENT OF SERIES: 85.5% 6.0% 8.5%
INTEREST ACCRUAL METHOD: actual/360 actual/360 actual/360
INTEREST DISTRIBUTION DATES: monthly (15th) monthly (15th) monthly (15th)
FIRST INTEREST DISTRIBUTION DATE: January 15, 2001 January 15, 2001 January 15, 2001
COMMENCEMENT OF ACCUMULATION PERIOD: May 1, 2005 November 1, 2005 November 1, 2005
EXPECTED FINAL PAYMENT DATE: November 2005 December 2005 December 2005
distribution date distribution date distribution date
ANTICIPATED RATINGS (MOODY'S/S&P):* Aaa/AAA A3/A not rated
CREDIT ENHANCEMENT: subordination of subordination of limited
Class B and Class C Class C subordination of
Certificates and Certificates and transferor interest
limited limited
subordination of subordination of
transferor interest transferor interest
CUSIP NUMBER: 98462PAE9 US98462PAE97 none
ISIN: 98462PAF6 US98462PAF62 none
COMMON CODE: 012162081 012162103 none
</TABLE>
------------------------
* 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.
5
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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.
The receivables arise in the accounts with the dealers. 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. As of
September 30, 2000, with respect to the accounts in the trust:
- there were approximately 2,385 accounts (solely for purposes of this
calculation the accounts included "parts-only" dealers and excluded
dealers considered inactive as of September 30, 2000 (all such excluded
dealers had zero balances));
- the aggregate receivables balance was approximately $605 million;
- the average credit line per account was approximately $433,865 and the
average balance of receivables per account was $253,734;
- the aggregate receivables balance as a percentage of the aggregate credit
line was approximately 58.48%; and
- the average rate charged to dealers was 6.01%.
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.
6
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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:
- subordination of the Class B Certificates;
- subordination of the Class C Certificates; and
- 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:
- subordination of the Class C Certificates; and
- 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:
- certificateholders of your series;
- certificateholders of other series issued by the trust; and
- 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."
7
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PRINCIPAL PAYMENTS
The trust expects to repay all principal on the Class A Certificates in one
payment on the November 2005 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 May 1, 2005 and ending on October 31, 2005.
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 December 2005 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 November 1, 2005 and ending on November 30, 2005. 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 "DESCRIPTION OF THE OFFERED
CERTIFICATES--MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS," "--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 "DESCRIPTION OF THE OFFERED CERTIFICATES--MATURITY AND PRINCIPAL
PAYMENT CONSIDERATIONS" AND "--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 May 2008 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:
- the Class A Certificates and the Class B Certificates will be
characterized as debt; and
- 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
8
<PAGE>
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:
- "employee benefit plans" as defined in Section 3(3) of ERISA;
- any "plan" as defined in Section 4975 of the U.S. Internal Revenue Code;
and
- 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."
9
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SELECTED TRUST PORTFOLIO SUMMARY DATA
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES FOR THE TRUST PORTFOLIO
AS OF SEPTEMBER 30, 2000
[graphic omitted-pie chart summarizing data contained in the table included
in the section "The Accounts--Geographic Distribution"]
The chart above shows the geographic distribution of the receivables in the
trust 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 trust portfolio.
AGE DISTRIBUTION OF THE RECEIVABLES FOR THE TRUST PORTFOLIO
AS OF SEPTEMBER 30, 2000
(DAYS)
[graphic omitted-bar chart summarizing data contained in the table included
in the section "The Accounts--Aging Experience"]
The chart above shows the percentages of the receivables in the trust
portfolio within the age brackets shown.
10
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PAYMENT RATE DATA
The chart below shows the payment rate for the trust portfolio from
October 31, 1995 to September 30, 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.
[graphic omitted-line graph summarizing data contained in the table included
in the section "Description of the Offered Certificates--Maturity and Principal
Payment Considerations"]
11
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the certificates.
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ABSENCE OF SECONDARY MARKET FOR You may be unable to resell your certificates due to the
CERTIFICATES COULD LIMIT YOUR ABILITY absence of a secondary market for the certificates. The
TO RESELL 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 TRUST COULD You may suffer a loss on your certificates if the assets of
RESULT IN LOSSES ON THE CERTIFICATES the trust are insufficient 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 OVER THE You may suffer a loss on your certificates if some liens on
CERTIFICATES COULD RESULT IN LOSSES Yamaha's or the transferor's property have priority over the
ON THE CERTIFICATES 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."
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
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12
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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 OR DEUTSCHE If Yamaha or Deutsche Financial enters a bankruptcy
FINANCIAL COULD RESULT IN LOSSES OR proceeding, you could experience losses or delays in the
DELAYS IN PAYMENTS ON THE payments on your certificates. Deutsche Financial sells 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:
- the trustee would not be able to exercise remedies against
Yamaha or Deutsche Financial on your behalf without
permission from the court;
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- the court might require the trustee to accept property in
exchange for the receivables that is of less value than
the receivables;
- 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;
- the court might prevent the trustee or the
certificateholders from taking some actions such as selling
the receivables or appointing a successor servicer;
- the court might sell the receivables and pay off the
certificates before their maturity;
- 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
- 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 "CERTAIN TRANSFER, SECURITY INTEREST AND BANKRUPTCY
CONSIDERATIONS" FOR A MORE DETAILED DESCRIPTION OF THESE
RISKS.
SLOWER GENERATION OF RECEIVABLES BY Each receivable is generally payable by a dealer upon sale
DEALERS COULD REDUCE COLLECTIONS of the related product and 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 generate 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 greater
than the rate of return that would have been available on
the expected final payment date.
EARLY AMORTIZATION EVENTS COULD If an early amortization event occurs under the pooling and
RESULT IN LOSSES OR ACCELERATION OF servicing agreement, it may shorten the average term and
PAYMENTS ON THE CERTIFICATES date of final 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.
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FOR MORE DETAILS ABOUT THE RISKS ASSOCIATED WITH EARLY
AMORTIZATION EVENTS, SEE "THE DEALER FLOORPLAN FINANCING
BUSINESS," "DESCRIPTION OF THE OFFERED
CERTIFICATES--MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS"
AND "--EARLY AMORTIZATION EVENTS."
INCREASE IN LIBOR COULD RESULT IN An increase in LIBOR could result in a cap on interest
CAPPED INTEREST PAYMENTS ON THE payments on the certificates at a maximum rate. The
CERTIFICATES 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 COULD Payment of the receivables depends upon the sale of the
LEAD TO SLOWER SALES OF PRODUCTS BY related products by the dealers. The level of product sales
DEALERS AND LOWER COLLECTIONS WITH may change because of a variety of economic and social
WHICH TO PAY THE CERTIFICATES 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. Certain
of these factors may vary on a regional basis, and may be
exacerbated by geographic concentrations in the portfolio.
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 TRUST IS While Yamaha is generally not obligated to make payments
ULTIMATELY DEPENDENT ON YAMAHA with respect to the 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
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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 FINANCIAL'S Deutsche Financial is not obligated to continue underwriting
SERVICES COULD DELAY THE TRUST'S or servicing Yamaha receivables. If Deutsche Financial
ABILITY TO COLLECT ON RECEIVABLES ceases such activities, delays in originating receivables
AND/OR GENERATE NEW RECEIVABLES, and/or processing payments and related information on the
DELAYING OR REDUCING PAYMENTS ON receivables could occur and result in delayed in payments to
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 WILL Certificateholders of any series may need the consent or
HAVE LIMITED CONTROL OF TRUST ACTIONS approval of the holders of a specified percentage of the
unpaid investor interests of all outstanding series to take
some actions. These actions include:
- amending the pooling and servicing agreement in some
cases;
- directing a reassignment of the receivables portfolio; and
- 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
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particular certificateholder to achieve the desired results
from any vote.
ISSUANCE OF ADDITIONAL SERIES BY THE Yamaha Motor Master Trust, is a master trust, that may issue
TRUST COULD AFFECT THE TIMING OF THE additional series of certificates from time to time. The
PAYMENTS ON THE CERTIFICATES trust may issue series with terms that are different from
your series without the prior review or consent of any
certificateholders. It is a condition to the issuance of
each new series that each rating agency that has rated an
outstanding series of the trust confirm that the issuance of
the new series will not result in a reduction or withdrawal
of its rating of any class of any outstanding series. 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 ADDITIONAL The Class B Certificates bear more credit risk than the
CREDIT RISK 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
"DESCRIPTION OF THE OFFERED CERTIFICATES--MATURITY AND
PRINCIPAL PAYMENT CONSIDERATIONS" AND "--INVESTOR
CHARGE-OFFS."
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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 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.
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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 The Chase Manhattan Bank (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 (collectively, the "TRUST PORTFOLIO"). 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.
FORWARD-LOOKING STATEMENTS
In this prospectus, Yamaha Motor Receivables Corporation uses
forward-looking statements. These forward-looking statements are found in the
material, including each of the tables, set forth under "Risk Factors" and
"Maturity and Principal Payment Considerations." Forward-looking statements are
also found elsewhere in this prospectus and include words like "expects,"
"intends," "anticipates," "estimates" and other similar words. These statements
are inherently subject to a variety of risks and uncertainties. Actual results
differ materially from those we anticipate due to changes in, among other
things:
- economic conditions and industry competition;
- political, social and economic conditions;
- the law and government regulatory initiatives; and
- interest rate fluctuations.
Yamaha Motor Receivables Corporation will not update or revise any
forward-looking statements to reflect changes in its expectations or changes in
the conditions or circumstances on which the statements were originally based.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be used by
the Transferor for general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
As discussed above, 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. 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
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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. Yamaha submitted for financing to Deutsche
Financial $1,181,141,333, $1,191,935,107, $1,384,059,194 and $1,873,909,373 for
the fiscal years ended 1997, 1998, 1999 and 2000, respectively. Yamaha submitted
for financing to Deutsche Financial $869,276,291 for the six month period ended
September 30, 1999 and $1,126,534,318 for the six month period ended
September 30, 2000, up approximately 29.59% from the same period last year.
Deutsche Financial services the Trust 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
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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
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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 99.84% 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
22
<PAGE>
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 Trust 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 Trust Portfolio.
23
<PAGE>
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.
24
<PAGE>
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 Trust 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:
- there were approximately 2,385 Accounts (solely for purposes of this
calculation, Accounts included "parts-only" dealers and excluded dealers
considered inactive as of September 30, 2000 (all such excluded dealers
had zero balances));
- the aggregate Receivables balance was approximately $605 million;
- the average credit line per Account was approximately $433,865 and the
average balance of Receivables per Account was $253,734;
- the aggregate Receivables balance as a percentage of the aggregate credit
line was approximately 58.48%; and
- the average rate charged to Dealers was 6.01%.
The average rate charged to Dealers will change as the composition of
interest bearing and non-interest bearing receivables in the Trust Portfolio
changes throughout the year. Other factors that may impact the rate are changes
in the level of the prime rate and changes in the interest-free financing
programs offered. 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 Trust Portfolio, Yamaha and the Transferor believe there are
no discernible trends in the historical performance of the Receivables that are
material.
25
<PAGE>
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
Trust Portfolio. There can be no assurance that the loss experience for the
Receivables in the future will be similar to the historical experience set forth
below with respect to the Trust 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 Deutsche Financial and Yamaha" 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 Trust Portfolio will likely be adversely affected. See "Risk Factors--The
performance of the trust is ultimately dependent on Yamaha."
ANNUALIZED LOSS EXPERIENCE FOR THE TRUST PORTFOLIO(1)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FISCAL YEAR ENDED MARCH 31,
SEPTEMBER 30, -----------------------------------------
2000 2000 1999 1998 1997
------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average Receivables Balance(2)........... $626,394 $529,147 $473,708 $503,566 $514,564
Charge-off Net of Recoveries............. $ 72 $ 413 $ 134 $ 489 $ 630
Charge-off Net of Recoveries/Average
Receivables Balance(2)................. 0.024% 0.078% 0.028% 0.097% 0.122%
</TABLE>
------------------------
(1) Dollars in thousands.
(2) Average receivables balance is the average of the monthly ending balances
for the period specified.
AGING EXPERIENCE
The following table provides the age distribution of Product inventory for
all Dealers in the Trust Portfolio. The actual experience of the Trust Portfolio
may differ from historical experience.
AGE DISTRIBUTION FOR THE TRUST PORTFOLIO(1)
BY PERCENTAGE OF RECEIVABLES OUTSTANDING (2)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FISCAL YEAR ENDED MARCH 31,
SEPTEMBER 30, -----------------------------------------
2000 2000 1999 1998 1997
------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1-90... 64.16% 52.80% 55.97% 47.30% 45.03%
91-180.. 19.37 28.64 22.58 22.62 22.59
181-270.. 5.93 9.86 7.97 7.72 8.66
271-365.. 4.78 2.41 2.97 5.96 6.44
366+... 5.76 6.28 10.50 16.39 17.28
------ ------ ------ ------ ------
TOTAL.. 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ======
</TABLE>
------------------------
(1) Ages in days.
(2) Percentages may not add to 100% due to rounding.
26
<PAGE>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution for all Dealers on
the basis of Receivables outstanding and the number of Accounts. The rate of
payment of outstanding Receivables in each state depends upon the rate of sales
of the related products by the Dealers in such state. The level of product sales
in a particular state may change because of a variety of economic and social
factors. No assurance can be given that the economic and social factors
affecting the payment rate or the percentage of Receivables arising in each
state will remain the same, and the Transferor is unable to determine and has no
basis to predict whether or to what extent economic factors will affect product
sales in a particular state.
GEOGRAPHIC DISTRIBUTION OF THE TRUST PORTFOLIO
AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES RECEIVABLES
OUTSTANDING(1) OUTSTANDING(3)
-------------- --------------
<S> <C> <C>
Florida.......................................... $ 43,548 7.20%
California....................................... 43,189 7.14
Texas............................................ 34,811 5.75
New York......................................... 31,546 5.21
Michigan......................................... 27,234 4.50
Pennsylvania..................................... 23,584 3.90
North Carolina................................... 23,030 3.81
Minnesota........................................ 21,731 3.59
Louisiana........................................ 21,046 3.48
Ohio............................................. 20,272 3.35
Other(2)......................................... 315,165 52.08
-------- ------
TOTAL.......................................... $605,156 100.00%
======== ======
</TABLE>
------------------------
(1) Dollars in thousands.
(2) The geographic distribution of Accounts in the Trust with respect to any
state other than as set forth above does not exceed 3%.
(3) Percentages may not add to 100% due to rounding.
COMPOSITION OF RECEIVABLES BY ACCOUNT BALANCE FOR THE
TRUST PORTFOLIO
AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
RECEIVABLES RECEIVABLES NUMBER OF NUMBER OF
OUTSTANDING(1) OUTSTANDING(2) ACCOUNTS ACCOUNTS(2)
-------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
$0 to $499,999.99.......... $341,880 56.49% 2,030 85.12%
$500,000 to $999,999.99.... 205,435 33.95 311 13.04
$1,000,000 to
$1,499,999.99.............. 35,946 5.94 31 1.30
$1,500,000 to
$1,999,999.99.............. 19,717 3.26 12 0.50
$2,000,000 to
$2,999,999.99.............. 2,178 0.36 1 0.04
-------- ------ ----- ------
$605,156 100.00% 2,385 100.00%
======== ====== ===== ======
</TABLE>
------------------------
(1) Dollars in thousands.
(2) Percentages may not add to 100% due to rounding.
27
<PAGE>
PRODUCT DISTRIBUTION
The following table provides the distribution of Products for all Dealers on
the basis of Receivables outstanding.
RECEIVABLES OUTSTANDING BY PRODUCT GROUP FOR THE TRUST PORTFOLIO
AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES TOTAL RECEIVABLES
OUTSTANDING(1) OUTSTANDING(3)
-------------- -----------------
<S> <C> <C>
Motorcycles/Scooters........................................ $135,467 22%
Water Vehicles.............................................. 61,420 10%
All-Terrain Vehicles........................................ 254,750 42%
Outboards................................................... 81,307 13%
Snowmobiles................................................. 60,142 10%
Other(2).................................................... 12,070 3%
-------- ----
TOTAL....................................................... $605,156 100%
======== ====
</TABLE>
------------------------
(1) Dollars in thousands.
(2) Includes snowblowers, generators, lawn tractors, go carts and parts for all
Products.
(3) Percentages may not add to 100% due to rounding.
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 The Chase Manhattan Bank, 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
28
<PAGE>
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 $171,000,000 (the "CLASS A INITIAL INVESTED
AMOUNT"), the Class B Invested Amount will be $12,000,000 (the "CLASS B INITIAL
INVESTED AMOUNT") and the Class C Invested Amount will be $17,000,000 (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 January 15, 2001. 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 December 7, 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 one-month LIBOR
determined as of December 5, 2000 for the period from the Closing Date up to but
excluding January 15, 2001) plus 0.26% 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 one-month LIBOR determined as of December 5,
2000 for the period from the Closing Date up to but excluding January 15, 2001)
plus 0.70% 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 one-month LIBOR determined as of December 5, 2000 for the period from the
Closing Date up to but excluding January 15, 2001) plus 0.70% 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
29
<PAGE>
(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
(212) 946-3261. 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 the Closing Date 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
30
<PAGE>
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 $171,000,000,
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 $12,000,000, 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 November 15, 2005 (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
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and Servicing Agreement also provides that the Class B Invested Amount is
payable on December 15, 2005 (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 "--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 Trust 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 Trust Portfolio as of September 30, 2000,
actual monthly payment rates with respect to the Accounts may be different in
the future.
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MONTHLY PAYMENT RATES FOR THE TRUST PORTFOLIO(1)
()
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FISCAL YEAR ENDED MARCH 31,
SEPTEMBER 30, -----------------------------------------
2000 2000 1999 1998 1997
------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Highest Monthly Payment Rate................ 34.22% 38.26% 29.43% 25.51% 23.72%
Lowest Monthly Payment Rate................. 25.41% 15.85% 18.25% 13.46% 11.35%
Average Monthly Payment Rate................ 29.87% 28.64% 23.93% 19.17% 18.07%
</TABLE>
------------------------
(1) Monthly payment rate is calculated as monthly collections divided by the
average aggregate principal balance for such period.
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 May 2005 Collection Period and continuing until the earlier of
the commencement of an Early Amortization Period and the last day of the
October 2005 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 November 2005 Collection Period
and continuing until the earlier of the commencement of an Early Amortization
Period and the last day of the November 2005 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
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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 "--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 "--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 1/171,000th of the undivided interest of the Class A
Certificateholders in the Trust and 1/12,000th 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."
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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
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<PAGE>
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
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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.
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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.
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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
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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
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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:
- the 6.25% Series 1994-1, Class A Asset-Backed Certificates (which have
been repaid);
- the 6.45% Series 1994-1, Class B Asset-Backed Certificates (which have
been repaid);
- the 6.20% Series 1995-1, Class A Asset-Backed Certificates (which have
been repaid);
- the 6.45% Series 1995-1, Class B Asset-Backed Certificates (which have
been retired);
- the Variable Funding Series 1998-1, Class A Asset-Backed Certificates;
- the Variable Funding Series 1998-1, Class B Asset-Backed Certificates;
- the Floating Rate Series 1999-1 Class A Asset-Backed Certificates; and
- the Floating Rate Series 1999-1 Class B Asset-Backed Certificates.
The Certificates are the fifth Series to be issued by the Trust, two of
which are currently outstanding. See "Other Series Issued and Outstanding." 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.
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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.
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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
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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;
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(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 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
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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 15% or (b) on a quarterly
basis, the percentage derived by dividing the number of New Accounts and
Dealer Replacement Accounts added to the Trust during such calendar quarter
by the number of Accounts in the Trust at the beginning of such calendar
quarter exceeds 10%, 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
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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
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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
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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 $2,287,500.00 (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.
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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;
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(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 December 1, 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.
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"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
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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
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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
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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
averaged for the three consecutive Collection Periods immediately preceding
such date, calculated as a percentage of the Pool Balance, exceeds 36%;
(3) as of the last day of any Collection Period, the aggregate balance
of Receivables with respect to all Products other than motorcycles/scooters,
water vehicles, all-terrain vehicles, outboards and snowmobiles, calculated
as a percentage of the Pool Balance, exceeds 10%;
(4) the sum of (x) the aggregate amount of all dealer "HOLDBACKS" with
respect to Products for which there has been no retail sale by the Dealer,
plus (y) the aggregate amount of all discounts available to Dealers pursuant
to Sales Programs on Products owed by Yamaha to the Dealers, exceeds 5% of
the Pool Balance;
(5) either (x) on an annual basis, the percentage derived by dividing
the number of New Accounts added to the Trust during any fiscal year of the
Transferor by the number of Accounts in the Trust at the beginning of such
year exceeds 8% or (y) on a quarterly basis, the percentage derived by
dividing the number of New Accounts added to the Trust during such calendar
quarter by the number of Accounts in the Trust at the beginning of such
calendar quarter exceeds 5%;
(6) the annualized rate (averaged for a period of three consecutive
Collection Periods) of (x) Defaulted Receivables minus recoveries plus the
repossession value of all Products repossessed
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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 15% 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 5%; or
(8) as of the last day of any Collection Period prior to the repayment
in full of 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
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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);
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(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
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(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) 39 days 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) 39 days 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) 39 days 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
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(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
"--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
"--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 "--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 "--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
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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
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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 $20,000,000 (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 May 2008 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 April 2005
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
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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
8.25% 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;
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(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.
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In addition to the consequences of an Early Amortization Event discussed
above, if Yamaha, the Transferor or Deutsche Financial (if it is then acting as
sub-servicer) 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 (if it is then acting as sub-servicer) 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 The Chase Manhattan Bank 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
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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
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(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.
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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
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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
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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;
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(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."
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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.
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The Pooling and Servicing Agreement generally does not provide for any
annual or other meetings of Certificateholders.
THE TRUSTEE
The Chase Manhattan Bank 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 450 West 33rd Street, 14th Floor, New York, NY
10001, Attention: Ryan Biasi.
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.
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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;
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(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
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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
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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 to secure loan obligations 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 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
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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 transfer of Receivables in the Accounts from
Deutsche Financial to Yamaha, and the transfer of those Receivables from Yamaha
to the Transferor. Those opinions conclude that, in each instance on the basis
of a reasoned analysis of analogous case law (although there is no precedent
based on directly similar facts), subject to certain facts, assumptions and
qualifications specified therein, as a legal matter under current case law
interpretations, in the event that Deutsche Financial or Yamaha, respectively,
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, (a) would not apply a stay with respect to payment to the
Transferor or the Trustee of amounts collected on account of Receivables that
are transferred by Deutsche Financial to Yamaha under the Receivables Sale
Agreement and that are transferred by Yamaha to the Transferor under the
Receivables Purchase Agreement (and thereafter by the Transferor to the Trust
under the Master Pooling and Servicing Agreement), and (b) that those
Receivables and the proceeds thereof would not be property of the estate of
Deutsche Financial (if it were a debtor under the Bankruptcy Code) or the estate
of Yamaha (if it were a debtor under the Bankruptcy Code). However, if a court
concluded otherwise, or if someone asserted contrary positions in a legal
proceeding, Receivables and collections thereon could be held or made available
for use by Deutsche Financial or Yamaha, as debtors, respectively, under the
Bankruptcy Code. As a consequence, delays in distributions on the Offered
Certificates (and possible reductions on 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
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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 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.
The Pooling and Servicing Agreement provides that, upon the appointment of a
receiver or bankruptcy trustee for the Transferor, Yamaha or Deutsche Financial
(if then acting as subservicer) 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."
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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
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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
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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
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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
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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
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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:
- employee benefit plans as defined in Section 3(3) of ERISA,
- plans described in Section 4975(e)(1) of the Code, including retirement
accounts and Keogh Plans,
- entities whose underlying asset include plan assets by reason of a plan's
investment in such entities, and
- 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:
- is freely transferable,
- is part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another, and
- 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
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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.
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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, 0.180% of the principal amount of such
Certificates and (2) the Class B Certificates, 0.300% 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 0.125% 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 $550,000.
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
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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.
Chase Securities Inc. is a wholly owned subsidiary of The Chase Manhattan
Corporation and an affiliate of the Trustee.
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.
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OTHER SERIES ISSUED AND OUTSTANDING
The trust has previously issued two other series that remain outstanding.
The table below discusses the principal characteristics of these series. For
more specific information relating to any series, any prospective investor
should contact the transferor at (714) 761-7500. The transferor will provide,
without charge, to any prospective purchaser of the certificates, a copy of the
disclosure documents for any previous publicly issued series.
<TABLE>
<S> <C>
SERIES 1998-1 VARIABLE FUNDING CERTIFICATES
1. CLASS A ASSET-BACKED CERTIFICATES
Invested Amount(1)..........................................
Variable
Maximum Permitted Invested Amount(1)........................
$175,500,000
Certificate Rate............................................
Variable
Servicing Fee Percentage....................................
2.0%
Final Series Termination Date...............................
September 2001
Series Issuance Date........................................
April 23, 1998
2. CLASS B ASSET-BACKED CERTIFICATES
Invested Amount(1)..........................................
Variable
Maximum Permitted Invested Amount(1)........................
$22,805,085
Certificate Rate............................................
Variable
Servicing Fee Percentage....................................
2.0%
Final Series Termination Date...............................
September 2001
(1) These numbers have varied based on seasonal variances in the levels of receivables
outstanding.
SERIES 1999-1
1. CLASS A ASSET-BACKED CERTIFICATES
Initial Invested Amount.....................................
$200,000,000
Certificate Rate............................................
Variable(2)
Annual Servicing Fee Percentage.............................
2.0%
Credit Support..............................................
Subordination of
Series 1999-1 Class B and
Class C Certificates
Expected Final Payment Date.................................
June 15, 2004
Final Series Termination Date...............................
December 2006
Series Issuance Date........................................
June 1, 1999
2. CLASS B ASSET-BACKED CERTIFICATES
Initial Invested Amount.....................................
$14,035,000
Certificate Rate............................................
Variable(2)
Annual Servicing Fee Percentage.............................
2.0%
Credit Support..............................................
Subordination of
Series 1999-1 Class C
Certificates
Expected Final Payment Date.................................
July 15, 2004
Final Series Termination Date...............................
December 2006
3. CLASS C ASSET-BACKED CERTIFICATES
Initial Invested Amount.....................................
$19,883,071
Certificate Rate............................................
Variable(2)
Annual Servicing Fee Percentage.............................
2.0%
Final Series Termination Date...............................
December 2006
(2) Based on LIBOR
</TABLE>
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
account............................. 45, 77
Accounts............................ 19
Accumulation Periods................ 33
Accumulation Shortfall.............. 33
Adjustment Payment.................. 61
Available Principal Funds........... 58
Available Subordinated Amount....... 56
Available Yield Funds............... 57
Bankruptcy Code..................... 78
Business Day........................ 31
Cede................................ 34
Certificate Owners.................. 34
Certificate Rates................... 29
Certificateholders.................. 30
Certificateholders' Interest........ 31
Certificates........................ 39
chattel paper....................... 45, 77
Class............................... 39
Class A Adjusted Invested Amount.... 51
Class A Certificate Rate............ 29
Class A Certificateholders.......... 78
Class A Certificates................ 28
Class A Expected Final Payment
Date.............................. 31
Class A Initial Invested Amount..... 29
Class A Invested Amount............. 51
Class A Investor Charge-Off......... 62
Class A Monthly Interest............ 59
Class A Monthly Principal........... 59
Class B Adjusted Invested Amount.... 52
Class B Certificate Rate............ 29
Class B Certificateholders.......... 78
Class B Certificates................ 28
Class B Expected Final Payment
Date.............................. 32
Class B Initial Invested Amount..... 29
Class B Invested Amount............. 52
Class B Investor Charge-Off......... 61
Class B Monthly Interest............ 59
Class B Monthly Principal........... 59
Class C Certificate Rate............ 29
Class C Certificateholders.......... 30
Class C Certificates................ 39
Class C Initial Invested Amount..... 29
Class C Invested Amount............. 52
Class C Investor Charge-Off......... 61
Class C Monthly Interest............ 59
Class C Monthly Principal........... 59
Clearstream......................... 35
</TABLE>
<TABLE>
<CAPTION>
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Clearstream Customers............... 37
Closing Date........................ 29
Code................................ 80
Collection Account.................. 47
Collection Period................... 25
Collections......................... 54
Commission.......................... 88
Controlled Accumulation Amount...... 33
Controlled Accumulation Period...... 33
Controlled Deposit Amount........... 33
Cooperative......................... 37
Credit Hold......................... 21
Dealers............................. 18
Dealer Replacement Accounts......... 45
Defaulted Receivables............... 61
Definitive Certificates............. 38
Depositaries........................ 36
Depositary.......................... 36
Determination Date.................. 46
Deutsche Financial.................. 18
Direct Participants................. 34
Distribution Date................... 29
DOL................................. 85
DTC................................. 34
DTC Participants.................... 35
Early Amortization Event............ 63
Early Amortization Period........... 62
Eligible Deposit Account............ 47
Eligible Institution................ 47
Eligible Investments................ 48
Eligible Receivable................. 44
Enhancement......................... 29
ERISA............................... 85
Euroclear........................... 37
Euroclear Operator.................. 37
Exchange Act........................ 88
Excess Principal Collections........ 54
Exchangeable Transferor
Certificate....................... 29
Expected Final Payment Dates........ 32
Final Series Termination Date....... 62
Final Termination Date.............. 62
Fixed Allocation Percentage......... 51
Floating Allocation Percentage...... 51
Foreign Investor.................... 83
General Account Regulations......... 86
general intangible.................. 45, 77
holdbacks........................... 55
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
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Holders............................. 39
Indirect Participants............... 35
Ineligible Receivable............... 43
Initial Servicer Cash Collateral
Deposit........................... 49
Interest Accrual Period............. 29
Invested Amount..................... 52
investment company.................. 63
Investor Default Amount............. 61
IRS................................. 80
ITT................................. 18
LIBOR Determination Date............ 30
London Banking Day.................. 30
Maximum Rate........................ 29
Minimum Transferor Percentage....... 43
Minimum Trust Principal Component... 49
Monthly Servicer Report............. 70
Monthly Servicing Fee............... 67
Moody's............................. 50
New Accounts........................ 46
New Products........................ 20
New Regulations..................... 84
Offered Certificates................ 28
OID................................. 80
OID Regulations..................... 81
Omnibus Proxy....................... 36
Parties in Interest................. 85
Pay-as-Sold......................... 22
Paying Agent........................ 35
Payment Date Statement.............. 70
Plan Asset Regulation............... 85
Pool Balance........................ 25
Pooling and Servicing Agreement..... 19
Principal Collections............... 54
Principal Funding Account........... 48
Principal Shortfalls................ 54
Principal Terms..................... 40
Product Security.................... 20
Products............................ 20
Rapid Accumulation Period........... 33
Rating Agency....................... 39
Receivables......................... 19
Receivables Purchase Agreement...... 74
Receivables Sales Agreement......... 73
Record Date......................... 30
</TABLE>
<TABLE>
<CAPTION>
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<S> <C>
Reference Banks..................... 30
Registration Statement.............. 88
Removed Accounts.................... 25
Revolving Period.................... 30
Sales Programs...................... 22
Scheduled Payment Plans............. 22
Securities Act...................... 41
Series.............................. 19
Series 2000-1....................... 39
Series Undistributed Principal
Collections....................... 59
Service Transfer.................... 69
Servicer............................ 18
Servicer Cash Collateral Account.... 49
Servicer Default.................... 69
Servicing Agreement................. 68
Servicing Fee....................... 67
Servicing Fee Percentage............ 67
Special Funding Account............. 49
Standard & Poor's................... 50
Supplement.......................... 40
Tax Counsel......................... 80
Telerate Page 3750.................. 30
Terms and Conditions................ 38
Transfer Date....................... 50
Transfer Deposit Amount............. 43
Transferor.......................... 18
Transferor Amount................... 46
Transferor Interest................. 29
Transferor Percentage............... 52
Transferor Subordination Event...... 55
Trust............................... 19
Trust Portfolio..................... 19
Trust Principal Component........... 43
Trustee............................. 19
U.S. Person......................... A-4
UCC................................. 35
Underwriter......................... 40
Underwriting Agreement.............. 87
Undistributed Principal
Collections....................... 55
Used Products....................... 20
Yamaha.............................. 18
Yield Collections................... 54
Yield Factor........................ 54
</TABLE>
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<PAGE>
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.
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<PAGE>
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
A-2
<PAGE>
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.
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<PAGE>
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.
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<PAGE>
PRINCIPAL OFFICE OF
YAMAHA MOTOR RECEIVABLES CORPORATION
6555 Katella Avenue
Suite A
Cypress, CA 90630
TRUSTEE
THE CHASE MANHATTAN BANK
450 West 33rd Street
14th Floor
New York, NY 10001
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
<PAGE>
YAMAHA MOTOR MASTER TRUST
ISSUER
SERIES 2000-1
$171,000,000
FLOATING RATE CLASS A
ASSET-BACKED CERTIFICATES
$12,000,000
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
FEBRUARY 28, 2001.
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