<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1997
REGISTRATION NO. 333-21917
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
(Issuer with respect to the Certificates)
WORLD OMNI LEASE SECURITIZATION L.P.
(Originator of the Trust described herein and Transferor of the 99.8% SUBI
Certificate to the Trust)
WORLD OMNI LT
(Issuer with respect to the SUBI and the 99.8% SUBI Certificate)
AUTO LEASE FINANCE L.P.
(Originator of World Omni LT and transferor of the SUBI and the 99.8% SUBI
Certificate to the Transferor described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7515 63-1120743
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
---------------------
6150 OMNI PARK DRIVE
MOBILE, ALABAMA 36609
(334) 639-7500
(Address, including zip code, and telephone number, including area code, of
principal executive offices of World Omni Lease Securitization L.P. and Auto
Lease Finance L.P.)
---------------------
A. TUCKER ALLEN
120 NORTHWEST 12TH AVENUE
DEERFIELD BEACH, FLORIDA 33442
(954) 429-2200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<C> <C>
CHARLES A. SWEET, ESQ. DALE W. LUM, ESQ.
WILLIAMS & CONNOLLY BROWN & WOOD LLP
725 TWELFTH STREET, N.W. 555 CALIFORNIA STREET
WASHINGTON, D.C. 20005 SAN FRANCISCO, CALIFORNIA 94104
</TABLE>
---------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. []
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. []
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []
---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Automobile Lease Asset Backed Certificates, Class A-1...... $250,000,000 100% $250,000,000 $75,757.58(5)
- -------------------------------------------------------------------------------------------------------------------------
Automobile Lease Asset Backed Certificates, Class A-2...... $290,000,000 100% $290,000,000 $87,878.79(5)
- -------------------------------------------------------------------------------------------------------------------------
Automobile Lease Asset Backed Certificates, Class A-3...... $290,000,000 100% $290,000,000 $87,878.79(5)
- -------------------------------------------------------------------------------------------------------------------------
Automobile Lease Asset Backed Certificates, Class A-4...... $277,297,857 100% $277,297,857 $84,029.65
- -------------------------------------------------------------------------------------------------------------------------
1997-A Special Unit of Beneficial Interest(2).............. (3) (3) (3) (3)
- -------------------------------------------------------------------------------------------------------------------------
99.8% 1997-A Special Unit of Beneficial Interest
Certificate(4)........................................... (3) (3) (3) (3)
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The 1997-A Special Unit of Beneficial Interest (the "SUBI") issued by World
Omni LT will constitute a beneficial interest in a specified portion of the
assets of World Omni LT, including certain lease contracts and the
automobile and light duty trucks relating to such lease contracts. The SUBI
is not being offered to investors hereunder but will be transferred by Auto
Lease Finance L.P. to World Omni Lease Securitization L.P.
(3) Not applicable.
(4) The 99.8% 1997-A Special Unit of Beneficial Interest Certificate (the "99.8%
SUBI Certificate") issued by World Omni LT will represent a 99.8% undivided
interest in the SUBI. The 99.8% SUBI Certificate is not being offered to
investors hereunder but will be transferred by Auto Lease Finance L.P. to
World Omni Lease Securitization L.P. and then to the Trustee for the World
Omni 1997-A Automobile Lease Securitization Trust issuing the Automobile
Lease Asset Backed Certificates, Class A-1, Class A-2, Class A-3 and Class
A-4.
(5) $303.03 of which was paid previously.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
WORLD OMNI LEASE SECURITIZATION L.P.
AUTO LEASE FINANCE L.P.
WORLD OMNI LT
---------------------
CROSS REFERENCE SHEET FURNISHED
PURSUANT TO RULE 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-1 CAPTION OR LOCATION IN PROSPECTUS
---------------------------- ---------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Cover Page of Prospectus......... Forepart of Registration Statement; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Summary; Risk Factors
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price............ *
6. Dilution................................... *
7. Selling Security Holders................... *
8. Plan of Distribution....................... Underwriting
9. Description of Securities to be
Registered............................... Summary; The Trust and the SUBI; The
Contracts; Maturity, Prepayment and Yield
Considerations; Description of the
Certificates; Security for the Certificates
10. Interests of Named Experts and Counsel..... *
11. Information With Respect to the
Registrant............................... The Trust and the SUBI; The Origination
Trust; The Transferor
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. *
</TABLE>
- ---------------
* Answer negative or item inapplicable.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PROSPECTUS PRELIMINARY PROSPECTUS DATED APRIL 22, 1997
$1,107,297,857 (APPROXIMATE)
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
$250,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-1
$290,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-2
$290,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-3
$277,297,857 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-4
WORLD OMNI LEASE SECURITIZATION L.P.
(TRANSFEROR)
WORLD OMNI FINANCIAL CORP.
(SERVICER)
------------------
The Automobile Lease Asset Backed Certificates (the "Certificates") will
represent undivided interests in the World Omni 1997-A Automobile Lease
Securitization Trust (the "Trust") formed pursuant to a Securitization Trust
Agreement between World Omni Lease Securitization L.P. (the "Transferor") and
First Bank National Association, as trustee (the "Trustee"). The property of the
Trust will consist of an undivided 99.8% interest in a Special Unit of
Beneficial Interest (the "SUBI"), which, in turn, will evidence a beneficial
interest in certain specified assets of World Omni LT, an Alabama trust (the
"Origination Trust"), monies on deposit in the Reserve Fund, the Residual Value
Surplus Account and in certain other accounts and certain other assets, as
described more fully under "The Trust and the SUBI". The assets of the
Origination Trust (the "Origination Trust Assets") will consist of retail
closed-end lease contracts assigned to the Origination Trust by dealers in the
World Omni Financial Corp. ("World Omni") network of dealers, the automobiles
and light duty trucks relating thereto and payments made under certain insurance
policies relating to such lease contracts, the related lessees and such leased
vehicles, including the Residual Value Insurance Policy, and certain other
assets, as more fully described under "The Origination Trust -- Property of the
Origination Trust". World Omni will service the lease contracts included in the
Origination Trust Assets.
(Cover continued on next page)
FOR A DISCUSSION OF MATERIAL RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE CLASS A CERTIFICATES, SEE "RISK FACTORS" ON PAGE 23 HEREIN.
------------------
THE CLASS A CERTIFICATES WILL REPRESENT BENEFICIAL INTERESTS IN THE TRUST AND
WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF WORLD OMNI LEASE
SECURITIZATION L.P., AUTO LEASE FINANCE L.P., WORLD OMNI LT, WORLD OMNI
FINANCIAL CORP.
OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) THE TRANSFEROR(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A-1 Certificate......................... % % %
- -----------------------------------------------------------------------------------------------------------------------------
Per Class A-2 Certificate......................... % % %
- -----------------------------------------------------------------------------------------------------------------------------
Per Class A-3 Certificate......................... % % %
- -----------------------------------------------------------------------------------------------------------------------------
Per Class A-4 Certificate......................... % % %
- -----------------------------------------------------------------------------------------------------------------------------
Total............................................. $ $ $
=============================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, calculated at the related Certificate Rate
from and including the date of initial issuance.
(2) The Transferor and World Omni have agreed to indemnify the Underwriters
against certain liabilities under the Securities Act of 1933. See
"Underwriting".
(3) Before deducting expenses payable by the Transferor estimated to be
$950,000.
------------------
The Class A Certificates are offered by the Underwriters when, as and if
issued by the Transferor, delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the Class A Certificates in book-entry form will be made through the
facilities of The Depository Trust Company, Cedel Bank, societe anonyme and the
Euroclear System, on or about April , 1997, against payment in immediately
available funds.
------------------
MERRILL LYNCH & CO.
CS FIRST BOSTON
BA SECURITIES, INC.
SALOMON BROTHERS INC
------------------
The date of this Prospectus is April , 1997.
<PAGE> 4
(Cover continued from previous page)
The SUBI initially will evidence a beneficial interest in a specified
portion of the Origination Trust Assets, including certain lease contracts, the
automobiles and light duty trucks relating to such lease contracts, certain
monies due under or payable in respect of such lease contracts and leased
vehicles on or after March 1, 1997, payments made under certain insurance
policies relating to such lease contracts, the related lessees and such leased
vehicles, including the Residual Value Insurance Policy, and certain other
Origination Trust Assets, as more fully described under "The Trust and the
SUBI -- The SUBI" (collectively, the "SUBI Assets"). From time to time until
principal is first distributed to the Certificateholders, as described below,
principal collections on or in respect of the SUBI Assets will be reinvested in
additional lease contracts assigned to the Origination Trust by dealers in the
World Omni network of dealers, together with the automobiles and light duty
trucks relating thereto, which at the time of reinvestment will become SUBI
Assets. The SUBI will not evidence a direct interest in the SUBI Assets, nor
will it represent a beneficial interest in all of the Origination Trust Assets.
Payments made on or in respect of the Origination Trust Assets not represented
by the SUBI will not be available to make payments on the Certificates. For
further information regarding the Trust, the SUBI and the Origination Trust, see
"The Trust and the SUBI" and "The Origination Trust".
The Certificates will consist of four classes of senior certificates
(respectively, the "Class A-1 Certificates", the "Class A-2 Certificates", the
"Class A-3 Certificates" and the "Class A-4 Certificates", and collectively, the
"Class A Certificates") and one class of subordinated certificates (the "Class B
Certificates"). The Class A Certificates will be the only Certificates offered
hereby. The initial principal amount of the Class B Certificates will be
approximately $65,839,332, and the Class B Certificates will be subordinated to
the Class A Certificates to the extent described herein. The Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class B Certificates initially will respectively evidence in
the aggregate 20.88%, 24.23%, 24.23%, 23.16% and 5.50% undivided interests in
the 99.8% interest in the SUBI and the other assets of the Trust to the extent
described herein. The Transferor will own the undivided interest in the Trust
not represented by the Certificates (the "Transferor Interest"). The initial
principal amount of the Transferor Interest will be approximately $23,941,575,
and the Transferor Interest will be subordinated to the Certificates as
described herein. For further information regarding the Certificates, see
"Description of the Certificates".
In general, no principal payments will be made on the Class A-2 Certificates
until the Class A-1 Certificates have been paid in full, no principal payments
will be made on the Class A-3 Certificates until the Class A-1 Certificates and
the Class A-2 Certificates have been paid in full, and no principal payments
will be made on the Class A-4 Certificates until the Class A-1 Certificates, the
Class A-2 Certificates and the Class A-3 Certificates have been paid in full.
Interest on the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates and the Class A-4 Certificates will accrue at the
respective fixed per annum interest rates specified above and will be
distributed to holders of the Class A Certificates on the twenty-fifth day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), beginning May 27, 1997 (each, a "Distribution Date"). Principal
will be distributed to holders of the Certificates to the extent described
herein on each Distribution Date beginning in June 1998, or, in certain limited
circumstances, earlier, as more fully described herein. The Final Scheduled
Distribution Date will occur in June 2003.
There currently is no secondary market for the Class A Certificates and
there is no assurance that one will develop. The Underwriters expect, but will
not be obligated, to make a market in each Class of Class A Certificates. There
is no assurance that any such market will develop, or if one does develop, that
it will continue.
As more fully described under "Ratings of the Class A Certificates", it is a
condition of issuance that each of Moody's Investors Service, Inc. and Standard
& Poor's Ratings Services rates each Class of Class A Certificates in its
highest rating category.
------------------------
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of any class of
Certificates. Such transactions may include stabilizing. For a description of
these activities, see "Underwriting".
------------------------
AVAILABLE INFORMATION
The Transferor, as originator of the Trust, has filed with the Securities
and Exchange Commission (the "Commission") on behalf of the Trust a Registration
Statement on Form S-1 (together with all amendments and exhibits thereto, the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Class A Certificates being offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and Suite 1300, Seven World Trade Center, New York, New York 10048.
Copies of such information can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. The Servicer, on
behalf of the Trust, will also file or cause to be filed with the Commission
such periodic reports as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder.
2
<PAGE> 5
INDEX
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
Available Information................................... 2
Index................................................... 3
Overview of Transaction................................. 4
Summary................................................. 5
Risk Factors............................................ 23
Limited Liquidity; Absence of Secondary Market......... 23
Reimbursement of Loss Amounts.......................... 23
Maturity and Prepayment Considerations................. 24
Sequential Payment of Principal on the Certificates.... 25
Geographic, Economic and Other Factors................. 26
Consumer Protection Laws............................... 26
ERISA Liabilities...................................... 27
Vicarious Tort Liability............................... 27
Insolvency of World Omni; Substantive Consolidation
with World Omni...................................... 28
The Trust and the SUBI.................................. 29
General................................................ 29
The Trust.............................................. 29
The SUBI............................................... 30
The Origination Trust................................... 31
General................................................ 31
Allocation of Origination Trust Liabilities............ 31
ALFI and ALFI L.P...................................... 32
The Origination Trustee................................ 32
Property of the Origination Trust...................... 32
Contract Origination; Titling of Leased Vehicles....... 32
Use of Proceeds......................................... 33
The Transferor.......................................... 33
World Omni.............................................. 34
General................................................ 34
Lease Contract Underwriting Procedures................. 35
Insurance.............................................. 36
Collection, Repossession and Disposition Procedures.... 36
Delinquency, Repossession and Loss Data................ 37
The Contracts........................................... 39
General................................................ 39
Characteristics of the Contracts....................... 42
General.............................................. 42
Distribution of the Initial Leased Vehicles by
Make............................................... 42
Distribution of the Initial Contracts by Lease
Rate............................................... 43
Distribution of the Initial Contracts by Maturity.... 43
Distribution of the Initial Contracts by State....... 43
Representations, Warranties and Covenants.............. 43
Maturity, Prepayment and Yield Considerations........... 45
Class A Certificate Factors and Trading Information;
Reports to Class A Certificateholders.................. 50
Description of the Certificates......................... 50
General................................................ 50
Transfer of the SUBI Interest.......................... 51
Reallocation Payments and Reallocation Deposit
Amounts.............................................. 51
Calculation of Investor Percentage and Transferor
Percentage........................................... 52
Certain Payments to the Transferor..................... 53
Distributions on the Certificates...................... 53
General.............................................. 53
Distributions of Interest............................ 53
Application and Distributions of Principal........... 57
Early Amortization Events.............................. 59
Statements to Certificateholders....................... 61
Termination of the Trust; Retirement of the
Certificates......................................... 62
Book-Entry Registration................................ 63
Definitive Certificates................................ 65
Security for the Certificates........................... 66
General................................................ 66
The Accounts........................................... 67
The Distribution Account............................. 67
The SUBI Collection Account.......................... 67
The Residual Value Surplus Account................... 68
Maintenance of the Accounts.......................... 69
Permitted Investments................................ 69
The Reserve Fund..................................... 69
The Residual Value Insurance Policy.................... 73
The Contingent and Excess Liability Insurance
Policies............................................. 75
Additional Document Provisions.......................... 75
Additional Agreement Provisions........................ 75
No Petition.......................................... 75
</TABLE>
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
Amendment............................................ 76
List of Certificateholders........................... 76
The Trustee.......................................... 77
Governing Law........................................ 77
The SUBI Trust Agreement............................... 77
The SUBI, the Other SUBIs and the UTI................ 77
Special Obligations of ALFI L.P. as Beneficiary and
Grantor............................................ 78
Origination Trustee Duties and Powers; Fees and
Expenses........................................... 78
Indemnity of Trustee and Trust Agents................ 80
Termination.......................................... 80
No Petition.......................................... 80
Amendment............................................ 80
Governing Law........................................ 80
Trustee as Third-Party Beneficiary................... 81
The Servicing Agreement................................ 81
General.............................................. 81
Custody of Contract Documents and Certificates of
Title.............................................. 81
Collections.......................................... 81
Notification of Liens and Claims..................... 82
Advances............................................. 82
Security Deposits.................................... 82
Insurance on Leased Vehicles......................... 83
Realization Upon Charged-off Contracts............... 83
Matured Leased Vehicle Inventory..................... 84
Records, Servicer Determinations and Reports......... 84
Evidence as to Compliance............................ 84
Compliance with ERISA................................ 85
Servicing Compensation............................... 85
Servicer Resignation and Termination................. 86
Indemnification by the Servicer...................... 86
Events of Servicing Termination...................... 86
Rights Upon Event of Servicing Termination........... 87
No Petition.......................................... 87
Amendment............................................ 87
Termination.......................................... 87
Governing Law........................................ 88
Trustee as Third-Party Beneficiary................... 88
Certain Legal Aspects of the Origination Trust and the
SUBI................................................... 88
The Origination Trust.................................. 88
The SUBI............................................... 88
Insolvency Related Matters............................. 89
Legal Proceedings...................................... 89
Certain Legal Aspects of the Contracts and the Leased
Vehicles............................................... 89
Back-up Security Interests............................. 89
Vicarious Tort Liability............................... 90
Repossession of Leased Vehicles........................ 91
Deficiency Judgments................................... 92
Consumer Protection Laws............................... 92
Other Limitations...................................... 93
Material Income Tax Considerations...................... 93
Federal Taxation....................................... 93
General.............................................. 93
Characterization of the Class A Certificates as
Indebtedness....................................... 94
Taxation of Interest and Discount Income............. 94
Sales of Class A Certificates........................ 96
Federal Income Tax Consequences to Foreign
Investors.......................................... 96
Backup Withholding................................... 97
Possible Alternative Treatment of the Class A
Certificates....................................... 97
Florida Income Taxation................................ 97
ERISA Considerations.................................... 98
Underwriting............................................ 100
Notice to Canadian Residents............................ 101
Ratings of the Class A Certificates..................... 102
Legal Matters........................................... 102
Experts................................................. 103
Index of Capitalized Terms.............................. 104
Index to Financial Statements of American International
Specialty Lines Insurance Company...................... 106
Global Clearance, Settlement and Tax Documentation
Procedures............................................. A-1
</TABLE>
3
<PAGE> 6
[OVERVIEW OF TRANSACTION CHART]
4
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. See the Index of
Capitalized Terms at page 101 for the location herein of certain capitalized
terms.
Overview................... Certain motor vehicle dealers ("Dealers") in the
World Omni Financial Corp. ("World Omni") network
of dealers have assigned, and will assign,
closed-end retail automobile and light duty truck
leases to World Omni LT, an Alabama trust (the
"Origination Trust"). The Origination Trust was
created in 1993 to avoid the administrative
difficulty and expense associated with retitling
leased vehicles in the securitization of automobile
and light duty truck leases. The Origination Trust
has issued to Auto Lease Finance L.P. ("ALFI L.P.")
an Undivided Trust Interest (the "UTI")
representing the entire beneficial interest in the
unallocated assets of the Origination Trust. ALFI
L.P. will instruct the trustee of the Origination
Trust to allocate a separate portfolio of leases
and leased vehicles within the Origination Trust
and create a special unit of beneficial interest
(the "SUBI") which will represent the entire
beneficial interest in such portfolio. Upon its
creation, such portfolio will no longer be a part
of the Origination Trust Assets represented by the
UTI. ALFI L.P. will sell its interest in the SUBI
to World Omni Lease Securitization L.P. (the
"Transferor") and the Transferor will in turn
contribute a 99.8% interest in the SUBI to the
World Omni 1997-A Automobile Lease Securitization
Trust (the "Trust"). In return, the Trust will
issue five classes of Certificates, including the
Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates and Class A-4 Certificates
being offered hereby. The undivided interest in the
Trust not evidenced by the Certificates will be
permanently retained by the Transferor. ALFI L.P.
has caused and from time to time in the future may
cause additional special units of beneficial
interest similar to the SUBI ("Other SUBIs") to be
created out of the UTI and sold to the Transferor
or one or more other entities. The Trust and the
Certificateholders will have no interest in the
UTI, any Other SUBI or any assets of the
Origination Trust evidenced by the UTI or any Other
SUBI.
The Trust.................. The Trust will be formed pursuant to a
securitization trust agreement dated as of April 1,
1997 (the "Agreement"), between the Transferor and
First Bank National Association ("First Bank"), as
trustee (in such capacity, the "Trustee"). The
property of the Trust will consist primarily of an
undivided 99.8% interest (the "SUBI Interest") in
the SUBI, which will evidence a beneficial interest
in certain specified assets of the Origination
Trust (including Insured Residual Value Loss
Amounts paid under the Residual Value Insurance
Policy), and monies on deposit in the Reserve Fund,
the Residual Value Surplus Account and in certain
other accounts established as described herein.
The Origination Trust was formed by ALFI L.P., as
grantor and initial beneficiary, and VT Inc., as
trustee (the "Origination Trustee"). The sole
general partner of ALFI L.P. is Auto Lease Finance,
Inc., a Delaware corporation ("ALFI") which is a
wholly owned, special purpose subsidiary of World
Omni. ALFI may not transfer its general partnership
interest in ALFI L.P. so long as any financings
involving interests in the Origination Trust
(including the transaction described herein) are
outstanding. The sole limited partner of ALFI L.P.
is World
5
<PAGE> 8
Omni. VT Inc. is an Alabama corporation and a
wholly owned, special purpose subsidiary of First
Bank that was organized solely for the purpose of
acting as Origination Trustee. VT Inc. is not
affiliated with World Omni or any affiliate
thereof. For further information regarding the
Origination Trustee, see "The Origination
Trust -- The Origination Trustee".
The Origination Trust Assets consist of retail
closed-end lease contracts assigned to the
Origination Trust by Dealers, the automobiles and
light duty trucks relating thereto and all proceeds
thereof and payments made under certain insurance
policies relating to such contracts, the related
lessees or such leased vehicles, including the
Residual Value Insurance Policy. The SUBI initially
will evidence a beneficial interest in a specified
portion of the Origination Trust Assets, including
certain lease contracts (the "Initial Contracts")
originated by Dealers located throughout the United
States, the automobiles and light duty trucks
relating thereto (the "Initial Leased Vehicles"),
certain monies due under or payable in respect of
the Initial Contracts and the Initial Leased
Vehicles on or after March 1, 1997 (the "Initial
Cutoff Date"), payments made under certain
insurance policies (including Insured Residual
Value Loss Amounts paid under the Residual Value
Insurance Policy) relating to the Initial
Contracts, the related lessees and the Initial
Leased Vehicles and certain related assets and
rights (collectively, the "SUBI Assets"). For
further information regarding the SUBI Assets, see
"The Trust and the SUBI -- The SUBI".
Prior to the time when principal is first
distributed to Certificateholders as described
herein, payments made on or in respect of the SUBI
Assets allocable to principal will be reinvested in
additional retail closed-end lease contracts (the
"Subsequent Contracts" and, together with the
Initial Contracts, the "Contracts") originated and
assigned to the Origination Trust by Dealers
located throughout the United States and the
automobiles and light duty trucks relating thereto
(the "Subsequent Leased Vehicles" and, together
with the Initial Leased Vehicles, the "Leased
Vehicles"). At the time of such reinvestment, the
related Subsequent Contracts and Subsequent Leased
Vehicles, together with certain related Origination
Trust Assets, will become SUBI Assets. For further
information regarding the Subsequent Contracts and
Subsequent Leased Vehicles, see "Summary -- The
Revolving Period; Subsequent Contracts and
Subsequent Leased Vehicles" and "The Trust and the
SUBI -- The SUBI".
The Dealers comprising the sources for Contracts
and Leased Vehicles are members of World Omni's
network of dealers. These Dealers offer automobiles
and light duty trucks for lease pursuant to World
Omni-approved terms and documentation. For further
information regarding World Omni's lease business,
see "World Omni".
The SUBI will evidence an indirect beneficial
interest, rather than a direct legal interest, in
the SUBI Assets. The SUBI will not represent a
beneficial interest in any Origination Trust Assets
other than the SUBI Assets. Payments made on or in
respect of Origination Trust Assets other than the
SUBI Assets will not be available to make payments
on the Certificates.
6
<PAGE> 9
The 0.2% interest in the SUBI not transferred to
the Trustee will be permanently retained by the
Transferor (the "Retained SUBI Interest").
Accordingly, the Transferor will be entitled to
receive 0.2% of all payments made on or in respect
of the SUBI Assets and will share in 0.2% of all
losses and liabilities incurred by the SUBI Assets.
Any payments made in respect of the Retained SUBI
Interest will not be available to make payments on
the Certificates. For further information regarding
the SUBI, see "Summary -- Security for the
Certificates -- The SUBI", "The Trust and the
SUBI -- The SUBI" and "The Origination Trust".
The Transferor............. The Transferor is a Delaware limited partnership,
the sole general partner of which is World Omni
Lease Securitization, Inc., a Delaware corporation
("WOLSI"), which is a wholly owned, special purpose
subsidiary of World Omni. WOLSI may not transfer
its general partnership interest in the Transferor
so long as any financings involving interests
formerly or partially held by it in the Origination
Trust (including the transaction described herein)
are outstanding. The sole limited partner of the
Transferor is World Omni.
World Omni................. World Omni is a Florida corporation that is a
wholly owned subsidiary of JM Family Enterprises,
Inc., a Delaware corporation ("JMFE"). JMFE also
wholly owns Southeast Toyota Distributors, Inc.
("SET"), which is the exclusive distributor of
Toyota automobiles and light duty trucks in
Florida, Alabama, Georgia, North Carolina and South
Carolina (the "Five State Area"). As more fully
described under "World Omni", World Omni provides
consumer lease and installment contract financing
to retail customers of, and floorplan and other
dealer financing to, Dealers that are located
throughout the United States. World Omni wholly
owns both ALFI and WOLSI.
Pursuant to an amended and restated servicing
agreement dated as of July 1, 1994, as amended, to
be supplemented by a servicing supplement dated as
of April 1, 1997 (collectively, the "Servicing
Agreement"), each between World Omni and the
Origination Trustee, World Omni will act as the
initial servicer of the Origination Trust Assets,
including the SUBI Assets (in such capacity, the
"Servicer"). The Trustee will be a third party
beneficiary of the Servicing Agreement, as
described under "Additional Document
Provisions -- The Servicing Agreement -- Trustee as
Third-Party Beneficiary".
Securities Offered......... The Automobile Lease Asset Backed Certificates (the
"Certificates") will represent fractional undivided
interests in the Trust. The Certificates will
consist of four classes of senior certificates (the
"Class A-1 Certificates", the "Class A-2
Certificates", the "Class A-3 Certificates" and the
"Class A-4 Certificates", respectively, and
collectively, the "Class A Certificates") and one
class of subordinated certificates (the "Class B
Certificates"). Generally, no principal payments
will be made on the Class A-2 Certificates until
the Class A-1 Certificates have been paid in full,
no principal payments will be made on the Class A-3
Certificates until the Class A-1 Certificates and
the Class A-2 Certificates have been paid in full,
and no principal payments will be made on the Class
A-4 Certificates until the Class A-1 Certificates,
Class A-2 Certificates and Class A-3 Certificates
have been paid in full, in each case as more fully
described under "Description of the
Certificates -- Distributions on the
7
<PAGE> 10
Certificates -- Application and Distributions of
Principal -- Amortization Period". The Class B
Certificates will be subordinated to the Class A
Certificates so that (i) interest payments
generally will not be made in respect of the Class
B Certificates until interest in respect of the
Class A Certificates has been paid, (ii) principal
payments generally will not be made in respect of
the Class B Certificates until the Class A-1, Class
A-2 and Class A-3 Certificates have been paid in
full and (iii) if other sources available to make
payments of principal and interest on the Class A-4
Certificates are insufficient, amounts that
otherwise would be paid in respect of the Class B
Certificates generally will be available for that
purpose, as more fully described under "Description
of the Certificates -- Distributions on the
Certificates". The undivided interest in the Trust
not represented by the Certificates will be
permanently retained by the Transferor (the
"Transferor Interest"). The Transferor Interest
will be subordinated to the Certificates as
described under "Summary -- Security for the
Certificates -- Subordination of the Transferor
Interest". Only the Class A Certificates are being
offered hereby. The Class A Certificates will be
issued in book-entry form in minimum denominations
of $1,000 and integral multiples thereof, as set
forth under "Description of the
Certificates -- Book-Entry Registration" and
"-- Definitive Certificates". The Class B
Certificates will be sold in one or more private
placements.
Each Certificate will represent the right to
receive monthly payments of interest at the related
Certificate Rate and, to the extent described
herein, monthly payments of principal during the
Amortization Period. These payments will be funded
from a portion of the payments received by the
Trust on or in respect of the SUBI Interest (i.e.,
from a portion of 99.8% of the payments received on
or in respect of the Contracts and the Leased
Vehicles) and, in certain circumstances, from
Excess Collections, monies on deposit in the
Residual Value Surplus Account, the Servicing Fee
(so long as World Omni is the Servicer), Transferor
Amounts that otherwise would be distributable in
respect of the Transferor Interest, Insured
Residual Value Loss Amounts paid under the Residual
Value Insurance Policy and monies on deposit in the
Reserve Fund. Interests in the assets of the Trust
will be allocated among the Class A-1
Certificateholders (the "Class A-1 Interest"), the
Class A-2 Certificateholders (the "Class A-2
Interest"), the Class A-3 Certificateholders (the
"Class A-3 Interest"), the Class A-4
Certificateholders (the "Class A-4 Interest" and,
together with the Class A-1 Interest, the Class A-2
Interest and the Class A-3 Interest, the "Class A
Interest"), the Class B Certificateholders (the
"Class B Interest" and, together with the Class A
Interest, the "Investor Interest") and the
Transferor Interest.
On the date of initial issuance of the Certificates
(the "Closing Date"), the Trust will issue
approximately $250,000,000 aggregate principal
amount of Class A-1 Certificates (the "Initial
Class A-1 Certificate Balance"), approximately
$290,000,000 aggregate principal amount of Class
A-2 Certificates (the "Initial Class A-2
Certificate Balance"), approximately $290,000,000
aggregate principal amount of Class A-3
Certificates (the "Initial Class A-3 Certificate
Balance"), approximately $277,297,857 aggregate
principal amount of Class A-4 Certificates (the
"Initial Class A-4 Certificate Balance" and,
together with the Initial
8
<PAGE> 11
Class A-1 Certificate Balance, the Initial Class
A-2 Certificate Balance and the Initial Class A-3
Certificate Balance, the "Initial Class A
Certificate Balance") and approximately $65,839,332
aggregate principal amount of Class B Certificates
(the "Initial Class B Certificate Balance" and,
together with the Initial Class A Certificate
Balance, the "Initial Certificate Balance"). The
aggregate principal amounts of the Class A-1, Class
A-2, Class A-3 and Class A-4 Certificates and the
Class B Certificates will, except in certain
circumstances described under "Summary -- The
Revolving Period; Subsequent Contracts and
Subsequent Leased Vehicles", remain fixed at their
respective Initial Certificate Balances during the
Revolving Period and, to the extent described
herein, will decline thereafter during the
Amortization Period as principal is paid on the
Certificates. The "Class Certificate Balance" of
any Class of Certificates on any day will equal the
Initial Class Certificate Balance, reduced by the
sum of all distributions made in respect of
principal (including any reimbursements of Loss
Amounts allocable to such Class and Certificate
Principal Loss Amounts in respect of such Class) on
or prior to such day on the related Class of
Certificates and those Certificate Principal Loss
Amounts in respect of such Class, if any, which
have not been reimbursed as described herein. The
"Class A Certificate Balance" will mean the sum of
the Class A-1, Class A-2, Class A-3 and Class A-4
Certificate Balances. The "Certificate Balance"
with respect to the Certificates will mean the sum
of the Class A Certificate Balance and the Class B
Certificate Balance.
The amount of the Transferor Interest will
initially equal approximately $23,941,575 (which
amount will equal 2.0% of 99.8% of the Aggregate
Net Investment Value as of the Initial Cutoff Date)
and on any day will equal the difference between
99.8% of the Aggregate Net Investment Value,
calculated as described under "Summary -- Security
for the Certificates -- The SUBI -- The Contracts",
and the Certificate Balance. As more fully
described under "Description of the Certificates --
General", the Aggregate Net Investment Value can
change daily. Because the Transferor Interest will
represent the interest in the Trust not represented
by the Certificates, the amount of the Transferor
Interest can decrease daily as the Aggregate Net
Investment Value decreases and can increase on a
Distribution Date to reflect reductions in the
Certificate Balance, but will never exceed the
initial amount of the Transferor Interest.
Registration of the
Certificates............... Each Class of Class A Certificates initially will
be represented by one or more certificates
registered in the name of Cede & Co. ("Cede"), as
the nominee of The Depository Trust Company
("DTC"). A person acquiring an interest in the
Class A Certificates (each, a "Certificate Owner")
may elect to hold his or her interest through DTC,
in the United States, or Cedel Bank, societe
anonyme ("Cedel") or the Euroclear System
("Euroclear"), in Europe. Transfers within DTC,
Cedel or Euroclear, as the case may be, will be in
accordance with the usual rules and operating
procedures of the relevant system. Cross-market
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will be
effected in DTC through Citibank, N.A. or Morgan
Guaranty Trust Company of New York, the relevant
depositaries (collectively, the "Depositaries") of
Cedel or Euroclear, respectively, and
9
<PAGE> 12
each a participating member of DTC. No Certificate
Owner will be able to receive a definitive
certificate representing such person's interest,
except in the limited circumstances described under
"Description of the Certificates -- Definitive
Certificates". Unless and until definitive
certificates are issued, Certificate Owners will
not be recognized as holders of record of Class A
Certificates and will be permitted to exercise the
rights of such holders only indirectly through DTC.
For further information regarding book-entry
registration of the Class A Certificates, see
"Description of the Certificates -- General" and
"-- Book-Entry Registration".
Interest................... On the twenty-fifth day of each month or, if such
day is not a Business Day, on the next succeeding
Business Day, beginning May 27, 1997 (each, a
"Distribution Date"), distributions in respect of
the Class A Certificates will be made to the
holders of record of the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates (respectively,
the "Class A-1 Certificateholders", the "Class A-2
Certificateholders", the "Class A-3
Certificateholders" and the "Class A-4
Certificateholders", and collectively, the "Class A
Certificateholders") as of the day immediately
preceding such Distribution Date or, if Definitive
Certificates are issued, the last day of the
immediately preceding calendar month (each such
date, a "Record Date"). On each Distribution Date,
the Trustee will distribute interest for the
related Interest Period to the Class A
Certificateholders, based on the related Class
Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to
reductions in such Class Certificate Balance as of
such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, on the
Initial Class Certificate Balance, in the case of
(i) the Class A-1 Certificates, at an annual
percentage rate equal to % (the "Class A-1
Certificate Rate"), (ii) the Class A-2
Certificates, at an annual percentage rate equal to
% (the "Class A-2 Certificate Rate"), (iii)
the Class A-3 Certificates, at an annual percentage
rate equal to % (the "Class A-3 Certificate
Rate") and (iv) the Class A-4 Certificates, at an
annual percentage rate equal to % (the "Class
A-4 Certificate Rate"). Interest in respect of the
Class A Certificates will accrue for the period
from and including the Distribution Date in each
month to but excluding the Distribution Date in the
immediately succeeding month (or, in the case of
the first Distribution Date, from and including the
Closing Date) (each, an "Interest Period"). All
such payments will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
The final scheduled Distribution Date for the
Certificates (the "Final Scheduled Distribution
Date") will be the June 2003 Distribution Date. A
"Business Day" will be a day other than a Saturday
or Sunday or a day on which banking institutions in
the States of Alabama, Florida, Illinois or New
York are authorized or obligated by law, executive
order or government decree to be closed. As
described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest",
distributions in respect of interest on the Class B
Certificates will be subordinated to distributions
in respect of interest on the Class A Certificates
under certain circumstances.
10
<PAGE> 13
The Revolving Period;
Subsequent Contracts and
Subsequent Leased
Vehicles................. No principal will be payable on the Certificates
until the June 1998 Distribution Date or, upon the
occurrence of an Early Amortization Event, until
the Distribution Date in the month immediately
succeeding the month in which such Early
Amortization Event occurs. From and including the
Closing Date and ending on the day immediately
preceding the commencement of the Amortization
Period (i.e., the earlier of May 1, 1998 or the
date of an Early Amortization Event) (the
"Revolving Period"), all Principal Collections and
reimbursements of Loss Amounts will be reinvested
in Subsequent Contracts and Subsequent Leased
Vehicles so as to maintain the Class A-1, Class
A-2, Class A-3, Class A-4 and Class B Certificate
Balances at constant levels during the Revolving
Period, except to the extent there are unreimbursed
Certificate Principal Loss Amounts in respect of
any such Class, in which case the Certificate
Balance of the related Class of Certificates will
decrease until such time, if any, as such
Certificate Principal Loss Amounts are reimbursed
as described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest". The
events that might lead to the termination of the
Revolving Period prior to its scheduled termination
date are described under "Description of the
Certificates -- Early Amortization Events".
Prior to the twenty-fifth calendar day (i) in each
month (beginning May 1997) during the Revolving
Period and (ii) if no Early Amortization Event has
occurred, in the month in which the Amortization
Date occurs, on one or more days selected by the
Servicer (each, a "Transfer Date"), the Servicer
will direct the Origination Trustee to reinvest
Principal Collections and certain Loss Amounts that
otherwise would be reimbursed to the
Certificateholders in certain lease contracts and
the related leased vehicles of the Origination
Trust that are not evidenced by the SUBI or any
Other SUBI. Upon such reinvestment, the related
Subsequent Contracts and Subsequent Leased Vehicles
will become SUBI Assets. If on the twenty-fifth
calendar day of any month (beginning May 1997)
during the Revolving Period the amount of Principal
Collections as of the last day of the immediately
preceding month that have not been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles
exceeds $1,000,000, an Early Amortization Event
will occur, the Revolving Period will terminate as
of such day and all unreinvested Principal
Collections and certain reimbursed Loss Amounts
will be distributed as principal to
Certificateholders on the immediately succeeding
Distribution Date. For further details concerning
the application of Principal Collections and Loss
Amounts, see "Summary -- Amortization Period;
Principal Payments", "Risk Factors -- Reimbursement
of Loss Amounts", "The Trust and the SUBI -- The
SUBI" and "Description of the
Certificates -- Distributions on the
Certificates -- Application and Distributions of
Principal -- Revolving Period".
The Subsequent Contracts and Subsequent Leased
Vehicles will be selected from the Origination
Trust's portfolio of lease contracts and related
vehicles that are not allocated to (or reserved for
allocation to) any Other SUBI, based on the same
criteria as are applicable to the Initial Contracts
and the other criteria described under the "The
Contracts -- Representations, Warranties and
Covenants". The reinvestment
11
<PAGE> 14
of Principal Collections (and reimbursement of Loss
Amounts) will be made in the available lease
contracts with the earliest origination dates,
except that certain lease contracts booked from
February 28, 1997 through April 7, 1997 shall be
reserved for allocation to the SUBI and will be
used first, and if allocations are being made in
respect of any one or more previous Other SUBIs at
the same time out of the Origination Trust's
general pool of unreserved lease contracts,
reinvestment will be made first in respect of such
previous Other SUBI(s). For further information
regarding the Subsequent Contracts and Subsequent
Leased Vehicles, see "The Contracts".
"Principal Collections" will mean, with respect to
any Collection Period, all Collections allocable to
the principal component of any Contract (including
any payment in respect of the related Leased
Vehicle, but other than any payment as to which a
Loss Amount has been realized and allocated during
any prior Collection Period), discounted to the
extent required below. A "Collection Period" will
be each calendar month (or, with respect to the
first Collection Period, the months of March and
April 1997). For purposes of determining Principal
Collections, the principal component of all
payments made on or in respect of a Contract (or
the related Leased Vehicle) with a Lease Rate less
than approximately 9.25% (each, a "Discounted
Contract") will be discounted at a rate of
approximately 9.25%, thereby effectively
reallocating a portion of the payments received in
respect of the principal component of the Contracts
to Interest Collections and providing additional
credit enhancement for the benefit of the
Certificateholders. "Collections" with respect to
any Collection Period will include all net
collections collected or received in respect of the
Contracts and Leased Vehicles during such
Collection Period other than Insured Residual Value
Loss Amounts paid under the Residual Value
Insurance Policy, such as Monthly Payments
(including amounts in the SUBI Collection Account
that previously constituted Payments Ahead but
which represent Monthly Payments due during such
Collection Period), Prepayments, Advances, Net
Matured Leased Vehicle Proceeds (including amounts
withdrawn from the Residual Value Surplus Account
to offset certain Residual Value Losses in respect
of Leased Vehicles relating to Matured Contracts
and certain Matured Leased Vehicle Expenses, but
not including any Residual Value Surplus deposited
into the Residual Value Surplus Account in respect
of such Collection Period), Net Repossessed Vehicle
Proceeds and other Net Liquidation Proceeds and any
Undistributed Transferor Excess Collections in
respect of the immediately preceding Collection
Period, less an amount equal to the sum of (i)
Payments Ahead with respect to one or more future
Collection Periods, (ii) amounts paid to the
Servicer in respect of outstanding Advances and
(iii) Additional Loss Amounts in respect of such
Collection Period. In addition, if such Collection
Period occurs during the Revolving Period, amounts
otherwise payable to the Certificateholders on the
related Distribution Date as reimbursement of Loss
Amounts allocable to the Investor Interest (as
described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest") will be
treated as Principal Collections and reinvested in
Subsequent Contracts and Subsequent Leased Vehicles
as described above. "Interest Collections" with
respect to any Collection Period generally will
equal the amount by which
12
<PAGE> 15
Collections exceed Principal Collections. "Net
Repossessed Vehicle Proceeds" will equal
Repossessed Vehicle Proceeds net of Repossessed
Vehicle Expenses, and "Net Liquidation Proceeds"
will equal Liquidation Proceeds net of Liquidation
Expenses.
Amortization Period;
Principal Payments......... The "Amortization Period" will commence on the
earlier of May 1, 1998 (the "Amortization Date") or
the day on which an Early Amortization Event
occurs, and will end when each Class of
Certificates has been paid in full and all
Certificate Principal Loss Amounts and Class B
Certificate Principal Carryover Shortfalls, if any,
have been repaid in full, together with accrued
interest thereon, or when the Trust otherwise
terminates. During the Amortization Period,
Principal Collections and certain Loss Amounts will
no longer be reinvested in Subsequent Contracts and
Subsequent Leased Vehicles as described above.
Instead, on each Distribution Date beginning with
the Distribution Date in the month following the
month in which the Amortization Period commences
and ending on the Distribution Date on which the
Class A-3 Certificates have been paid in full, all
Principal Collections for the related Collection
Period that are allocable to the Investor Interest
will be distributed as principal payments first to
the Class A-1 Certificateholders until the Class
A-1 Certificates have been paid in full, second, to
the Class A-2 Certificateholders until the Class
A-2 Certificates have been paid in full, third, to
the Class A-3 Certificateholders until the Class
A-3 Certificates have been paid in full and
thereafter the Class A Percentage and the Class B
Percentage of any remaining such Principal
Collections will be distributed as principal
payments to the Class A-4 Certificateholders and to
the holders of record of the Class B Certificates
(the "Class B Certificateholders" and, together
with the Class A Certificateholders, the
"Certificateholders"), respectively. On each
Distribution Date after the Class A-3 Certificates
have been paid in full, the Class A Percentage and
the Class B Percentage of Principal Collections for
the related Collection Period allocable to the
Investor Interest will be distributed to the Class
A-4 Certificateholders and the Class B
Certificateholders, respectively, until the related
Class of Certificates has been paid in full.
Certain Loss Amounts incurred during the
Amortization Period will be reimbursed to the
Certificateholders as described below. The "Class A
Percentage" will mean the Class A Certificate
Balance immediately after the Class A-3
Certificates have been paid in full, as a
percentage of the Certificate Balance at such time,
and the "Class B Percentage" will mean the Class B
Certificate Balance immediately after the Class A-3
Certificates have been paid in full, as a
percentage of the Certificate Balance at such time.
The Class A Percentage and the Class B Percentage
will not change after they are set.
In no event will the principal distributed in
respect of any Class of Certificates exceed its
Certificate Balance. In addition, under certain
circumstances, (i) Class A Certificateholders will
be entitled to receive reimbursement of an
allocable percentage of Loss Amounts as a
distribution of principal from sources other than
Principal Collections and (ii) principal allocable
to the Class B Certificates may instead be
distributed in respect of Loss Amounts allocable to
the Class A-4 Certificates, Class A-4 Certificate
Principal Loss Amounts and accrued and unpaid
interest thereon, as described under "Description
of the
13
<PAGE> 16
Certificates -- Distributions on the
Certificates -- Distributions of Interest",
"-- Application and Distributions of Principal" and
"Risk Factors -- Reimbursement of Loss Amounts".
See "Description of the Certificates -- Early
Amortization Events" for a description of the
events that might lead to the commencement of the
Amortization Period prior to the Amortization Date.
During the Amortization Period, the amount of
Principal Collections allocable to the Investor
Interest in respect of a Collection Period (the
"Principal Allocation") generally will mean the
Principal Collections in respect of such Collection
Period allocable to the SUBI Interest multiplied by
the Investor Percentage for such Principal
Collections. The "Investor Percentage" for purposes
of the Principal Allocation will equal the
percentage equivalent of a fraction (not to exceed
100%), the numerator of which is the Certificate
Balance and the denominator of which is 99.8% of
the Aggregate Net Investment Value, calculated as
described under "Summary -- Security for the
Certificates -- The SUBI -- The Contracts", as of
the last day of the last Collection Period (i)
preceding the Amortization Date or (ii) preceding
the month, if any, during which an Early
Amortization Event occurs. See "Description of the
Certificates -- Calculation of Investor Percentage
and Transferor Percentage" for a description of
calculation of the Investor Percentage relating to
Interest Collections and Loss Amounts.
Allocations based upon the Principal Allocation for
Principal Collections during the Amortization
Period may result in distributions of principal
with respect to a Collection Period during the
Amortization Period to Certificateholders in
amounts that are greater relative to the declining
balance of the Certificate Balance than would be
the case if no fixed Investor Percentage were used
to determine the percentage of Principal
Collections distributed in respect of the
Certificates. Additionally, to the extent that on
any Distribution Date during the Amortization
Period any portion of the Investor Percentage of
Interest Collections in respect of the related
Collection Period allocable to the SUBI Interest
remains after required distributions have been
made, such excess interest will be deposited into
the Reserve Fund until the amount on deposit
therein equals the Reserve Fund Cash Requirement.
Any remaining excess interest, up to but not
exceeding the product of (i) one-twelfth of 0.25%,
(ii) 99.8% and (iii) the Aggregate Net Investment
Value as of the last day of such Collection Period
(the "Accelerated Principal Distribution Amount"),
will be distributed as an additional payment of
principal to the Certificateholders in the same
manner and priority as principal is distributed in
respect of the Certificates as described in the
preceding paragraphs. See "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest" and
"Security for the Certificates -- The
Accounts -- The SUBI Collection
Account -- Withdrawals from the SUBI Collection
Account" for further information regarding the
foregoing matters.
Optional Purchase.......... The Certificates will be subject to purchase at the
option of the Transferor on any Distribution Date
if, either before or after giving effect to any
payment of principal required to be made on such
Distribution Date, the Certificate Balance has been
reduced to an amount less than or equal to 10% of
the Initial Certificate Balance, at a purchase
price
14
<PAGE> 17
determined as described under "Description of the
Certificates -- Termination of the Trust;
Retirement of the Certificates".
Security for the
Certificates............... The security for the Certificates will consist
primarily of the following:
A. The SUBI.............. The SUBI will evidence a beneficial interest in the
SUBI Assets. The Origination Trust was created
pursuant to a trust agreement (the "Origination
Trust Agreement"), among ALFI L.P., as grantor and
initial beneficiary, the Origination Trustee and
First Bank, as trust agent (in such capacity, the
"Trust Agent"). The SUBI Interest will be evidenced
by a certificate (the "SUBI Certificate")
evidencing a 99.8% beneficial interest in the SUBI
Assets that will be issued by the Origination Trust
pursuant to a supplement to the Origination Trust
Agreement dated as of April 1, 1997 (the "SUBI
Supplement" and, together with the Origination
Trust Agreement, the "SUBI Trust Agreement"). The
Trustee will be a third party beneficiary of the
SUBI Trust Agreement. The Transferor will
permanently hold the Retained SUBI Interest,
representing the 0.2% beneficial interest in the
SUBI Assets not evidenced by the SUBI Certificate.
The Origination Trust Assets evidenced by the SUBI
will primarily include the Contracts and the Leased
Vehicles. The SUBI will not evidence an interest in
any Origination Trust Assets other than the SUBI
Assets, and payments made on or in respect of all
other Origination Trust Assets will not be
available to make payments on the Certificates. For
more information regarding the SUBI, see "The Trust
and the SUBI" and "The Origination Trust".
1. The Contracts......... The Contracts will consist of a pool of retail
closed-end lease contracts originated by Dealers
located throughout the United States, each of which
will have an original term of not more than 60
months. Each Contract will be a finance lease for
accounting purposes and will have been written for
a "capitalized cost" (which may exceed the
manufacturer's suggested retail price), plus an
implicit rate in each Lease calculated as an annual
percentage rate (the "Lease Rate") on a constant
yield basis. The Contracts will provide for equal
monthly payments (the "Monthly Payments") such that
at the end of the related Contract term such
capitalized cost will have been amortized to an
amount equal to the residual value of the related
Leased Vehicle established at the time of
origination of such Contract (the "Residual
Value"). The amount to which the capitalized cost
of a Contract has been amortized at any point in
time is referred to herein as its "Outstanding
Principal Balance".
The Initial Contracts consist of 51,898 lease
contracts. As of the Initial Cutoff Date, the Lease
Rate of the Initial Contracts ranged from 2.14% to
12.95%, with a weighted average Lease Rate of
8.30%. The aggregate of the original principal
balances of the Initial Contracts as of their
respective dates of origination was $1,269,396,602.
As of the Initial Cutoff Date, the aggregate
Outstanding Principal Balance of the Initial
Contracts was $1,227,193,400, the aggregate
Residual Value of the Initial Leased Vehicles was
$804,381,005 and the Initial Contracts had a
weighted average original term of 40.99 months and
a weighted average remaining term to scheduled
maturity of 36.98 months. See "The Contracts" for
further information regarding the Initial
Contracts.
15
<PAGE> 18
The Initial Contracts were, and the Subsequent
Contracts will be, identified by the Servicer from
the Origination Trust's portfolio of lease
contracts originated by Dealers located throughout
the United States that are not evidenced by (or
reserved for allocation to) any Other SUBI, based
upon the criteria specified in the SUBI Trust
Agreement and described under "The
Contracts -- Characteristics of the Contracts" and
"-- Representations, Warranties and Covenants".
The "Aggregate Net Investment Value" as of any day
will equal the sum of (i) the Discounted Principal
Balance of all Contracts other than Charged-off,
Liquidated, Matured and Additional Loss Contracts,
(ii) the aggregate Residual Value of all Leased
Vehicles to the extent that the related Contracts
have reached their scheduled maturities (each, a
"Matured Contract") within the three immediately
preceding Collection Periods but which Leased
Vehicles as of the last day of the most recent
Collection Period have remained unsold and not
otherwise disposed of by the Servicer for no more
than two full Collection Periods (the "Matured
Leased Vehicle Inventory") and (iii) during the
Revolving Period, the amount of Principal
Collections and Loss Amounts that otherwise would
be reimbursed to the Certificateholders, if any,
that have not been reinvested in Subsequent
Contracts and Subsequent Leased Vehicles. The
"Discounted Principal Balance" of (i) a Discounted
Contract will equal its Outstanding Principal
Balance, discounted by approximately 9.25%, and
(ii) all Contracts other than Discounted Contracts
will equal their Outstanding Principal Balance. As
of the Initial Cutoff Date, the aggregate
Discounted Principal Balance of the Initial
Contracts and the Aggregate Net Investment Value
was $1,199,477,720.
2. The Leased Vehicles... The Leased Vehicles will be comprised of
automobiles and light duty trucks. As of the times
of origination of the Contracts, the related Leased
Vehicles will be either new vehicles, dealer
demonstrator vehicles or manufacturers' program
vehicles, as described under "The Contracts --
General". Manufacturers' program vehicles are
vehicles which have been sold directly by
manufacturers to rental car companies and returned
to the manufacturer for resale.
The certificates of title to the Initial Leased
Vehicles have been, and the certificates of title
to the Subsequent Leased Vehicles will be,
registered at all times in the name of the
Origination Trustee (in its capacity as trustee of
the Origination Trust). Such certificates of title
will not reflect the indirect interest of the
Trustee in the Leased Vehicles by virtue of its
beneficial interest in the SUBI. Therefore, if the
Class A Certificates were recharacterized as
secured loans, the Trustee would not have a
perfected lien in the Leased Vehicles, although it
would be deemed to have a perfected security
interest in the SUBI Certificate and the Contracts
and certain related rights. For further information
regarding the titling of the Leased Vehicles and
the interest of the Trustee therein, see "The
Origination Trust -- Contract Origination; Titling
of Leased Vehicles" and "Certain Legal Aspects of
the Contracts and the Leased Vehicles -- Back-up
Security Interests".
B. The Accounts.......... The Origination Trustee will maintain the SUBI
Collection Account and the Residual Value Surplus
Account for the benefit of the holders of interests
in the SUBI. Within two Business Days of receipt,
payments
16
<PAGE> 19
made on or in respect of the Contracts or the
Leased Vehicles generally will be deposited by the
Servicer into the SUBI Collection Account. Such
payments will include, but will not be limited to,
Monthly Payments made by lessees, Monthly Payments
determined by the Servicer to be due in one or more
future Collection Periods (each, a "Payment
Ahead"), Prepayments, proceeds from the sale or
other disposition of Leased Vehicles relating to
Matured Contracts (including payments for excess
mileage and excess wear and use, but excluding
Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy) ("Matured Leased
Vehicle Proceeds"), proceeds received in connection
with the sale or other disposition of Leased
Vehicles that have been repossessed ("Repossessed
Vehicle Proceeds") and other amounts received in
connection with the realization of the amounts due
under any Contract (excluding Insured Residual
Value Loss Amounts paid under the Residual Value
Insurance Policy) (together with Matured Leased
Vehicle Proceeds and Repossessed Vehicle Proceeds,
"Liquidation Proceeds"). The Servicer will be
entitled to reimbursement for expenses incurred in
connection with the realization of Matured Leased
Vehicle Proceeds ("Matured Leased Vehicle
Expenses"), Repossessed Vehicle Proceeds
("Repossessed Vehicle Expenses") and other
Liquidation Proceeds (such expenses, together with
Matured Leased Vehicle Expenses and Repossessed
Vehicle Expenses, "Liquidation Expenses"), either
from amounts on deposit in the SUBI Collection
Account or, to the extent described herein, the
Residual Value Surplus Account, or as a deduction
from Matured Leased Vehicle Proceeds, Repossessed
Vehicle Proceeds or other Liquidation Proceeds, as
appropriate, deposited into the SUBI Collection
Account. For further details regarding these
deposits and reimbursements, see "Security for the
Certificates -- The Accounts -- The SUBI Collection
Account" and "-- The Residual Value Surplus
Account".
On the Business Day immediately preceding each
Distribution Date (each, a "Deposit Date"), the
following amounts will be deposited into the SUBI
Collection Account: (i) Advances by the Servicer,
(ii) Reallocation Payments by World Omni (together
with, under certain circumstances during the
Amortization Period, Reallocation Deposit Amounts)
in respect of certain Contracts as to which an
uncured breach of certain representations and
warranties or certain servicing covenants has
occurred and (iii) certain amounts in respect of
the Residual Value of Leased Vehicles relating to
Matured Contracts withdrawn from the Residual Value
Surplus Account. Thereafter, 99.8% of Interest
Collections (and, with respect to the Deposit Date
in any month following the month during which the
Amortization Period commences, 99.8% of Principal
Collections) on deposit in the SUBI Collection
Account in respect of the related Collection Period
will be allocable to the SUBI Interest and
deposited into the Distribution Account maintained
with the Trustee for the benefit of the
Certificateholders and the Transferor. Any Insured
Residual Value Loss Amount paid under the Residual
Value Insurance Policy will be deposited into the
SUBI Collection Account (if it relates to the
Revolving Period) or the Distribution Account (if
it relates to the Amortization Period) within one
Business Day of receipt by the Servicer. Any
Required Amount will be withdrawn from the Reserve
Fund and deposited into the
17
<PAGE> 20
Distribution Account on each Distribution Date. All
payments to Certificateholders will be made from
the Distribution Account. The remaining 0.2% of
Collections will be distributed on such
Distribution Date to the Transferor in respect of
the Retained SUBI Interest, which amounts in no
event will be available to make payments on the
Certificates. Any funds remaining in the
Distribution Account on a Distribution Date in
respect of the related Collection Period following
the payment of amounts required to be paid
therefrom generally will be paid to the Transferor.
For further information regarding these deposits
and payments, see "Security for the
Certificates -- The Accounts -- The Distribution
Account" and "-- The SUBI Collection Account".
On each Deposit Date, if Matured Leased Vehicle
Proceeds received during the related Collection
Period with respect to Leased Vehicles relating to
Matured Contracts that were sold or otherwise
disposed of during such Collection Period, net of
related Matured Leased Vehicle Expenses incurred
during such Collection Period ("Net Matured Leased
Vehicle Proceeds"), exceed the aggregate Residual
Value of the related Leased Vehicles (the "Residual
Value Surplus"), then such excess will be deposited
into the Residual Value Surplus Account maintained
with the Origination Trustee for the benefit of
holders of interests in the SUBI. On each Deposit
Date, funds on deposit in the Residual Value
Surplus Account, if any, will be withdrawn and
deposited into the SUBI Collection Account up to an
amount equal to the sum of (a) the aggregate of the
Residual Values of those Leased Vehicles that were
a part of Matured Leased Vehicle Inventory but that
had remained unsold and not otherwise disposed of
for at least two full Collection Periods as of the
last day of the most recent Collection Period, (b)
the amount by which Net Matured Leased Vehicle
Proceeds (after application of amounts withdrawn
pursuant to the next sentence) for the related
Collection Period are less than the aggregate of
the Residual Values of all Leased Vehicles included
in Matured Leased Vehicle Inventory that were sold
or otherwise disposed of during such Collection
Period and (c) any losses on Contracts terminated
on or prior to their Maturity Dates during the
related Collection Period by agreement between the
Servicer and the lessee in connection with the
payment of less than their respective Outstanding
Principal Balances. Also on each Deposit Date,
funds on deposit in the Residual Value Surplus
Account will be withdrawn and paid to the Servicer
in reimbursement for any Matured Leased Vehicle
Expenses incurred during such Collection Period,
but only to the extent that, after such
reimbursement (but exclusive of any other
reimbursement from any other source), Net Matured
Leased Vehicle Proceeds would be no more than the
aggregate of the Residual Values of all Leased
Vehicles sold or otherwise disposed of during such
Collection Period. For further information
regarding the Residual Value Surplus Account, see
"Security for the Certificates -- The Accounts --
The Residual Value Surplus Account".
C. The Residual Value
Insurance Policy...... Automobile and light duty truck leasing companies
such as World Omni sometimes obtain residual value
insurance to minimize losses in respect of the
residual values of leased vehicles. Although many
forms of such insurance are available, in general,
claims are made if the proceeds of the
18
<PAGE> 21
sale of a leased vehicle are less than its residual
value established at the time of origination of the
related closed-end lease contract.
On the Closing Date, American International
Specialty Lines Insurance Company ("AISLIC"), an
indirect subsidiary of American International
Group, Inc. ("AIG"), will issue an insurance policy
to the Transferor (with the Origination Trustee,
the Trustee, the Servicer and ALFI L.P. also named
as insureds) in respect of Residual Value Loss
Amounts (the "Residual Value Insurance Policy").
The Residual Value Insurance Policy will provide
coverage for the Insured Residual Value Loss Amount
for any Collection Period. The aggregate maximum
amount payable under the Residual Value Insurance
Policy with respect to any Leased Vehicle will be
the lesser of $60,000 and its insured residual
value, calculated as described under "Security for
the Certificates -- The Residual Value Insurance
Policy". Additionally, the aggregate maximum amount
payable under the Residual Value Insurance Policy
will not exceed the aggregate insured residual
values of all Leased Vehicles.
Prior to each Distribution Date, the Servicer will
make a claim for any Insured Residual Value Loss
Amount under the Residual Value Insurance Policy.
The proceeds of any such claim will be used to make
the payments described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest". For a
fuller description of these mechanics, see
"Security for the Certificates -- The Residual
Value Insurance Policy".
The "Insured Residual Value Loss Amount" for any
Collection Period will be the lesser of (i) the
Investor Percentage of the Residual Value Loss
Amount allocable to the SUBI Interest, and (ii) any
shortfall in the amount required to make all
payments (other than deposits into the Reserve
Fund) required to be made on the related
Distribution Date that are described under
"Description of the Certificates -- Distributions
on the Certificates -- Distributions of Interest",
after application of the Investor Percentage of
Interest Collections allocable to the SUBI Interest
and Transferor Amounts otherwise payable in respect
of the Transferor Interest, as described below
under "Summary -- Security for the
Certificates -- Subordination of the Transferor
Interest".
D. The Reserve Fund...... The Trust will have the benefit of the Reserve Fund
maintained with the Trustee for the benefit of the
Certificateholders and the Transferor (as holder of
the Transferor Interest). The Reserve Fund is
designed to provide additional funds for the
benefit of the Certificateholders in the event that
on any Distribution Date Interest Collections
allocable to the Investor Interest for the related
Collection Period, plus Transferor Amounts
otherwise distributable in respect of the
Transferor Interest, plus any Insured Residual
Value Loss Amount paid under the Residual Value
Insurance Policy, are insufficient to pay, among
other things, the sum of (i) accrued interest and
any overdue interest (with interest thereon) at the
applicable Certificate Rate on the Certificates on
such Distribution Date, (ii) any Loss Amount for
such Collection Period allocable to the Investor
Interest, calculated as described under
"Description of the Certificates -- Calculation of
Investor Percentage and Transferor Percentage", and
(iii) any unreimbursed Certificate Principal Loss
Amounts, together with interest thereon at the
applicable
19
<PAGE> 22
Certificate Rate. Monies on deposit in the Reserve
Fund also will be available to Certificateholders
should Collections ultimately be insufficient to
pay in full any Class of Certificates. For further
information regarding the Reserve Fund, see
"Security for the Certificates -- The
Accounts -- The Reserve Fund".
The Reserve Fund will be created with an initial
deposit by the Transferor of approximately
$11,970,788 (the "Initial Deposit") (which amount
will equal 1.0% of 99.8% of the Aggregate Net
Investment Value as of the Initial Cutoff Date). On
each Distribution Date, the funds in the Reserve
Fund will be supplemented by (i) certain Interest
Collections, as more fully described under
"Description of the Certificates -- Distributions
on the Certificates -- Distributions of Interest",
(ii) income realized on the investment of amounts
on deposit in the Reserve Fund and (iii) in certain
circumstances, the deposit of monies in respect of
the related Collection Period remaining in the
Distribution Account after making all payments
required to be made therefrom on such Distribution
Date prior to such deposit, including monies that
would otherwise be distributed or applied in
respect of the Transferor Interest, until the
amount on deposit in the Reserve Fund equals the
Reserve Fund Cash Requirement then in effect,
calculated as described under "Security for the
Certificates -- The Accounts -- The Reserve
Fund -- The Reserve Fund Cash Requirement".
The Transferor may be required under certain
circumstances to deposit funds into the Reserve
Fund in an amount equal to certain Reserve Fund
supplemental requirements. For a description of the
circumstances under which the Transferor will be
required to make such deposits, see "Security for
the Certificates -- The Accounts -- The Reserve
Fund". For further information regarding deposits
into the Reserve Fund, see "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest".
After giving effect to all payments from the
Reserve Fund on a Distribution Date, monies on
deposit therein that are in excess of the Reserve
Fund Cash Requirement will be paid to the
Transferor, free and clear of any lien of the
Trust.
E. Subordination of the
Transferor Interest... The Transferor Interest will initially equal
approximately $23,941,575, and will represent the
interest in the Trust not represented by the
Investor Interest. However, to provide additional
credit enhancement for the Certificates, on each
Distribution Date, no payments will be made to the
Transferor in respect of the Transferor Interest
until all payments required to be made on such
Distribution Date that are described under
"Description of the Certificates -- Distributions
on the Certificates -- Distributions of Interest"
have been made and the amount on deposit in the
Reserve Fund equals the Reserve Fund Cash
Requirement. For a description of certain payments
made to the Transferor, see "Description of the
Certificates -- Certain Payments to the
Transferor".
Advances................... On each Deposit Date the Servicer will be obligated
to make, by deposit into the SUBI Collection
Account, an advance equal to the aggregate Monthly
Payments due but not received during the related
Collection Period with respect to Contracts that
are 31 days or more past due as of
20
<PAGE> 23
the end of such Collection Period, and the Servicer
may (but shall not be required to) make such an
advance with respect to Contracts that are one or
more days, but less than 31 days, past due as of
the end of such Collection Period (each, an
"Advance"). The Servicer will not be required to
make any Advance to the extent that it determines
that such Advance may not be ultimately recoverable
by the Servicer from Net Liquidation Proceeds or
otherwise. For further information regarding
Advances, see "Additional Document
Provisions -- The Servicing Agreement -- Advances".
Servicing Compensation..... The Servicer will be entitled to receive a monthly
fee with respect to the SUBI Assets allocable to
the SUBI Interest (the "Servicing Fee"), payable on
each Distribution Date, equal to one-twelfth of 1%
of 99.8% of the Aggregate Net Investment Value as
of the first day of the related Collection Period
(or, in the case of the first Distribution Date,
one-twelfth of 1% of 99.8% of the Aggregate Net
Investment Value as of the Initial Cutoff Date).
The Servicer also will be entitled to additional
servicing compensation in the form of, among other
things, late fees and other administrative fees or
similar charges under the Contracts. For further
information regarding Servicer compensation, see
"Additional Document Provisions -- The Servicing
Agreement -- Servicing Compensation".
Tax Status................. Brown & Wood LLP, special federal income tax
counsel to the Transferor and counsel for the
Underwriters, is of the opinion that the Class A
Certificates will be characterized as indebtedness
for federal income tax purposes, as described under
"Material Income Tax Considerations -- Federal
Taxation". Each Class A Certificateholder, by its
acceptance of a Class A Certificate, and each
Certificate Owner by its acquisition of an interest
in the Class A Certificates, will agree to treat
the Class A Certificates as indebtedness for
federal, state and local income tax purposes.
Prospective investors are advised to consult their
own tax advisors regarding the federal income tax
consequences of the purchase, ownership and
disposition of Class A Certificates, and the tax
consequences arising under the laws of any state or
other taxing jurisdiction. For further information
regarding material federal income tax
considerations with respect to the Class A
Certificates, see "Material Income Tax
Considerations -- Federal Taxation".
ERISA Considerations....... As more fully described under "ERISA
Considerations", an employee benefit plan subject
to the requirements of the fiduciary responsibility
provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the
provisions of Section 4975 of the Internal Revenue
Code of 1986, as amended, contemplating the
purchase of Class A Certificates should consult its
counsel before making a purchase, and the fiduciary
of such plan and such legal advisors should
consider the application of the ERISA prohibited
transaction exemption described herein.
Ratings.................... It is a condition of issuance of the Class A
Certificates that each of Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's
Ratings Services ("Standard & Poor's" and, together
with Moody's, the "Rating Agencies") rates each
Class of Class A Certificates in its highest rating
category. The ratings of the Class A Certificates
should be evaluated independently from similar
ratings on other types of securities.
21
<PAGE> 24
A rating is not a recommendation to buy, sell or
hold the related Class A Certificates, inasmuch as
such rating does not comment as to market price or
suitability for a particular investor. The ratings
of the Class A Certificates address the likelihood
of the payment of principal of and interest on the
Class A Certificates pursuant to their terms. For
further information concerning the ratings assigned
to the Class A Certificates, including the
limitations of such ratings, see "Ratings of the
Class A Certificates".
22
<PAGE> 25
RISK FACTORS
LIMITED LIQUIDITY; ABSENCE OF SECONDARY MARKET
There is currently no market for the Class A Certificates. The Underwriters
expect, but will not be obligated, to make a market in each Class of Class A
Certificates. There can be no assurance that a secondary market for the Class A
Certificates will develop or, if one does develop, that it will provide the
related Certificateholders with liquidity of investment or will continue for the
life of the related Class A Certificates.
REIMBURSEMENT OF LOSS AMOUNTS
In the event that Loss Amounts are incurred in respect of the Contracts and
the Leased Vehicles during a Collection Period, if the related Distribution Date
occurs during the Revolving Period, an amount equal to the Investor Percentage
of such Loss Amounts will not be reimbursed to the Certificateholders but will
be treated as if such amount constituted Principal Collections received during
the Collection Period in which such Distribution Date occurs. Accordingly, to
the extent covered by Excess Collections or otherwise, as described herein, such
amount will be available for reinvestment in Subsequent Contracts and Subsequent
Leased Vehicles. If the related Distribution Date occurs during the Amortization
Period, the Class A-1 Certificateholders will be entitled to receive the Class
A-1 Allocation Percentage of the Investor Percentage of such Loss Amounts, the
Class A-2 Certificateholders will be entitled to receive the Class A-2
Allocation Percentage of the Investor Percentage of such Loss Amounts, the Class
A-3 Certificateholders will be entitled to receive the Class A-3 Allocation
Percentage of the Investor Percentage of such Loss Amounts and the Class A-4
Certificateholders will be entitled to receive the Class A-4 Allocation
Percentage of the Investor Percentage of such Loss Amounts. Such distributions
of principal will be made from, to the extent available: (i) Excess Collections
(which may include Undistributed Transferor Excess Collections in respect of the
previous Collection Period); (ii) amounts on deposit in the Residual Value
Surplus Account (which will be deposited into the Distribution Account, to the
extent available, to reduce the Residual Value Loss Amount); (iii) the Servicing
Fee (so long as World Omni is the Servicer); (iv) Transferor Amounts otherwise
payable to the Transferor in respect of the Transferor Interest; (v) Insured
Residual Value Loss Amounts paid under the Residual Value Insurance Policy; (vi)
amounts on deposit in the Reserve Fund; (vii) amounts otherwise payable as
interest to the Class B Certificateholders; and (viii) in the case of the Class
A-4 Certificates, amounts otherwise payable as principal to the Class B
Certificateholders. With respect to any Distribution Date, the "Class A-1
Allocation Percentage" will mean the Class A-1 Certificate Balance as a
percentage of the Certificate Balance, calculated as of the last day of the
related Collection Period. The "Class A-2 Allocation Percentage", the "Class A-3
Allocation Percentage" and the "Class A-4 Allocation Percentage" will be
calculated in the same manner as the Class A-1 Allocation Percentage,
appropriately modified to relate to the Class A-2, Class A-3 or Class A-4
Certificates, as the case may be. Higher Loss Amounts that occur during the
Amortization Period may therefore accelerate the rate of return of principal on
the Certificates. To the extent that Principal Collections and Loss Amounts that
otherwise would be reimbursed to the Certificateholders are reinvested in
Subsequent Contracts during the Revolving Period, the aggregate Residual Value
of the Leased Vehicles as a percentage of the Aggregate Net Investment Value
will increase. Furthermore, to the extent that Loss Amounts (including Residual
Value Loss Amounts) ultimately exceed the sources available for repayment
thereof, investors in the Class A Certificates could incur a loss on their
investment. World Omni's agreements with its Dealers generally do not provide
for recourse to the Dealer for unpaid amounts in respect of a defaulted lease
contract. For further information on Dealer repurchase obligations, see "The
Origination Trust -- Contract Origination; Titling of Leased Vehicles".
"Loss Amounts" will include Charged-off Amounts, Residual Value Loss
Amounts and Additional Loss Amounts. The "Residual Value Loss Amount" for any
Collection Period generally will represent the aggregate net losses on
dispositions of Matured Leased Vehicle Inventory, and will be equal to the sum
of (a) the aggregate of the Residual Values of all those Leased Vehicles that
were included in Matured Leased Vehicle Inventory but that had remained unsold
and not otherwise disposed of by the Servicer for at least two full Collection
Periods as of the last day of such Collection Period, (b) the excess, if any, of
(i) the aggregate of the Residual Values of all Leased Vehicles previously
included in Matured Leased Vehicle Inventory but
23
<PAGE> 26
that were sold or otherwise disposed of during such Collection Period, over (ii)
Net Matured Leased Vehicle Proceeds for such Collection Period, and (c) any
losses on Contracts terminated on or prior to their Maturity Dates during such
Collection Period by agreement between the Servicer and the lessee in connection
with the payment of less than their respective Outstanding Principal Balances,
but only to the extent that such sum exceeds the amount transferred from the
Residual Value Surplus Account to the SUBI Collection Account on the related
Deposit Date in respect of such sums.
As more fully described under "Security for the Certificates -- The
Residual Value Insurance Policy", the Residual Value Insurance Policy will be
drawn upon to pay the Investor Percentage of any Residual Value Loss Amount
allocable to the SUBI Interest, to the extent necessary to make up any shortfall
in the amount required to make all payments required to be made on the related
Distribution Date that are described under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest",
after application of the Investor Percentage of Interest Collections allocable
to the SUBI Interest and Transferor Amounts otherwise payable in respect of the
Transferor Interest.
For a discussion of the recent leased vehicle residual value loss
experience of World Omni, see "World Omni -- Delinquency, Repossession and Loss
Data". The amount of Residual Value losses will vary based on a variety of
factors, including the effect of World Omni's pro-active lease termination
program, more fully described under "Maturity, Prepayment and Yield
Considerations", and the supply of, and demand for, vehicles similar to the
Leased Vehicles in the used car market. No assurance can be given as to the
likely levels of Residual Value losses over the life of the Certificates.
MATURITY AND PREPAYMENT CONSIDERATIONS
No principal will be paid to any Class A Certificateholders until the June
1998 Distribution Date or, upon the occurrence of an Early Amortization Event,
until the Distribution Date in the month immediately succeeding the month in
which such Early Amortization Event occurs. During the Revolving Period,
Principal Collections and reimbursements of Loss Amounts will be reinvested in
Subsequent Contracts and Subsequent Leased Vehicles. Accordingly, the
continuation of the Revolving Period will be dependent, in part, upon the
continued origination and assignment to the Origination Trust of lease contracts
and leased vehicles meeting the eligibility criteria described herein. An
unexpectedly high rate of Principal Collections (including Prepayments) received
during the Revolving Period or a significant decline in the number of qualifying
lease contracts available to be assigned to the Origination Trust could result
in the occurrence of an Early Amortization Event and the commencement of the
Amortization Period prior to the Amortization Date. The retail automobile and
light duty truck leasing business in the United States may be affected by a
variety of social, economic and geographic factors. Economic factors include
interest rates, unemployment levels, the rate of inflation and consumer
perceptions of economic conditions. However, it is not possible to determine or
predict whether or to what extent economic, geographic or social factors will
affect retail automobile and light duty truck leasing in general, or that of
World Omni or its Dealers in particular. As a result, there can be no assurance
that the Revolving Period will not terminate prior to the Amortization Date due
to the occurrence of an Early Amortization Event. Since an Early Amortization
Event would result in the commencement of distributions of principal to Class
A-1 Certificateholders on the Distribution Date in the succeeding month, it
could shorten the final maturity of and affect the yield on each Class of Class
A Certificates. See "Description of the Certificates -- Early Amortization
Events" for a description of the events that might lead to the early
commencement of the Amortization Period and a description of the results of an
Early Amortization Event.
The rate of payment of principal on the Certificates during the
Amortization Period will depend on the rate of payments on or in respect of the
Contracts and the Leased Vehicles (including scheduled payments on and
prepayments and liquidations of the Contracts) and losses with respect thereto,
which cannot be predicted with certainty. In addition, because payments made on
or in respect of the Contracts and the Leased Vehicles that are allocable to the
SUBI Interest will ordinarily be distributed to Certificateholders during the
Amortization Period according to the timing of their receipt, the rate of
principal payments on the Class A Certificates and the yield to maturity of the
Class A Certificates generally will be directly related to the rate at which
payments on or in respect of the Contracts and the Leased Vehicles are made.
Moreover, if on any Distribution Date relating to the Amortization Period any
Excess Collections exist at a time when the amount
24
<PAGE> 27
on deposit in the Reserve Fund is at least equal to the Reserve Fund Cash
Requirement, the related Accelerated Principal Distribution Amount will be
distributed as principal to Certificateholders as more fully described under
"Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest". The rate of payment of principal of
the Class A Certificates may also be affected by payment by World Omni of
Reallocation Payments (together with, under certain circumstances during the
Amortization Period, Reallocation Deposit Amounts) in respect of certain
Contracts as to which an uncured breach of certain representations and
warranties or certain servicing covenants has occurred and the exercise by the
Transferor of its right to purchase the SUBI Interest represented by the SUBI
Certificate at its option under certain circumstances pursuant to the Agreement,
thereby retiring the Certificates. A substantial increase in the rate of
payments on or in respect of the Contracts and Leased Vehicles (including
prepayments and liquidations of the Contracts) during the Amortization Period
may shorten the final maturity of and may significantly affect the yields on
each Class of Class A Certificates. See "Description of the Certificates --
Termination of the Trust; Retirement of the Certificates", "The
Contracts -- Representations, Warranties and Covenants" and "Additional Document
Provisions -- The Servicing Agreement -- Collections" for further information
regarding these matters.
Each of the Contracts may be prepaid by the related lessee without penalty
in full or in part at any time upon payment of a $250 processing fee. As more
fully described under "Maturity, Prepayment and Yield Considerations", World
Omni actively encourages lessees under lease contracts with remaining terms of
less than one year to either buy, trade in or refinance the related leased
vehicles prior to the scheduled maturities of such lease contracts. As a part of
this program, during the last several months of a lease contract World Omni may
selectively offer certain incentives to encourage lease terminations, which may
result in residual value losses. As also more fully described under "Maturity,
Prepayment and Yield Considerations", World Omni estimates that over calendar
years 1994, 1995 and 1996, an average of approximately 86% of the number of
retail automobile and light duty truck lease contracts in its portfolio
(including lease contracts owned by the Origination Trustee on behalf of the
Origination Trust and by certain special purpose finance subsidiaries of World
Omni) with scheduled maturities during this period terminated prior to maturity.
Such early terminations primarily were due either to voluntary prepayments or to
repossession of the leased vehicles due to default by the lessees under the
related lease contracts. No assurance can be given that the Contracts will
experience the same rate of prepayment or default or any greater or lesser rate
than World Omni's historical rate for the retail automobile and light duty truck
lease contracts in its portfolio (including lease contracts owned by the
Origination Trustee on behalf of the Origination Trust and by certain special
purpose finance subsidiaries of World Omni).
For further information regarding these topics and related yield
information, see "Maturity, Prepayment and Yield Considerations".
SEQUENTIAL PAYMENT OF PRINCIPAL ON THE CERTIFICATES
In general, no principal payments will be made on the Class A-2, Class A-3,
Class A-4 or Class B Certificates until the Class A-1 Certificates have been
paid in full, on the Class A-3, Class A-4 or Class B Certificates until the
Class A-1 and Class A-2 Certificates have been paid in full, or on the Class A-4
or Class B Certificates until the Class A-1, Class A-2 and Class A-3
Certificates have been paid in full. On each Distribution Date during the
Amortization Period, all Principal Collections for the related Collection Period
that are allocable to the Investor Interest will be distributed first to the
Class A-1 Certificateholders until the Class A-1 Certificates have been paid in
full, second to the Class A-2 Certificateholders until the Class A-2
Certificates have been paid in full, third to the Class A-3 Certificateholders
until the Class A-3 Certificates have been paid in full and thereafter the Class
A Percentage and the Class B Percentage of any such remaining Principal
Collections will then be distributed as principal payments to the Class A-4
Certificateholders and the Class B Certificateholders, respectively.
Principal payments in respect of the Class A-4 and Class B Certificates
will be based on the fixed Class A Percentage and Class B Percentage, which will
be calculated when the Class A-1, Class A-2 and Class A-3 Certificates have been
paid in full. The Investor Percentage of Loss Amounts will be allocated among
the Certificateholders on a pro rata basis, based on the Class A-1, Class A-2,
Class A-3, Class A-4 and Class B
25
<PAGE> 28
Allocation Percentages, as the case may be, and then reimbursed out of available
funds in the amounts and order of priority described in "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest".
As a result, Class A-2 Certificates may be allocated more Loss Amounts than the
Class A-1 Certificates as a relative percentage of their respective Initial
Certificate Balances, Class A-3 Certificates may be allocated more Loss Amounts
than the Class A-1 or Class A-2 Certificates as a relative percentage of their
respective Initial Certificate Balances, and Class A-4 Certificates may be
allocated more Loss Amounts than the Class A-1, Class A-2 or Class A-3
Certificates as a relative percentage of their respective Initial Certificate
Balances, primarily because Loss Amounts will be allocated on each Distribution
Date based on the then-current Class A-2, Class A-3 and Class A-4 Allocation
Percentages, which will increase as the Certificate Balance of each Class of
Class A Certificates senior in priority of payment decreases during the
Amortization Period.
In addition, the Investor Percentage of the net proceeds of any sale or
other disposition of the SUBI Interest, the SUBI Certificate or other property
of the Trust, which may occur under certain circumstances involving an
Insolvency Event with respect to the Transferor (as described under "Description
of the Certificates -- Early Amortization Events"), to the extent such net
proceeds constitute Principal Collections, will be distributed first, on a pro
rata basis, to the Class A Certificateholders based on their respective Class
Certificate Balances until the Class A Certificates have been paid in full, and
second, to the Class B Certificateholders.
GEOGRAPHIC, ECONOMIC AND OTHER FACTORS
The Dealers which originated and will originate the Contracts are located
(and, therefore, the lessees generally are and will be located) throughout the
United States, with the largest percentage of Initial Contracts originated in
(and the largest percentage of Subsequent Contracts expected to be originated
in) the Five State Area. Less than 5% of the total number of Initial Contracts
were originated in any State other than a State in the Five State Area. For a
further breakdown of these percentages, see "The Contracts -- Characteristics of
the Contracts -- Distribution of the Initial Contracts by State". Due to the
geographic concentration of Contracts in the Five State Area, adverse economic
conditions in one of more of the States therein may have a disproportionate
impact on the performance of the SUBI Assets. Economic factors such as
unemployment, interest rates, the rate of inflation and consumer perceptions of
the economy may affect the rate of prepayment and defaults on the Contracts and
the ability to sell or otherwise dispose of Leased Vehicles relating to Matured
Contracts for an amount at least equal to their respective Residual Values.
These economic factors, as well as other factors such as consumer perceptions of
used vehicle values, also may affect the ability to realize the Residual Values
of Leased Vehicles upon sale. Certain shortfalls in respect of the Residual
Values of Leased Vehicles relating to Matured Contracts will be covered by the
Residual Value Insurance Policy, as and to the extent described under "Security
for the Certificates -- The Residual Value Insurance Policy".
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws, including the federal
Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of
Governors of the Federal Reserve System, impose requirements on retail lease
contracts such as the Contracts. These laws apply to the Origination Trust as
the assignee and co-lessor of the Contracts and may also apply to the Trust as
owner of the SUBI Certificate which represents a beneficial interest in, among
other things, the Contracts. The failure by the Origination Trust to comply with
such requirements may give rise to liabilities on the part of the Origination
Trust, and claims by such parties may be subject to set-off as a result of such
noncompliance. Many States, including each of the States in the Five State Area,
have adopted Lemon Laws that provide vehicle users certain rights in respect of
substandard vehicles which may apply to one or more of the Leased Vehicles. A
successful claim under a Lemon Law could result in, among other things, the
termination of the related Contract and/or require the refunding of a portion of
payments that previously have been paid. World Omni will make representations
and warranties that each Contract complies with all requirements of law in all
material respects. If any such representation and warranty proves incorrect, has
certain material adverse effects and is
26
<PAGE> 29
not timely cured, World Omni will be required to make a Reallocation Payment
(together with, under certain circumstances during the Amortization Period,
Reallocation Deposit Amounts) into the SUBI Collection Account and reallocate
the related Contract and Leased Vehicle out of the SUBI, as described under "The
Contracts -- Representations, Warrants and Covenants" and "Description of the
Certificates -- Reallocation Payments and Reallocation Deposit Amounts". For
further information regarding consumer protection laws, see "Certain Legal
Aspects of the Contracts and the Leased Vehicles -- Consumer Protection Laws".
ERISA LIABILITIES
The Origination Trust Assets, including the SUBI Assets, could become
subject to liens in favor of the PBGC to satisfy unpaid ERISA obligations of any
member of an "affiliated group" that includes World Omni, SET, JMFE and their
respective affiliates. The ratings of the Class A Certificates may be downgraded
in the event of any unfunded ERISA liability of any member of such affiliated
group, as described under "Additional Document Provisions -- The Servicing
Agreement -- Compliance with ERISA". The ratings of the Class A Certificates
address the likelihood of the payment of principal of and interest on the Class
A Certificates pursuant to their terms, as described under "Ratings of the Class
A Certificates". However, the Transferor believes that the likelihood of any
such liability being asserted against the Origination Trust Assets or, if so
asserted, being successfully pursued, is remote. In particular, the Transferor
believes that the Origination Trust should, as a legal matter, be treated as a
distinct entity separate and apart from such affiliated group, and not
considered part of such affiliated group under ERISA's "common control"
provisions. Additionally, such affiliated group maintains only one plan (which
is neither a multi-employer or multiple employer plan) that would subject it to
a lien if the plan were to terminate with assets insufficient to cover its
liabilities. That plan historically has had assets that significantly exceeded
its liabilities. However, no assurance can be given that any of these conditions
will continue in the future.
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Leased Vehicles and the Trust
will have an interest therein evidenced by the SUBI, they will be operated by
the related lessees and their respective invitees. State laws differ as to
whether anyone suffering injury to person or property involving a leased vehicle
may bring an action against the owner of the vehicle merely by virtue of that
ownership. To the extent that applicable State law permits such an action, the
Origination Trust and the Origination Trust Assets may be subject to liability
to such an injured party. However, the laws of many States, including each of
the States in the Five State Area, either do not permit such suits, or the
lessor's liability is capped at the amount of any liability insurance that the
lessee was required to, but failed to, maintain. For further information in this
regard, see "Certain Legal Aspects of the Contracts and the Leased
Vehicles -- Vicarious Tort Liability". Notwithstanding the foregoing, in the
event that vicarious liability on the Origination Trust as owner of a Leased
Vehicle were imposed and the coverage provided by the Contingent and Excess
Liability Insurance Policies were insufficient to cover such a loss with respect
to a Leased Vehicle or, in certain circumstances, a leased vehicle that is an
Other SUBI Asset or a UTI Asset, investors in the Class A Certificates could
incur a loss on their investment. See "Security for the Certificates -- The
Contingent and Excess Liability Insurance Policies" and "Certain Legal Aspects
of the Origination Trust and the SUBI -- The SUBI".
All of the Contracts will contain provisions requiring the lessees to
maintain levels of insurance satisfying applicable state law, and the Servicing
Agreement will require the Servicer to police compliance by the lessees
therewith. In addition, in the event that any such insurance has lapsed or has
not been maintained in full force and effect or the Servicer has failed to
maintain the right to receive the proceeds of such insurance, the Servicing
Agreement will require World Omni to pay all such amounts as would otherwise
have been recoverable as Insurance Proceeds. For further information regarding
insurance matters, see "World Omni -- Insurance" and "Additional Document
Provisions -- The Servicing Agreement -- Insurance on Leased Vehicles".
Under Florida law, the owner of a motor vehicle that is subject to a lease
having an initial term of at least one year is exempt from liability arising out
of an accident in which the leased vehicle is involved if the lessee is required
by the lease to maintain certain specific levels of insurance, and such
insurance is maintained either
27
<PAGE> 30
by the lessee or the lessor, as further described under "Certain Legal Aspects
of the Contracts and the Leased Vehicles -- Vicarious Tort Liability". However,
a court applying the law of another jurisdiction might reach another result.
Moreover, actions by third parties might arise against the owner of a leased
vehicle based on legal theories other than negligence, such as a product defect
or improper vehicle preparation prior to the origination of the related lease
contract. Even if the Origination Trust were to be the subject of an action for
damages as a result of its ownership of a Leased Vehicle, however, it will be
the beneficiary of the Contingent and Excess Liability Insurance Policies with
respect thereto, as more fully described under "Security for the
Certificates -- The Contingent and Excess Liability Insurance Policies".
Although the Origination Trust's insurance coverage exceeds $10 million per
claim, with an allowance for multiple claims in any policy period, in the event
that all such insurance coverage were exhausted and damages were assessed
against the Origination Trust, claims could be imposed against the assets of the
Origination Trust, including the Leased Vehicles. If any such claims are imposed
against any SUBI Assets or, in certain limited circumstances, any Other SUBI
Assets or UTI Assets, investors in the Class A Certificates could incur a loss
on their investment. For further information regarding the potential for
third-party claims against the Origination Trust Assets, see "The Origination
Trust -- Allocation of Origination Trust Liabilities", "Certain Legal Aspects of
the Origination Trust and the SUBI -- The SUBI", "Certain Legal Aspects of the
Contracts and the Leased Vehicles -- Vicarious Tort Liability" and "ERISA
Considerations".
INSOLVENCY OF WORLD OMNI; SUBSTANTIVE CONSOLIDATION WITH WORLD OMNI
The Transferor has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief under the United States Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") by World Omni will not result in the consolidation of
the assets and liabilities of ALFI, ALFI L.P., WOLSI, the Transferor, the
Origination Trust or the Trust with those of World Omni. With respect to WOLSI
and ALFI, these steps include their creation as separate, special purpose
finance subsidiaries of World Omni pursuant to articles of incorporation
containing certain limitations (including the requirement that each must have at
all times at least two "independent directors" and restrictions on the nature of
their respective businesses and on their ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of a majority
of their respective directors, including each independent director). With
respect to the Transferor and ALFI L.P., these steps include their creation as
separate, special purpose limited partnerships of which WOLSI and ALFI,
respectively, are the sole general partners, pursuant to limited partnership
agreements containing certain limitations (including restrictions on the nature
of their respective businesses and on their ability to commence a voluntary case
or proceeding under any Insolvency Law without the affirmative vote of all of
the directors of their respective general partners, including each independent
director).
Reallocation Payments made by World Omni in respect of certain Contracts as
to which an uncured breach of certain representations and warranties or certain
servicing covenants has occurred (and, if during the Amortization Period such
payment would cause the Transferor Interest to be less than zero, payment of the
related Reallocation Deposit Amount), payments made by World Omni in respect of
certain insurance policies required to be obtained and maintained by lessees
pursuant to the Contracts, unreimbursed Advances made by World Omni, as
Servicer, pursuant to the Servicing Agreement, and payments made by World Omni
to the Transferor, pursuant to the Support Agreement or otherwise, may be
recoverable by World Omni as debtor-in-possession or by a creditor or a trustee
in bankruptcy of World Omni as a preferential transfer from World Omni if such
payments were made within one year prior to the filing of a bankruptcy case in
respect of World Omni. In addition, the insolvency of World Omni could result in
the replacement of World Omni as Servicer, which could result in a temporary
interruption of payments on the Certificates and an Event of Servicing
Termination under the Servicing Agreement.
Additionally, if prior to the Amortization Date a conservator, receiver or
bankruptcy trustee were appointed by the Transferor, or if certain other events
relating to the bankruptcy or insolvency of the Transferor were to occur (each,
an "Insolvency Event"), the Amortization Period would commence and the Trustee
may, and upon receipt of written instructions from holders of Certificates
evidencing Voting Interests of not less than 51% of the Class A Certificates
(voting together as a single class) or 51% of the Class A
28
<PAGE> 31
Certificates and the Class B Certificates (voting together as a single class)
will, attempt to sell the SUBI Interest, the SUBI Certificate and the other
property of the Trust. The consummation of such sale would result in an early
termination of the Trust and a pro rata loss to the Class A-1, Class A-2, Class
A-3 and Class A-4 Certificateholders if the Investor Percentage of the net
proceeds of such sale were insufficient to pay in full the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificate Balances, together with any unreimbursed
Class A-1, Class A-2, Class A-3 and Class A-4 Certificate Principal Loss
Amounts, with accrued and unpaid interest thereon at the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificate Rates, respectively.
On the Closing Date, Williams & Connolly, counsel to ALFI, ALFI L.P., the
Transferor, WOLSI and World Omni, will render an opinion based on 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, under present reported decisional authority and statutes
applicable to federal bankruptcy cases, if World Omni were to become a debtor in
a case under the Bankruptcy Code, it would not be a proper exercise by a federal
bankruptcy court of its equitable discretion to disregard the independent forms
so as to substantively consolidate the assets and liabilities of ALFI, ALFI
L.P., the Transferor, WOLSI, the Origination Trust or the Trust with those of
World Omni. In addition, on the Closing Date, counsel to the Transferor will
render an opinion to the effect that (i) the transfer of the SUBI Certificate by
the Transferor to the Trust constitutes a sale of the SUBI Certificate and the
SUBI Assets evidenced thereby, subject in each case to the rights of the
Transferor as the holder of the Transferor Interest and the Retained SUBI
Interest, or (ii) if such transfer does not constitute a sale, then the
Agreement creates a valid perfected security interest, for the benefit of
Certificateholders, in the Transferor's right, title and interest in the SUBI
Certificate. For further information regarding the risk of insolvency, see
"Certain Legal Aspects of the Origination Trust and the SUBI -- Insolvency
Related Matters".
The Origination Trust has been registered under the business trust
provisions of certain state laws, including those of Alabama and Florida. As
such, the Origination Trust may be subject to the Insolvency Laws, and claims
against the Origination Trust Assets could have priority over the beneficial
interest therein represented by the SUBI. In addition, claims of a third party
against the Origination Trust Assets, including the SUBI Assets, to the extent
such claims are not covered by insurance, would take priority over the holders
of beneficial interests in the Origination Trust, such as the Trustee, as more
fully described under "Security for the Certificates -- The Contingent and
Excess Liability Insurance Policies" and "Certain Legal Aspects of the Contracts
and Leased Vehicles -- Vicarious Tort Liability".
THE TRUST AND THE SUBI
GENERAL
The Trust and the Certificateholders will have no interest in the UTI, any
Other SUBI or any assets of the Origination Trust evidenced by the UTI or any
Other SUBI. Payments made on or in respect of the Origination Trust Assets not
represented by the SUBI will not be available to make payments on the
Certificates. For further information regarding the Origination Trust, see "The
Origination Trust".
THE TRUST
Pursuant to the Agreement, the Transferor will establish the Trust by
transferring and assigning the SUBI Interest, represented by the SUBI
Certificate, to the Trustee in exchange for the Certificates and a certificate
evidencing the Transferor Interest. (Agreement, Section 2.02). The property of
the Trust will primarily include (i) the SUBI Interest which evidences a
beneficial interest in certain specified Origination Trust Assets (i.e., the
SUBI Assets), (ii) such amounts as from time to time may be held in the
Distribution Account and the Reserve Fund, and investments of such amounts and
(iii) the Trustee's rights as a third-party beneficiary to the Servicing
Agreement and the SUBI Trust Agreement. The Trust also will have a beneficial
interest in such amounts as from time to time may be held in the SUBI Collection
Account and the Residual Value Surplus Account and investments of such amounts.
29
<PAGE> 32
If the protection provided to the Class A Certificateholders by (i) the
Investor Percentage of certain excess Interest Collections; (ii) available
monies on deposit in the Residual Value Surplus Account; (iii) amounts otherwise
payable to the Transferor in respect of the Transferor Interest; (iv) so long as
World Omni is the Servicer, amounts otherwise payable in respect of the
Servicing Fee; (v) Insured Residual Value Loss Amounts paid under the Residual
Value Insurance Policy; (vi) available monies on deposit in the Reserve Fund;
(vii) the subordination of interest payments otherwise payable to the Class B
Certificateholders; and (viii) in the case of the Class A-4 Certificates, the
subordination of principal payments otherwise payable to the Class B
Certificateholders is insufficient, the Class A Certificateholders ultimately
will have to look to (a) payments made on or in respect of the Contracts and the
Leased Vehicles (including under certain related insurance policies) and (b) the
proceeds of Dealer repurchase obligations, if any, to make distributions on or
in respect of the SUBI Assets allocable to the SUBI Interest to the Trustee
which in turn will be distributed to the Certificateholders. In such event,
certain factors, such as the fact that the Trust will not have a direct
ownership interest in the Contracts or the Leased Vehicles or a perfected
security interest in the Leased Vehicles (which will be titled in the name of
the Origination Trustee, in its capacity as trustee of the Origination Trust)
may limit the amount realized to less than the amount due from the related
lessees. Investors in the Class A Certificates may thus be subject to delays in
payment and may incur losses on their investment in the Class A Certificates as
a result of defaults or delinquencies by lessees and because of depreciation in
the value of the related Leased Vehicles. See "The Origination
Trust -- Allocation of Origination Trust Liabilities", "Security for the
Certificates -- The Accounts -- The Reserve Fund", "Additional Document
Provisions -- The Servicing Agreement -- Insurance on Leased Vehicles", "Certain
Legal Aspects of the Origination Trust and the SUBI -- The SUBI" and "Certain
Legal Aspects of the Contracts and the Leased Vehicles" for a discussion of
these matters.
THE SUBI
The SUBI will be issued pursuant to the SUBI Trust Agreement and will
evidence a beneficial interest in certain specified Origination Trust Assets
consisting of (i) the Contracts, the Leased Vehicles and all proceeds or
payments received or due on or after the related Cutoff Date; and (ii) all other
related Origination Trust Assets, including (A) the SUBI Collection Account and
Residual Value Surplus Account, (B) the right to receive payments made to World
Omni, the Origination Trust or the Origination Trustee under any insurance
policy relating to the Contracts, the related lessees or the Leased Vehicles,
including Insured Residual Value Loss Amounts payable under the Residual Value
Insurance Policy, (C) the right to receive the proceeds of any Dealer repurchase
obligations in respect of the Contracts or Leased Vehicles, and (D) all proceeds
of the foregoing (collectively, the "SUBI Assets"). (SUBI Trust Agreement,
Sections 4.02, 11.01 and 11.02).
As described under "Summary -- The Revolving Period; Subsequent Contracts
and Subsequent Leased Vehicles" and "Description of the
Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal", during the Revolving Period, Principal Collections
and reimbursement of Loss Amounts will be reinvested in Subsequent Contracts and
Subsequent Leased Vehicles which will become SUBI Assets at the time of such
reinvestment. The SUBI will not represent a direct interest in the SUBI Assets,
nor will it represent an interest in any Origination Trust Assets other than the
SUBI Assets. Payments made on or in respect of such other Origination Trust
Assets will not be available to make payments on the Certificates or to cover
expenses of the Origination Trust allocable to the SUBI Assets.
Pursuant to the SUBI Trust Agreement, on the Closing Date the Origination
Trustee will issue the SUBI Certificate, which will evidence the SUBI Interest,
to the Transferor. Simultaneously therewith, the Origination Trustee will issue
to the Transferor a certificate evidencing the Retained SUBI Interest, which
will represent the 0.2% interest in the SUBI not evidenced by the SUBI
Certificate, and the Transferor will transfer and assign the SUBI Certificate to
the Trustee pursuant to the Agreement. The certificate evidencing the Retained
SUBI Interest will be permanently retained by the Transferor and payments made
in respect thereof will not be available to make payments on the Certificates.
30
<PAGE> 33
THE ORIGINATION TRUST
GENERAL
The Origination Trust is an Alabama trust formed pursuant to the
Origination Trust Agreement. The primary business purpose of the Origination
Trust is to take assignments of, and serve as record holder of title to,
substantially all of the fixed rate retail closed-end lease contracts and the
related leased vehicles originated through Dealers in the World Omni network of
dealers since November 1993. Pursuant to the Servicing Agreement, World Omni
will service the lease contracts included in the Origination Trust Assets,
including the Contracts. For further information regarding the Origination Trust
and the servicing of the Origination Trust Assets, see "Additional Document
Provisions -- The SUBI Trust Agreement" and "-- The Servicing Agreement" and
"Certain Legal Aspects of the Origination Trust and the SUBI -- The Origination
Trust".
Except as otherwise described under "Additional Document Provisions -- The
SUBI Trust Agreement", pursuant to the Origination Trust Agreement the
Origination Trust has not and will not (i) issue interests therein or securities
thereof other than the SUBI Interest, the Retained SUBI Interest, the SUBI
Certificate, the certificate representing the Retained SUBI Interest, Other
SUBIs representing divided interests in other portfolios of Origination Trust
Assets (the "Other SUBI Assets") and certificates representing Other SUBIs or
portions thereof (the "Other SUBI Certificates"), the UTI representing a divided
interest in the remaining portfolio of Origination Trust Assets not allocated as
SUBI Assets or Other SUBI Assets (the "UTI Assets") and one or more certificates
representing the UTI or portions thereof (the "UTI Certificates"); (ii) borrow
money (except from World Omni) in connection with funds used to acquire lease
contracts and the related leased vehicles; (iii) make loans; (iv) invest in or
underwrite securities, other than Permitted Investments or as otherwise
permitted by the Origination Trust Agreement or the SUBI Trust Agreement; (v)
offer securities in exchange for property (other than the SUBI Certificate, the
Other SUBI Certificates and the UTI Certificates); or (vi) repurchase or
otherwise reacquire its securities except in connection with financing or
refinancing the acquisition of lease contracts and the related leased vehicles
or as otherwise permitted by each such financing or refinancing. (SUBI Trust
Agreement, Section 5.01). The Origination Trust will not be permitted to acquire
lease contracts otherwise than through dealers in the World Omni network of
Dealers, unless such lease contracts are (in World Omni's reasonable judgment)
originated generally in accordance with World Omni's then-current lease contract
underwriting standards. (SUBI Trust Agreement, Section 2.01).
ALLOCATION OF ORIGINATION TRUST LIABILITIES
The Origination Trust Assets are comprised of several portfolios of assets
other than the SUBI Assets, including five portfolios of Other SUBI Assets and
the remaining portfolio of UTI Assets. ALFI L.P. has pledged (and may in the
future pledge) the UTI as security for obligations to third-party lenders, and
has created and sold and may in the future create and sell or pledge Other SUBIs
in connection with other financings. The Origination Trust Agreement will permit
the Origination Trust, in the course of its activities, to incur certain
liabilities relating to its assets other than the SUBI Assets, or relating to
its assets generally, and to which, in certain circumstances, the SUBI Assets
may be subject. Pursuant to the Origination Trust Agreement, as among the
beneficiaries of the Origination Trust and their pledgees, an Origination Trust
liability relating to a particular Origination Trust Asset will be allocated to
and charged against the allocated portfolio of Origination Trust Assets to which
it belongs. Origination Trust liabilities that are incurred with respect to the
Origination Trust Assets generally will be borne pro rata among all portfolios
of Origination Trust Assets. The Origination Trustee, the beneficiaries of the
Origination Trust (including the Trustee and the Certificateholders) and their
pledgees will be bound by this allocation. In particular, the Origination Trust
Agreement will require the holders from time to time of Other SUBI Certificates
and any UTI Certificates to waive any claim that they might otherwise have with
respect to the SUBI Assets and to fully subordinate any claims to the SUBI
Assets in the event that this waiver is not given effect. Similarly, by virtue
of holding Certificates or a beneficial interest in the Certificates,
Certificateholders and Certificate Owners will be deemed to have waived any
claim that they might otherwise have with respect to Other SUBI Assets and the
UTI Assets. For further information regarding these matters, see "The SUBI Trust
Agreement -- The SUBI,
31
<PAGE> 34
the Other SUBIs and the UTI" and "Certain Legal Aspects of the Origination Trust
and the SUBI -- The SUBI".
ALFI AND ALFI L.P.
ALFI is a wholly owned, special purpose finance subsidiary of World Omni
and was incorporated under the laws of Delaware in September 1993, solely for
the purpose of acting as general partner of ALFI L.P. ALFI L.P. was formed as a
limited partnership under the laws of Delaware in June 1994 solely for the
purpose of being grantor and initial beneficiary of the Origination Trust,
holding the UTI and the UTI Certificates, acquiring interests in the SUBI and
the Other SUBIs and engaging in related transactions. ALFI's articles of
incorporation and ALFI L.P.'s limited partnership agreement limit their
respective activities to the foregoing purposes and to any activities incidental
to and necessary for such purposes. ALFI may not transfer its general
partnership interest in ALFI L.P. so long as any financings involving interests
in the Origination Trust (including the transaction described herein) are
outstanding. World Omni is the sole limited partner of ALFI L.P. The principal
office of ALFI L.P. is located at 6150 Omni Park Drive, Mobile, Alabama and its
telephone number is (334) 639-7500.
THE ORIGINATION TRUSTEE
The Origination Trustee is a wholly owned, special purpose subsidiary of
First Bank that was organized in 1993 solely for the purpose of acting as
Origination Trustee. First Bank, as Trust Agent, serves as agent for the
Origination Trustee to perform certain functions of the Origination Trustee
pursuant to the Origination Trust Agreement. (Origination Trust Agreement,
Section 5.03). The Origination Trust Agreement provides that in the event that
First Bank no longer can be the Trust Agent, the designee of ALFI L.P. (who may
not be ALFI L.P. or any affiliate thereof) will have the option to purchase the
stock of the Origination Trustee for a nominal amount. If ALFI L.P.'s designee
does not timely exercise this option, then the Origination Trustee will appoint
a new trust agent, and that new trust agent (or its designee) will next have the
option to purchase the stock of the Origination Trustee. If none of these
options is timely exercised, First Bank may sell the stock of the Origination
Trustee to another party. (Origination Trust Agreement, Section 6.10).
PROPERTY OF THE ORIGINATION TRUST
The property of the Origination Trust consists of (i) fixed rate retail
closed-end lease contracts originated throughout the United States and assigned
to the Origination Trust by World Omni or Dealers since November 1993 and all
monies due from lessees thereunder; (ii) the automobiles and light duty trucks
leased pursuant thereto and all proceeds thereof; (iii) all of World Omni's
rights (but not its obligations) with respect to such lease contracts and leased
vehicles, including the right to receive proceeds of Dealer repurchase
obligations, if any; (iv) the rights to proceeds from residual value, physical
damage, credit life, disability and all other insurance policies, if any,
covering the lease contracts, the related lessees or the leased vehicles,
including, but not limited to, the Contingent and Excess Liability Insurance
Policies, the Residual Value Insurance Policy and other residual value insurance
policies that may relate to Other SUBI Assets or the UTI Assets; (v) all
security deposits with respect to such lease contracts to the extent due to the
lessor thereunder; and (vi) all proceeds of the foregoing (collectively, the
"Origination Trust Assets"). From time to time after the date of this
Prospectus, World Omni will cause Dealers to originate additional retail
closed-end lease contracts and to assign such lease contracts to the Origination
Trustee on behalf of the Origination Trust and, as described below, title the
related leased vehicles in the name of the Origination Trustee on behalf of the
Origination Trust. (Origination Trust Agreement, Section 2.01).
CONTRACT ORIGINATION; TITLING OF LEASED VEHICLES
All lease contracts originated by the Origination Trust have been, or will
be, underwritten using the underwriting criteria described under "World
Omni -- Lease Contract Underwriting Procedures". In connection with the
origination of each lease contract, the Origination Trustee, on behalf of the
Origination Trust, will be listed as the owner of the related leased vehicle on
the related certificate of title. Liens will not be placed on such certificates
of title, and new certificates of title will not be issued, to reflect the
interest of the
32
<PAGE> 35
Trustee, as holder of the SUBI Certificate, in the Leased Vehicles. The
certificates of title to the Leased Vehicles will, however, reflect a first lien
recorded in favor of Bank of America Trust Company of Florida, N.A. or AL
Holding Corp. (collectively, the "Administrative Lienholders"). Such lien (the
"Administrative Lien") will exist solely to assure delivery of the certificates
of title to the Leased Vehicles to the Servicer. Neither of the Administrative
Lienholders will have any interest in any of the Leased Vehicles.
Pursuant to agreements between World Omni and the Dealers, each Dealer is
obligated, after origination of lease contracts and assignment thereof to the
Origination Trustee on behalf of the Origination Trust, to repurchase such lease
contracts which do not meet certain representations and warranties made by such
Dealer. These representations and warranties relate primarily to the origination
of the lease contracts and the titling of the related leased vehicles, and do
not typically relate to the creditworthiness of the related lessees or the
collectibility of such lease contracts. The Dealer agreements do not generally
provide for recourse to the Dealer for unpaid amounts in respect of a defaulted
lease contract, other than in connection with the breach of the foregoing
representations and warranties. The rights of World Omni to receive proceeds of
such Dealer repurchase obligations will constitute Origination Trust Assets (and
accordingly will constitute SUBI Assets to the extent they relate to the
Contracts and Leased Vehicles), although the related Dealer agreements will not
constitute Origination Trust Assets.
USE OF PROCEEDS
The net proceeds from the sale of the Class A Certificates (i.e., the
proceeds of the public offering of the Class A Certificates minus expenses
relating thereto) will be applied by the Transferor to purchase the SUBI
Certificate from ALFI L.P.
THE TRANSFEROR
The Transferor is a limited partnership formed under the laws of Delaware
in June 1994. The sole general partner of the Transferor, WOLSI, is a wholly
owned, special purpose finance subsidiary of World Omni and was incorporated
under the laws of Delaware in March 1994. WOLSI may not transfer its general
partnership interest in the Transferor so long as any financings involving
interests formerly or partially held by it in the Origination Trust (including
the transaction described herein) are outstanding. World Omni is the sole
limited partner of the Transferor. The principal office of the Transferor is
located at 6150 Omni Park, Mobile, Alabama 36609 and its telephone number is
(334) 639-7500.
The Transferor and WOLSI were organized solely for the purpose of acquiring
interests in the SUBI and the Other SUBIs, issuing certificates similar to the
Certificates and engaging in related transactions. The limited partnership
agreement of the Transferor and the certificate of incorporation of WOLSI limit
their respective activities to the foregoing purposes and to any activities
incidental to and necessary for such purposes.
A support agreement dated as of October 1, 1995, as amended (the "Support
Agreement"), between the Transferor and World Omni provides that World Omni
will, directly or indirectly, retain 100% ownership of the Transferor and that
under certain circumstances World Omni will make contributions or loans or
provide or arrange for financial assistance to the Transferor in order to ensure
that the Transferor maintains positive partners' capital. The Support Agreement
will provide that World Omni's total obligations thereunder will not exceed
$60.0 million. The Support Agreement does not constitute a guarantee by World
Omni of the Certificates or any other obligations of the Transferor. The Support
Agreement provides that no person other than the Transferor and WOLSI may take
any action to enforce the Support Agreement. Although World Omni intends to
comply with all of its obligations under the Support Agreement, because (as
described above) it can only be enforced by the Transferor and WOLSI, there can
be no assurance that the Trustee or the Certificateholders would be able to
enforce the Support Agreement directly against World Omni.
33
<PAGE> 36
WORLD OMNI
GENERAL
The Initial Contracts were, and the Subsequent Contracts will be, assigned
to the Origination Trust by Dealers. World Omni is a Florida corporation and a
wholly owned subsidiary of JM Family Enterprises, Inc. ("JMFE"), a Delaware
corporation. JMFE is primarily engaged, through its subsidiaries, in providing
Toyota dealerships in the Five State Area, as well as other automotive
dealerships throughout the United States, with a full range of distribution and
financial services. In January 1993, a predecessor corporation to World Omni
merged with its sister automobile leasing company, World Omni Leasing, Inc., in
connection with which the name World Omni Financial Corp. was retained. WOLSI
and ALFI are wholly owned, special purpose finance subsidiaries of World Omni.
In addition to the lease contract financing described below, World Omni
provides retail installment contract financing to retail customers of certain
automotive dealers and wholesale floorplan financing and capital and mortgage
loans to dealers and customers of Southeast Toyota Distributors, Inc. ("SET"),
World Omni's sister corporation, as well as to other automotive dealers within
and outside the Five State Area.
SET is the exclusive distributor of Toyota cars and light duty trucks,
parts and accessories in the Five State Area. As such, SET is the sole provider
of Toyotas to Dealers in the Five State Area. SET distributes Toyota vehicles
pursuant to a Distributor Agreement, which first was entered into in 1968 and
has been renewed through October 1999, with Toyota Motor Sales, USA, Inc.
("TMS"), a California corporation that is wholly owned by Toyota Motor
Corporation, the largest automotive company in Japan. Lexus cars, parts and
accessories are distributed in the Five State Area directly by TMS and not by
SET. SET's consolidated revenues for the years ended December 31, 1996, December
31, 1995 and December 31, 1994 were approximately $4.2 billion, approximately
$3.8 billion and approximately $3.5 billion, respectively. Since March 1996,
substantially all financial services provided by World Omni to, by and through
SET's Toyota Dealers in the Five State Area have been provided under the name
"Southeast Toyota Finance".
World Omni (either directly or through the Origination Trust and certain
special purpose finance subsidiaries of World Omni) owns and leases vehicles
primarily through more than 1000 Dealers located throughout the United States.
Pursuant to written agreements with World Omni, each Dealer offers automobiles
and light duty trucks for set lease periods pursuant to World Omni-approved
terms and a World Omni-supplied form of closed-end retail motor vehicle lease
and disclosure statement. Each Dealer is responsible for obtaining certain
credit-related information about a prospective lessee and for forwarding such
information to World Omni's central operations center in Mobile, Alabama (the
"Mobile Center") or to Southeast Toyota Finance's offices in Deerfield Beach,
Florida (the "Deerfield Office"), as applicable. At the Mobile Center or the
Deerfield Office, each application is reviewed, evaluated and "scored" as
described under "World Omni -- Lease Contract Underwriting Procedures". The
results of this computer-based evaluation are then sent to one of World Omni's
purchase offices for final review and credit evaluation. The related purchase
office then advises the Dealer if such applicant is acceptable to World Omni. If
a prospective lessee is accepted, the Dealer will prepare all necessary
paperwork to sell the vehicle from its inventory to World Omni or its designee,
and to enter into a lease contract with its customer and assign the lease
contract to World Omni or, at World Omni's direction, a different assignee.
Substantially all retail lease contracts originated by World Omni Dealers are
assigned to, and the related leased vehicles are titled in the name of, the
Origination Trustee on behalf of the Origination Trust. For further information
regarding the underwriting of lease contracts, see "World Omni -- Lease Contract
Underwriting Procedures".
World Omni's lease contracts are serviced primarily through the Mobile
Center, which handles collection activities, operational accounting, insurance
verification and dealer and customer inquiries for World Omni. In addition, the
Mobile Center and the Deerfield Office verify that all documents supplied by a
Dealer with respect to a lease contract conform with World Omni's requirements.
World Omni recently opened a national customer service center located in
St. Louis, Missouri (the "St. Louis Center"). None of the Initial Contracts were
(although some of the Subsequent Contracts may
34
<PAGE> 37
be) originated through the St. Louis Center. It currently is anticipated that
none of the Contracts will be serviced through the St. Louis Center.
World Omni initiated operations in 1982, and as of December 31, 1996,
December 31, 1995 and December 31, 1994, World Omni and its affiliates had
approximately 232,000, 156,900 and 115,900 retail lease contracts outstanding,
respectively. Aggregate net outstanding principal balances of retail lease
contracts at such dates (including retail lease contracts that were sold but are
still being serviced by World Omni), were $4.6 billion, $2.8 billion and $1.8
billion, respectively. Of these amounts, the related leased vehicles had an
estimated aggregate residual value as of the end of their lease terms of
approximately $3.3 billion, $2.0 billion and $1.2 billion, respectively. For the
years ended December 31, 1996, December 31, 1995 and December 31, 1994, World
Omni's consolidated gross revenues were approximately $275 million,
approximately $228 million and approximately $199 million, respectively.
The principal executive offices of World Omni are located at 120 Northwest
12th Avenue, Deerfield Beach, Florida 33442 and its telephone number is (954)
429-2200.
LEASE CONTRACT UNDERWRITING PROCEDURES
World Omni has underwritten retail motor vehicle lease contracts since
February 1983. The Initial Contracts were, and the Subsequent Contracts will be,
underwritten by the Origination Trust, in each case through World Omni's
purchase offices.
The World Omni underwriting standards are intended to evaluate a
prospective lessee's credit standing and repayment ability. Generally, a
prospective lessee is required by the Dealer to complete a credit application on
a form prepared or approved by World Omni. As part of the description of the
applicant's financial condition, the applicant is required to provide current
information enumerating, among other things, employment history, residential
status, bank account information, annual income and credit references. The
Dealer then transmits the completed application to the Mobile Center, the
Deerfield Office or the St. Louis Center, as applicable. Upon receipt, all
application data is entered into a centralized computer network (owned and
maintained by a division of JMFE) that automatically obtains an independent
credit bureau report and then "scores" the application with the use of a
scorecard. The scorecard enables World Omni to review an application and
establish the probability that the proposed lease contract will be paid in
accordance with its terms. The credit scores rank-order applications according
to credit risk, which is the likelihood that the account will be delinquent or
repossessed. The application also is evaluated against a "cutoff score"
established by World Omni as the minimum acceptable score to purchase a lease
contract, which is revised from time to time as changes occur in economic
conditions and World Omni's lease contract portfolio.
This numerical credit scoring system was developed by Fair, Isaac & Company
("Fair, Isaac"), a lending and leasing consulting firm, specifically for World
Omni based upon an analysis of the historical performance of the retail
automobile and light duty truck lease and installment sale contract portfolios
of World Omni. To determine the appropriate characteristics for credit scoring,
Fair, Isaac reviewed a random sample of 10,000 retail lease contracts and 10,000
retail installment sale contracts from World Omni's portfolio. Fair, Isaac then
compiled a list of ten to twelve characteristics that cumulatively carried the
most weight in predicting historical performance and assigned point values and
weighting to each of these characteristics. The weighting system is particularly
significant because the weightings are beyond the control of a dealer and cannot
be manipulated. Fair, Isaac determined that the most accurate determinant of the
performance of a lease or installment sale contract was the credit bureau
report. Based on such historical performance, Fair, Isaac prepared two retail
credit and two lease scorecards (which differ according to the geographical
location of the dealer and whether the vehicle is new or used), each of which
assigned at least a 50% weighting to the credit bureau report. The Fair, Isaac
scorecard system was implemented in the fourth quarter of 1990 and was used for
substantially all lease contracts originated from that time until February 1997.
In an effort to increase the predictiveness of the scorecards developed by
Fair, Isaac, World Omni implemented an updated scorecard system in February
1997, which includes three retail credit and two lease scorecards (which, for
lease scorecards, differ according to the geographic location of the dealer and,
for retail
35
<PAGE> 38
scorecards, whether the vehicle is new or used and the credit "depth" of the
applicant). The revised scorecards are primarily weighted to the credit bureau
report.
Each of these numerical scoring models is intended to provide a means of
analysis to assist in decision making, but the final decision rests with World
Omni's credit specialists. Under World Omni's guidelines, a credit specialist
generally may not override the scorecard analysis of applications above or below
the cutoff score by more than a limited percentage of such applications
(depending on vehicle make and geographic location). Both the number of
overrides granted by each credit specialist and the aggregate number of
overrides granted by all credit specialists are tracked by World Omni daily in
order to insure the statistical validity of the scoring models. Detailed
reporting on all aspects of the numerical scoring model is utilized to track
performance of World Omni's retail automobile and light duty truck lease
contract portfolio and to enable World Omni to fine tune the scoring model
according to statistical indications in order to continually assure the
statistical validity of the scoring models. In limited circumstances, lessees
with established credit histories with World Omni may be pre-approved for new
leases without the use of a numerical scorecard.
For the years ended December 31, 1996, December 31, 1995 and December 31,
1994, World Omni, either directly or through the Origination Trust and certain
special purpose finance subsidiaries of World Omni, on average, booked
approximately 70%, approximately 71% and approximately 75%, respectively, of all
credit applications relating to leased vehicles. These averages generally
reflect adjustments in underwriting criteria in connection with the use of the
Fair, Isaac scorecard system. Substantially all of the Initial Contracts were,
and substantially all Subsequent Contracts will be, underwritten using the Fair,
Isaac numerical scorecard. See "The Contracts -- Characteristics of the
Contracts" for further information on the identity and characteristics of the
Contracts.
After an application has been approved by a World Omni purchase office and
the prospective lessee has agreed to the terms of the related lease contract,
including an assignment of the lease contract from the Dealer to World Omni (or,
at the direction of World Omni, an assignee thereof), World Omni receives from
the Dealer a lease contract package containing, among other things, the standard
form lease contract between the Dealer and the lessee, the customer's
application, applicable insurance information (company, agent and additional
insured(s), with the lessor named as loss payee) and the customer's first
payment and security deposit. World Omni determines whether such package
complies with its requirements. The specifics of the lease contract are compared
to the application approved by the purchasing department, and the rate,
truth-in-leasing disclosures and purchase price from the Dealer are verified.
INSURANCE
Each lease contract requires the lessee to maintain automobile bodily
injury and property damage liability insurance which must name the dealer's
assignee (with respect to the Contracts, the Origination Trustee on behalf of
the Origination Trust) as an additional insured. Each lease contract further
requires the lessee to maintain (all risks) comprehensive and collision
insurance covering damage to the leased vehicle and naming the dealer's assignee
(with respect to the Contracts, the Origination Trustee on behalf of the
Origination Trust) as loss payee. The insurance coverage is verified
independently and tracked by World Omni (through its third-party contracted
agents) throughout the term of the lease contract. If at any point during the
term of the lease contract World Omni cannot verify within 60 days that the
required insurance is in place, such lease contract would, by its terms, be in
default and World Omni generally would repossess the related leased vehicle.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
Collection efforts are primarily performed through the Mobile Center. These
efforts are enhanced by the use of an automated dialing system. Notwithstanding
the centralization of collection efforts, repossessions
36
<PAGE> 39
continue to be handled locally, as independent contractors are employed in
connection with repossessions. General guidelines for collection of lease
contracts and repossession of leased vehicles include the following:
<TABLE>
<CAPTION>
NUMBER OF
DAYS DELINQUENT ACTION
- --------------- ------
<S> <C> <C>
22-45................................ Telephone contact with the lessee is initiated
46-89................................ Telephone and/or field collections continue
60-90................................ The leased vehicle is normally repossessed
</TABLE>
Occasionally, situations occur in the collection process when a lessee has
become delinquent and is willing but unable to bring the related account current
(i.e., a skipped payment). In this situation, at the discretion of collection
department management, but subject to extensive guidelines, the lease contract
may be extended, provided that the lessee pays an extension fee (each, an
"Extension Fee") equal to the lesser of (i) the product of 1.15% multiplied by
the outstanding principal balance of such lease contract, and (ii) one-half of
the related monthly contract payment. In circumstances deemed appropriate by
collection department management, World Omni may reduce or waive the payment by
the lessee of an Extension Fee. However, the Servicing Agreement will require
that all Extension Fees relating to the Contracts be deposited into the SUBI
Collection Account and that a Contract may not be extended more than five times.
Moreover, no extensions of a Contract may be made for more than five months in
the aggregate or to a date later than the last day of the month immediately
preceding the month in which the Final Scheduled Distribution Date occurs, as
described under "Additional Document Provisions -- The Servicing
Agreement -- Collections".
World Omni disposes of off-lease vehicles through several outlets,
including a Toyota "certified" program, in which vehicles are inspected and
given body work, repairs and maintenance as needed, certified as meeting the
program standards, and then sold to automobile dealers primarily in World Omni's
dealer network for retail sale; large regional automobile auctions which are
utilized for off-lease vehicle sales in addition to liquidation of repossessed
vehicles; and negotiated sales of groups of vehicles to rental companies, fleet
lessors and others.
DELINQUENCY, REPOSSESSION AND LOSS DATA
The following tables set forth certain delinquency, repossession and loss
data with respect to World Omni's retail automobile and light duty truck lease
contract portfolio originated by Dealers located throughout the United States,
including lease contracts assigned to the Origination Trust and lease contracts
originated by World Omni and assigned to special purpose finance subsidiaries of
World Omni, as of and for the years ended December 31, 1992 through December 31,
1996.
As shown on these tables, World Omni's delinquency rates during 1993 and
1994 were generally consistent, decreasing from 1992 largely due to improved
credit quality resulting from stricter underwriting standards (including the
implementation of a new computerized credit evaluation system and the effects of
the implementation of the Fair, Issac credit scoring system in the fourth
quarter of 1990), an improved collection system and the implementation of
centralized collection efforts through the Mobile Center. Delinquencies trended
up in 1995 and 1996, consistent with recent trends in overall consumer credit
and, to a lesser extent, due to some disruption in collection activity caused by
the implementation of a new collection system at the Mobile Center in 1996. The
new collection system is now fully operational.
Net Repossession Losses as a percentage of the Average Net Receivables
Outstanding decreased in 1993 and 1994 versus 1992 primarily as a result of a
decreasing number of repossessions as a result of improved credit quality for
the reasons mentioned previously. General economic trends were also positive
during this period as was the used car market in general.
Total Net Repossession Losses increased in 1995 and 1996 compared to 1994
primarily as a result of the increasing number of lease contracts outstanding
and the higher Average Net Repossession Loss per Liquidated Lease Contract. The
higher Average Net Repossession Loss per Liquidated Lease Contract in 1995 as
well as in 1996 was generally due to higher average amounts being financed and
generally higher residual values. The higher average loss per Liquidated Lease
Contract as well as a somewhat higher
37
<PAGE> 40
repossession frequency percentage in 1996 resulted in higher Net Repossession
Losses as a percentage of Average Net Receivables. The higher frequency of
repossession in 1996 was due to a general trend of weaker overall consumer
credit quality nationally as well as World Omni adjusting, to a limited extent,
its credit policies.
World Omni's total losses and average loss per vehicle realized on the
disposition of vehicles in connection with leases that reached scheduled
termination substantially decreased from 1992 to 1994. Management attributes
this decrease primarily to an improved used car market during the same period
and World Omni's pro-active lease termination programs implemented in 1990.
Residual value losses and the number of vehicles returned to and sold by
World Omni increased in 1995 and 1996. 1995 losses and returns increased as a
result of special programs on shorter term leases. Losses in 1996 increased over
1995 as a result of generally higher residual values, higher losses on shorter
term leases (i.e., leases with terms 24 months or shorter) and an increase in
the losses on leases with other maturities. In addition, there was some
weakening in the used car market relative to the prior three years. There are no
short term leases included in the Initial Contracts nor will any be included in
the Subsequent Contracts.
The new and used car market has experienced growth over the last five
years, showing some weakness towards the end of 1996. This overall growth in the
new and used car market may not continue, which could negatively affect World
Omni's returns and losses in the future. World Omni believes that the number of
vehicles returned and losses relating to residual value will continue to trend
upward in the future. As a result, losses on returned and sold vehicles may
increase and the Full Termination Ratio may increase. Based upon prior
experience however, World Omni does not believe that World Omni's loss
experience or these recent negative trends will materially adversely affect
Class A Certificateholders or World Omni's business. However, no assurances can
be given in this regard.
The data presented in the following tables are for illustrative purposes
only. Delinquency, repossession and loss experience may be influenced by a
variety of economic, social, geographic and other factors. There is no assurance
that World Omni's delinquency, repossession and loss experience with respect to
its retail automobile and light duty truck lease contracts and the related
leased vehicles in the future, or the experience with respect to the Contracts
and the Leased Vehicles, will be similar to that set forth below.
RETAIL VEHICLE LEASE CONTRACT DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------
1996 1995 1994 1993
--------------- --------------- --------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease Contracts(1).... $4,641,992 $2,798,830 $1,823,823 $1,039,888
Ending Number of Lease Contracts....... 231,942 156,471 114,298 71,198
Number and Percentage of Lease
Contracts
Delinquent (2)(3)(4)
31-60 Days........................... 3,294 1.42% 1,745 1.12% 1,114 0.97% 625 0.88%
61-90 Days........................... 297 0.13 118 0.08 38 0.03 27 0.04
91 Days or More...................... 64 0.03 18 0.01 7 0.01 3 0.00
------ ------ ------ ------ ------ ------ ---- ------
Total.......................... 3,655 1.58% 1,881 1.21% 1,159 1.01% 655 0.92%
<CAPTION>
AT DECEMBER 31,
----------------
1992
----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Dollar Amount of Lease Contracts(1).... $624,017
Ending Number of Lease Contracts....... 48,646
Number and Percentage of Lease
Contracts
Delinquent (2)(3)(4)
31-60 Days........................... 756 1.55%
61-90 Days........................... 16 0.03
91 Days or More...................... 2 0.00
------- ------
Total.......................... 774 1.58%
</TABLE>
- ---------------
(1) Based on the sum of all principal amounts outstanding under lease contracts
(inclusive of the residual values of the related leased vehicles).
(2) Excludes lease contracts the related lessees of which are bankrupt or have
commenced bankruptcy proceedings. As of December 31, 1996, approximately 213
lease contracts involving bankrupt lessees were delinquent for at least 61
days.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
(4) As a percentage of the total number of lease contracts at period end.
38
<PAGE> 41
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Dollar Amount of Lease Contracts(1)....................... $ 4,641,992 $2,798,830 $1,823,823 $1,039,888 $624,017
Ending Number of Lease Contracts.......................... 231,942 156,471 114,298 71,198 48,646
Average Lease Contracts Outstanding....................... 194,492 133,069 93,023 58,605 46,013
Repossessions:
Number of Repossessions................................. 4,297 2,519 1,776 1,287 1,916
Number of Repossessions as a
Percentage of:
Lease Contracts Outstanding............................. 1.85% 1.61% 1.55% 1.81% 3.94%
Average Lease Contracts Outstanding..................... 2.21% 1.89% 1.91% 2.20% 4.16%
Losses:
Average Net Receivables Outstanding..................... $ 3,718,336 $2,243,790 $1,426,382 $ 817,452 $548,852
Net Repossession Losses(2).............................. $ 23,196 $ 11,347 $ 6,283 $ 3,811 $ 5,759
Average Net Repossession Loss per Liquidated Lease
Contract(1)(3)........................................ $ 5,398 $ 4,505 $ 3,538 $ 2,961 $ 3,006
Net Repossession Losses as a Percentage of Average Net
Receivables........................................... 0.62% 0.51% 0.44% 0.47% 1.05%
</TABLE>
- ---------------
(1) Based on the sum of all principal amounts outstanding under lease contracts
(inclusive of the residual values of the related leased vehicles).
(2) Includes losses on charged-off accounts, but does not include expenses
incurred to dispose of vehicles.
(3) Dollars not in thousands.
RESIDUAL VALUE LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total Number of Leased Vehicles Scheduled to Terminate...... 36,413 25,677 14,775 17,218 15,155
Number of Leased Vehicles Returned to and Sold by World
Omni...................................................... 5,018 4,611 779 2,050 2,142
Full Termination Ratio(2)................................... 13.8% 18.0%(3) 5.3% 11.9% 14.1%
Total Losses/(Gains) on Vehicles that Reached Scheduled
Term(4)................................................... $ 3,700(5) $ 1,893 $ (168) $ 503 $ 894
Average Loss/(Gain)(4)(6)................................... $ 737 $ 411 $ (216) $ 245 $ 417
</TABLE>
- ---------------
(1) Because the terms of the retail closed-end lease contracts originated by
World Omni have gradually shifted from five years to three years since 1992,
the residual value loss experience for the periods in the table may not be
fully comparable.
(2) The ratio of line 2 over line 1 expressed as a percentage.
(3) The ratio for the year ended December 31, 1995 includes special program
short-term lease contracts referenced under "Delinquency, Repossession and
Loss Data" above. Excluding those vehicles, the ratio would have been 7.1%.
(4) Figures do not include expenses incurred in disposal of vehicles returned to
World Omni, as such information is not readily available.
(5) Does not include losses related to World Omni's incentive programs of
approximately $211,250.
(6) Dollars not in thousands.
THE CONTRACTS
GENERAL
The Initial Contracts will consist of a pool of 51,898 closed-end retail
lease contracts, having an aggregate Outstanding Principal Balance as of the
Initial Cutoff Date of $1,227,193,400, selected from the Origination Trust's
portfolio of retail closed-end automobile and light duty truck lease contracts
that are not evidenced by or reserved for allocation to an Other SUBI. During
the Revolving Period, Principal Collections (and reimbursement of Loss Amounts)
will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles, which
at the time of such reinvestment will become SUBI Assets. See "Description of
the Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal -- Revolving Period". The Initial Contracts were
originated by Dealers located throughout the United States and assigned to the
Origination Trust, and the Subsequent Contracts will be originated by Dealers
located in the United States and assigned to the Origination Trust, in
accordance with the underwriting procedures described under "World Omni -- Lease
Contract Underwriting Procedures". The Initial Contracts have been selected
based
39
<PAGE> 42
upon the criteria specified in the SUBI Trust Agreement and described under "The
Contracts -- Characteristics of the Contracts -- General" and
"-- Representations, Warranties and Covenants". The Subsequent Contracts will be
selected from the other lease contracts of the Origination Trust that were
originated after the Initial Cutoff Date that also meet the foregoing criteria.
Principal Collections (and reimbursements of Loss Amounts) will first be
reinvested in the eligible lease contract with the earliest origination date,
then with the eligible lease contract with the next earliest origination date
and so forth, except that (i) certain leases booked from February 28, 1997
through April 7, 1997 have been reserved for allocation to the SUBI, so that
reinvestment of Principal Collections and reimbursement of Loss Amounts will
first be made in such leases to the extent available, (ii) certain leases have
been, and may in the future be, allocated to (or reserved for allocation to)
Other SUBIs and therefore not be available for reinvestment of such amounts from
the SUBI, and (iii) to the extent that reinvestment of such amounts from the
SUBI and any one or more previous Other SUBIs are at any time being made out of
the Origination Trust's general pool of available lease contracts that have not
been so reserved, such reinvestment will first be made with respect to such
previous Other SUBI(s). World Omni will represent and warrant that, except as
otherwise described in the immediately preceding sentence, no adverse selection
procedures were employed or will be employed in selecting the Initial Contracts
or the Subsequent Contracts for inclusion in the SUBI Assets and that it is not
aware of any bias in the selection of such Contracts that would cause the
delinquencies or losses on such Contracts to be worse than other retail
closed-end automobile and light duty truck lease contracts held in the
Origination Trust's portfolio; however, there can be no assurance that the
delinquencies or losses on the Contracts will not be worse. Subsequent Contracts
may be originated by World Omni using different underwriting criteria than those
which were applied to the Initial Contracts. For this reason, the
characteristics of the Subsequent Contracts may vary from those of the Initial
Contracts.
Each Contract will have been written for an original term of not more than
60 months, for a "capitalized cost" (which may exceed the manufacturer's
suggested retail price), plus an implicit Lease Rate. The Initial Contracts
were, and the Subsequent Contracts will be, written on a constant yield basis
and provide for equal Monthly Payments such that at the end of the lease term
the capitalized cost has been amortized to an amount equal to the Residual Value
of the related Leased Vehicle.
At the times of origination of the related Contracts, the related Leased
Vehicles were, in the case of the Initial Contracts, or will be, in the case of
the Subsequent Contracts, new vehicles, dealer demonstrator vehicles driven
fewer than 6,000 miles or manufacturers' program vehicles. Manufacturers'
program vehicles are vehicles which have been sold directly by manufacturers to
rental car companies and returned to the manufacturer for resale, generally
after a period of eight to twelve months. Such vehicles generally are then
resold to dealers through an automobile auction.
All of the Contracts will be closed-end leases. Under a "closed-end lease",
at the end of its term, if the lessee does not elect to purchase the related
leased vehicle by exercise of the purchase option contained in such lease
contract, the lessee is required to return the leased vehicle to or upon the
order of the lessor, at which time the lessee will then owe only incidental
charges for excess mileage, excessive wear and use and other items as may be due
under such lease. In contrast, under an "open-end lease", the lessee is also
obligated to pay at the end of the lease term any deficit between the fair
market value of the leased vehicle at that time and the residual value
established at the time of origination of such lease.
Each lessee will be permitted to purchase the Leased Vehicle at the end of
the term of the related Contract. The purchase price will be a fixed dollar
amount equal to the Residual Value plus any applicable taxes and all other
incidental charges which may be due under the Contract. In addition, each
Contract will allow the related lessee voluntarily to terminate such Contract by
paying certain miscellaneous charges and a termination amount more fully
described below. In most instances, the Contracts are not expected to run to
their full terms, as more fully described under "Risk Factors -- Maturity and
Prepayment Considerations" and "Maturity, Prepayment and Yield Considerations".
Each Contract will provide that the lessor may terminate such Contract and
repossess the Leased Vehicle in the event of a default by the lessee. Events of
default under the Contracts will include, but will not be limited to, failure to
make payment when due, certain events of bankruptcy or insolvency, failure to
maintain
40
<PAGE> 43
the insurance required by the Contract, failure to maintain or repair the Leased
Vehicle as required or to comply with any other term or condition of the
Contract and the making of a material misrepresentation by the lessee in the
lease application. World Omni (or, with respect to insurance, its third-party
contracted agents) regularly tracks lessees' compliance with their payment and
insurance obligations and monitors the related leases for noncompliance as more
fully described under "World Omni -- Insurance" and "-- Collection, Repossession
and Disposition Procedures".
In the forms of contract used by the Dealers to evidence the Contracts,
upon early termination where the lessee is not in default and does not exercise
its option to purchase the Leased Vehicle, the amount owed by the lessee (the
"Early Termination Charge") will be determined by adding (i) the future Monthly
Payments and any incidental charges owing under the Contract, less unearned
lease charges, (ii) the Residual Value and (iii) a $250 processing fee,
subtracting the "Realized Value" (as described below), from the sale or other
disposition of the related Leased Vehicle and applying the Security Deposit to
reduce any deficiency. In calculating the amount of unearned lease charges under
clause (i) above, the Contracts will provide that the constant yield method will
be used, in which lease charges are earned on a daily basis through the payment
date immediately following the date of early termination. If, instead, there is
an early termination and the lessee is in default, the amount owed by a lessee
in default will be determined by adding (i) the Early Termination Charge, (ii)
payments accrued under the Contract through the date of termination, (iii)
collection, repossession, storage, preparation and sale expenses, (iv)
attorneys' fees and disbursements incurred after default (not exceeding 15% of
the amount owed by the lessee) and (v) simple interest at a 15% annual rate.
The "Realized Value" of a Leased Vehicle is the actual wholesale price or
the wholesale price otherwise determined by World Omni in a commercially
reasonable manner. However, each Contract provides that the lessee has the right
to obtain from an independent third party acceptable to the lessor a
professional appraisal of the wholesale value of the Leased Vehicle that could
be realized at sale. This appraised value then would be used as the wholesale
value for purposes of calculating sums due from the lessee. Although World Omni
cannot predict whether any lessee will challenge the wholesale sale price
determined by World Omni, management of World Omni is unaware of any successful
such challenge by any lessee under its retail closed-end automobile and light
duty truck lease contracts. See "Maturity, Prepayment and Yield Considerations"
for further information relating to the relationship between payments on the
Contracts and the effective yield on the Certificates.
In the event of early termination of a Contract where the lessee is in
default, the amounts collected with respect to such Contract and the related
Leased Vehicle (after deducting the costs and other sums retained by the
Servicer in connection therewith) may be less than the Outstanding Principal
Balance of such Contract, which shortfall can be due to, among other things, the
use of wholesale appraisal of a Leased Vehicle as described above. In the event
that a Contract reaches the date on which the last Monthly Payment is due, as
such date may have been extended (the "Maturity Date"), but the related Leased
Vehicle cannot be sold or otherwise disposed of for a net amount at least equal
to its Residual Value, there may be an additional shortfall in amounts otherwise
expected to be received in respect of the SUBI Interest. In the event that any
of the foregoing shortfalls are not covered from the Investor Percentage of
certain excess Interest Collections, available monies on deposit in the Residual
Value Surplus Account, amounts otherwise payable to the Transferor in respect of
the Transferor Interest, the Servicing Fee otherwise payable to the Servicer (so
long as World Omni is the Servicer), Insured Residual Value Loss Amounts paid
under the Residual Value Insurance Policy, amounts on deposit in the Reserve
Fund, the subordination of interest payments otherwise payable to the Class B
Certificateholders and, in the case of the Class A-3 Certificates, the
subordination of principal payments otherwise payable to the Class B
Certificateholders, in each case to the extent described herein, investors in
the Class A Certificates could suffer a loss on their investment.
41
<PAGE> 44
CHARACTERISTICS OF THE CONTRACTS
General
The Initial Contracts were, and the Subsequent Contracts will be, selected
by reference to several criteria, including, as of the related Cutoff Date, that
each Contract (i) is written with respect to a Leased Vehicle that was at the
time of the origination of the related lease contract a new vehicle, a limited
mileage dealer demonstrator vehicle, or a manufacturers' program vehicle; (ii)
was originated in the United States after November 1, 1993 in the case of the
Initial Contracts, and on or before April 30, 1998 in the case of the Subsequent
Contracts; (iii) has a Maturity Date on or after February 5, 1999 and no later
than February 24, 2002 in the case of the Initial Contracts, and no later than
April 30, 2003 in the case of the Subsequent Contracts; (iv) fully amortizes to
an amount equal to the Residual Value of the related Leased Vehicle based on a
fixed Lease Rate calculated on a constant yield basis and provides for level
payments over its term (except for payment of the Residual Value); (v) was not
more than 60 days past due as of the Initial Cutoff Date or the related
Subsequent Cutoff Date, as the case may be; and (vi) has never been extended for
more than five months in the aggregate. (SUBI Trust Agreement, Section 10.01).
Appearing below is some additional information regarding the characteristics of
the Initial Contracts:
INITIAL CONTRACTS
<TABLE>
<CAPTION>
AVERAGE MINIMUM MAXIMUM
---------- --------- ----------
<S> <C> <C> <C>
Original Principal Balance........................... $24,459.45 $7,060.00 $71,907.93
Outstanding Principal Balance(1)..................... $23,646.26 $6,850.12 $70,281.27
Residual Value....................................... $15,499.27 $3,350.00 $48,392.90
Lease Rate(1)........................................ 8.30%(2) 2.14% 12.95%
Seasoning (months)(1)................................ 4.01(2) 1 12
Remaining Term (months)(1)........................... 36.98(2) 23 59
</TABLE>
- ---------------
(1) As of the Initial Cutoff Date.
(2) Weighted by Outstanding Principal Balance as of the Initial Cutoff Date.
Distribution of the Initial Leased Vehicles by Make
As of the Initial Cutoff Date, the composition of the Initial Leased
Vehicles by make of vehicle was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF NUMBER OF
VEHICLE MAKE INITIAL CONTRACTS INITIAL CONTRACTS
------------ ----------------- -----------------
<S> <C> <C>
Toyotas................................................ 31,603 60.89%
United States manufacturers............................ 16,911 32.59
Other Japanese manufacturers........................... 336 0.65
Other foreign manufacturers............................ 3,048 5.87
------- -------
Total........................................ 51,898 100.00%
======= =======
</TABLE>
42
<PAGE> 45
Distribution of the Initial Contracts by Lease Rate
The distribution of the Initial Contracts as of the Initial Cutoff Date by
Lease Rate was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PERCENTAGE OF INITIAL CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING PRINCIPAL OUTSTANDING PRINCIPAL
LEASE RATE RANGE INITIAL CONTRACTS INITIAL CONTRACTS BALANCE BALANCE
---------------- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
2.00% to 2.99%..... 110 0.21% $ 2,245,918.04 0.18%
3.00% to 3.99%..... 580 1.12 9,576,202.43 0.78
4.00% to 4.99%..... 2,166 4.17 34,058,800.38 2.77
5.00% to 5.99%..... 3,992 7.69 70,104,271.67 5.71
6.00% to 6.99%..... 4,511 8.69 85,283,239.16 6.95
7.00% to 7.99%..... 4,734 9.12 109,818,632.19 8.95
8.00% to 8.99%..... 20,899 40.27 565,730,927.79 46.10
9.00% to 9.99%..... 11,830 22.80 276,957,562.45 22.57
10.00% to 10.99%..... 1,941 3.74 47,438,835.51 3.87
11.00% to 11.99%..... 1,030 1.99 24,128,970.53 1.97
12.00% to 12.99%..... 105 0.20 1,850,039.39 0.15
------- ------- ----------------- -------
Total...... 51,898 100.00% $1,227,193,399.54 100.00%
======= ======= ================= =======
</TABLE>
Distribution of the Initial Contracts by Maturity
The distribution of the Initial Contracts as of the Initial Cutoff Date by
year of maturity was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PERCENTAGE OF INITIAL CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING PRINCIPAL OUTSTANDING PRINCIPAL
YEAR OF MATURITY INITIAL CONTRACTS INITIAL CONTRACTS BALANCE BALANCE
---------------- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
1999................. 14,333 27.62% $ 321,589,773.57 26.20%
2000................. 31,888 61.44 751,111,699.40 61.21
2001................. 5,250 10.12 141,205,908.99 11.51
2002................. 427 0.82 13,286,017.58 1.08
------- ------- ----------------- -------
Total...... 51,898 100.00% $1,227,193,399.54 100.00%
======= ======= ================= =======
</TABLE>
Distribution of the Initial Contracts by State
The distribution of the Initial Contracts as of the Initial Cutoff Date by
State of origination, broken out for States representing 5% or more of the
number of Initial Contracts, was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PERCENTAGE OF INITIAL CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING PRINCIPAL OUTSTANDING PRINCIPAL
STATE INITIAL CONTRACTS INITIAL CONTRACTS BALANCE BALANCE
----- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
Alabama.............. 4,186 8.07% $ 93,928,060.32 7.65%
Florida.............. 19,599 37.76 432,895,340.95 35.28
Georgia.............. 7,858 15.14 177,250,781.23 14.44
North Carolina....... 10,138 19.53 223,183,483.42 18.19
South Carolina....... 2,693 5.19 61,626,556.29 5.02
All other states..... 7,424 14.31 238,309,177.33 19.42
------- ------- ----------------- -------
Total...... 51,898 100.00% $1,227,193,399.54 100.00%
======= ======= ================= =======
</TABLE>
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Initial Contracts and Initial Leased Vehicles will be described in a
schedule appearing as an exhibit to the SUBI Trust Agreement, which schedule
will be amended from time to time as Subsequent Contracts
43
<PAGE> 46
and Subsequent Leased Vehicles become SUBI Assets during the Revolving Period
(collectively, the "Schedule of Contracts and Leased Vehicles").
The Schedule of Contracts and Leased Vehicles will identify each Contract
by identification number, will identify each Leased Vehicle by its vehicle
identification number and will set forth as to each such Contract, among other
things, its: (i) date of origination; (ii) Maturity Date; (iii) Monthly Payment;
(iv) original Outstanding Principal Balance; (v) Outstanding Principal Balance
and Discounted Principal Balance as of the related Cutoff Date; and (vi)
Residual Value. (Servicing Agreement, Sections 1.01 and 10.01). In the Servicing
Agreement, representations and warranties will be made with respect to each
Contract and Leased Vehicle to the effect described in the text of the first
paragraph under "The Contracts -- Characteristics of the Contracts -- General",
and certain other representations and warranties will be made, including, among
other things, that each such Contract and, to the extent applicable, the related
Leased Vehicle or lessee: (a) was originated by a Dealer located in the United
States in the ordinary course of its business and in compliance with World
Omni's normal credit and collection policies and practices; (b) is owned by the
Origination Trustee, on behalf of the Origination Trust, free of all liens,
encumbrances or rights of others (other than the Administrative Lien); (c) was
originated in compliance with, and complies with, all material applicable legal
requirements; (d) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any governmental authority required
to be obtained, effected or given by the originator of such Contract and the
Origination Trustee in connection with (i) the origination of such Contract,
(ii) the execution, delivery and performance by such originator of the Contract
and (iii) the acquisition by the Origination Trust of such Contract and Leased
Vehicle, have been duly obtained, effected or given and are in full force and
effect as of such date of creation or acquisition; (e) is the legal, valid and
binding obligation of the lessee; (f) to the knowledge of the Servicer, is not
subject to any right of rescission, setoff, counterclaim or any other defense of
the related lessee to pay the Outstanding Principal Balance due under such
Contract and no such right of rescission, offset, defense or counterclaim has
been asserted or threatened; (g) the related Dealer, the Servicer and the
Origination Trustee have each satisfied all obligations required to be fulfilled
on its part with respect thereto; (h) is payable solely in United States dollars
in the United States; (i) the lessee thereunder is located in the United States
and is not (i) ALFI, ALFI L.P., WOLSI, the Transferor or any of their respective
affiliates or (ii) the United States or any state or local government thereof,
or any agency, department or instrumentality of the United States or any state
or local government thereof; (j) requires the lessee to maintain insurance
against loss or damage to the related Leased Vehicle under an insurance policy
that names the Origination Trustee as loss payee, and the related Leased Vehicle
is covered by the Residual Value Insurance Policy; (k) the related certificate
of title therefor is registered in the name of the Origination Trustee (or a
properly completed application for such title has been submitted to the
appropriate titling authority); (l) is a closed-end lease that (i) requires
equal monthly payments to be made within 60 months of the date of origination of
such Contract and (ii) requires such payments to be made by the lessee thereof
within 30 days after the billing date for such payment; (m) is fully assignable
and does not require the consent of the lessee as a condition to any transfer,
sale or assignment of the rights of the originator; (n) has a Residual Value
that does not exceed the lesser of (i) $60,000 and (ii) an amount reasonably
established by the Servicer consistent with its policies and practices regarding
the setting of residual values as applied with respect to closed-end retail
automobile and light duty truck leases; (o) has never been extended by more than
five months in the aggregate or otherwise modified except in accordance with
World Omni's normal credit and collection policies and practices; (p) the lessee
thereunder has not made a claim under the Soldiers' and Sailors' Civil Relief
Act of 1940; (q) is not an Other SUBI Asset; (r) the lessee thereunder is not
bankrupt or currently the subject of a bankruptcy proceeding; (s) is not more
than 60 days past due; (t) is a finance lease for accounting purposes; and (u)
is a "true lease" for applicable state law purposes. (SUBI Trust Agreement,
Section 10.01; Servicing Agreement, Sections 8.01 and 9.01).
The Servicing Agreement will provide that the reinvestment of Principal
Collections (and Loss Amounts that otherwise would be reimbursed to the
Certificateholders) in Subsequent Contracts and Subsequent Leased Vehicles
during the Revolving Period will be subject to the satisfaction of certain
conditions precedent, including, among other things, that, unless the Trustee
receives confirmation (written or oral) from each Rating Agency to the effect
that the use of a different criteria will not result in the qualification,
reduction or withdrawal of its then-current rating on any Class of Class A
Certificates or the Class B Certificates, after
44
<PAGE> 47
giving effect to such reinvestment, (i) each Subsequent Contract will be
allocated as a SUBI Asset based upon its Discounted Principal Balance as of the
relevant Cutoff Date (i.e., for a Discounted Contract, its Outstanding Principal
Balance discounted by approximately 9.25%, and for each other Contract, its
Outstanding Principal Balance), (ii) the weighted average remaining term of the
Contracts (including the Subsequent Contracts) is not greater than 38 months and
(iii) the weighted average Residual Value of the Leased Vehicles relating to the
Contracts (including the Subsequent Contracts), as a percentage of the aggregate
Outstanding Principal Balance of the Contracts (including the Subsequent
Contracts), in each case as of the related dates of origination, is not greater
than 65%. (Servicing Agreement, Section 8.02).
The Servicing Agreement will provide that upon the discovery by the
Origination Trustee, World Omni, the Trustee or the Transferor of a breach of
any representation, warranty or covenant referred to in the second preceding
paragraph that materially and adversely affects the owners of interests in the
SUBI or the Certificateholders in the related Contract or Leased Vehicle, which
breach is not cured in all material respects within 60 days after World Omni
discovers such breach or is given notice thereof, World Omni will be required to
deposit (or cause to be deposited) into the SUBI Collection Account an amount
(the "Reallocation Payment") equal to the Discounted Principal Balance of such
Contract as of the last day of the Collection Period during which the related
cure period ended, plus an amount equal to any imputed lease charge on such
Contract at the related Lease Rate that was delinquent as of the end of such
Collection Period. The foregoing payment obligation will survive any termination
of World Omni as Servicer under the Servicing Agreement. (Servicing Agreement,
Sections 8.03 and 11.01).
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
All of the Contracts will be prepayable, in whole or in part, at any time
without penalty. The prepayment experience with respect to the Contracts will
affect the life of the Class A Certificates.
In general, the rate of prepayments on the Contracts may be influenced by a
variety of economic, social, geographic and other factors. The Origination Trust
was formed and began to accept assignments of lease contracts in November 1993.
All of the lease contracts assigned to the Origination Trust for allocation as
SUBI Assets since that time have been, and all of the lease contracts to be
assigned to the Origination Trust subsequent to the date of this Prospectus will
be, assigned by Dealers using World Omni's underwriting standards. Under its
pro-active lease termination program, World Omni actively encourages lessees
under lease contracts with remaining terms of less than one year to either buy,
trade in or refinance the related leased vehicles prior to the related scheduled
maturities of such lease contracts. World Omni estimates that on average over
calendar years 1994, 1995 and 1996, an average of approximately 86% of the
number of retail automobile and light duty truck lease contracts in its
portfolio (including those owned by the Origination Trustee on behalf of the
Origination Trust and by certain special purpose finance subsidiaries of World
Omni) that were scheduled to mature during such period were terminated prior to
maturity, either because of voluntary prepayments or repossession of the leased
vehicles due to default by the lessees under the related lease contracts. World
Omni is not aware of any publicly available industry statistics that set forth
termination rates for retail closed-end automobile and light duty truck lease
contracts similar to the Contracts.
As a part of its pro-active lease termination program, World Omni actively
monitors its overall portfolio, and selectively offers incentives to encourage
customer loyalty and to minimize anticipated residual value losses on lease
contracts scheduled to reach maturity in the near term. These incentives
generally occur during the last year of a lease contract (typically, the last
six months), and through December 31, 1996 the losses relating to these
incentives have been immaterial. There can be no assurance as to the amount of
any losses that may arise from these incentives in the future. However, all such
losses relating to the Contracts will constitute Residual Value Loss Amounts
and, therefore, will be covered by the Residual Value Insurance Policy.
The distribution of the Initial Contracts by year of maturity is set forth
under "The Contracts -- Characteristics of the Contracts -- Distribution of the
Initial Contracts by Maturity", and historical levels of lease contract
defaults, leased vehicle repossessions and losses and residual value losses are
discussed under "World Omni -- Delinquency, Repossession and Loss Data". No
assurances can be given that the Contracts
45
<PAGE> 48
will experience the same rate of prepayment or default or any greater or lesser
rate than World Omni's historical rate, or that the Residual Value experience of
Leased Vehicles related to Contracts that have reached their Maturity Dates will
differ from World Omni's historical residual value loss experience, for all of
the retail automobile and light duty truck lease contracts in its portfolio
(including those owned by the Origination Trustee on behalf of the Origination
Trust and by certain special purpose finance subsidiaries of World Omni).
The effective yield on, and average life of, each Class of Class A
Certificates will depend upon, among other things, the amount of scheduled and
unscheduled payments on or in respect of the Contracts and the Leased Vehicles
and the rate at which such payments are paid to the Class A Certificateholders.
In the event of prepayments of the Contracts (and payment of the Residual Value
of the related Leased Vehicles) or payment of any Accelerated Principal
Distribution Amounts during the Amortization Period, Class A Certificateholders
who receive such amounts may not be able to reinvest the related payments of
principal received on the Class A Certificates at yields as high as the related
Certificate Rate. The timing of changes in the rate of prepayments on the
Contracts and payments in respect of the Leased Vehicles may also affect
significantly an investor's actual yield to maturity and the average life of the
related Class of Class A Certificates. A substantial increase in the rate of
payments on or in respect of the Contracts and Leased Vehicles (including
prepayments and liquidations of the Contracts) during the Amortization Period
may shorten the final maturity of and may significantly affect the yield on the
Class A Certificates.
Additionally, although monies on deposit in the Accounts and Principal
Collections (and Loss Amounts that otherwise would be reimbursed to the
Certificateholders) that have not been reinvested in Subsequent Contracts and
Subsequent Leased Vehicles during the Revolving Period will be invested in
Permitted Investments, and all gain on other income from such investments will
be available for making the distributions described under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest",
no assurance can be made as to the rate of return that will be realized on such
Permitted Investments. Any reinvestment risk resulting from the rate of
prepayment of the Contracts (and payment of the Residual Value of the related
Leased Vehicles), the making of the foregoing investments or payment of any
Accelerated Principal Distribution Amounts and the distribution of any such
amounts to Class A Certificateholders will be borne entirely by the Class A
Certificateholders.
The yield to an investor who purchases Class A Certificates in the
secondary market at a price other than par will vary from the anticipated yield
if the rate of prepayment on the Contracts is actually different than the rate
anticipated by such investor at the time such Class A Certificates were
purchased.
In sum, an investor's expected yield will be affected by the following
factors: (i) the price the investor paid for the Class A Certificates, (ii) the
rate of prepayments in respect of the Contracts and Leased Vehicles and (iii)
the investor's assumed reinvestment rate. These factors do not operate
independently, but are interrelated. For example, if the rate of prepayments on
or in respect of the Contracts and Leased Vehicles is slower than anticipated,
the investor's yield will be lower if interest rates are higher than the
investor anticipated and higher if interest rates are lower than the investor
anticipated. Conversely, if the rate of prepayments on or in respect of the
Contracts and Leased Vehicles is faster than anticipated, the investor's yield
will be higher if interest rates are higher than the investor anticipated and
lower if interest rates are lower than the investor anticipated.
In general, during the Amortization Period, no principal payments will be
received by Class A-2 Certificateholders until the Class A-1 Certificates have
been paid in full, by Class A-3 Certificateholders until the Class A-1 and Class
A-2 Certificates have been paid in full or by Class A-4 and Class B
Certificateholders until the Class A-1, Class A-2 and Class A-3 Certificates
have been paid in full. In addition, the Class A Percentage and the Class B
Percentage of Principal Collections allocable to the Investor Interest will be
calculated when the Class A-1, Class A-2 and Class A-3 Certificates have been
paid in full, and then used to determine the distribution of principal payments
on the Class A-4 Certificates and the Class B Certificates, as described under
"Risk Factors -- Maturity and Prepayment Considerations" and "-- Sequential
Payment of Principal on the Certificates", which may affect the maturity and
yield on the Class A-4 Certificates. The Investor Percentage of Loss Amounts
will be allocated among the Certificateholders on a pro rata basis, based on the
Class A-1, Class A-2, Class A-3, Class A-4 and Class B Allocation Percentages,
as the case may be,
46
<PAGE> 49
and then reimbursed out of available funds in the amounts and order of priority
described in "Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest". In addition, the Investor Percentage
of the net proceeds of any sale or other disposition of the SUBI Interest, the
SUBI Certificate and other property of the Trust, which may occur under certain
circumstances involving an Insolvency Event with respect to the Transferor (as
described under "Description of the Certificates -- Early Amortization Events"),
to the extent such net proceeds constitute Principal Collections, will be
distributed first, on a pro rata basis, to the Class A Certificateholders based
on their respective Class Certificate Balances until the Class A Certificates
have been paid in full, and second, to the Class B Certificateholders.
The following information is provided solely to illustrate the effect of
prepayments of the Contracts on the Class A-1 Certificate Balance, the Class A-2
Certificate Balance, the Class A-3 Certificate Balance and the Class A-4
Certificate Balance and the weighted average life of each Class of Class A
Certificates under the assumptions stated below and is not a prediction of the
prepayment rates that might actually be experienced with respect to the
Contracts.
Prepayments on automobile lease contracts may be measured by a prepayment
standard or model. The prepayment model used with respect to the Contracts is
based on a prepayment assumption (the "Prepayment Assumption") expressed in
terms of percentages of ABS. "ABS" refers to a prepayment model which assumes a
constant percentage of the original number of Contracts in a pool prepay each
month. However, as used herein, a 100% Prepayment Assumption assumes that, based
on the assumptions in the next paragraph, the original Outstanding Principal
Balance of a Contract will prepay as follows: (i) 0.55% ABS for the first six
months of the life of the Contract, (ii) 0.70% ABS for the seventh through
twelfth month of the life of the Contract, (iii) 0.85% ABS for the thirteenth
through eighteenth month of the life of the Contract, (iv) 1.15% ABS for the
nineteenth through twenty-fourth month of the life of the Contract and (v) 1.70%
ABS following the twenty-fourth month of the life of the Contract until the
original Outstanding Principal Balance of the Contract has been paid in full.
Neither ABS nor the Prepayment Assumption purports to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of lease contracts, including the Contracts. There can be no
assurance that the Contracts will prepay at the indicated levels of the
Prepayment Assumption or at any other rate.
The tables below were prepared on the basis of certain assumptions,
including that: (i) all Collections (including Monthly Payments and net sale
proceeds in respect of the Leased Vehicles relating to Matured Contracts) are
timely received, and that no Contracts are ever delinquent; (ii) no Reallocation
Payment or Reallocation Deposit Amount is made in respect of any Contract; (iii)
there are no Loss Amounts; (iv) the Transferor exercises its optional purchase
option of the Certificates as described herein; (v) all distributions of
principal (including any Accelerated Principal Distribution Amount) and interest
on the Class A Certificates are made on the dates specified herein; (vi) the
Servicing Fee is 1% per annum of 99.8% of the Aggregate Net Investment Value;
(vii) all prepayments are full Prepayments; (viii) the Revolving Period ends on
April 30, 1998; (ix) the Initial Contracts have assumed Lease Rates of 9.25% and
were originated four months prior to the Initial Cutoff Date; and (x) all
Principal Collections in respect of each Collection Period during the Revolving
Period are reinvested, on a Transfer Date that is the fifteenth day of the
following calendar month, in Subsequent Contracts that have stated terms of
three years, Lease Rates of 9.25% and Residual Values equal to 65% of the
original Outstanding Principal Balances thereof, were originated on the Initial
Cutoff Date and that otherwise have terms that are substantially similar to
those of the Initial Contracts.
No representation is made as to what the actual levels of losses and
delinquencies on the Contracts will be. Since the tables below were prepared on
the basis of the foregoing assumptions, there will be discrepancies between the
characteristics of the Contracts that actually will be allocated as SUBI Assets
in respect of Principal Collections made during the Revolving Period and Loss
Amounts with respect to the Revolving Period that otherwise would be reimbursed
to the Certificateholders, and the characteristics of the Contracts assumed in
preparing the tables to be allocated as SUBI Assets in respect of Principal
Collections made during the Revolving Period and Loss Amounts with respect to
the Revolving Period that otherwise would be reimbursed to the
Certificateholders, as well as other discrepancies between the foregoing
assumptions and the actual experience in respect of the Contracts. Any such
discrepancy may increase or decrease the percentage of the outstanding Class A-1
Certificate Balance, the Class A-2 Certificate Balance, the Class A-3
Certificate
47
<PAGE> 50
Balance or the Class A-4 Certificate Balance, as the case may be, and the
weighted average lives of each Class of Class A Certificates set forth in the
tables. In addition, since the Contracts will have characteristics which differ
from those assumed in preparing the tables, distributions of principal on the
Class A Certificates may be made earlier or later than set forth in the tables.
Investors are urged to make their investment decisions on a basis that includes
their determination as to anticipated prepayment rates under a variety of the
assumptions discussed herein.
The following tables set forth the percentages of the Initial Certificate
Balance of each Class of Class A Certificates that would be outstanding after
each of the dates shown, based on a rate equal to 0%, 50%, 100%, 150% and 200%
of the Prepayment Assumption. As used in the table, "0% Prepayment Assumption"
assumes no prepayments on a Contract, "50% Prepayment Assumption" assumes that a
Contract will prepay at 50% of the Prepayment Assumption, and so forth.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-1 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
May 1997................................................. 100% 100% 100% 100% 100%
November 1997............................................ 100 100 100 100 100
May 1998................................................. 100 100 100 100 100
November 1998............................................ 71 55 34 9 0
May 1999................................................. 40 0 0 0 0
November 1999............................................ 0 0 0 0 0
May 2000................................................. 0 0 0 0 0
November 2000............................................ 0 0 0 0 0
May 2001................................................. 0 0 0 0 0
Weighted Average Life (Years)(1)......................... 1.90 1.63 1.48 1.39 1.31
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-1 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-1 Certificate
Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-2 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
----------------- --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
May 1997................................................. 100% 100% 100% 100% 100%
November 1997............................................ 100 100 100 100 100
May 1998................................................. 100 100 100 100 100
November 1998............................................ 100 100 100 100 80
May 1999................................................. 100 100 53 0 0
November 1999............................................ 66 23 0 0 0
May 2000................................................. 0 0 0 0 0
November 2000............................................ 0 0 0 0 0
May 2001................................................. 0 0 0 0 0
Weighted Average Life (Years)(1)......................... 2.66 2.46 2.12 1.83 1.66
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-2 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-2 Certificate
Balance.
48
<PAGE> 51
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-3 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
May 1997................................................. 100% 100% 100% 100% 100%
November 1997............................................ 100 100 100 100 100
May 1998................................................. 100 100 100 100 100
November 1998............................................ 100 100 100 100 100
May 1999................................................. 100 100 100 79 0
November 1999............................................ 100 100 59 0 0
May 2000................................................. 0 0 0 0 0
November 2000............................................ 0 0 0 0 0
May 2001................................................. 0 0 0 0 0
Weighted Average Life (Years)(1)......................... 2.95 2.88 2.65 2.22 1.86
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-3 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-3 Certificate
Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-4 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
May 1997................................................. 100% 100% 100% 100% 100%
November 1997............................................ 100 100 100 100 100
May 1998................................................. 100 100 100 100 100
November 1998............................................ 100 100 100 100 100
May 1999................................................. 100 100 100 100 40
November 1999............................................ 100 100 100 57 0
May 2000................................................. 75 55 0 0 0
November 2000............................................ 0 0 0 0 0
May 2001................................................. 0 0 0 0 0
Weighted Average Life (Years)(1)......................... 3.30 3.09 3.01 2.62 2.07
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-4 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-4 Certificate
Balance.
49
<PAGE> 52
CLASS A CERTIFICATE FACTORS AND TRADING INFORMATION;
REPORTS TO CLASS A CERTIFICATEHOLDERS
The "Class A-1 Certificate Factor", the "Class A-2 Certificate Factor", the
"Class A-3 Certificate Factor" and the "Class A-4 Certificate Factor" will each
be a seven-digit decimal that the Servicer will compute each month indicating
the Class A-1, Class A-2, Class A-3 or Class A-4 Certificate Balance, as the
case may be, as of the close of business on the Distribution Date in such month
as a fraction of the Initial Certificate Balance of the related Class of Class A
Certificates. Each Certificate Factor will initially be 1.0000000 and will
remain unchanged during the Revolving Period, except in certain limited
circumstances where there are unreimbursed Class A-1, Class A-2, Class A-3 or
Class A-4 Certificate Principal Loss Amounts. During the Amortization Period,
each Certificate Factor will decline to reflect reductions in the related
Certificate Balance resulting from distributions of principal and unreimbursed
Class A-1, Class A-2, Class A-3 or Class A-4 Certificate Principal Loss Amounts,
if any. The portion of the Class A Certificate Balance for a given month
allocable to a Class A Certificateholder can be determined by multiplying the
original denomination of the holder's Class A Certificate by the related
Certificate Factor for that month.
Pursuant to the Agreement, First Bank, as Trustee, will provide to all
registered holders of the Class A Certificates (which shall be Cede as the
nominee of DTC unless Definitive Certificates are issued under the limited
circumstances described herein) unaudited monthly reports concerning payments
received on or in respect of the Contracts and the Leased Vehicles, the
Aggregate Net Investment Value, the Investor Percentage, the Class A-1, Class
A-2, Class A-3 and Class A-4 Certificate Factors and various other items of
information. Certificate Owners may obtain copies of such reports upon a request
in writing to the Trustee. In addition, Class A Certificateholders during each
calendar year will be furnished information for tax reporting purposes not later
than the latest date permitted by law. For further details concerning
information furnished to Certificateholders and Certificate Owners, see
"Description of the Certificates -- Statements to Certificateholders" and
"-- Book-Entry Registration".
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement, a form of which,
together with forms of the SUBI Trust Agreement and the Servicing Agreement, has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The following summaries of all material provisions of the foregoing
documents and the summaries of all material provisions included under "The Trust
and the SUBI", "The Origination Trust -- Property of the Origination Trust",
"The Contracts -- Characteristics of the Contracts -- General" and
"-- Representations, Warranties and Covenants", "Security for the Certificates"
and "Additional Document Provisions" do not purport to be complete and are
subject to, and qualified in their entirety by reference to, the provisions of
such documents. Where particular provisions of or terms used in the Agreement,
the SUBI Trust Agreement and the Servicing Agreement are referred to, the actual
provisions (including definitions of terms and Section references) are
incorporated by reference as part of such summaries.
GENERAL
The Class A Certificates will be issued in denominations of $1,000 and
integral multiples thereof in book-entry form. (Agreement, Section 4.01). The
Class A Certificates will initially be represented by certificates registered in
the name of Cede, the nominee of DTC. No Certificate Owner will be entitled to
receive a certificate representing such owner's Certificate, except as set forth
below. Unless and until Class A Certificates are issued in fully registered
certificated form ("Definitive Certificates") under the limited circumstances
described below, all references herein to distributions, notices, reports and
statements to Class A Certificateholders will refer to the same actions made
with respect to DTC or Cede, as the case may be, for the benefit of Certificate
Owners in accordance with DTC procedures. (Agreement, Section 4.09). See
"Description of the Certificates -- Book-Entry Registration" and "-- Definitive
Certificates".
The outstanding principal amount of each class of Certificates (each, a
"Class") at any time will be equal to the initial principal amount of such Class
of Certificates, less the sum of (i) all principal payments made on
50
<PAGE> 53
or prior to such date allocable to principal, (ii) the amount of Certificate
Principal Loss Amounts allocable to such Class of Certificates, if any, which
have not been reimbursed as described herein and (iii) in the case of the Class
B Certificates, any unreimbursed Class B Certificate Principal Carryover
Shortfall. (Agreement, Section 1.01). See "Description of the
Certificates -- Distributions on the Certificates". Each Certificate will
represent the right to receive payments of interest at the related Certificate
Rate and, to the extent described herein, payments of principal during the
Amortization Period funded from the Investor Percentage of distributions to the
Trust of Interest Collections and Principal Collections allocable to the SUBI
Interest and Accelerated Principal Distribution Amounts allocable to
Certificates of the related Class, amounts on deposit in the Residual Value
Surplus Account, Transferor Amounts otherwise payable to the Transferor in
respect of the Transferor Interest, the Servicing Fee (so long as World Omni is
the Servicer) and Insured Residual Value Loss Amounts payable under the Residual
Value Insurance Policy, in each case to the extent described herein. As
described under "Description of the Certificates -- Distributions on the
Certificates", the right of the Class B Certificates to receive payments of
interest and principal also will be subordinated to the right of the Class A
Certificates to receive such payments.
The Transferor will permanently retain the Transferor Interest, which will
represent the interest in the Trust not represented by the Certificates. The
Transferor Interest will represent an undivided interest in the Trust, including
the right to receive the Transferor Percentage of Interest Collections and
Principal Collections calculated as described under "Description of the
Certificates -- Calculation of Investor Percentage and Transferor Percentage".
The Transferor Interest will be subordinated to the Certificates to the extent
described under "Description of the Certificates -- Certain Payments to the
Transferor" and on any day will equal the difference between 99.8% of the
Aggregate Net Investment Value and the Certificate Balance.
During the Revolving Period, the Certificate Balance will remain constant
except in certain limited circumstances where there are unreimbursed Certificate
Principal Loss Amounts. During the Amortization Period, the Certificate Balance
will decline as the Investor Percentage of Principal Collections allocable to
the SUBI Interest and Accelerated Principal Distribution Amounts are distributed
to the Certificateholders and as Certificate Principal Loss Amounts are incurred
and not reimbursed. The Aggregate Net Investment Value can change daily as
principal is paid on or in respect of the Contracts and the Leased Vehicles, as
Reallocation Payments in respect of certain Contracts as to which an uncured
breach of certain representations and warranties or certain servicing covenants
has occurred are paid by World Omni during the Amortization Period, together
with, under certain circumstances, Reallocation Deposit Amounts, as liquidation
losses and other losses in respect of the Contracts and Leased Vehicles are
incurred and as Leased Vehicles in Matured Leased Vehicle Inventory are sold or
otherwise disposed of. Consequently, the amount of the Transferor Interest can
change daily as the Aggregate Net Investment Value changes and may increase on
any Distribution Date to reflect reductions in the Certificate Balance, but will
never exceed the initial amount of the Transferor Interest.
TRANSFER OF THE SUBI INTEREST
On the Closing Date, pursuant to the Agreement, the Transferor will deliver
the SUBI Certificate to the Trustee and transfer and assign to the Trustee,
without recourse, all of its right, title and interest in and to the SUBI
Interest represented by the SUBI Certificate. The Trustee will, concurrently
with such delivery, transfer and assignment, execute, authenticate and deliver
the Certificates to or upon the order of the Transferor. (Agreement, Sections
2.02 and 4.02).
Pursuant to the Agreement, the Transferor will represent and warrant that
immediately prior to the transfer and assignment of the SUBI Certificate to the
Trustee, it had good title to, and was the sole legal and beneficial owner of
the SUBI Certificate, free and clear of liens and claims. (Agreement, Section
5.01).
REALLOCATION PAYMENTS AND REALLOCATION DEPOSIT AMOUNTS
As more fully described under "The Contracts -- Representations, Warranties
and Covenants" and "Additional Document Provisions -- The Servicing
Agreement -- Collections", under certain circumstances World Omni will be
required to make Reallocation Payments in respect of certain Contracts (and the
related
51
<PAGE> 54
Leased Vehicles) discovered not to be in compliance with World Omni's
representations or warranties or Contracts as to which certain servicing
procedures have not been followed, in either case that materially and adversely
affects such Contract. Upon any such payment during the Amortization Period (but
not during the Revolving Period), the Aggregate Net Investment Value will
decline by an amount equal to the Discounted Principal Balance of such Contract,
thereby reducing the amount of the Transferor Interest by the same amount, and
such Contract and the related Leased Vehicle will no longer constitute SUBI
Assets as they will be reallocated and become UTI Assets. If such deduction
would cause the Transferor Interest to become less than zero, World Omni will be
required to deposit (or cause to be deposited) in the SUBI Collection Account
the amount (the "Reallocation Deposit Amount") by which the Transferor Interest
would be reduced to less than zero. Notwithstanding the foregoing, in the event
a Reallocation Deposit Amount is required to be made, reallocation of the
related Contract (and the related Leased Vehicle) will not be considered to have
occurred unless such deposit is actually made. (Servicing Agreement, Section
8.03).
CALCULATION OF INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
Pursuant to the Servicing Agreement, to the extent allocable to the SUBI
Interest, the Servicer will allocate between the Investor Interest and the
Transferor Interest, based on the applicable Investor Percentage and the
Transferor Percentage for the related Collection Period, all Interest
Collections and (during the Amortization Period) Principal Collections collected
or received in respect of the related Collection Period. In addition, similar
allocations will be made by the Servicer at the end of each Collection Period in
respect of (i) an amount equal to the Discounted Principal Balance of any
Contract that became a Charged-off Contract during such Collection Period (all
such amounts in any Collection Period, the "Charged-off Amount"), (ii) the
Residual Value Loss Amount for such Collection Period and (iii) any Additional
Loss Amounts incurred during such Collection Period. A "Charged-off Contract"
will be a Contract (a) with respect to which the related Leased Vehicle has been
repossessed and sold or otherwise disposed of or (b) which has been written off
by the Servicer in accordance with its normal policies for writing off lease
contracts other than with respect to repossessions. (SUBI Trust Agreement,
Section 10.01; Agreement, Sections 1.01 and 3.03; Servicing Agreement, Section
9.02).
For convenience, this Prospectus refers to the Investor Percentage with
respect to Interest Collections, Principal Collections, Charged-off Amounts,
Residual Value Loss Amounts and Additional Loss Amounts as if the Investor
Percentage were the same percentage at all times in each case. The Investor
Percentage may be a different percentage for each Collection Period, and will
vary primarily as a result of changes in the Aggregate Net Investment Value.
The Investor Percentage in respect of any Collection Period will mean, with
respect to (i) Loss Amounts and Interest Collections, in each case that are
allocable to the SUBI Interest, the percentage equivalent of a fraction (not to
exceed 100%) the numerator of which is the Certificate Balance on the last day
of the immediately preceding Collection Period (or, in the case of the first
Collection Period, the Initial Certificate Balance) and the denominator of which
is 99.8% of the Aggregate Net Investment Value on the last day of the
immediately preceding Collection Period (or, in the case of the first Collection
Period, as of the Initial Cutoff Date) and (ii) Principal Collections during the
Amortization Period, the percentage equivalent of a fraction (not to exceed
100%) the numerator of which is the Certificate Balance and the denominator of
which is 99.8% of the Aggregate Net Investment Value, in each case as of the
last day of the last Collection Period preceding (a) the Amortization Date or
(b) the date on which an Early Amortization Event occurs. The "Transferor
Percentage" will in all cases, be equal to 100% minus the applicable Investor
Percentage. (Agreement, Section 1.01).
As a result of the calculations described above, Interest Collections
allocable to the SUBI Interest in each Collection Period will be allocated to
the Certificateholders based on the relationship of the Certificate Balance to
the Aggregate Net Investment Value (which may change daily and from Collection
Period to Collection Period). As described above, the Investor Percentage
applied when allocating Principal Collections allocable to the SUBI Interest may
vary monthly during the Revolving Period, because the Certificate Balance as a
percentage of the Aggregate Net Investment Value may fluctuate monthly. During
the Amortization Period, however, the Principal Allocation will be determined by
reference to a fixed percentage which will
52
<PAGE> 55
equal the Investor Percentage with respect to Principal Collections allocable to
the SUBI Interest as of the last day of the Revolving Period.
CERTAIN PAYMENTS TO THE TRANSFEROR
On each Distribution Date, the Trustee will pay to the Transferor, from
amounts on deposit in the Distribution Account in respect of the related
Collection Period that are allocable to the SUBI Interest, the following amounts
(the "Transferor Amounts"): (i) if such Distribution Date is in respect of the
Revolving Period, the Transferor Percentage of Interest Collections and (ii) if
such Distribution Date occurs in any month following the month in which the
Amortization Period commences, the Transferor Percentage of Interest Collections
and, to the extent that the Transferor Interest is equal to or greater than
zero, the Transferor Percentage of Principal Collections. The foregoing payments
will be made net of the Transferor Percentage of the Servicing Fee, Capped
Origination Trust Administrative Expenses, Capped Trust Administrative Expenses,
Capped Contingent and Excess Liability Premiums and Uncapped Administrative
Expenses payable in respect of the related Collection Period. Any Principal
Collections not paid to the Transferor because the Transferor Interest is less
than or equal to zero ("Unallocated Principal Collections") will be retained in
the Distribution Account for payment to Certificateholders.
Notwithstanding the foregoing, no Transferor Amounts will be paid to the
Transferor on a Distribution Date unless (i) the amounts described in clauses
(i) through (xvi) of the first paragraph under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest"
have been paid in full and (ii) the amount on deposit in the Reserve Fund, after
giving effect to all withdrawals therefrom and other deposits thereto on such
Distribution Date, is at least equal to the Reserve Fund Cash Requirement.
(Agreement, Section 3.03).
DISTRIBUTIONS ON THE CERTIFICATES
General
On the second Business Day prior to each Distribution Date (each, a
"Determination Date"), the Servicer will inform the Trustee of, among other
things, the amount of Interest Collections and Principal Collections allocable
to the SUBI Interest, the Investor Percentage, the Transferor Percentage, the
Class A-1, Class A-2, Class A-3 and Class A-4 Certificate Factors, the Class
A-1, Class A-2, Class A-3, Class A-4 and Class B Allocation Percentages, the
amount of Advances to be made by the Servicer, the Required Amount, if any, to
be withdrawn from the Reserve Fund and the Servicing Fee and other servicing
compensation payable to the Servicer, in each case with respect to the
Collection Period immediately preceding the Collection Period in which such
Determination Date occurs. On or prior to each Determination Date, the Servicer
shall also determine the Reserve Fund Cash Requirement, the amounts to be
distributed to the Certificateholders and to the Transferor in respect of the
Transferor Interest and the Reserve Fund Supplemental Requirement (if any).
(Servicing Agreement, Section 10.01).
Distributions of Interest
On each Distribution Date, the Trustee will make the following payments in
the amounts and order of priority described below. The Trustee will distribute
from amounts on deposit in the Distribution Account the Investor Percentage of
Interest Collections collected during or received in respect of the related
Collection Period allocable to the SUBI Interest, together with (i) Transferor
Amounts that would otherwise be payable to the Transferor in respect of the
Transferor Interest on such Distribution Date, plus (ii) to the extent necessary
to make the distributions described below other than in clause (viii), the sum
of any Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy in respect of such Collection Period and the amount withdrawn
from the Reserve Fund in respect of the Required Amount, if any, plus (iii) to
the extent needed to make distributions described in clauses (ix) through (xi),
to the Class A-4 Certificateholders during the Amortization Period, amounts that
would otherwise be distributable to the
53
<PAGE> 56
Class B Certificateholders in respect of the Class B Percentage of the Investor
Percentage of Principal Collections in respect of such Collection Period:
(i) in the event of an Early Amortization Event involving an
Insolvency Event as a result of the Trustee having received written
instructions from holders of Certificates evidencing Voting Interests of
not less than 51% of the Class A Certificates (voting together as a single
class) or 51% of the Class A Certificates and Class B Certificates (voting
together as a single class) to sell or dispose of the SUBI Interest, to the
Trustee, the Investor Percentage of Capped Trust Administrative Expenses;
(ii) to each Class of Class A Certificateholders, interest at the
related Certificate Rate on the Class A-1, Class A-2, Class A-3 or Class
A-4 Certificate Balance, as applicable, as of the immediately preceding
Distribution Date (after giving effect to any reduction in such Certificate
Balance on such immediately preceding Distribution Date) or, in the case of
the first Distribution Date, on the Initial Class A-1, Class A-2, Class A-3
or Class A-4 Certificate Balance, as applicable, for the related Interest
Period, calculated on the basis of a 360-day year consisting of twelve
30-day months, together with any unpaid Class A-1, Class A-2, Class A-3 or
Class A-4 Interest Carryover Shortfall, as applicable;
(iii) to the Class B Certificateholders, interest at a specified rate
per annum not expected to exceed 9.25% (the "Class B Certificate Rate" and,
together with the Class A-1, Class A-2, Class A-3 and Class A-4 Certificate
Rates, the "Certificate Rates"), on the Class B Certificate Balance as of
the immediately preceding Distribution Date (after giving effect to any
reduction in the Class B Certificate Balance on such immediately preceding
Distribution Date) or, in the case of the first Distribution Date, on the
Initial Class B Certificate Balance, for the related Interest Period,
calculated on the basis of a 360-day year consisting of twelve 30-day
months, together with any unpaid Class B Interest Carryover Shortfall;
(iv) to the Servicer, reimbursement of the Investor Percentage of
Capped Contingent and Excess Liability Premiums;
(v) to the Origination Trustee, the Investor Percentage of Capped
Origination Trust Administrative Expenses;
(vi) in circumstances other than as set forth in clause (i) above, to
the Trustee, the Investor Percentage of Capped Trust Administrative
Expenses;
(vii) in the event that World Omni is not the Servicer, to such other
Servicer, the Investor Percentage of (a) the Servicing Fee and (b) any
unpaid Servicing Fees payable in respect of compensation to such other
Servicer with respect to one or more prior Collection Periods;
(viii) to the Reserve Fund, until the amount on deposit therein equals
the Reserve Fund Cash Requirement;
(ix) to each Class of Class A Certificateholders, an amount equal to
the Class A-1, Class A-2 or Class A-3 or Class A-4 Allocation Percentage,
as applicable, multiplied by the Investor Percentage of all Loss Amounts
incurred during the related Collection Period and allocable to the SUBI
Interest;
(x) to each Class of Class A Certificateholders, the aggregate of the
amounts allocable to such Class pursuant to clause (ix) above that were not
previously distributed pursuant to such clause or this clause (each such
amount, a "Class A-1 Certificate Principal Loss Amount", "Class A-2
Certificate Principal Loss Amount," "Class A-3 Certificate Principal Loss
Amount" or "Class A-4 Certificate Principal Loss Amount", respectively);
(xi) to each Class of Class A Certificateholders, accrued and unpaid
interest at the related Certificate Rate, on any unreimbursed Class A-1,
Class A-2, Class A-3 and Class A-4 Certificate Principal Loss Amount, as
applicable;
(xii) to the Class B Certificateholders, an amount equal to the Class
B Allocation Percentage multiplied by the Investor Percentage of all Loss
Amounts incurred during the related Collection Period and allocable to the
SUBI Interest;
54
<PAGE> 57
(xiii) to the Class B Certificateholders, the aggregate of the amounts
allocable pursuant to clause (xii) above that were not previously
distributed pursuant to such clause or this clause (each such amount, a
"Class B Certificate Principal Loss Amount"), together with any Class B
Certificate Principal Carryover Shortfall;
(xiv) to the Class B Certificateholders, accrued and unpaid interest
at the Class B Certificate Rate on any unreimbursed Class B Certificate
Principal Loss Amount and any unreimbursed Class B Certificate Principal
Carryover Shortfall;
(xv) in the event that World Omni is the Servicer (and it has not
elected to waive the Servicing Fee with respect to the related Collection
Period), to the Servicer, the Investor Percentage of (a) the Servicing Fee
for the related Collection Period and (b) any unpaid Servicing Fee with
respect to one or more prior Collection Periods; and
(xvi) to the Trustee and the Origination Trustee, the Investor
Percentage of all specified expenses incurred with respect to the Trust or
the Origination Trust in excess of the Capped Administrative Expenses that
have been paid but have not yet been reimbursed (the "Uncapped
Administrative Expenses").
Notwithstanding the foregoing, as more fully described under "Description
of the Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal", on any Distribution Date relating to a Collection
Period during the Revolving Period, for purposes of reinvestment, amounts
otherwise payable to Certificateholders pursuant to clauses (ix), (x), (xii) and
(xiii) above (whether from Interest Collections, Transferor Amounts that
otherwise would be payable to the Transferor, Insured Residual Value Loss
Amounts paid under the Residual Value Insurance Policy, or from amounts on
deposit in the Reserve Fund) will be treated as Principal Collections for the
Collection Period in which such Distribution Date occurs. Accordingly, such
amounts will be available to be reinvested in Subsequent Contracts and
Subsequent Leased Vehicles during the Revolving Period. (Agreement, Section
3.03).
The balance, if any, of the Interest Collections allocated to the Investor
Interest for the related Collection Period, after giving effect to the
distributions in clauses (i) through (xvi) above, will constitute "Excess
Collections". On each Distribution Date that occurs (i) during the Revolving
Period, Excess Collections will be paid to the Transferor and (ii) during the
Amortization Period, an amount equal to the related Accelerated Principal
Distribution Amount will be paid to Certificateholders as a payment of principal
and any remaining Excess Collections will be paid to the Transferor. On any
Distribution Date, the Transferor may (at its option) instruct the Trustee not
to pay any or all of such remaining Excess Collections to it, but instead to
redeposit such amount ("Undistributed Transferor Excess Collections") into the
SUBI Collection Account for application as Collections in respect of the
Collection Period during which such Distribution Date occurs. The Transferor
will have no further claim to any Undistributed Transferor Excess Collections
deposited into the SUBI Collection Account, except insofar as they become Excess
Collections that are payable to the Transferor for a succeeding Collection
Period. To the extent that an Accelerated Principal Distribution Amount is paid
to Certificateholders on a Distribution Date in any month following the month
during which the Amortization Period commences, such amount will be distributed
first to the Class A-1 Certificateholders until the Class A-1 Certificates have
been paid in full, second, to the Class A-3 Certificateholders until the Class
A-2 Certificates have been paid in full, third, to the Class A-3
Certificateholders until the Class A-4 Certificates have been paid in full, and
thereafter the Class A Percentage and the Class B Percentage of any remaining
amount will be distributed to the Class A-4 Certificateholders and the Class B
Certificateholders, respectively. If any Transferor Amounts are required to be
applied to make any of the distributions in clauses (i) through (xvi) above, the
Interest Collections that are part of the Transferor Amounts will be applied
before any Principal Collections that are part of the Transferor Amounts are so
applied. (Agreement, Section 3.03).
In the event on any Distribution Date there remains any shortfall in
amounts required to be distributed to the Class A-1 Certificateholders, Class
A-2 Certificateholders, Class A-3 Certificateholders and Class A-4
Certificateholders under clauses (ii), (ix), (x) or (xi) above, then the amount
available will be distributed pro rata to such Certificateholders based on the
Class A-1 Allocation Percentage, the Class A-2 Allocation
55
<PAGE> 58
Percentage, the Class A-3 Allocation Percentage and the Class A-4 Allocation
Percentage, respectively. (Agreement, Section 3.03).
If and to the extent that the full amount distributable on a Distribution
Date pursuant to clauses (i) through (xvi) above exceeds the Investor Percentage
of Interest Collections allocable to the SUBI Interest for the related
Collection Period, then (i) Transferor Amounts otherwise distributable to the
Transferor will be applied to such shortfall, (ii) if such Transferor Amounts
are insufficient to cover such shortfall, then the proceeds of a claim under the
Residual Value Insurance Policy for any Insured Residual Value Loss Amount will
be applied to such shortfall (other than any shortfall in amounts to be
deposited into the Reserve Fund as set forth in clause (viii) above), and (iii)
if available Transferor Amounts and any claim under the Residual Value Insurance
Policy are insufficient to cover such shortfall, then the Required Amount will
be withdrawn from the Reserve Fund and applied to such shortfall (other than any
shortfall in amounts to be deposited into the Reserve Fund as set forth in
clause (viii) above).
"Interest Collections" with respect to any Collection Period will be
calculated as described under "Summary -- The Revolving Period; Subsequent
Contracts and Subsequent Leased Vehicles". (SUBI Trust Agreement, Section
10.01).
"Capped Origination Trust Administrative Expenses" will equal the amounts
sufficient to pay specified administrative costs and expenses of the Origination
Trust that are allocable to the SUBI Interest up to but not exceeding $100,000
in any calendar year. (SUBI Trust Agreement, Section 10.01). "Capped Trust
Administrative Expenses" will equal the amounts sufficient to pay specified
administrative costs and expenses associated with the Certificates such as the
Trustee's compensation, the reasonable fees and disbursements of the
Transferor's accountants and attorneys, up to but not exceeding $50,000 in any
calendar year (or $100,000 in a calendar year in which an Early Amortization
Event occurs with respect to which the Trustee sells or otherwise disposes of
the SUBI Interest). (Agreement, Section 1.01).
"Capped Contingent and Excess Liability Premiums" will equal the amounts
sufficient to pay the premiums then due on the portion of the Contingent and
Excess Liability Insurance Policies allocable to the SUBI Interest, up to but
not exceeding $745,000 in any calendar year.
A "Certificate Principal Loss Amount" with respect to any Distribution Date
will equal the sum of any Class A-1, Class A-2, Class A-3, Class A-4 and Class B
Certificate Principal Loss Amount and will represent a loss of principal in
respect of Loss Amounts allocable to the Investor Interest and will arise when
the Investor Percentage of Interest Collections allocable to the SUBI Interest,
Insured Residual Value Loss Amounts paid under the Residual Value Insurance
Policy, the Required Amount, the Transferor Amounts, the Servicing Fee (so long
as World Omni is the Servicer) and, with respect to any Class A-4 Certificate
Principal Loss Amount, amounts otherwise payable in respect of principal to the
Class B Certificateholders are not sufficient to cover such loss. As described
under "Description of the Certificates -- General", any Certificate Principal
Loss Amounts allocable to a Class of Class A Certificates which are not
reimbursed as provided herein will reduce the Certificate Balance of such Class
of Class A Certificates. (Agreement, Section 1.01).
The "Class A-1 Interest Carryover Shortfall" with respect to any
Distribution Date will equal the excess, if any, of (i) the amount of interest
distributable on the Class A-1 Certificates for such Distribution Date and any
outstanding Class A-1 Interest Carryover Shortfall from the immediately
preceding Distribution Date plus interest at the Class A-1 Certificate Rate on
such outstanding Class A-1 Interest Carryover Shortfall from such immediately
preceding Distribution Date through the current Distribution Date, over (ii) the
amount of interest distributed to the Class A-1 Certificateholders on such
Distribution Date. The "Class A-2 Interest Carryover Shortfall", the "Class A-3
Interest Carryover Shortfall", the "Class A-4 Interest Carryover Shortfall" and
the "Class B Interest Carryover Shortfall" will be calculated in the same manner
as the Class A-1 Interest Carryover Shortfall, appropriately modified to relate
to the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates and the Class B Certificates, respectively. (Agreement, Section
1.01).
56
<PAGE> 59
The "Class B Certificate Principal Carryover Shortfall", with respect to
any Distribution Date relating to the Amortization Period from and after the
Distribution Date on which the Class A-3 Certificates are paid in full, will
equal the amount, if any, of the Class B Percentage of the Investor Percentage
of Principal Collections allocable to the SUBI Interest for such Distribution
Date that is instead applied to the distribution of principal to the Class A
Certificateholders, pursuant to clauses (ix) through (xi) above. The Class B
Percentage of the Investor Percentage of Principal Collections allocable to the
SUBI Interest will be applied for such purposes only to the extent that the
other amounts available therefor are insufficient.
The "Class B Allocation Percentage" with respect to any Distribution Date
will mean the Class B Certificate Balance as a percentage of the Certificate
Balance, calculated as of the last day of the related Collection Period.
The "Required Amount" will equal the lesser of (i) the amount on deposit in
the Reserve Fund on the related Deposit Date after all deposits thereto
(including pursuant to clause (viii) above) and (ii) the amount, if any, by
which (a) the full amount distributable on the related Distribution Date
pursuant to clauses (i) through (vii) and (ix) through (xvi) above exceeds (b)
the sum of (1) the Investor Percentage of Interest Collections allocable to the
SUBI Interest for the related Collection Period, (2) any Transferor Amounts
applied to cover such distributable amount on such Distribution Date, and (3)
any Insured Residual Value Loss Amounts paid under the Residual Value Insurance
Policy with respect to the related Collection Period. (Agreement, Sections 1.01,
3.03 and 3.04). For further details regarding the Reserve Fund, see "Security
for the Certificates -- The Accounts -- The Reserve Fund".
Application and Distributions of Principal
Revolving Period. No principal will be payable to the Class A
Certificateholders until the June 1998 Distribution Date or, upon the occurrence
of an Early Amortization Event, until the Distribution Date in the month
immediately succeeding the month in which such Early Amortization Event occurs.
On a Transfer Date related to any Collection Period during the Revolving
Period, the Servicer will identify lease contracts and the related leased
vehicles of the Origination Trust that meet the eligibility criteria described
under "The Contracts" and are not evidenced by the SUBI or any Other SUBI. On
each Transfer Date, the Servicer, acting on behalf of the Origination Trustee,
will allocate as SUBI Assets additional lease contracts and related leased
vehicles so identified having aggregate Discounted Principal Balances as of the
last day of the preceding Collection Period (each, a "Subsequent Cutoff Date"
and, together with the Initial Cutoff Date, the "Cutoff Dates") approximately
equal to, but not greater than, all Principal Collections collected or received
since the Initial Cutoff Date (including Loss Amounts that otherwise would be
reimbursed to the Certificateholders which for this purpose are treated as
Principal Collections, as described under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest")
that have not yet been reinvested in Subsequent Contracts and Subsequent Leased
Vehicles as described herein. Upon such allocation, the related lease contracts
and leased vehicles will become Subsequent Contracts and Subsequent Leased
Vehicles and accordingly will become SUBI Assets. No partial interest in lease
contracts (and the related leased vehicles) will be so allocated as SUBI Assets.
Coincident with such allocation, the Servicer, acting on behalf of the
Origination Trustee, will transfer from the SUBI Collection Account an amount of
unreinvested Principal Collections equal to the aggregate Discounted Principal
Balances of the related Subsequent Contracts as of the related Subsequent Cutoff
Date to an account maintained by the Origination Trustee to hold collections
with respect to the Origination Trust Assets that are not SUBI Assets.
Any Principal Collections (and Loss Amounts that otherwise would be
reimbursed to the Certificateholders) that are not so reinvested may be
reinvested in additional Subsequent Contracts and Subsequent Leased Vehicles on
one or more subsequent Transfer Dates prior to the end of the Revolving Period.
In the event that on the twenty-fifth day of any month (beginning May 1997)
during the Revolving Period the amount of such Principal Collections and Loss
Amounts as of the last day of the immediately preceding month that have not been
reinvested in Subsequent Contracts and Subsequent Leased Vehicles exceeds
$1,000,000, an Early Amortization Event will occur, the Revolving Period will
terminate prior to the Amortization Date and any unreinvested Principal
Collections at the end of the Revolving Period will be
57
<PAGE> 60
distributed as principal to the Trust and then to Certificateholders on the
immediately succeeding Distribution Date. (Servicing Agreement, Section 8.02;
SUBI Trust Agreement, Section 11.02; Agreement, Section 8.01).
"Collections" and "Principal Collections" with respect to any Collection
Period will be calculated as described under "Summary -- The Revolving Period;
Subsequent Contracts and Subsequent Leased Vehicles". (SUBI Trust Agreement,
Section 10.01).
Amortization Period. On each Distribution Date beginning with the
Distribution Date in the month following the month in which the Amortization
Period commences and ending on the Distribution Date on which the Class A-3
Certificates have been paid in full, the Trustee will distribute an amount equal
to the Investor Percentage of all Principal Collections collected or received in
respect of the related Collection Period allocable to the Investor Interest as
principal first to the Class A-1 Certificateholders until the Class A-1
Certificates have been paid in full, second, to the Class A-2 Certificateholders
until the Class A-2 Certificates have been paid in full, third, to the Class A-3
Certificateholders until the Class A-3 Certificates have been paid in full, and
thereafter the Class A Percentage and the Class B Percentage of any such
remaining Principal Collections will be distributed as principal to the Class
A-4 Certificateholders and the Class B Certificateholders, respectively. The
Trustee will also distribute to Class A-1 Certificateholders on the Distribution
Date in the month following the month in which the Amortization Period commences
the Class A Percentage of the Investor Percentage of the sum of (i) any
Principal Collections allocable to the SUBI Interest that were not reinvested in
Subsequent Contracts and Subsequent Leased Vehicles as of the end of the
Revolving Period and (ii) any Unallocated Principal Collections on deposit in
the Distribution Account at the time the Amortization Period commences. The
aggregate distributions of principal to the Certificateholders of each Class of
Class A Certificates will not exceed the Initial Certificate Balances of such
Class of Certificates. (SUBI Trust Agreement, Section 11.02; Agreement, Section
3.03).
In general, no principal payments will be made on the Class A-2
Certificates until the Class A-1 Certificates have been paid in full, on the
Class A-3 Certificates until the Class A-1 and Class A-2 Certificates have been
paid in full, or on the Class A-4 or Class B Certificates until the Class A-1,
Class A-2 and Class A-3 Certificates have been paid in full. The Investor
Percentage of Loss Amounts will be allocated among Certificateholders on a pro
rata basis, based on the Class A-1 Allocation Percentage, the Class A-2
Allocation Percentage, the Class A-3 Allocation Percentage, the Class A-4
Allocation Percentage and the Class B Allocation Percentage, as the case may be,
and then reimbursed out of available funds in the amounts and order of priority
described in "Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest". Loss Amounts will not be allocated
or reimbursed to any Certificateholder once the related Certificates have been
paid in full. In addition, the Investor Percentage of the net proceeds of any
sale or other disposition of the SUBI Interest, the SUBI Certificate or other
property of the Trust, which may occur under certain circumstances involving an
Insolvency Event with respect to the Transferor (as described under "Description
of the Certificates -- Early Amortization Events"), to the extent such net
proceeds constitute Principal Collections, will be distributed on a pro rata
basis, first, to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificateholders based on their respective Class Certificate Balances until
the Class A Certificates have been paid in full, and second, to the Class B
Certificateholders.
In addition, on any Distribution Date relating to the Amortization Period
from and after the Distribution Date on which the Class A-3 Certificates are
paid in full, but only to the extent that other amounts available therefor are
insufficient, amounts that would otherwise be distributable to the Class B
Certificateholders in respect of the Class B Percentage of the Investor
Percentage of Principal Collections collected or received in respect of the
related Collection Period and allocable to the SUBI Interest will instead be
distributed as principal payments to the Class A-4 Certificateholders up to an
amount equal to the sum of (i) the Class A-4 Allocation Percentage of the
Investor Percentage of Loss Amounts incurred during the related Collection
Period and allocable to the SUBI Interest, (ii) any Class A-4 Certificate
Principal Loss Amounts and (iii) accrued and unpaid interest on any Class A-4
Certificate Principal Loss Amounts, as set forth under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest."
Principal payments made during the Amortization Period in respect of the
Class A-1 Certificates, the Class A-2 Certificates or Class A-3 Certificates, as
applicable, will consist primarily of the Investor Percentage
58
<PAGE> 61
of all Principal Collections during the related Collection Period allocable to
the SUBI Interest. However, principal payments made in respect of the Class A-4
Certificates and the Class B Certificates (once the Class A-1 Certificates,
Class A-2 Certificates and Class A-3 Certificates have been paid in full) will
be based upon a calculation of the Class A Percentage and the Class B Percentage
of the Investor Percentage of such Principal Collections.
EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the close of
business on the last day of April 1998 and the Amortization Period will begin on
May 1, 1998 and continue to the earlier of the payment in full of the
Certificates and the termination of the Trust, unless an Early Amortization
Event occurs prior to any of such dates, thereby commencing the Amortization
Period. An "Early Amortization Event" will mean any of the following events:
(i) failure by the Servicer (a) to make any payment or deposit
required with respect to the SUBI, the SUBI Interest or the Certificates
under the Agreement, the SUBI Trust Agreement or the Servicing Agreement,
within five Business Days after the date the payment or deposit is required
to be made, or (b) to deliver a Servicer's Certificate within ten Business
Days after any Determination Date;
(ii) failure by the Transferor or the Servicer duly to observe or
perform in any material respect any other of its covenants or agreements in
the Agreement (other than those described in clause (i) above), the SUBI
Trust Agreement or the Servicing Agreement, which failure materially and
adversely affects the rights of holders of the SUBI Interest or
Certificateholders and which continues unremedied for 60 days after the
giving of written notice of such failure (a) to the Transferor or the
Servicer, as the case may be, by the Trustee or the Origination Trustee or
(b) to the Transferor or the Servicer, as the case may be, and to the
Trustee by holders of Certificates evidencing not less than 25% of the
Voting Interests of the Class A Certificates and the Class B Certificates,
voting together as a single class;
(iii) failure to cure the inaccuracy of certain representations,
warranties and certificates of the Transferor or the Servicer in the
Agreement, the SUBI Trust Agreement or the Servicing Agreement, which
failure materially and adversely affects the rights of holders of the SUBI
Interest or Certificateholders and which continues uncured for 60 days
after notice is given as described in clause (ii) above; provided that an
Early Amortization Event pursuant to this subparagraph (iii) will not be
deemed to occur if a related Reallocation Payment is due in connection with
such breach and has been paid by the Servicer in accordance with the
Servicing Agreement;
(iv) the occurrence of certain Insolvency Events relating to the
Transferor;
(v) creation of any lien or encumbrance not otherwise permitted by the
Agreement, the SUBI Trust Agreement or the Servicing Agreement on the SUBI
Assets, which lien or encumbrance is not released within 60 days of its
creation;
(vi) transfer of, or imposition of a lien or encumbrance on, the
Retained SUBI Interest held by the Transferor except as permitted by the
Agreement, which, in the case of the imposition of a lien or encumbrance,
is not released within 30 days of its creation;
(vii) the Transferor, the Trust or the Origination Trust becomes
subject to registration as an "investment company" for purposes of the
Investment Company Act of 1940, as amended;
(viii) if on the twenty-fifth day of any month (beginning May 1997)
the amount of Principal Collections and Loss Amounts that otherwise would
be available to be reimbursed to the Certificateholders as of the last day
of the immediately preceding month that have not been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles exceeds $1,000,000;
(ix) an Event of Servicing Termination occurs;
(x) if on any Distribution Date the aggregate amount withdrawn from
the Reserve Fund and deposited into the Distribution Account on or prior to
such Distribution Date (without giving effect to any deposits into the
Reserve Fund) exceeds $2,992,697 (i.e., 0.25% multiplied by 99.8% of the
Aggregate Net Investment Value as of the Initial Cutoff Date); or
59
<PAGE> 62
(xi) any Leased Vehicle is no longer covered by the Residual Value
Insurance Policy or one or more policies with substantially similar
coverage and provisions issued by an insurer acceptable to each Rating
Agency, or an alternative mechanism to support Residual Values of Leased
Vehicles implemented in accordance with the procedures required for
amendment of the Agreement (as described in "Additional Document
Provisions -- Additional Agreement Provisions -- Amendment").
The Amortization Period will commence on the day as of which an Early
Amortization Event is deemed to have occurred. (Agreement, Section 8.01). In
such event, distributions of principal to the Certificateholders will begin on
the Distribution Date in the month following the month in which the Early
Amortization Event occurs. If, because of the occurrence of an Early
Amortization Event, the Amortization Period begins earlier than the Amortization
Date, Class A-1 Certificateholders will begin receiving distributions of
principal earlier than they would otherwise have under the Agreement, and Class
A-2, Class A-3 and Class A-4 Certificateholders may begin receiving
distributions of principal earlier than they would otherwise have under the
Agreement, which may shorten the final maturity of the related Class of Class A
Certificates.
In addition to the consequences of an Early Amortization Event discussed
above, if an Insolvency Event with respect to the Transferor were to occur
during the Revolving Period, the Agreement will require the Transferor to
promptly give notice of such Insolvency Event to the Trustee. Pursuant to the
Agreement, within 15 days of such notice, the Trustee may, and upon receipt of
written instructions from holders of Certificates evidencing Voting Interests of
not less than 51% of the Class A Certificates (voting together as a single
class) or 51% of the Class A Certificates and Class B Certificates (voting
together as a single class) shall, publish a notice of the Insolvency Event
stating that the Trustee intends to sell or dispose of the SUBI Interest and the
SUBI Certificate and the other property of the Trust in a commercially
reasonable manner. Following such publication, unless otherwise prohibited by
applicable law, the Trustee will sell or otherwise dispose of the SUBI Interest,
the SUBI Certificate and such other property in a commercially reasonable manner
and on commercially reasonable terms; provided that such sale shall not be made
without the consent of all the Certificateholders if a net loss would be
realized as a result of such sale. The net sale or disposition proceeds of the
SUBI Interest, the SUBI Certificate and such other property will be deposited
into the SUBI Collection Account and treated as Collections on or in respect of
the SUBI Assets. The interest portion of the Investor Percentage of such
proceeds will be distributed to the Certificateholders in the priority provided
for herein, and the principal portion of the Investor Percentage of such
proceeds will be distributed first, on a pro rata basis, to the Class A-1, Class
A-2, Class A-3 and Class A-4 Certificateholders based on their respective Class
Certificate Balances until the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates have been paid in full, and second, to the Class B
Certificateholders. (Agreement, Section 8.02). If such proceeds, together with
all amounts on deposit in the Accounts, the Reserve Fund and the Residual Value
Surplus Account, amounts otherwise payable to the Transferor in respect of the
Transferor Interest, Insured Residual Value Loss Amounts paid under the Residual
Value Insurance Policy, the Servicing Fee (if World Omni is the Servicer) and,
in the case of the Class A-4 Certificates, certain amounts otherwise
distributable in respect of the Class B Certificates, are insufficient to pay
the Certificate Balance of a Class of Class A Certificates, any unreimbursed
Certificate Principal Loss Amount in respect of such Class of Class A
Certificates and any accrued and unpaid interest thereon in full, the related
Class A Certificateholders will suffer a corresponding loss.
The "Voting Interests" of the (i) Class A Certificates will be allocated
among the Class A-1, Class A-2, Class A-3 and Class A-4 Certificateholders or
Certificate Owners, as the case may be, in accordance with their respective
Class Certificate Balances, as the context may require, and (ii) Class B
Certificates will be allocated among the Class B Certificateholders in
accordance with the Class B Certificate Balance represented thereby.
Notwithstanding the foregoing, in certain circumstances, any Class A
Certificates or Class B Certificates, as the case may be, held or beneficially
owned by ALFI, ALFI L.P., the Transferor, WOLSI, World Omni or any of their
respective affiliates shall be excluded from such determination. (Agreement,
Section 1.01).
60
<PAGE> 63
STATEMENTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution
to each Certificateholder as of the close of business on the related Record Date
(which, in the case of the Class A Certificates, shall be Cede as the nominee of
DTC unless Definitive Certificates are issued under the limited circumstances
described herein) a statement, setting forth with respect to such Distribution
Date or the related Collection Period, among other things, the following:
(i) the Investor Percentages for Interest Collections and Principal
Collections allocable to the SUBI Interest for such Collection Period;
(ii) the amount being distributed to Certificateholders (the
"Certificate Distribution Amount");
(iii) the amount of the Certificate Distribution Amount allocable to
interest and to principal on each Class of Certificates;
(iv) the amount of the Certificate Distribution Amount allocable to
any Class A-1 Interest Carryover Shortfall, any Class A-2 Interest
Carryover Shortfall, any Class A-3 Interest Carryover Shortfall, any Class
A-4 Interest Carryover Shortfall and any Class B Interest Carryover
Shortfall;
(v) the amount, if any, of any unpaid Class A-1 Interest Carryover
Shortfall, unpaid Class A-2 Interest Carryover Shortfall, unpaid Class A-3
Interest Carryover Shortfall, unpaid Class A-4 Interest Carryover Shortfall
and unpaid Class B Interest Carryover Shortfall, after giving effect to
distribution of the Certificate Distribution Amount;
(vi) the Certificate Balance, the Class A-1 Certificate Balance, the
Class A-2 Certificate Balance, the Class A-3 Certificate Balance, the Class
A-4 Certificate Balance, the Class A-1 Certificate Factor, the Class A-2
Certificate Factor, the Class A-3 Certificate Factor, the Class A-4
Certificate Factor, the Class A-1 Allocation Percentage, the Class A-2
Allocation Percentage, the Class A-3 Allocation Percentage, the Class A-4
Allocation Percentage and the Class B Allocation Percentage as of such
Distribution Date, in each case after giving effect to distribution of the
Certificate Distribution Amount;
(vii) the aggregate amount, if any, of the reimbursement of Loss
Amounts included in distribution of the Certificate Distribution Amount and
the amount thereof allocated to each Class of Certificateholders;
(viii) the amount of the Certificate Distribution Amount allocable to
reimbursement of previous Class A-1 Certificate Principal Loss Amounts,
Class A-2 Certificate Principal Loss Amounts, Class A-3 Certificate
Principal Loss Amounts, Class A-4 Certificate Principal Loss Amounts and
Class B Certificate Principal Loss Amounts, in each case together with the
amount of accrued interest thereon included in such distribution;
(ix) the amount, if any, of the aggregate unreimbursed Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss
Amounts, Class A-3 Certificate Principal Loss Amounts, Class A-4
Certificate Principal Loss Amounts and Class B Certificate Principal Loss
Amounts, after giving effect to distribution of the Certificate
Distribution Amount;
(x) the amount of any unreimbursed Class B Certificate Principal
Carryover Shortfall;
(xi) the Investor Percentage of the Servicing Fee;
(xii) the amount of any Required Amount included in the Certificate
Distribution Amount, the balance on deposit in the Reserve Fund on such
Distribution Date, after giving effect to withdrawals therefrom and
deposits thereto on such Distribution Date, the change in such balance from
the immediately preceding Distribution Date, the Reserve Fund Cash
Requirement and the Reserve Fund Supplemental Requirement, if any;
(xiii) the amount of Transferor Amounts, if any, included in the
Certificate Distribution Amount;
(xiv) the Aggregate Net Investment Value as of the end of such
Collection Period;
61
<PAGE> 64
(xv) the aggregate amount of Payments Ahead on deposit in the SUBI
Collection Account and the change in such amount from the immediately
preceding Distribution Date;
(xvi) the amounts of Advances made in respect of such Collection
Period and the amount of unreimbursed Advances on such Distribution Date;
(xvii) the balance on deposit in the Residual Value Surplus Account on
the related Deposit Date, after giving effect to the change in such balance
from the immediately preceding Deposit Date, and the aggregate amount of
Residual Value Surplus deposited into or withdrawn from the Residual Value
Surplus Account on the related Deposit Date;
(xviii) certain information used in determining compliance with the
Charge-off Test Rate and the Delinquency Test; and
(xix) the Insured Residual Value Loss Amount, if any, for such
Distribution Date.
Each amount set forth pursuant to clauses (ii) through (v) and (vii)
through (x) above will be expressed in the aggregate and as a dollar amount per
$1,000 of original principal balance of a Class A Certificate or Class B
Certificate, as applicable. Copies of such statements may be obtained by
Certificateholders or Certificate Owners by a request in writing addressed to
the Trustee. In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of the Agreement,
the Trustee will mail to each person who at any time during such calendar year
shall have been a Class A or Class B Certificateholder or a Certificate Owner, a
statement containing the sum of the amounts described in clauses (ii) through
(vi) and (viii) through (xi) above for the purpose of preparing such person's
federal income tax return. (Agreement, Section 3.06).
TERMINATION OF THE TRUST; RETIREMENT OF THE CERTIFICATES
The respective obligations and responsibilities of the Transferor and the
Trustee created by the Agreement will terminate upon the earliest to occur of
(i) the maturity, sale or other liquidation, as the case may be, of the last
outstanding Contract and Leased Vehicle evidenced by the SUBI and the
distribution of all proceeds thereof, together with all amounts on deposit in
the Accounts and the Reserve Fund, in the manner to be prescribed in the
Agreement, (ii) the day following the Distribution Date on which the
Certificates have been paid in full and after which there is no unreimbursed
Certificate Principal Loss Amount or Class B Certificate Principal Carryover
Shortfall (together with accrued interest thereon) and (iii) the occurrence of
the event described below. In order to avoid excessive administrative expenses,
the Transferor will be permitted at its option to purchase the SUBI Interest
evidenced by the SUBI Certificate from the Trust on any Distribution Date if,
either before or after giving effect to any payment of principal required to be
made on such Distribution Date, the Certificate Balance is less than or equal to
10% of the Initial Certificate Balance. The purchase price will be equal to the
greater of (i) the sum of the Class A Certificate Balance and the Class B
Certificate Balance, in each case plus accrued and unpaid interest thereon at
the related Certificate Rate, plus certain other accrued and unpaid amounts, if
any, due to the Investor Certificateholders or the Servicer, and (ii) 99.8% of
the Aggregate Net Investment Value as of the last day of the preceding
Collection Period. The Trustee will give written notice of termination of the
Trust to each Certificateholder of record. In connection with any such
termination, except as otherwise provided in the Agreement, the Transferor will
be deemed to relinquish all claims it may have against the assets of the Trust
in respect of Transferor Amounts that were not paid to the Transferor.
(Agreement, Sections 7.01 and 7.02).
The final distribution to any Certificateholder will be made only upon
surrender and cancellation of such Certificateholder's Certificate at an office
or agency of the Trustee specified in the notice of termination. Any funds
remaining that are payable in such final distribution to a Certificateholder,
after the Trustee has taken certain measures to locate such Certificateholder
and such measures have failed, will be distributed to the United Way.
(Agreement, Section 7.01).
62
<PAGE> 65
BOOK-ENTRY REGISTRATION
Certificate Owners may hold through DTC (in the United States), or Cedel or
Euroclear (in Europe), which in turn hold through DTC, if they are participants
in such systems, or indirectly through organizations that are participants in
such systems ("Participants").
Cede, as nominee for DTC, will hold the Class A Certificates. Cedel and
Euroclear will hold omnibus positions on behalf of their Participants through
customers' securities accounts in the Depositaries which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC. Unless and until Definitive Certificates are issued, it is
anticipated that the only Class A Certificateholder will be Cede, as the nominee
of DTC. Certificate Owners will only be permitted to exercise their rights
indirectly through DTC.
Transfers between Participants in DTC ("DTC Participants") will occur in
accordance with DTC rules. Transfers between Participants in Cedel ("Cedel
Participants") and Participants in Euroclear ("Euroclear Participants") will
occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of Cedel or Euroclear by its Depositary.
However, each such cross-market transaction will require delivery of
instructions to Cedel or Euroclear by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). Cedel or Euroclear will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the related Depositaries.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participants or Euroclear Participants on such business day. Cash received in
Cedel or Euroclear as a result of sales of Class A Certificates by or through a
Cedel Participant or Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the UCC in effect in the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that DTC Participants deposit with DTC. DTC also facilitates
the clearance and settlement of securities transactions among DTC Participants
through electronic computerized book-entry changes in accounts of DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations. Indirect access to the DTC system also is available to
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect DTC Participants"). The rules applicable to DTC and DTC
Participants are on file with the Commission.
Certificate Owners that are not DTC Participants or Indirect DTC
Participants but that desire to purchase, sell or otherwise transfer ownership
of, or an interest in, Class A Certificates under the DTC System may do so only
through DTC Participants or Indirect DTC Participants. DTC Participants will
receive a credit for the Class A Certificates in DTC's records. The ownership
interest of each Certificate Owner in turn will be recorded on the DTC
Participants' and Indirect DTC Participants' respective records. Certificate
Owners will not receive written confirmation from DTC of their purchase, but
Certificate Owners are expected
63
<PAGE> 66
to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the DTC Participant or Indirect
DTC Participant through which the Certificate Owner entered into the
transaction. Transfers of ownership interests in the Class A Certificates will
be accomplished by entries made on the books of DTC Participants acting on
behalf of Certificate Owners.
To facilitate subsequent transfers, all Class A Certificates deposited by
DTC Participants with DTC will be registered in the name of Cede, as nominee of
DTC. The deposit of Class A Certificates with DTC and their registration in the
name of Cede will effect no change in beneficial ownership. DTC will have no
knowledge of the actual Certificate Owners and its records will reflect only the
identity of the DTC Participants to whose accounts such Class A Certificates are
credited, which may or may not be the Certificate Owners. DTC Participants and
Indirect DTC Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect DTC Participants and by DTC Participants and
Indirect DTC 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.
Principal and interest payments with respect to the Class A Certificates
will be made to DTC. DTC's practice is to credit DTC Participants' accounts on
each Distribution Date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payment
on such Distribution Date. Payments by DTC Participants and Indirect DTC
Participants to Certificate Owners will be governed by standing instructions and
customary practices, as in 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 Indirect DTC Participant and not of
DTC, the Trustee, the Origination Trustee, the Servicer or the Transferor,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal of and interest on the Class A Certificates
to DTC will be the responsibility of the Trustee, disbursement of such payments
to DTC Participants will be the responsibility of DTC and disbursement of such
payments to Certificate Owners will be the responsibility of DTC Participants
and Indirect DTC Participants. As a result, under the book-entry format,
Certificate Owners may experience some delay in their receipt of payments.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect DTC Participants and certain banks, the ability of a
Certificate Owner to pledge Class A Certificates to persons or entities that do
not participate in the DTC system, or otherwise take actions with respect to
such Class A Certificates, may be limited due to the lack of a physical
certificate for such Class A Certificates.
Neither DTC nor Cede will consent or vote with respect to the Class A
Certificates. Under its usual procedures, DTC mails an "Omnibus Proxy" to the
Trustee as soon as possible after any applicable record date for such a consent
or vote. The Omnibus Proxy assigns Cede's consenting or voting rights to those
DTC Participants to whose accounts the Class A Certificates are credited on that
record date (identified in a listing attached to the Omnibus Proxy).
None of the Transferor, the Servicer, the Origination Trustee nor the
Trustee will have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Class A
Certificates held by Cede, as nominee of DTC, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for Cedel Participants and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are
64
<PAGE> 67
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Indirect access to Cedel is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Cedel Participant, either directly
or indirectly.
Euroclear was created in 1968 to hold securities for Euroclear Participants
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in any of 32 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. Euroclear is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York (the "Euroclear Operator"), 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. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Class A Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting and withholding in accordance with relevant United
States tax laws and regulations. For further information in this regard, see
"Material Income Tax Considerations -- Federal Taxation -- Federal Income Tax
Consequences to Foreign Investors" herein and "Global Clearance, Settlement and
Tax Documentation Procedures -- Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I hereto. Cedel or the Euroclear Operator, as the case
may be, will take any other action permitted to be taken by a Class A
Certificateholder on behalf of a Cedel Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to the related
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Class A Certificates among Participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificate Owners rather than to
DTC only if (i) DTC is no longer willing or able to discharge its
responsibilities with respect to the Class A Certificates, and neither the
Trustee nor the Transferor is able to locate a qualified successor, (ii) the
Transferor, at its option, elects to
65
<PAGE> 68
terminate the book-entry system through DTC or (iii) after an Early Amortization
Event, Certificate Owners representing in the aggregate not less than 51% of the
Voting Interests of the Class A Certificates (voting together as a single class)
advise the Trustee through DTC or its successor in writing that the continuation
of a book-entry system through DTC or its successor is no longer in the best
interest of Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all Certificate
Owners, through Participants, of the availability through DTC of Definitive
Certificates. Upon surrender by DTC of the certificates representing the related
Class A Certificates and the receipt of instructions for re-registration, the
Trustee will issue Definitive Certificates to Certificate Owners, who thereupon
will become Certificateholders for all purposes of the Agreement. (Agreement,
Section 4.11).
Payments on the related Class A Certificates will thereafter be made by the
Trustee directly to holders of such Class A Certificates in accordance with the
procedures set forth herein and to be set forth in the Agreement. Interest
payments and any principal payments on the Definitive Certificates on each
Distribution Date will be made to holders in whose names the Definitive
Certificates were registered at the close of business on the Record Date with
respect to such Distribution Date. Payments will be made by check mailed to the
address of such holders as they appear on the Certificate Register or, under the
circumstances to be provided by the Agreement, by wire transfer to a bank or
depository institution located in the United States and having appropriate
facilities therefor. (Agreement, Section 3.03). The final payment on any Class A
Certificates (whether Definitive Certificates or global certificates registered
in the name of Cede representing the Class A Certificates), however, will be
made only upon presentation and surrender of such Definitive Certificates or
global certificates at the office or agency specified in the notice of final
distribution to Class A Certificateholders. (Agreement, Section 7.01).
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or the Certificate Registrar to be set forth in the
Agreement. No service charge will be imposed for any registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection therewith. (Agreement,
Section 4.07).
SECURITY FOR THE CERTIFICATES
GENERAL
The property of the Trust will primarily consist of the SUBI Interest
evidenced by the SUBI Certificate, which is more fully described under "The
Trust and the SUBI -- The SUBI". The property of the Trust will also include
such amounts as from time to time are held in the Reserve Fund and the
Distribution Account. The Trust will also have the collateral benefit of monies
on deposit in the SUBI Collection Account and the Residual Value Surplus
Account, the Contingent and Excess Liability Insurance Policies and the Residual
Value Insurance Policy described below and the Trustee's rights as a third-party
beneficiary of the SUBI Trust Agreement and the Servicing Agreement.
As described under "Certain Legal Aspects of the Origination Trust and the
SUBI -- The SUBI" and "Certain Legal Aspects of the Contracts and the Leased
Vehicles -- Back-up Security Interests", the Trustee generally will be deemed to
have ownership of the SUBI Certificate and, through such ownership, an indirect
beneficial ownership interest in the Contracts and Leased Vehicles. If a court
of competent jurisdiction recharacterizes the transfer of the SUBI Interest to
the Trust, the Trustee may instead be deemed to have a perfected security
interest in the SUBI Certificate, the Contracts and Contract Rights susceptible
of perfection under the UCC, but in no event will the Trustee be deemed to have
a perfected security interest in the Leased Vehicles.
66
<PAGE> 69
THE ACCOUNTS
The Distribution Account
On or prior to the Closing Date, the Transferor will establish a trust
account with the Trustee for the exclusive benefit of the Certificateholders and
the Transferor, in its capacity as holder of the Transferor Interest, from which
all payments with respect to the Certificates will be made (the "Distribution
Account"). (Agreement, Section 3.01). Within one Business Day of receipt, the
Servicer will deposit all Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy (if they relate to the Amortization Period) into
the Distribution Account. On each Deposit Date, all Principal Collections and
Interest Collections with respect to the related Collection Period allocable to
the SUBI Interest will be remitted to the Distribution Account. Such deposits
will be made from, among other sources, (i) monies on deposit in the SUBI
Collection Account or the Reserve Fund and (ii) the Transferor in the case of
exercise of its right to purchase the SUBI Interest represented by the SUBI
Certificate when the Certificate Balance is less than or equal to 10% of the
Initial Certificate Balance.
The SUBI Collection Account
On or prior to the Closing Date, the Origination Trustee will establish a
trust account for the exclusive benefit of the holders of interests in the SUBI
into which collections on or in respect of the Contracts and the Leased Vehicles
generally will be deposited (the "SUBI Collection Account"). (SUBI Trust
Agreement, Section 12.01).
Deposits into the SUBI Collection Account. Deposits into the SUBI
Collection Account will include, but will not be limited to, the following
payments made in respect of the SUBI Assets: (i) Monthly Payments; (ii) early
payments of the Outstanding Principal Balance of a Contract, including an amount
equal to the Residual Value of the related Leased Vehicle (each, a
"Prepayment"); (iii) Matured Leased Vehicle Proceeds, Repossessed Vehicle
Proceeds and other Liquidation Proceeds, and Insurance Proceeds; (iv) Extension
Fees; (v) Payments Ahead; (vi) Advances made by the Servicer; (vii) Reallocation
Payments by World Omni (together with, under certain circumstances during the
Amortization Period, Reallocation Deposit Amounts) in respect of certain
Contracts as to which an uncured breach of certain representations and
warranties or certain servicing covenants has occurred; (viii) Undistributed
Transferor Excess Collections; (ix) Insured Residual Value Loss Amounts paid
under the Residual Value Insurance Policy with respect to the Revolving Period;
and (x) certain amounts in respect of certain shortfalls in the Residual Values
of Leased Vehicles relating to Matured Contracts, as described under "Security
for the Certificates -- The Accounts -- The Residual Value Surplus Account".
(Servicing Agreement, Sections 2.02, 8.02, 9.02 and 9.04; SUBI Trust Agreement,
Section 12.01).
"Insurance Proceeds" will include recoveries pursuant to the Contingent and
Excess Liability Insurance Policies and the comprehensive, collision, public
liability and property damage insurance policy required to be obtained and
maintained by the lessee pursuant to each Contract (or payment by the Servicer
under the Servicing Agreement of such amounts under the circumstances described
in "Additional Document Provisions -- The Servicing Agreement -- Insurance on
Leased Vehicles"), and amounts paid by any insurer under any other insurance
policy relating to the Contracts, the related lessees or the Leased Vehicles,
but will not include Insured Residual Value Loss Amounts paid under the Residual
Value Insurance Policy. (SUBI Trust Agreement, Section 10.01).
Monthly Payments made by the lessees under the Contracts normally will be
paid by mail and deposited into a lock box maintained by the Servicer, and then
deposited in the SUBI Collection Account within two Business Days after receipt.
Within two Business Days after receipt by the Servicer of all other payments on
or in respect of the Contracts or the Leased Vehicles other than Security
Deposits and Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy, including without limitation any Monthly Payments delivered
directly to the Servicer or World Omni (in the event that World Omni is no
longer the Servicer), Matured Leased Vehicle Proceeds, Repossessed Vehicle
Proceeds and other Liquidation Proceeds, Insurance Proceeds, Extension Fees,
Payments Ahead and Prepayments (regardless of whether made by
67
<PAGE> 70
lessees or other persons), such payments shall be remitted to the SUBI
Collection Account. (Servicing Agreement, Sections 2.02 and 9.02).
Notwithstanding the foregoing, the Servicer may remit all payments
collected or received by it on or in respect of the Contracts and the Leased
Vehicles to the SUBI Collection Account on a less frequent basis if (i) it
obtains a letter of credit, surety bond or insurance policy (collectively, the
"Servicer Letter of Credit") under which demands for payment may be made to
secure timely remittance of monthly collections to the SUBI Collection Account
and (ii) the Trustee is provided with a letter from each Rating Agency to the
effect that the use of such alternative remittance schedule will not result in
the qualification, reduction or withdrawal of its then-current rating of any
Class of Certificates. (Servicing Agreement, Section 9.02).
Net Deposits. So long as World Omni is the Servicer, the Servicer will be
permitted to deposit in the Distribution Account only the net amount
distributable to the Trustee, as holder of the SUBI Interest, and the Transferor
on the related Deposit Date. The Servicer, however, will account to the Trustee,
the Origination Trustee, the Certificateholders and the Transferor as if all of
the deposits and distributions described herein were made individually.
(Agreement, Section 3.05; Servicing Agreement, Section 9.02). This "net deposit"
provision will be for the administrative convenience of the parties involved and
will not affect amounts required to be deposited into the Accounts.
Withdrawals from the SUBI Collection Account. On each Deposit Date, all
Principal Collections and Interest Collections in respect of the SUBI Interest
on deposit in the SUBI Collection Account in respect of the related Collection
Period (including that portion of Payments Ahead representing Monthly Payments
due in such Collection Period) will be deposited into the Distribution Account.
During the Revolving Period, however, Principal Collections will be retained in
the SUBI Collection Account for reinvestment in Subsequent Contracts and
Subsequent Leased Vehicles as described under "Description of the
Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal -- Revolving Period". (Agreement, Section 3.02; SUBI
Trust Agreement, Section 12.01; Servicing Agreement, Sections 2.02, 8.02 and
9.02).
In the event that on any date the Servicer supplies the Origination Trustee
and the Trustee with an officer's certificate setting forth the basis for such
withdrawal, the Origination Trustee shall remit to the Servicer, without
interest and prior to any other distribution from the SUBI Collection Account on
such date, monies from the SUBI Collection Account representing (i) unreimbursed
Matured Leased Vehicle Expenses (after reimbursements thereof from the Residual
Value Surplus Account, if any), Repossessed Vehicle Expenses and other
Liquidation Expenses; (ii) delinquent Monthly Payments with respect to which the
Servicer has made an unreimbursed Advance; and (iii) an amount equal to any
unreimbursed Advances that the Servicer has concluded are Nonrecoverable
Advances. (Servicing Agreement, Section 9.02). For further information regarding
Nonrecoverable Advances, see "Additional Document Provisions -- The Servicing
Agreement -- Advances".
The Residual Value Surplus Account
On or prior to the Closing Date, the Origination Trustee will establish a
trust account for the exclusive benefit of the holders of interests in the SUBI
into which all Residual Value Surplus with respect to a Collection Period will
be deposited on the related Deposit Date (the "Residual Value Surplus Account"
and, together with the Distribution Account, the SUBI Collection Account and the
Reserve Fund, the "Accounts"). (SUBI Trust Agreement, Section 12.03).
On each Deposit Date, funds on deposit in the Residual Value Surplus
Account shall be withdrawn by the Origination Trustee and deposited into the
SUBI Collection Account up to an amount equal to the sum of (a) the aggregate of
the Residual Values of Leased Vehicles that were a part of Matured Leased
Vehicle Inventory but had not been sold or otherwise disposed of for at least
two full Collection Periods as of the end of the related Collection Period, (b)
the amount by which Net Matured Leased Vehicle Proceeds (after application of
amounts withdrawn pursuant to the next sentence) for the related Collection
Period are less than the aggregate of the Residual Values of Leased Vehicles
that were a part of Matured Leased Vehicle Inventory but were sold or otherwise
disposed of during such Collection Period and (c) any losses on
68
<PAGE> 71
Contracts terminated on or prior to their Maturity Dates during such Collection
Period by agreement between the Servicer and the lessee in connection with the
payment of less than their respective Outstanding Principal Balances. In the
event that the Servicer supplies the Origination Trustee and the Trustee with an
officer's certificate setting forth the basis for such withdrawal, funds on
deposit in the Residual Value Surplus Account will be withdrawn and paid to the
Servicer in reimbursement for any Matured Leased Vehicle Expenses incurred
during such Collection Period, but only to the extent that, after reimbursement
of such Matured Leased Vehicle Expenses (exclusive of any other reimbursement
thereof), Net Matured Leased Vehicle Proceeds would be no more than the
aggregate of the Residual Values of Leased Vehicles sold or otherwise disposed
of from Matured Leased Vehicle Inventory during such Collection Period.
Maintenance of the Accounts
The Distribution Account and the Reserve Fund will be maintained with the
Trustee and the SUBI Collection Account and the Residual Value Surplus Account
will be maintained with the Trust Agent so long as either (i) the short-term
unsecured debt obligations of the Trustee or the Trust Agent, as the case may
be, are rated at least P-1 by Moody's and A-1+ by Standard & Poor's (the
"Required Deposit Ratings") or (ii) the Trustee or the Trust Agent, as the case
may be, is a depository institution or trust company having a long-term
unsecured debt rating from Moody's of at least Baa3 and corporate trust powers
and the related Account is maintained in a segregated trust account in the
corporate trust department of the Trustee or the Trust Agent, as the case may
be. If the Trustee or the Trust Agent at any time does not qualify under either
of these criteria, the Servicer shall, with the assistance of the Trustee or the
Trust Agent, as the case may be, as necessary, cause the related Account to be
moved to a depository institution organized under the laws of the United States
or any state thereof whose short-term unsecured debt obligations are rated at
least equal to the Required Deposit Ratings or moved to a segregated trust
account located in a corporate trust department of a depository institution or
trust company as described above. (Agreement, Sections 3.01 and 3.04; SUBI Trust
Agreement, Sections 12.01 and 12.03; Servicing Agreement, Section 9.02).
Permitted Investments
Upon receipt of directions from the Servicer, the Trustee or the
Origination Trustee, as the case may be, shall invest funds on deposit in the
Accounts in one or more Permitted Investments maturing (i) no later than the
Business Day immediately preceding the Deposit Date immediately succeeding the
date of such investment, in the case of amounts on deposit in the SUBI
Collection Account, the Reserve Fund or the Residual Value Surplus Account or
(ii) on the Business Day immediately preceding the Distribution Date immediately
succeeding the date of such investment in the case of amounts on deposit in the
Distribution Account. Notwithstanding the foregoing, (a) investments on which
the entity at which the related Account is located is the obligor may mature on
the related Deposit Date or Distribution Date, as the case may be, and (b)
investments during the Revolving Period of Principal Collections on deposit in
the SUBI Collection Account may mature on such dates as in the Servicer's
discretion will maintain sufficient cash to acquire Subsequent Contracts and
Subsequent Leased Vehicles on the related Transfer Dates.
All income or other gain from the foregoing investments generally shall be
retained in the related Account with such gain in respect of funds in the SUBI
Collection Account and the Distribution Account generally being treated as
Interest Collections received in respect of the related Collection Period. Any
loss resulting from such investments shall be charged to the related Account.
(SUBI Trust Agreement, Sections 11.01 and 12.01; Agreement, Section 3.01;
Servicing Agreement, Section 9.02). "Permitted Investments" will be specified in
the SUBI Trust Agreement and will be limited to investments that meet the
criteria of each Rating Agency from time to time as being consistent with its
then-current rating of each Class of Certificates. (Agreement, Section 1.01).
The Reserve Fund
On or prior to the Closing Date, the Servicer will establish a trust
account with the Trustee for the exclusive benefit of the Certificateholders and
the Transferor, as holder of the Transferor Interest (the "Reserve Fund"). The
monies on deposit in the Reserve Fund will, as described below, be applied on
each
69
<PAGE> 72
Distribution Date to pay certain shortfalls in respect of amounts collected with
respect to the related Collection Period to be paid from the Distribution
Account and certain other shortfalls in respect of the Residual Values of the
Leased Vehicles, should, among other things, Transferor Amounts and Insured
Residual Value Loss Amounts paid under the Residual Value Insurance Policy with
respect to such Collection Period not be sufficient to cover such shortfalls. In
addition, to the extent not otherwise required to make any of the payments
described under "Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest", monies on deposit in the Reserve
Fund will be available to make payments to the Certificateholders should
Collections ultimately be insufficient to reduce the Class A-1 Certificate
Balance, the Class A-2 Certificate Balance, the Class A-3 Certificate Balance,
the Class A-4 Certificate Balance or the Class B Certificate Balance to zero.
(Agreement, Sections 3.03 and 3.04).
The Reserve Fund Cash Requirement. The Reserve Fund will be created on or
prior to the Closing Date with the deposit by the Transferor of the Initial
Deposit. On each Distribution Date, the funds in the Reserve Fund will be
supplemented by (i) certain Interest Collections, (ii) all income realized on
the investment of amounts on deposit in the Reserve Fund in Permitted
Investments, net of losses resulting from such investments, and (iii) the
deposit of monies in respect of the related Collection Period remaining in the
Distribution Account after making all payments required to be made therefrom on
such Distribution Date prior to such deposit, including monies that otherwise
would be distributed to the Transferor as Transferor Amounts, until the amount
on deposit therein equals the Reserve Fund Cash Requirement then in effect.
Except as otherwise described below, the "Reserve Fund Cash Requirement" with
respect to any Distribution Date will equal the lesser of (i) approximately
$11,970,788 (i.e., 1.0% of 99.8% of the Aggregate Net Investment Value as of the
Initial Cutoff Date) and (ii) the Certificate Balance as of the related
Distribution Date (after giving effect to reductions in the Certificate Balance
on such Distribution Date).
So long as all of the Reserve Fund Tests (as described under "Security for
the Certificates -- The Accounts -- The Reserve Fund -- Reserve Fund Tests") are
satisfied and there is no AISLIC Trigger Event or Downgrade Trigger Event, the
Reserve Fund Cash Requirement is expected to be approximately $11,970,788 for
each Distribution Date relating to the Revolving Period.
Other Reserve Fund Requirements. On each Deposit Date on which withdrawals
are to be made from the Reserve Fund in order (a) to deposit into the
Distribution Account an amount equal to the Required Amount, or (b) to make any
other payments to Certificateholders or otherwise from the Reserve Fund, as
described under "Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest", to the extent that the amount on
deposit in the Reserve Fund is insufficient to make such deposits or payments (a
"Reserve Fund Deficiency"), the Transferor shall be required to deposit into the
Reserve Fund an additional cash amount which is limited to the lesser of (i)
such Reserve Fund Deficiency, and (ii) the sum of (A) approximately $5,985,394
(i.e., 0.5% of 99.8% of the Aggregate Net Investment Value as of the Initial
Cutoff Date), plus (B) the aggregate of all sums previously released to the
Transferor from the Reserve Fund as a result of a reduction for any reason
(other than by reason of the Certificate Balance being less than approximately
$11,970,788) of the Reserve Fund Cash Requirement below the amount of the
Initial Deposit, less (C) all amounts previously deposited by or on behalf of
the Transferor into the Reserve Fund to satisfy a Reserve Fund Deficiency (the
"Reserve Fund Supplemental Requirement").
In the event (i) a conservator, receiver or bankruptcy trustee is appointed
by AISLIC, or if certain other events relating to the bankruptcy or insolvency
of AISLIC occur, or (ii) the Residual Value Insurance Policy has been declared
void or unenforceable by a court of competent jurisdiction in a final judgment
as to which the time for noting an appeal has expired and all appeals have been
decided, if one or more policies with substantially similar aggregate coverage
and provisions have not been issued by an insurer acceptable to each Rating
Agency nor has an alternative mechanism been implemented to support the Residual
Values of the Leased Vehicles in accordance with the procedures required for
amendment of the Agreement (as described in "Additional Document
Provisions -- Additional Agreement Provisions -- Amendment") (each such event,
an "AISLIC Trigger Event"), then, within 60 days of notice thereof, the
Transferor shall be required to deposit into the Reserve Fund an additional cash
amount equal to the difference between (x) the greater of the Initial Deposit
and the amount then on deposit in the Reserve Fund, and (y) $41,897,757 (i.e.,
3.5% of 99.8% of the Aggregate Net Investment Value as of the Initial Cutoff
Date) (the "AISLIC Reserve Fund
70
<PAGE> 73
Supplemental Requirement"). From such time until one or more policies are issued
with substantially similar aggregate coverage and provisions issued by an
insurer acceptable to each Rating Agency, or an alternative mechanism is
implemented to support the Residual Values of the Leased Vehicles as described
above, the Reserve Fund Cash Requirement shall be $41,897,757 (i.e., 3.5% of
99.8% of the Aggregate Net Investment Value as of the Initial Cutoff Date).
In the event that AISLIC's claims paying ability is downgraded to "Aa3" or
lower by Moody's, or below "AAA" by Standard & Poor's (a "Downgrade Trigger
Event"), then within 60 days thereof, the Transferor shall either (i) cause one
or more policies to be issued with substantially similar aggregate coverage and
provisions by an insurer acceptable to each Rating Agency, or cause an
alternative mechanism to be implemented to support the Residual Values of the
Leased Vehicles in accordance with the procedures required for amendment of the
Agreement (as described in "Additional Document Provisions -- Additional
Agreement Provisions -- Amendment"), or (ii) deposit into the Reserve Fund any
amount that the Rating Agencies may require in order to maintain their
then-current ratings on each Class of Certificates (the "Downgrade Reserve Fund
Supplemental Requirement"). For so long as the Transferor elects to comply with
the requirements of clause (ii) rather than clause (i), the Reserve Fund Cash
Requirement shall be such amount as the Rating Agencies may require in order to
maintain their then-current ratings on each Class of Certificates and the Rating
Agencies may impose additional conditions to the maintenance of their then-
current ratings on each Class of Certificates, including the addition of further
triggers for the application of the Alternate Reserve Fund Formula described
below (which tests generally would be expected to relate to the Residual Values
of the Leased Vehicles). If the Transferor cannot comply with either clause (i)
or clause (ii), or determines in good faith that such compliance would not be
commercially reasonable, then all Excess Collections in respect of any
Distribution Date, after giving effect to all payments required to be made
therefrom on such Distribution Date, will be deposited into the Reserve Fund,
rather than being paid to the Transferor, regardless of the Reserve Fund Cash
Requirement. On the Distribution Date following the date on which the Transferor
complies with clause (i) or clause (ii), monies on deposit in the Reserve Fund
in excess of the Reserve Fund Cash Requirement shall be distributed to the
Transferor (or to the Certificateholders to the extent allocable to the
Accelerated Principal Distribution Amount).
Payment of the Reserve Fund Supplemental Requirement, the AISLIC Reserve
Fund Supplemental Requirement and the Downgrade Reserve Fund Supplemental
Requirement will be obligations of the Transferor with respect to the Reserve
Fund. In the event that there is a Reserve Fund Deficiency, an AISLIC Trigger
Event or a Downgrade Trigger Event, the Reserve Fund Supplemental Requirement,
the AISLIC Reserve Fund Supplemental Requirement or the Downgrade Reserve Fund
Supplemental Requirement, as the case may be, will supplement the cash available
in the Reserve Fund to the limited extent described above. There can be no
assurance that the Transferor will have sufficient cash to fund all or a part of
any Reserve Fund Deficiency or to meet its obligation to pay any Reserve Fund
Supplemental Requirement, AISLIC Reserve Fund Supplemental Requirement or
Downgrade Reserve Fund Supplemental Requirement. However, pursuant to the
Support Agreement, World Omni has agreed under certain circumstances to provide
or arrange for financial assistance in order to ensure that the Transferor
maintains positive partners' capital. The Support Agreement will not constitute
a guarantee by World Omni of any obligations of the Transferor, including
payment of any Reserve Fund Supplemental Requirement, AISLIC Reserve Fund
Supplemental Requirement or Downgrade Reserve Fund Supplemental Requirement. See
"The Transferor" for further information in this regard.
Reserve Fund Tests. Notwithstanding the foregoing calculations of the
Reserve Fund Cash Requirement and the supplemental requirements discussed above,
in the event that the Charge-off Rate Test or the Delinquency Test
(collectively, the "Reserve Fund Tests") is not satisfied as of any
Determination Date, the ERISA Compliance Test is satisfied and no AISLIC Trigger
Event or Downgrade Trigger Event has occurred and is continuing, the Reserve
Fund Cash Requirement for the related Distribution Date will be an amount
calculated pursuant to a formula (the "Alternate Reserve Fund Formula") that
will be equal to the lesser of (i) two times the Reserve Fund Cash Requirement
and (ii) the Certificate Balance as of such Distribution Date (after giving
effect to any reduction in the Certificate Balance on such Distribution Date).
The Alternate Reserve Fund Formula will be utilized to determine the Reserve
Fund Cash Requirement on all future
71
<PAGE> 74
Distribution Dates until the Distribution Date as of which the related Reserve
Fund Test is satisfied and all other Reserve Fund Tests are satisfied.
Notwithstanding the foregoing, as described under "Additional Document
Provisions -- The Servicing Agreement -- Compliance with ERISA", in the event
that the ERISA Compliance Test is not satisfied on any Determination Date, all
Excess Collections (as described under "Description of the
Certificates -- Distributions on the Certificates -- Distribution of Interest")
in respect of each Distribution Date thereafter will be deposited in the Reserve
Fund until the Distribution Date following the Determination Date on which the
ERISA Compliance Test has been satisfied. (Agreement, Section 1.01).
The "Charge-off Rate Test" will not be satisfied if, with respect to any
Determination Date the average of the Charge-off Rates for the three immediately
preceding calendar months (or the months of March and April 1997 in the case of
the May 1997 Determination Date) is greater than 2.75%. The "Delinquency Test"
will not be satisfied if, with respect to any Determination Date the average of
the Delinquency Rates for the three immediately preceding calendar months (or
the months of March and April 1997 in the case of the May 1997 Determination
Date) is greater than 1.75%. The "Charge-off Rate" with respect to any calendar
month will be the Discounted Principal Balance of all Contracts that became
Charged-off Contracts during such month, less all Net Repossessed Vehicle
Proceeds and other Net Liquidation Proceeds collected during such month with
respect to Charged-off Contracts, all divided by the average of the Aggregate
Net Investment Value as of the last day of such month and the preceding month.
Such result will then be multiplied by twelve to produce an annualized rate. The
"Delinquency Rate" for any calendar month will be the number of Current
Contracts that are 61 days or more delinquent, whether or not the related Leased
Vehicles have been repossessed (or repossession proceedings in respect thereof
have been initiated), but which have not yet been sold or otherwise disposed of,
divided by the aggregate number of Current Contracts, in each case as of the
last day of such month. (Agreement, Section 1.01).
"Current Contracts" will be all Contracts other than Charged-off,
Liquidated, Matured and Additional Loss Contracts. A "Liquidated Contract" will
be a Contract that has been the subject of a Prepayment in full or otherwise has
been paid in full. An "Additional Loss Contract" will be a Contract that has
been sold or otherwise disposed of by the Servicer, acting on behalf of the
Origination Trust, to pay an Additional Loss Amount.
The Transferor may, from time to time after the date of this Prospectus,
request each Rating Agency to approve (a) a formula for determining the Reserve
Fund Cash Requirement, the Reserve Fund Supplemental Requirement, the AISLIC
Reserve Fund Supplemental Requirement and/or the Downgrade Reserve Fund
Supplemental Requirement that is different from the one described above
(including using different Reserve Fund Tests or different cures for failures
thereof) that would result in a decrease in the amount of the Reserve Fund Cash
Requirement, the Reserve Fund Supplemental Requirement, the AISLIC Reserve Fund
Supplemental Requirement and/or the Downgrade Reserve Fund Supplemental
Requirement or (b) a change in the manner by which the Reserve Fund is funded,
which change could include borrowings by the Transferor to fund all or a portion
of the Initial Deposit (which borrowings would be payable from assets or cash
flow otherwise payable to the Transferor) or to meet the Reserve Fund Cash
Requirement, the Reserve Fund Supplemental Requirement, the AISLIC Reserve Fund
Supplemental Requirement and/or the Downgrade Reserve Fund Supplemental
Requirement. If each Rating Agency confirms (in writing or orally) to the
Trustee to the effect that the use of any such new formula or change will not
result in a qualification, reduction or withdrawal of its then-current rating of
any Class of Certificates, and (with respect to a reduction of the Reserve Fund
Cash Requirement below the amount specified under "Additional Document
Provisions -- Additional Agreement Provisions -- Amendment" or a reduction or
elimination of the AISLIC Reserve Fund Supplemental Requirement) the
Transferor's counsel delivers an opinion to the effect described under
"Additional Document Provisions -- Additional Agreement
Provisions -- Amendment", then such new formula or change will be implemented
and, to the extent necessary, the Agreement will be amended, without the consent
of any Certificateholder or Certificate Owner. (Agreement, Section 9.01).
Withdrawals from the Reserve Fund. On each Deposit Date the Trustee shall
withdraw from the Reserve Fund, to the extent available, and deposit in the
Distribution Account an amount equal to the Required Amount. Amounts on deposit
in the Reserve Fund will also be available to make certain other
72
<PAGE> 75
payments to Certificateholders and the Transferor as described under "Security
for the Certificates -- The Accounts -- The Reserve Fund". Monies on deposit in
the Reserve Fund on a Distribution Date in excess of the Reserve Fund Cash
Requirement will be released to the Transferor. Any such amounts received by the
Transferor shall be free of any claim of the Trust, the Trustee or the Investor
Certificateholders and shall not be available to the Trustee or the Trust for
the purpose of making deposits to the Reserve Fund or making payments to the
Investor Certificateholders, nor shall the Transferor be required to refund any
amount properly received by it. (Agreement, Sections 3.03 and 3.04).
THE RESIDUAL VALUE INSURANCE POLICY
On or prior to the Closing Date, American International Specialty Lines
Insurance Company ("AISLIC") will issue an insurance policy to the Transferor
(with the Origination Trustee, the Trustee, the Servicer and ALFI L.P. also
named as insureds) in respect of Residual Value Loss Amounts (the "Residual
Value Insurance Policy"). The Residual Value Insurance Policy will provide
coverage for the Insured Residual Value Loss Amount for any Collection Period,
and will cover only the Leased Vehicles and not any UTI Asset or Other SUBI
Asset. Insured Residual Value Loss Amounts payable under the Residual Value
Insurance Policy will only arise in connection with the disposition of Leased
Vehicles relating to Matured Contracts and in connection with losses on
Contracts terminated prior to their Maturity Dates by agreement between the
Servicer and the lessee in connection with the payment of less than 100% of
their respective Outstanding Principal Balances. The Residual Value Insurance
Policy may not be cancelled by AISLIC. The Residual Value Insurance Policy will
not have any deductibles or provide for co-insurance, but the aggregate maximum
amount payable under the Residual Value Insurance Policy with respect to any
Leased Vehicle will be the lesser of $60,000 and its insured residual value.
Additionally, the aggregate maximum amount payable under the Residual Value
Insurance Policy will not exceed the aggregate insured residual values of all
Leased Vehicles. For these purposes, the residual value of a Leased Vehicle
generally will be determined by reference to World Omni's residual value lease
policies communicated to its Dealers, as amended or supplemented from time to
time (which amount generally will be equal to its Residual Value), as adjusted
for extensions of the related Contract.
On the fifteenth day of each calendar month, the Servicer will determine
whether, on the upcoming Distribution Date, there will be any Insured Residual
Value Loss Amount for the related Collection Period. If so, the Servicer will
make a claim for the Insured Residual Value Loss Amount under the Residual Value
Insurance Policy. Pursuant to the Residual Value Insurance Policy, so long as
all conditions precedent to liability set forth therein are satisfied and no
exclusions apply, AISLIC will pay any such claim within five days. Within one
Business Day after receipt, the Servicer will deposit the proceeds of any such
claim into the SUBI Collection Account, if the payment relates to the Revolving
Period, so that the proceeds will be available for reinvestment in Subsequent
Contracts and Subsequent Leased Vehicles, and into the Distribution Account, if
the payment relates to the Amortization Period, so that the proceeds will be
available to make the payments described under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest"
by the relevant Distribution Date.
AISLIC is an insurance company incorporated under the laws of the State of
Alaska and is wholly owned by National Union Fire Insurance Company of
Pittsburgh, Pa. ("National Union"), The Insurance Company of the State of
Pennsylvania, and Birmingham Fire Insurance Company of Pennsylvania all of which
are wholly-owned subsidiaries of American International Group, Inc. ("AIG"), a
publicly-held holding company incorporated under the laws of the State of
Delaware. The Residual Value Insurance Policy is an obligation of AISLIC and not
of AIG or any other affiliate of AISLIC. AISLIC is located at American
International Specialty Lines Insurance Company, c/o American International
Surplus Lines Agency, Inc., Harborside Financial Center, 401 Plaza 3, Jersey
City, New Jersey 07311 and its telephone number is (201) 309-1100.
For the year ended December 31, 1996, AISLIC had Total Assets of
approximately $509 million, Total Liabilities of approximately $317 million and
a Capital Surplus Account of approximately $192 million, in each case as
reported on a statutory accounting basis (which varies from generally accepted
accounting principles in certain respects) in accordance with guidelines
established by the National Association of
73
<PAGE> 76
Insurance Commissioners. As of the date of this Prospectus, AISLIC's claims
paying ability was rated "Aaa" by Moody's and "AAA" by Standard & Poor's.
AISLIC files Annual Statements with the insurance departments of the State
of Alaska and other states in which it is eligible to write insurance. Copies of
the Annual Statement of AISLIC for the year ended December 31, 1996 are
available on request from the Trustee. Audited financial statements of AISLIC,
prepared in accordance with Alaska insurance regulations, for the two years
ended December 31, 1995 and the two years ended December 31, 1994, are included
in this Prospectus.
Under its current overall reinsurance arrangements, AISLIC reinsures
approximately 80% of its business with National Union. AISLIC also has ceded
additional reinsurance of its obligations under the Residual Value Insurance
Policy to National Union. As a result of these reinsurance arrangements, which
do not relieve AISLIC from its direct obligations to the insureds under the
Residual Value Insurance Policy, 95% of the Insured Residual Value Loss Amounts
paid by AISLIC under that policy will be reinsured by National Union. None of
the insureds under the Residual Value Insurance Policy (including the Trustee on
behalf of the Certificateholders) will have any rights against National Union as
a result of these reinsurance arrangements.
For the year ended December 31, 1996, National Union had Total Assets of
approximately $12.7 billion, Total Liabilities of approximately $8.5 billion and
a Capital Surplus Account of approximately $4.2 billion, in each case as
reported on a statutory accounting basis (which varies from generally accepted
accounting principles in certain respects) in accordance with the guidelines
established by the National Association of Insurance Commissioners. As of the
date of this Prospectus, National Union's claims paying ability was rated "Aaa"
by Moody's and "AAA" by Standard & Poor's.
AIG and AISLIC have entered into a Support Agreement (the "AIG Support
Agreement"). Under the AIG Support Agreement, AIG has agreed that AIG will cause
AISLIC to maintain a policyholders' surplus of not less than $1 million or such
greater amount as shall be sufficient to enable AISLIC to perform its
obligations under any policy issued by it. The AIG Support Agreement also
provides that if AISLIC needs funds not otherwise available to make timely
payment of its obligations under policies issued by it or otherwise, AIG will
provide such funds at the request of AISLIC. The AIG Support Agreement is not a
direct or indirect guarantee by AIG to any person of any obligation of AISLIC.
AIG may terminate the AIG Support Agreement only under circumstances in which
AISLIC attains an "AAA" rating of its claims paying ability by Standard & Poor's
(or, if Standard & Poor's shall not make such a rating available, an equivalent
rating from another nationally recognized statistical rating organization)
without the AIG Support Agreement. Policyholders (including the Trustee on
behalf of the Certificateholders) may enforce the AIG Support Agreement only if
AIG fails to meet its obligations thereunder on demand.
For the year ended December 31, 1996, AIG had Total Assets of approximately
$148.4 billion, Total Capital Funds of approximately $22.0 billion and Net
Income of approximately $2.9 billion, in each case as reported in accordance
with generally accepted accounting principles.
The Servicing Agreement will require that World Omni pay the premiums due
on the Residual Value Insurance Policy, and will provide that as long as any
Certificates are outstanding, no insured party may terminate or cause the
termination of any Residual Value Insurance Policy unless one or more policies
are issued with substantially similar aggregate coverage and provisions issued
by an insurer acceptable to each Rating Agency, or an alternative mechanism is
implemented to support the Residual Values of the Leased Vehicles in accordance
with the procedures required for amendment of the Agreement (as described in
"Additional Document Provisions -- Additional Agreement
Provisions -- Amendment"). The foregoing obligations of World Omni will survive
any termination of World Omni as Servicer under the Servicing Agreement.
(Servicing Agreement, Section 9.10). World Omni will be obligated to reimburse
AISLIC for a specified percentage of claims paid under the Residual Value
Insurance Policy, although the failure to make such reimbursement will not
affect AISLIC's obligation to pay claims under the Residual Value Insurance
Policy.
74
<PAGE> 77
THE CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES
In addition to the physical damage and liability insurance coverage
required to be obtained and maintained by the lessees pursuant to the Contracts,
and as additional protection in the event that any lessee fails to maintain all
such required insurance, World Omni maintains contingent liability insurance
with Lexington Insurance Company which provides coverage of up to $2.0 million
per occurrence (with no annual or aggregate cap on the number of claims
thereunder) for bodily injury and property damage suffered by third persons
caused by any vehicle owned by any insured. World Omni also maintains
substantial amounts of excess insurance coverage for which the Origination
Trustee is an additional named insured (together with the aforementioned primary
contingent liability insurance policy, the "Contingent and Excess Liability
Insurance Policies"). These insurance policies collectively provide insurance
coverage in excess of $10 million per accident, and permit multiple claims in
any policy period. To the extent that such coverage were exhausted and damages
were assessed against the Origination Trust, claims could be imposed against the
assets of the Origination Trust. In such event, investors in the Class A
Certificates could incur a loss on their investment. However, the Origination
Trustee will be an additional named insured under the Contingent and Excess
Liability Insurance Policies and payments made thereunder will constitute SUBI
Assets. To the extent that payments under the Contingent and Excess Liability
Insurance Policies are made to third party claimants, they will reduce the
Additional Loss Amounts that otherwise would be required to be paid out of the
SUBI Assets. See "Risk Factors -- Vicarious Tort Liability", "Certain Legal
Aspects of the Origination Trust and the SUBI -- The SUBI" and "Certain Legal
Aspects of the Contracts and the Leased Vehicles -- Vicarious Tort Liability"
for a discussion of related risks.
With respect to damage to the Leased Vehicles, each lessee is required by
the related Contract to maintain comprehensive and collision insurance. As more
fully described under "Additional Document Provisions -- The Servicing
Agreement -- Insurance on Leased Vehicles", World Omni will be required to
police the maintenance of lessee-required insurance and, under certain
circumstances, will be required to make payments in respect thereof. In the
event that all of the foregoing insurance coverage were exhausted and no
third-party reimbursement for such damage to a Leased Vehicle were available,
investors in the Class A Certificates could incur a loss on their investment.
The Servicing Agreement will provide that so long as any Certificates are
outstanding, neither the Origination Trustee nor World Omni may terminate or
cause the termination of any Contingent and Excess Liability Insurance Policy
unless, among other things, a replacement insurance policy providing at least
the same amount of coverage and which does not provide for any annual or
aggregate cap on payments thereunder is obtained and each Rating Agency has
delivered a letter to the Trustee to the effect that the obtaining of any such
replacement insurance will not cause its then-current rating of any Class of
Certificates to be qualified, reduced or withdrawn. The foregoing obligations of
World Omni will survive any termination of World Omni as Servicer under the
Servicing Agreement. (Servicing Agreement, Section 9.10).
ADDITIONAL DOCUMENT PROVISIONS
ADDITIONAL AGREEMENT PROVISIONS
Certain provisions of the Agreement are described under "Description of the
Certificates". The following summarizes certain additional provisions of the
Agreement.
No Petition
The Trustee will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Transferor, WOLSI, ALFI L.P., ALFI, the
Origination Trust or the Origination Trustee until one year and one day after
the later of (i) payment of the Certificates in full and (ii) final payment of
all other financings involving interests in the Origination Trust (including the
transaction described herein and all other transactions involving the UTI and
each Other SUBI). (Agreement, Section 6.16).
75
<PAGE> 78
Amendment
The Agreement may be amended by the Transferor and the Trustee, without the
consent of the Certificateholders, to cure any ambiguity, to correct or
supplement any provision therein which may be inconsistent with any other
provision therein, to add any other provisions with respect to matters or
questions arising under the Agreement which are not inconsistent with the
provisions of the Agreement or to add or amend any provision therein in
connection with permitting transfers of the Class B Certificates; provided that
any such action will not, in the good faith judgment of the parties, materially
and adversely affect the interest of any Certificateholder and the Trustee shall
have been furnished with an opinion of counsel to the effect that such amendment
will not adversely and materially affect the interest of any Certificateholder.
(Agreement, Section 9.01). See "Security for the Certificates -- The
Accounts -- The Reserve Fund -- The Reserve Fund Cash Requirement".
The Agreement may also be amended from time to time by the Transferor and
the Trustee (including with respect to changing the formula for determining the
Reserve Fund Cash Requirement, the Reserve Fund Supplemental Requirement, the
AISLIC Reserve Fund Supplemental Requirement and/or the Downgrade Reserve Fund
Supplemental Requirement, the manner in which the Reserve Fund or Residual Value
Surplus Account is funded, the need for the Residual Value Surplus Account,
changing the remittance schedule for collection deposits in the Distribution
Account, changing the definition of "Permitted Investments", or replacing the
Residual Value Insurance Policy with an alternative mechanism) if (a) the
Trustee has been furnished with confirmation (written or oral) from each Rating
Agency to the effect that such amendment would not cause its then-current rating
on any Class of Certificates to be qualified, reduced or withdrawn or (b) the
Trustee has received the consent of the holders of Certificates evidencing not
less than 51% of the Voting Interests of the Class A Certificates and the Class
B Certificates, voting together as a single class, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of each Class of
Certificateholders; provided, however, that: (i) any amendment eliminating the
Reserve Fund or the Residual Value Insurance Policy, reducing the Residual Value
Cash Requirement to less than the lesser of (A) approximately $11,970,788 and
(B) the Certificate Balance as of the related Distribution Date (after giving
effect to reductions in the Certificate Balance on such Distribution Date), or
eliminating or reducing the AISLIC Reserve Fund Supplemental Requirement shall
also require an opinion of the Transferor's counsel to the effect that, after
such amendment, for federal income tax purposes the Trust will not be treated as
an association taxable as a corporation, and the Class A Certificates will, and
the Class B Certificates should, properly be characterized as indebtedness that
is secured by the assets of the Trust; and (ii) (A) no such amendment shall
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the SUBI or the SUBI Certificate or
distributions that shall be required to be made on any Class of Certificates or
the applicable Certificate Rate and (B) no amendment of any type shall reduce
the percentage of the aggregate Voting Interests of the Certificates of any
Class required to consent to any such amendment, in each case without the
consent of all Certificateholders and Certificate Owners.
List of Certificateholders
Upon a written request of the Servicer, the Trustee, as Certificate
Registrar, will provide to the Servicer within 15 days after receipt of such
request a list of the names and addresses of all Certificateholders. In
addition, three or more Certificateholders or holders of Certificates evidencing
not less than 25% of the Voting Interests of any Class of Certificates, upon
compliance by such Certificateholders with certain provisions of the Agreement,
may request that the Trustee, as Certificate Registrar, afford such
Certificateholders access during business hours to the current list of
Certificateholders for purposes of communicating with other Certificateholders
with respect to their rights under the Agreement. (Agreement, Section 4.06). See
"Description of the Certificates -- Book-Entry Registration" and "-- Definitive
Certificates".
The Agreement will not provide for the holding of any annual or other
meetings of Certificateholders.
76
<PAGE> 79
The Trustee
First Bank will be the Trustee under the Agreement. The Corporate Trust
Office of the Trustee is located at One Illinois Center, 111 East Wacker Drive,
Suite 3000, Chicago, Illinois 60601. First Bank is not affiliated with World
Omni, although it does act as a service provider to World Omni.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement, becomes legally unable to act or becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by such successor
Trustee. (Agreement, Section 6.07).
The Trustee must be a corporation organized under the laws of a state of
the United States, the District of Columbia or the Commonwealth of Puerto Rico,
authorized to exercise corporate trust powers under those laws, and subject to
supervision or examination by federal or state laws, with a combined capital and
surplus of at least $50,000,000 and a long-term deposit rating no lower than
Baa3 by Moody's, or must be otherwise acceptable to each Rating Agency. A
co-trustee or separate trustee need not meet these eligibility requirements.
(Agreement, Sections 6.06 and 6.10).
Holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, generally will have the power to direct any
proceeding for any remedy available to the Trustee under the Agreement, and the
exercise of any trust or power conferred on the Trustee by the Agreement
(including actions by the Trustee in its capacity as a party to, or a
third-party beneficiary of, the SUBI Trust Agreement or the Servicing
Agreement). However, the Trustee will not be required to follow such a direction
if, after being advised by counsel, it concludes that the action is unlawful, or
if it in good faith determines that the proceedings directed would be illegal,
would subject it to personal liability or would be unduly prejudicial to the
rights of other Certificateholders. (Agreement, Section 6.15).
A Certificateholder may institute proceedings under the Agreement, but only
if such holder previously has given to the Trustee written notice of default and
unless the holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, have made written request upon the Trustee to
institute such proceeding in its own name as Trustee and have offered to the
Trustee reasonable indemnity and the Trustee for 30 days has neglected or
refused to institute any such proceeding. (Agreement, Section 9.03). The Trustee
will be under no obligation to exercise any of the rights or powers vested in it
by the Agreement or to make any investigation of matters arising thereunder or
to institute, conduct or defend any litigation thereunder or in relation thereto
at the request, order or direction of any of the Certificateholders, unless such
holders have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
(Agreement, Section 6.02). Certificateholders will have no express right to
institute a proceeding directly under the SUBI Trust Agreement or the Servicing
Agreement.
Governing Law
The Agreement will be governed by the laws of the State of Illinois.
THE SUBI TRUST AGREEMENT
The SUBI, the Other SUBIs and the UTI
ALFI L.P. is the grantor and (as holder of the UTI) a beneficiary of the
Origination Trust. In its capacity as grantor, ALFI L.P. will from time to time
assign, transfer, grant and convey (or cause to be assigned, transferred,
granted and conveyed) to the Origination Trustee in trust the Origination Trust
Assets. (SUBI Trust Agreement, Section 2.01). ALFI L.P. will hold the UTI, which
represents a beneficial interest in all Origination Trust Assets other than the
SUBI Assets and the Other SUBI Assets. (SUBI Trust Agreement, Section 4.01).
ALFI L.P. has pledged (and may in the future pledge) the UTI as security for
obligations to
77
<PAGE> 80
third-party lenders, and has created and sold (and may in the future create and
sell or pledge) Other SUBIs in connection with financings similar to the
transaction described herein. Each holder or pledgee of the UTI and any Other
SUBI will be required to expressly disclaim any interest in the Origination
Trust Assets other than the UTI Assets or the Other SUBI Assets, respectively,
and to fully subordinate any claims to such other Origination Trust Assets in
the event that this disclaimer is not given effect. Except under the limited
circumstances described under "Certain Legal Aspects of the Origination Trust
and The SUBI -- The SUBI" and "Additional Document Provisions -- The SUBI Trust
Agreement -- The SUBI, The Other SUBIs and the UTI", the SUBI Assets will not be
available to make payments in respect of, or pay expenses relating to, the UTI
or any Other SUBIs, and the Other SUBI Assets evidenced by any Other SUBIs will
not be available to make payments on, or pay expenses relating to, the SUBI, the
UTI or any other Other SUBI.
Each Other SUBI will be created pursuant to a supplement to the Origination
Trust Agreement (each, an "Other SUBI Supplement") which will amend the
Origination Trust Agreement only with respect to the Other SUBI to which it
relates. The SUBI Supplement will amend the Origination Trust Agreement only as
it relates to the SUBI and no Other SUBI Supplement will amend the Origination
Trust Agreement as it relates to the SUBI. (SUBI Trust Agreement, Section 4.02).
All Origination Trust Assets, including the SUBI Assets, will be owned by
the Origination Trustee on behalf of the beneficiaries of the Origination Trust.
The SUBI Assets will be segregated from the rest of the Origination Trust Assets
on the books and records of the Origination Trustee and the Servicer and the
holders of other beneficial interests in the Origination Trust (including the
UTI and any Other SUBIs) will have no rights to the SUBI Assets. Liabilities of
the Origination Trust shall be allocated to the SUBI Assets, the UTI Assets or
Other SUBI Assets, respectively, if incurred with respect thereto, or will be
allocated pro rata among all Origination Trust Assets if incurred with respect
to the Trust Assets generally. (SUBI Trust Agreement, Section 7.01; Servicing
Agreement, Section 2.02).
Additional Loss Amounts will be incurred in the event of any uninsured
liability to third parties (i.e., litigation risk) on the part of the
Origination Trust as ultimately is borne by the SUBI Assets, whether such
liability is incurred (i) with respect to the SUBI Assets and is therefore
allocated to the SUBI Assets pursuant to the SUBI Trust Agreement, (ii) with
respect to the Origination Trust Assets generally and therefore a pro rata
portion of such liability is allocated to the SUBI Assets pursuant to the SUBI
Trust Agreement or (iii) with respect to UTI Assets or Other SUBI Assets if such
UTI Assets or Other SUBI Assets are insufficient to pay such liability. See
"Certain Legal Aspects of the Origination Trust and The SUBI -- The SUBI" for a
discussion of related risks. For purposes of making calculations with respect to
distributions on the Certificates, "Additional Loss Amounts" will include both
losses incurred with respect to the foregoing uninsured liabilities and monies
reserved within the SUBI Collection Account against future losses in respect of
such liabilities by the Servicer on behalf of the Trustee. (SUBI Trust
Agreement, Sections 7.01 and 10.01).
Special Obligations of ALFI L.P. as Beneficiary and Grantor
ALFI L.P., as grantor, will be liable for all debts and obligations arising
with respect to the Origination Trust Assets or the operation of the Origination
Trust; provided, however, that its liability with respect to any pledge of the
UTI and any assignee or pledgee of a SUBI or SUBI Certificate or Other SUBI or
Other SUBI Certificate shall be as set forth in the financing documents relating
thereto. ALFI, as the general partner of ALFI L.P., the grantor, is required at
all times to maintain a minimum net worth of $10 million. To the extent that
ALFI L.P. shall have paid or suffered any liability or expense with respect to
the Origination Trust Assets or the operation of the Origination Trust, ALFI
L.P. shall be indemnified, defended and held harmless out of the assets of the
Origination Trust against any such liability or expense (including reasonable
attorneys' fees and expenses). (SUBI Trust Agreement, Sections 4.03 and 11.10).
Origination Trustee Duties and Powers; Fees and Expenses
Pursuant to the SUBI Trust Agreement, the Origination Trustee will be
required to, among other things, (i) apply for and maintain (or cause to be
applied for and maintained) all licenses, permits and authorizations necessary
and appropriate to accept assignments of the Contracts and the Leased Vehicles
and to carry out its
78
<PAGE> 81
duties as Origination Trustee, including motor vehicle dealer licenses, and (ii)
file (or cause to be filed) applications for certificates of title as are
necessary and appropriate so as to cause the Origination Trustee to be recorded
as the holder of legal title of record to the Leased Vehicles. (SUBI Trust
Agreement, Section 5.01). In carrying out the foregoing duties, the Origination
Trustee will be required to exercise the same degree of care and skill as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. (SUBI Trust Agreement, Section 5.02).
The Origination Trustee may be replaced by ALFI L.P. only if it ceases to
be qualified in accordance with the terms of the SUBI Trust Agreement and shall
be removed if certain representations and warranties made by the Origination
Trustee therein prove to have been materially incorrect when made, or in certain
events of bankruptcy or insolvency. (SUBI Trust Agreement, Section 6.03). The
Securitization Trustee, as holder of the SUBI Certificate, on behalf of the
Certificateholders may, or at the direction of holders of Certificates
evidencing not less than 51% of the Voting Interests of the Class A Certificates
and the Class B Certificates, voting together as a single class, will, exercise
its powers under the Origination Trust Agreement to cause the Trust Agent to be
removed or replaced for a material breach of its obligations. (SUBI Trust
Agreement, Sections 5.03 and 10.02).
The Origination Trustee will make no representations as to the validity or
sufficiency of the SUBI, the SUBI Certificate or the Retained SUBI Interest
(other than the execution and authentication of the SUBI Certificate and the
certificate evidencing the Retained SUBI Interest), or of any Contract, Leased
Vehicle or related document, will not be responsible for performing any of the
duties of ALFI L.P. or the Servicer and will not be accountable for the use or
application by any owners of beneficial interests in the Origination Trust
Assets of any funds paid in respect of the Origination Trust Assets, or the
investment of any of such monies before such monies are deposited into the
accounts relating to the SUBI, the Other SUBIs and the UTI. The Origination
Trustee will not independently verify the Contracts or the Leased Vehicles.
(SUBI Trust Agreement, Section 5.04). The duties of the Origination Trustee will
generally be limited to the acceptance of assignments of lease contracts, the
titling of the related leased vehicles in the name of the Origination Trustee,
the creation of the SUBI, the Other SUBIs and the UTI, the maintenance of the
SUBI Collection Account, the Residual Value Surplus Account and accounts
relating to the Other SUBIs and the UTI and the receipt of the various
certificates, reports or other instruments required to be furnished to the
Origination Trustee under the SUBI Trust Agreement, in which case it will only
be required to examine them to determine whether they conform to the
requirements of the SUBI Trust Agreement. (SUBI Trust Agreement, Section 5.01).
The Origination Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the SUBI Trust Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of ALFI L.P., the Servicer or by the holders of a majority in interest
in the SUBI, unless such party or parties have offered to the Origination
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby. The reasonable expenses of
every such exercise of rights or powers or examination shall be paid by the
party or parties requesting such exercise or examination or, if paid by the
Origination Trustee, shall be a reimbursable expense of the Origination Trustee.
(SUBI Trust Agreement, Sections 5.03 and 6.08).
The Origination Trustee may enter from time to time into one or more agency
agreements (each, an "Agency Agreement") with such person or persons, including
without limitation any affiliate of the Origination Trustee (each, a "Trust
Agent"), as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to ALFI. The Origination Trustee has engaged
First Bank as the Trust Agent. Pursuant to the Agency Agreement (which currently
is a part of the SUBI Trust Agreement), the Trust Agent shall perform each and
every obligation of the Origination Trustee under the SUBI Trust Agreement.
(SUBI Trust Agreement, Section 5.03).
The Origination Trustee shall be paid out of Origination Trust Assets
reasonable compensation and reimbursement of all reasonable expenses (including
reasonable attorneys' fees). (SUBI Trust Agreement, Section 6.08). However, with
regard to the SUBI Assets allocable to the SUBI Interest, this requirement is
79
<PAGE> 82
subject to the provisions regarding Capped Origination Trust Administrative
Expenses described under "Description of the Certificates -- Distributions on
the Certificates -- Distributions of Interest".
Indemnity of Trustee and Trust Agents
The Origination Trustee and each Trust Agent will be indemnified and held
harmless out of and to the extent of the Origination Trust Assets with respect
to any loss, liability or expense, including reasonable attorneys' fees and
expenses (collectively "Claims"), arising out of or incurred in connection with
(i) any of the Origination Trust Assets (including without limitation any Claims
relating to lease contracts or leased vehicles of the Origination Trust, any
personal injury or property damage claims arising with respect to any such
leased vehicle or any claim with respect to any tax arising with respect to any
Origination Trust Asset) or (ii) the Origination Trustee's or the Trust Agent's
acceptance or performance of the trusts and duties contained in the Agreement or
any Agency Agreement. Notwithstanding the foregoing, neither the Origination
Trustee nor any Trust Agent will be indemnified or held harmless out of the
Origination Trust Assets as to any Claim (i) for which World Omni shall be
liable pursuant to the Servicing Agreement, (ii) incurred by reason of the
Origination Trustee's or such Trust Agent's willful misfeasance, bad faith or
negligence or (iii) incurred by reason of the Origination Trustee's or Trust
Agent's breach of its respective representations and warranties pursuant to the
SUBI Trust Agreement or the Servicing Agreement. Such indemnities may result in
Additional Loss Amounts to the extent payable in respect of the SUBI Assets or
allocated to the SUBI. (SUBI Trust Agreement, Section 5.05).
Termination
The Origination Trust and the respective obligations and responsibilities
of ALFI L.P. and the Origination Trustee shall terminate upon the last to occur
of (i) the payment to ALFI L.P. and each permitted purchaser, assignee and
pledgee of any of ALFI L.P.'s interests in the Origination Trust (including the
Trustee, with respect to the SUBI Interest) of all amounts and obligations
required to be paid to them, and the expiration or termination of all financings
secured by the Origination Trust Assets by their respective terms and (ii) the
maturity or liquidation and the disposition of all Origination Trust Assets and
the disposition to or upon the order of ALFI L.P. or any permitted purchaser,
assignee or pledgee of all net proceeds thereof. (SUBI Trust Agreement, Section
8.01).
No Petition
The Origination Trustee and the Trust Agent will agree not to institute, or
join in, any bankruptcy or similar proceeding against the Transferor, WOLSI,
ALFI L.P. or ALFI until one year and one day after final payment of all
financings involving interests in the Origination Trust. (SUBI Trust Agreement,
Section 6.09). Each pledgee or assignee of any UTI or other SUBI must give a
similar non-petition covenant. (SUBI Trust Agreement, Sections 4.01 and 4.02).
Amendment
The SUBI Trust Agreement may be amended by written agreement between ALFI
L.P. and the Origination Trustee, with the approval of the Trustee (which may be
given in the circumstances described under "Additional Document
Provisions -- Additional Agreement Provisions -- Amendment"). To the extent that
any such amendment relates to or affects the UTI or any Other SUBI in addition
to the SUBI, the SUBI Certificate or the SUBI Assets, such amendment may require
certain other approvals. (SUBI Trust Agreement, Sections 9.01 and 13.01).
Governing Law
The SUBI Trust Agreement will be governed by the laws of the State of
Alabama. (SUBI Trust Agreement, Sections 9.02 and 13.02).
80
<PAGE> 83
Trustee as Third-Party Beneficiary
As the holder of the SUBI Interest, the Trustee will be a third-party
beneficiary of the SUBI Trust Agreement. Therefore, the Trustee may, and, upon
the direction of Certificateholders representing at least 51% of the Voting
Interests of the Class A Certificates and the Class B Certificates (voting
together as a single class) will, exercise any right conferred by the SUBI Trust
Agreement upon a holder of any interest in the SUBI. (SUBI Trust Agreement,
Section 10.02).
THE SERVICING AGREEMENT
General
Pursuant to the Servicing Agreement, the Servicer will perform on behalf of
the Origination Trustee all of the obligations of the lessor under the
Contracts, including, but not limited to, collecting and posting payments,
responding to inquiries of the lessees, investigating delinquencies, sending
payment statements and reporting tax information to the lessees, paying costs of
disposition of Leased Vehicles related to Charged-off Contracts, Matured
Contracts and Additional Loss Contracts and policing the Contracts, commencing
legal proceedings to enforce a Contract on behalf of the Origination Trust,
administering the Contracts, including accounting for collections and furnishing
monthly and annual statements to the Origination Trustee with respect to
distributions and generating federal income tax information. The Origination
Trustee will furnish the Servicer with all powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out such
servicing and administrative duties under the Servicing Agreement. The Trustee
will be a third-party beneficiary of the Servicing Agreement. (Servicing
Agreement, Sections 2.01 and 12.12).
Custody of Contract Documents and Certificates of Title
To assure uniform quality in servicing the Contracts and World Omni's own
portfolio of automobile and light duty truck lease contracts and to reduce
administrative costs, the Origination Trustee will appoint World Omni, as
Servicer, to be its agent, bailee and custodian of the Contracts, the
certificates of title relating to the Leased Vehicles and insurance policies and
other documents relating to the Contracts, the related lessees and the Leased
Vehicles. Such documents will not be physically segregated from other automobile
and light duty truck lease contracts, certificates of title and insurance
policies and other documents relating to such lease contracts and leased
vehicles of World Omni, or those which World Omni services for others, including
those leased vehicles constituting Origination Trust Assets that are not
evidenced by the SUBI. The accounting records and computer systems of World Omni
will reflect the interests of the holders of interest in the SUBI in the Initial
Contracts, the Subsequent Contracts, the Initial Leased Vehicles, the Subsequent
Leased Vehicles and all related Contract Rights, and "protective" UCC financing
statements reflecting certain interests in the Contracts and the Contract Rights
will be filed, as more fully described under "Certain Legal Aspects of the
Contracts and Leased Vehicles -- Back-up Security Interests". The Servicer will
be responsible for filing all periodic sales and use tax or property (real or
personal) tax reports, periodic renewals of licenses and permits, periodic
renewals of qualification to act as a trust and a business trust and other
periodic governmental filings, registration or approvals arising with respect to
or required of the Origination Trustee or the Origination Trust. (Servicing
Agreement, Sections 2.01 and 2.07).
Collections
The Servicer will service, administer and collect all amounts due on or in
respect of the Contracts. The Servicer will make reasonable efforts to collect
all such amounts and, in a manner consistent with the Servicing Agreement, will
be obligated to service the Contracts generally in accordance with customary and
usual procedures of institutions which service closed-end automobile and light
duty truck lease contracts and, to the extent more exacting, the procedures used
by the Servicer in respect of lease contracts serviced by it for its own
account. (Servicing Agreement, Sections 2.01 and 2.02).
Consistent with its usual procedures, the Servicer may, in its discretion,
extend the Maturity Date of any Contract by up to five months in the aggregate,
provided that no Contract may be extended more than five times and that the new
Maturity Date of any Contract so extended must not be later than the last day of
the
81
<PAGE> 84
month immediately preceding the month in which the Final Scheduled Distribution
Date occurs. The amount of any Extension Fee received by the Servicer in
connection with the extension of a Contract will be deposited into the SUBI
Collection Account. In the event that the Servicer extends a Contract in
contravention of the foregoing, the Servicing Agreement will require the
Servicer to deposit into the SUBI Collection Account an amount equal to the
Reallocation Payment in respect of such Contract on the Deposit Date relating to
the Collection Period in which such extension was granted, at which time such
Contracts and the related Leased Vehicles will no longer constitute SUBI Assets
as they will be reallocated as UTI Assets. (Servicing Agreement, Sections 2.02
and 9.02). See "World Omni -- Collection, Repossession and Disposition
Procedures" for further details regarding collection procedures.
As more fully described under "Security for the Certificates -- The
Accounts -- The SUBI Collection Account", unless the Servicer obtains a Servicer
Letter of Credit, the Servicer will deposit or cause to be deposited all
payments received on or in respect of the Contracts and the Leased Vehicles
(other than Security Deposits) into the SUBI Collection Account within two
Business Days after receipt.
Notification of Liens and Claims
The Servicer will be required to notify the Transferor (in the event that
World Omni is not acting as the Servicer), the Trustee and the Origination
Trustee as soon as practicable of all liens or claims of whatever kind made by a
third party that would materially adversely affect the interests of, among
others, the Transferor, the Origination Trust or any SUBI Asset (with respect
to, among other things, any Contract or Leased Vehicle). Following its learning
of any such lien or claim with respect to any Leased Vehicle, the Servicer will
take whatever actions it deems reasonably necessary to cause such lien or claim
to be removed. (Servicing Agreement, Sections 2.08 and 9.09). See "Certain Legal
Aspects of the Origination Trust and the SUBI -- The SUBI" and "Certain Legal
Aspects of the Contracts and the Leased Vehicles -- Back-up Security Interests"
for a discussion of the risk of liens on SUBI Assets and other Origination Trust
Assets.
Advances
On each Deposit Date, the Servicer will be obligated to make, by deposit
into the SUBI Collection Account, an advance in an amount equal to the aggregate
Monthly Payments due but not received during the related Collection Period with
respect to Contracts that are 31 days or more past due as of the end of the
related Collection Period, and the Servicer may (but shall not be required to)
make such an advance with respect to Contracts that are one or more days, but
less than 31 days, past due as of the end of the related Collection Period
(collectively, an "Advance"). (Servicing Agreement, Section 9.04).
Notwithstanding the foregoing, the Servicer will not be required to make an
Advance to the extent that such Advance would constitute a Nonrecoverable
Advance. (Servicing Agreement, Section 9.04). A "Nonrecoverable Advance" will be
any Advance that, in the reasonable judgment of the Servicer, may not be
ultimately recoverable by the Servicer from Net Liquidation Proceeds or
otherwise. (Servicing Agreement, Section 6.01). In making Advances, the Servicer
will assist in maintaining a regular flow of scheduled principal and interest
payments on the Contracts, rather than to guarantee or insure against losses.
Accordingly, all Advances shall be reimbursable to the Servicer, without
interest, if and when a payment relating to a Contract with respect to which an
Advance has previously been made is subsequently received. In addition, the
Servicer will be reimbursed for all Nonrecoverable Advances from collections on
or in respect of the Contracts and Leased Vehicles in general. (Servicing
Agreement, Section 9.02).
Security Deposits
The Origination Trustee's rights related to the Contracts will include all
rights under the Contracts to the security deposits paid by the lessees at the
time of origination of the Contracts (the "Security Deposits"). As part of its
general servicing obligations, the Servicer will retain possession of each
Security Deposit remitted by the lessees as an agent for the Origination Trust
and will apply the proceeds of such Security Deposits in accordance with the
terms of the Contracts, its customary and usual servicing procedures and
applicable law. However, in the event that any Contract becomes a Charged-off
Contract or the related Leased Vehicle is
82
<PAGE> 85
repossessed, the related Security Deposit will, to the extent provided by
applicable law and such Contract, constitute Liquidation Proceeds. (Servicing
Agreement, Section 2.04). The Origination Trustee may not have an interest in
the Security Deposits that is enforceable against third parties until such time
as they are deposited into the SUBI Collection Account. The Servicer will not be
required to segregate Security Deposits from its own funds, and any income
earned from any investment thereof by the Servicer shall be for the account of
the Servicer as additional servicing compensation.
Insurance on Leased Vehicles
Each lessee is required to maintain in full force and effect during the
term of a Contract a comprehensive collision and physical damage insurance
policy covering the actual cash value of the related Leased Vehicle and naming
the Origination Trustee, on behalf of the Origination Trust, as loss payee. Each
lessee also is required to maintain bodily injury and property damage liability
insurance in amounts equal to the greater of the amount prescribed by applicable
state law or industry standards as set forth in the Contract and naming the
Origination Trustee, on behalf of the Origination Trust, as an additional
insured. (Servicing Agreement, Section 2.11). Since lessees may choose their own
insurers to provide the required coverage, the specific terms and conditions of
their policies vary. If a lessee fails to obtain or maintain the required
insurance, the related Contract will be in default. It is the practice of World
Omni not to obtain insurance on behalf of and at the expense of the related
lessee but rather to repossess the related Leased Vehicle. In the event that a
required insurance policy has lapsed, has not been maintained in full force and
effect or the Servicer has failed to maintain the right to receive the proceeds
thereof for damage to or destruction of the related Leased Vehicle, the
Servicing Agreement will require World Omni to pay promptly into the SUBI
Collection Account all such amounts as would otherwise have been recoverable as
Insurance Proceeds. This obligation will survive any termination of World Omni
as Servicer under the Servicing Agreement. (Servicing Agreement, Section 2.11).
World Omni does not require lessees to carry credit disability, credit life
or credit health insurance or other similar insurance coverage which provides
for payments to be made on the Contracts on behalf of such lessees in the event
of disability or death. To the extent that such insurance coverage is obtained
on behalf of a lessee, payments received in respect of such coverage may be
applied to payments on the related Contract to the extent that the lessee's
beneficiary chooses to do so.
Realization Upon Charged-off Contracts
The Servicer will use commercially reasonable efforts to repossess and
liquidate the Leased Vehicle relating to a Contract that comes into and
continues in default and for which no satisfactory arrangements can be made for
collection of delinquent payments. Such liquidation may be through repossession
of such Leased Vehicle and disposition at a public or private sale, or the
Servicer may take any other action permitted by applicable law. The Servicer may
enforce all rights under any such Contract, sell the Leased Vehicle in
accordance with the Contract and commence and prosecute any proceedings in
connection with the Contract. In connection with any such repossession, the
Servicer will follow such practices and procedures as it deems necessary or
advisable and as are normal and usual for responsible holders of closed-end
automobile and light duty truck lease contracts and, to the extent more
exacting, the practices and procedures used by the Servicer in respect of any
such lease contracts serviced by it for its own account, and in any event in
compliance with all applicable laws. The Servicer will be required to repair the
Leased Vehicle if it reasonably determines that such repairs will increase the
related Net Repossessed Vehicle Proceeds. The Servicer will be responsible for
all costs and expenses incurred in connection with the sale or other disposition
of Leased Vehicles related to Charged-off Contracts and other Contracts as to
which a lessee has defaulted and the related Leased Vehicles, but will be
entitled to reimbursement to the extent that such costs constitute Repossessed
Vehicle Expenses or other Liquidation Expenses or expenses recoverable under an
applicable insurance policy. Proceeds from the sale or other disposition of
repossessed Leased Vehicles will constitute Repossessed Vehicle Proceeds and
will be deposited into the SUBI Collection Account. The Servicer will be
entitled to reimbursement of all related Repossessed Vehicle Expenses from
amounts on deposit in the SUBI Collection Account upon presentation to the
Trustee of an officer's certificate of the Servicer and Principal Collections in
respect of a Collection Period
83
<PAGE> 86
will include all Net Repossessed Vehicle Proceeds collected during such
Collection Period. (Servicing Agreement, Sections 2.06 and 9.02).
Matured Leased Vehicle Inventory
Upon the scheduled maturity of a Contract, the related lessee has the
option to acquire the related Leased Vehicle for an amount equal to its Residual
Value plus any applicable taxes and all other incidental charges which may be
due under such Contract. If the lessee chooses not to exercise this option but
instead returns the Leased Vehicle to the Servicer, such Leased Vehicle will be
placed in Matured Leased Vehicle Inventory, and the Servicer, acting on behalf
of the Origination Trust, will sell or otherwise dispose of the Leased Vehicle
in a manner similar to that for other off-lease Leased Vehicles. (Servicing
Agreement, Section 2.06).
Principal Collections in respect of a Collection Period will include all
Net Matured Leased Vehicle Proceeds collected during such Collection Period. All
related Matured Leased Vehicle Proceeds will be deposited into the SUBI
Collection Account. Related Matured Leased Vehicle Expenses may be released from
amounts on deposit in the SUBI Collection Account or the Residual Value Surplus
Account upon presentation of an officer's certificate by the Servicer. Any
Residual Value Surplus for a Collection Period will be deposited into the
Residual Value Surplus Account. (SUBI Trust Agreement, Section 10.01; Servicing
Agreement, Section 9.02).
Records, Servicer Determinations and Reports
The Servicer will retain or cause to be retained all data (including,
without limitation, computerized records, operating software and related
documentation) relating directly to or maintained in connection with the
servicing of the Contracts. Upon the occurrence and continuance of an Event of
Servicing Termination and termination of the Servicer's obligations under the
Servicing Agreement, the Servicer will use commercially reasonable efforts to
effect the orderly and efficient transfer of the servicing of the Contracts to a
successor servicer. (Servicing Agreement, Sections 2.03 and 9.03).
The Servicer will perform certain monitoring and reporting functions on
behalf of the Transferor, the Trustee, the Origination Trustee and
Certificateholders, including the preparation and delivery to the Trustee, the
Origination Trustee and each Rating Agency of a monthly certificate, on or
before each Determination Date, setting forth all information necessary to make
all distributions required in respect of the related Collection Period (the
"Servicer's Certificate"), and the preparation and delivery of monthly
statements setting forth information described under "Description of the
Certificates -- Statements to Certificateholders", and an annual officer's
certificate specifying the occurrence and status of any Event of Servicing
Termination. (Servicing Agreement, Section 10.01).
Evidence as to Compliance
The Servicing Agreement will provide that a firm of nationally recognized
independent accountants will furnish to the Trustee on or before April 30 of
each year, beginning April 30, 1998, a statement as to compliance by the
Servicer during the preceding twelve months ended December 31 (or since the
Closing Date in the case of the first such statement) with certain standards
relating to the servicing of the Contracts, the Servicer's accounting records
and computer files with respect thereto and certain other matters. (Servicing
Agreement, Sections 3.02 and 10.02).
The Servicing Agreement will also provide for delivery to the Trustee, on
or before April 30 of such year, beginning April 30, 1998, of a certificate
signed by an officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Agreement throughout the preceding twelve months ended
December 31 (or since the Closing Date in the case of the first such
certificate) or, if there has been a default in the fulfillment of any such
obligation, describing each such default. (Servicing Agreement, Sections 3.03
and 10.03).
84
<PAGE> 87
Copies of such statements and certificates may be obtained by Certificate
Owners or Class A Certificateholders by a request in writing addressed to the
Trustee at its Corporate Trust Office. (Agreement, Section 3.06).
Compliance with ERISA
On or before each Determination Date, the Servicer shall provide the
Trustee and each Rating Agency with an officer's certificate stating that none
of SET, JMFE, World Omni nor any of their respective affiliates for purposes of
ERISA (i) maintains an ERISA plan which, as of its last valuation date, had
unfunded current liability, (ii) anticipates that the value of the assets of any
ERISA plan it maintains would not be sufficient to cover any current liability
and (iii) is contemplating benefit improvements with respect to any plans then
maintained or the establishment of any new ERISA plans, either of which would
cause it to maintain an ERISA plan with unfunded current liability (the "ERISA
Compliance Test"). In the event that the Servicer does not timely make the
foregoing certifications, or any such certification is incorrect, all Excess
Collections in respect of any Distribution Date, after giving effect to all
payments required to be made therefrom on such Distribution Date, will be
deposited into the Reserve Fund, regardless of the Reserve Fund Cash
Requirement. On the Distribution Date following the date on which the ERISA
Compliance Test is satisfied, monies on deposit in the Reserve Fund in excess of
the Reserve Fund Cash Requirement shall be distributed to the Transferor (or to
the Certificateholders to the extent allocable to the Accelerated Principal
Distribution Amount). See "Security for the Certificates -- The Accounts -- The
Reserve Fund -- The Reserve Fund Cash Requirement" for a more complete
description of the Reserve Fund Cash Requirement. (Servicing Agreement, Section
10.03; Agreement, Sections 1.01, 3.03 and 3.04).
Servicing Compensation
The Servicer will be entitled to compensation for the performance of its
servicing obligations under the Servicing Agreement. The Servicer will be
entitled to receive on each Distribution Date, the Servicing Fee in respect of
the related Collection Period equal to one-twelfth of the product of 1.00% and
the Aggregate Net Investment Value as of the first day of the month preceding
the month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, as of the Initial Cutoff Date); the portion of the Servicing
Fee allocable to the SUBI Interest will be 99.8% thereof. The Servicing Fee will
be calculated and paid based upon a 360-day year consisting of twelve 30-day
months. So long as World Omni is the Servicer, it may, by notice to the Trustee
and the Origination Trustee, on or before a Determination Date, elect to waive
the Servicing Fee with respect to the related Collection Period, so long as
World Omni believes that sufficient collections will be available from Interest
Collections on one or more future Distribution Dates to pay such waived
Servicing Fee, without interest. In such event, the Servicing Fee for such
Collection Period shall be deemed to equal zero for all purposes of the
Agreement and the Servicing Agreement.
The Servicer will also be entitled to additional servicing compensation in
the form of late fees and other administrative fees or similar charges paid with
respect to the Contracts, and earnings from the investment of Security Deposits
as described above under "Additional Document Provisions -- The Servicing
Agreement -- Security Deposits". The Servicer will not be entitled to retain any
Extension Fee paid in connection with an extended Contract, as such amounts will
be required to be deposited into the SUBI Collection Account. The Servicer will
pay all expenses incurred by it in connection with its servicing activities
under the Servicing Agreement, including the payment of Uncapped Administrative
Expenses allocable to the SUBI Interest, and will not be entitled to
reimbursement of such expenses except to the extent any such expenses constitute
Liquidation Expenses in respect of a Contract or Leased Vehicle or reasonable
issuance expenses under an applicable insurance policy, or to the extent that
Uncapped Administrative Expenses are reimbursed out of Interest Collections.
(Servicing Agreement, Sections 2.05 and 9.06).
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of the Contracts as an agent for the Trustee under the
Servicing Agreement, including collecting and posting payments, responding to
inquiries of lessees on the Contracts, investigating delinquencies, sending
payment statements and reporting tax information to lessees, paying costs of
sale or other disposition of Leased Vehicles relating to defaulted Contracts and
Leased Vehicles included in Matured Leased Vehicle Inventory, policing
85
<PAGE> 88
the SUBI Assets, administering the Contracts, including making Advances,
accounting for collections, furnishing monthly and annual statements to the
Trustee with respect to distributions and generating federal income tax
information. (Servicing Agreement, Section 2.05).
Servicer Resignation and Termination
The Servicer may not resign from its obligations and duties under the
Servicing Agreement unless it determines that its duties thereunder are no
longer permissible by reason of a change in applicable law or regulations. No
such resignation will become effective until a successor servicer has assumed
the Servicer's obligations under the Servicing Agreement. The Servicer may not
assign the Servicing Agreement or any of its rights, powers, duties or
obligations thereunder except as otherwise provided therein or except in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with the Servicing Agreement. (Servicing Agreement, Sections 2.10 and
9.11).
The rights and obligations of the Servicer under the Servicing Agreement
may be terminated following the occurrence and continuance of an Event of
Servicing Termination, as described under "Additional Document Provisions -- The
Servicing Agreement -- Rights Upon Event of Servicing Termination". (Servicing
Agreement, Sections 4.01 and 11.01).
Indemnification by the Servicer
The Servicer will indemnify the Trustee and its agents for any and all
liabilities, losses, damages and expenses that may be incurred by them as a
result of any act or omission by the Servicer in connection with the performance
of its duties under the Servicing Agreement. (Servicing Agreement, Section
9.08).
Events of Servicing Termination
"Events of Servicing Termination" under the Servicing Agreement with
respect to the SUBI Assets will consist of, among other things: (i) any failure
by the Servicer to deliver to the Origination Trustee for distribution to
holders of interests in the SUBI or to the Trustee for distribution to the
Certificateholders any required payment, which failure continues unremedied for
five Business Days after discovery of such failure by an officer of the Servicer
or receipt by the Servicer of notice thereof from the Trustee, the Origination
Trustee or holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class; (ii) any failure by the Servicer duly to observe or
perform in any material respect any other of its covenants or agreements in the
Servicing Agreement which failure materially and adversely affects the rights of
holders of interests in the SUBI or the Certificateholders and which continues
unremedied for 60 days after written notice of such failure is given as
described in clause (i) above; (iii) failure by the Servicer to deliver to the
Origination Trustee or the Trustee any report required to be delivered to the
Origination Trustee or the Trustee pursuant to the Servicing Agreement within
ten Business Days after the date such report is due; (iv) any representation,
warranty or statement of the Servicer made in the Servicing Agreement or any
other document relating to the Origination Trust to which the Servicer is a
party or by which it is bound or any certificate, report or other writing
delivered pursuant to the Servicing Agreement shall prove to be incorrect in any
material respect as of the time when the same shall be made which continues
unremedied for 30 days after written notice of such failure is given as
described in clause (i) above; (v) failure by the Servicer to maintain or pay
when due the premium in respect of any Contingent and Excess Liability Insurance
Policy or the Residual Value Insurance Policy; (vi) any failure by the
Transferor to timely deposit into the Reserve Fund an amount equal to the AISLIC
Reserve Fund Supplemental Requirement after an AISLIC Trigger Event; and (vii)
the occurrence of certain Insolvency Events relating to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred to
under clause (i) for a period of ten Business Days, under clause (ii) for a
period of 90 days, under clause (iii) for a period of 20 Business Days or under
clause (iv) for a period of 60 days, shall not constitute an Event of Servicing
Termination if such failure or delay was caused by act of God or other similar
occurrence. Upon the occurrence of any such event, the Servicer shall not be
relieved from using all commercially reasonable efforts to perform its
obligations in a timely manner in accordance with the terms of the Servicing
Agreement and the Servicer shall provide to the Trustee, the Origination
Trustee, the Transferor and the Certificateholders
86
<PAGE> 89
prompt notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. (Servicing Agreement, Sections 4.01 and
11.01).
Rights Upon Event of Servicing Termination
As long as an Event of Servicing Termination remains unremedied, the
Origination Trustee, upon the direction of the Trustee or holders of
Certificates evidencing not less than 51% of the Voting Interests of the Class A
Certificates and the Class B Certificates, voting together as a single class,
may terminate all of the rights and obligations of the Servicer under the
Servicing Agreement with respect to the SUBI Assets. In the event of such a
termination affecting the SUBI Assets, the Trust Agent generally will succeed to
the rights, powers, responsibilities, duties and liabilities of the Servicer
under the Servicing Agreement with respect to the SUBI Assets (excluding certain
specific obligations listed in the Servicing Agreement) or provide for a new
Servicer to be approved by each Rating Agency. The Trust Agent or other new
Servicer, will receive substantially the same servicing compensation to which
the Servicer otherwise would have been entitled. If, however, a bankruptcy
trustee or similar official has been appointed for the Servicer, and no Event of
Servicing Termination other than such appointment has occurred, such trustee or
official may have the power to prevent the Origination Trustee, the Trustee or
such Certificateholders from effecting a transfer of servicing. Notwithstanding
the termination of the Servicer's rights and powers in such event, the Servicer
will remain obligated to perform certain specific obligations listed in the
Servicing Agreement and to reimburse the Trust Agent for any losses incurred in
performing certain such obligations, and will be entitled to payment of certain
amounts payable to it for services rendered prior to such termination.
(Servicing Agreement, Sections 4.01 and 11.01).
The holders of Certificates evidencing not less than 51% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, with the consent of the Origination Trustee and the
Trustee (which consents shall not be unreasonably withheld) may waive any
default by the Servicer in the performance of its obligations under the
Servicing Agreement and its consequences with respect to the SUBI Assets, other
than a default in making any required deposits to or payments from an Account in
accordance with the Servicing Agreement or in respect of a covenant or provision
of the Servicing Agreement that cannot be modified or amended without the
consent of each Certificateholder (in which event the related waiver will
require the approval of holders of all of the Certificates). No such waiver will
impair the rights of the Certificateholders with respect to subsequent defaults.
(Servicing Agreement, Section 4.01; Agreement, Sections 8.02 and 9.03).
No Petition
The Servicer will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Transferor, WOLSI, ALFI L.P., ALFI, the
Origination Trustee or the Origination Trust until one year and one day after
final payment of all financings involving interests in the Origination Trust.
(Servicing Agreement, Section 5.14).
Amendment
The Servicing Agreement may be amended from time to time in a writing
signed by the Origination Trustee and the Servicer, with the approval of the
Trustee (which approval may be given in the circumstances described under
"Additional Document Provisions -- Additional Agreement
Provisions -- Amendment"). Any such amendment relating to the UTI or any Other
SUBI may require certain other approvals. (Servicing Agreement, Sections 5.02
and 12.02).
Termination
The Servicing Agreement shall terminate upon the earlier to occur of (i)
the termination of the Origination Trust, (ii) the discharge of the Servicer in
accordance with its terms or (iii) the termination of the Agreement. (Servicing
Agreement, Section 5.01).
87
<PAGE> 90
Governing Law
The Servicing Agreement will be governed by the laws of the State of
Alabama.
Trustee as Third-Party Beneficiary
As the holder of the SUBI Interest, the Trustee will be a third-party
beneficiary of the Servicing Agreement. (Servicing Agreement, Section 12.12).
CERTAIN LEGAL ASPECTS OF THE ORIGINATION TRUST AND THE SUBI
THE ORIGINATION TRUST
The Origination Trust may be deemed to be a business trust under Alabama
law. In an Alabama business trust, the trust property is managed for the profit
of the beneficiaries, as opposed to a common "asset preservation" trust, in
which the trustee is charged with the mere maintenance of trust property. The
principal requirement for the formation of a business trust in Alabama is the
filing of the trust instrument with the appropriate state authority. The
Origination Trust Agreement has been, and the SUBI Trust Agreement will be, so
filed. The Origination Trust also has been qualified as a business trust
authorized to transact business in certain other states where it is required to
be qualified.
Because the Origination Trust has been registered as a business trust for
Alabama and other state law purposes, like a corporation, it may be eligible to
be a debtor in its own right under the United States Bankruptcy Code, as further
described under "Risk Factors -- Insolvency of World Omni; Substantive
Consolidation with World Omni".
THE SUBI
The SUBI will be issued pursuant to the SUBI Trust Agreement and will
evidence a beneficial interest in the SUBI Assets. The SUBI will not represent a
direct interest in the SUBI Assets, nor will it represent an interest in any
Origination Trust Assets other than the SUBI Assets. Under the allocation of
Origination Trust liabilities described under "Additional Document
Provisions -- The SUBI Trust Agreement -- The SUBI, the Other SUBIs and the
UTI", payments made on or in respect of such other Origination Trust Assets will
not be available to make payments on the Certificates or to cover expenses of
the Origination Trust allocable to the SUBI Assets. Any liability to third
parties arising from or in respect of a Contract or Leased Vehicle will be borne
by the holders of interests in the SUBI (including the Trust). If any such
liability arises from a contract or leased vehicle that is an Other SUBI Asset
or a UTI Asset, the Origination Trust Assets (including the SUBI Assets) will
not be subject to such liability unless such Other SUBI Assets or UTI Assets are
insufficient to pay the liability. In such event, because there will be no other
assets from which to satisfy any such liability, to the extent that it is owed
to entities other than the Origination Trustee and the beneficiaries of the
Origination Trust, the other Origination Trust Assets, including the SUBI
Assets, will be available to satisfy such liabilities. Under such circumstances,
investors in the Class A Certificates could incur a loss on their investment.
Similarly, to the extent that a third-party claim that otherwise would be
allocable to an Other SUBI or UTI is satisfied out of the SUBI Assets rather
than Other SUBI Assets or UTI Assets, and the claim exceeds the value of the
portfolio to which it should be allocated, the Origination Trustee will not be
able to reallocate the remaining Origination Trust Assets so that each portfolio
will bear the expense of the claim as nearly as possible if the claim has been
properly allocated. In such circumstances, investors in the Class A Certificates
could incur a loss on their investment.
Because the Trustee will not own directly the SUBI Assets, and since its
interest therein generally will be an indirect beneficial ownership interest,
perfected liens of third-party creditors of the Origination Trust in one or more
SUBI Assets will take priority over the interest of the Trustee in such SUBI
Assets. Therefore, a general creditor of the Origination Trust may obtain a lien
on one or more SUBI Assets regardless of whether its claim would be allocated to
such SUBI Assets under the terms of the Origination Trust Agreement.
88
<PAGE> 91
Potentially material examples of such liens could include tax liens arising
against the Transferor or the Trust, liens arising under various federal and
state criminal statutes, certain liens in favor of the Pension Benefit Guaranty
Corporation (the "PBGC"), judgment liens arising from successful claims under
federal and state consumer protection laws and Lemon Laws with respect to leases
and leased vehicles included in the Origination Trust Assets and judgment liens
arising from successful claims against the Origination Trust arising from the
operation of the leased vehicles constituting Origination Trust Assets. See
"Risk Factors -- Consumer Protection Laws", "-- ERISA Liabilities" and
"-- Vicarious Tort Liability" and "Certain Legal Aspects of the Contracts and
the Leased Vehicles -- Vicarious Tort Liability" and "-- Consumer Protection
Laws" for a further discussion of these risks.
The Origination Trust Agreement provides that, to the extent that such a
third-party claim is satisfied out of one or more SUBI Assets rather than Other
SUBI Assets or UTI Assets, as the case may be, the Origination Trustee will
reallocate the remaining Origination Trust Assets (i.e., the Other SUBI Assets
and the UTI Assets) so that each portfolio will bear the expense of the claim as
nearly as possible as if the claim had been allocated as provided in the
Origination Trust Agreement as set forth under "Additional Document
Provisions -- The SUBI Trust Agreement -- The SUBI, the Other SUBIs and the
UTI".
INSOLVENCY RELATED MATTERS
As described under "The Origination Trust -- Allocation of SUBI Assets" and
"Certain Legal Aspects of the Origination Trust and the SUBI -- The SUBI," each
holder or pledgee of the UTI and any Other SUBI will be required to expressly
disclaim any interest in the SUBI Assets, and to fully subordinate any claims to
the SUBI Assets in the event that this disclaimer is not given effect. Although
no assurance can be given, in the unlikely event of a bankruptcy of ALFI L.P.,
the Transferor believes that the SUBI Assets would not be treated as part of
ALFI L.P.'s bankruptcy estate and that, even if they were so treated, the
subordination by holders and pledgees of the UTI and Other SUBIs should be
enforceable. In addition, as described under "Risk Factors -- Insolvency of
World Omni; Substantive Consolidation with World Omni", the Transferor has taken
steps in structuring the transactions contemplated hereby that are intended to
make it unlikely that the voluntary or involuntary application for relief by
World Omni under any Insolvency Laws will result in consolidation of the assets
and liabilities of ALFI, ALFI L.P., WOLSI, the Transferor, the Origination Trust
or the Trust with those of World Omni. If, however, (i) a court concluded that
the assets and liabilities of ALFI, ALFI L.P., the Transferor, WOLSI, the
Origination Trust or the Trust should be consolidated with those of World Omni
in the event of the application of applicable Insolvency Laws to World Omni,
(ii) a filing were made under any Insolvency Law by or against ALFI, ALFI L.P.,
the Transferor, WOLSI, the Origination Trust or the Trust or (iii) an attempt
were made to litigate any of the foregoing issues, delays in payments on the
Certificates and possible reductions in the amount of such payments could occur.
LEGAL PROCEEDINGS
None of ALFI, ALFI L.P., the Transferor or WOLSI is a party to any legal
proceeding. World Omni is a party to, and is vigorously defending, numerous
legal proceedings, all of which it believes constitute ordinary routine
litigation incidental to the business and activities conducted by World Omni.
The Origination Trustee, on behalf of the Origination Trust, has been named as a
defendant in various cases which it believes constitute ordinary routine
litigation incidental to the business and activities conducted by the
Origination Trustee as an assignee of lease contracts and leased vehicles.
CERTAIN LEGAL ASPECTS OF THE
CONTRACTS AND THE LEASED VEHICLES
BACK-UP SECURITY INTERESTS
As described under "Risk Factors -- Insolvency of World Omni; Substantive
Consolidation with World Omni", the transfer of the SUBI Certificate by the
Transferor to the Trust is intended to constitute a sale of the SUBI Certificate
and of the beneficial interest in the SUBI Assets evidenced thereby, subject in
each case to the rights of the Transferor as the holder of the Transferor
Interest and the Retained SUBI Interest.
89
<PAGE> 92
Although deemed highly unlikely by the Transferor, theoretically it is possible
that a court could recharacterize (for accounting and general state law
purposes) the transactions contemplated by the SUBI Trust Agreement as a
financing secured by a pledge of the SUBI Certificate, or even the underlying
SUBI Assets, to the Trustee on behalf of the Certificateholders, rather than as
a sale. In such an event, absent prior perfection of the Trustee's security
interest in the SUBI Assets, the holder of a perfected lien in one or more SUBI
Assets would have priority over the interest of the Trustee in such SUBI Assets.
Therefore, certain actions have been taken to ensure that, were the Certificates
to be so recharacterized as secured loans, the Trustee would be deemed to have a
perfected security interest in the SUBI Certificate (and the SUBI Interest
evidenced thereby) and in the Contracts and the rights thereunder susceptible of
perfection under the Uniform Commercial Code (the "UCC") in effect in the States
of Alabama, Illinois and Florida. In particular, on or prior to the Closing
Date, "protective" UCC-1 financing statements will be filed in the States of
Alabama, Florida and Illinois to effect this perfection. By virtue of its
possession of the SUBI Certificate, the Trustee also will be deemed to have a
perfected security interest therein (and in the SUBI Interest evidenced
thereby). However, no action will be taken to perfect the lien that the Trustee
would be deemed to have in the Leased Vehicles in the event of such a
recharacterization. Therefore, to the extent that a valid lien is imposed by a
third party against a Leased Vehicle, the interest of the lienholder will be
superior to the unperfected beneficial interest of the Trustee in such Leased
Vehicle. Although the Servicing Agreement will require the Servicer to contest
all such liens and cause the removal of any liens that may be imposed, if any
such liens are imposed against the Leased Vehicles, investors in the Class A
Certificates could incur a loss on their investment. For further information
relating to potential liens on the SUBI Assets, see "Additional Document
Provisions -- The Servicing Agreement -- Notification of Liens and Claims" and
"Certain Legal Aspects of the Origination Trust and the SUBI -- The SUBI".
The Trustee's back-up security interest in the Contracts could be
subordinate to the interest of certain other parties who take possession of the
Contracts before the filing described above has been completed. Specifically,
the Trustee's security interest in a Contract could be subordinate to the rights
of a purchaser of such Contract who takes possession thereof without knowledge
or actual notice of the Trustee's security interest. The Contracts will not be
stamped to reflect the foregoing back-up security arrangements.
As noted under "Certain Legal Aspects of the Origination Trust and the
SUBI -- The SUBI", various liens could be imposed upon all or part of the SUBI
Assets that, by operation of law, would take priority over the Trustee's
interest therein. Such liens would include tax liens arising against the
Transferor or the Trust, mechanic's, repairmen's, garagemen's and motor vehicle
accident liens and certain liens for personal property taxes, in each case
arising with respect to a particular Leased Vehicle, liens arising under various
state and federal criminal statutes and certain liens, more fully described
under "Risk Factors -- ERISA Liabilities", in favor of the PBGC. Additionally,
any perfected security interest of the Trustee in all or part of the property of
the Trust could also be subordinate to claims of any trustee in bankruptcy or
debtor-in-possession in the event of a bankruptcy of the Transferor prior to any
perfection of the transfer of the assets transferred by the Transferor to the
Trust pursuant to the Agreement, as more fully described under "Risk
Factors -- Insolvency of World Omni; Substantive Consolidation with World Omni".
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the leased vehicles, they will be
operated by the lessees and their respective invitees. State laws, including the
laws in the Five State Area, differ as to whether anyone suffering injury to
person or property involving a leased vehicle may bring an action against the
owner of the vehicle merely by virtue of that ownership.
In Alabama and Georgia, a victim of such an accident has no such cause of
action against the owner of a leased vehicle arising from the negligent
operation of such leased vehicle unless the owner has negligently entrusted or
negligently continues to entrust the vehicle to an inappropriate lessee.
In Florida, under Section 324.021(9)(b), Florida Statutes, the owner of a
motor vehicle that is subject to a lease having an initial term of at least one
year is exempt from liability arising out of an accident in which the leased
vehicle is involved if the lessee is required under the lease to maintain
certain specified levels of
90
<PAGE> 93
insurance and such insurance is in effect. In 1991, in a case involving finance
leases, the Florida Supreme Court ruled that this statute is constitutional and
that a Florida owner/lessor that complies with the statute will not be deemed
the owner of the leased vehicle for purposes of financial responsibility for
liability or tort claims arising out of the negligent operation of the leased
vehicle or the negligent acts of the operator. In 1992, the Florida Supreme
Court held that this statute is applicable to true leases as well as finance
leases. In March 1996, the Florida Supreme Court strictly interpreted the
requirements of Section 324.021(9)(b), ruling that the existence of a lessor's
blanket contingent liability insurance policy did not satisfy the statutory
requirement that the lessee have insurance in effect at the time of the accident
and denying the lessor the liability exemption provided in the statute. However,
effective with respect to actions brought on or after June 1, 1996, the statute
was amended to provide that a lessor's blanket contingent liability insurance
policy with certain required policy limits will be deemed to satisfy the
statute's requirements for the liability exemption. The Origination Trust's
insurance coverage meets these requirements.
In North Carolina, a lessor of a motor vehicle generally is not responsible
to injured parties for a lessee's negligent use of the leased vehicle when all
control has been relinquished to the lessee, unless the lessor knew or in the
exercise of reasonable care should have known that the leased vehicle was
defective or unsafe at the time of delivery to the lessee and the defect or
unsafe condition caused injury, or if the lessor negligently entrusted the
vehicle to an incompetent lessee.
As more fully described under "Risk Factors -- Vicarious Tort Liability",
following an accident involving a Leased Vehicle, under certain circumstances
the Origination Trust may be the subject of an action for damages as a result of
its ownership of such Leased Vehicle. To the extent that applicable state law
permits such an action, the Origination Trust and the Origination Trust Assets
may be subject to liability. However, the laws of many States, including each of
the States in the Five State Area, either do not permit such suits, or the
lessor's liability is capped at the amount of any liability insurance that the
lessee was required to, but failed to, maintain. Although the Origination
Trust's insurance coverage is substantial, in the event that all applicable
insurance coverage were exhausted and damages were assessed against the
Origination Trust, claims could be imposed against the assets of the Origination
Trust, including the Leased Vehicles. However, such claims would not take
priority over any SUBI Assets to the extent that the Trustee has a prior
perfected security interest therein (such as would be the case, in certain
limited circumstances, with respect to the Contracts) as further described under
"Certain Legal Aspects of the Contracts and the Leased Vehicles -- Back-up
Security Interests". If any such claims were imposed against the assets of the
Origination Trust, investors in the Class A Certificates could incur a loss on
their investment.
REPOSSESSION OF LEASED VEHICLES
In the event that a default by a lessee has not been cured within a certain
period of time after notice, the Servicer will ordinarily retake possession of
the related leased vehicle. Some jurisdictions require that the lessee be
notified of the default and be given a time period within which to cure the
default prior to repossession. Generally, this right to cure may be exercised on
a limited number of occasions in any one-year period. In these jurisdictions, if
the lessee objects or raises a defense to repossession, an order must be
obtained from the appropriate state court, and the vehicle must then be
repossessed in accordance with that order. Other jurisdictions permit
repossession without notice (although in Florida, Georgia and North Carolina a
course of conduct in which the lessor has accepted late payments has been held
to create a right of the lessee to receive prior notice), but only if the
repossession can be accomplished peacefully. If a breach of the peace cannot be
avoided, judicial action is required.
In Georgia, a leased vehicle may be repossessed without notice, but only if
the repossession can be accomplished without a breach of the peace. If a breach
of the peace cannot be avoided, the lessor must seek a writ of possession in a
state court action or pursue other judicial action to repossess such leased
vehicle.
After the Servicer has repossessed a Leased Vehicle, it may provide the
lessee with a period of time within which to cure the default under the related
Contract. If by the end of such period the default has not been cured, the
Servicer will attempt to sell the Leased Vehicle. The Net Repossessed Vehicle
Proceeds therefrom may be less than the remaining amounts due under the Contract
at the time of default by the lessee.
91
<PAGE> 94
DEFICIENCY JUDGMENTS
The proceeds of sale of a leased vehicle generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
amounts due under the related lease contract. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale of a leased vehicle do not cover the full amounts due under the related
lease contract, a deficiency judgment can be sought in those states (including
each of the States in the Five State Area) that do not prohibit directly or
limit such judgments. However, in some states (including Florida), a lessee may
be allowed an offsetting recovery for any amount not recovered at resale because
the terms of the resale were not commercially reasonable. In any event, a
deficiency judgment would be a personal judgment against the lessee for the
shortfall, and a defaulting lessee would be expected to have little capital or
sources of income available following repossession. Therefore, in many cases, it
may not be useful to seek a deficiency judgment. Even if a deficiency judgment
is obtained, it may be settled at a significant discount.
In Georgia, amounts recoverable by the lessor of a leased vehicle from a
lessee upon default or early termination are not considered to be "deficiency
judgments", but damages for breach or early termination of the related lease
contract. In the case of liquidated damages provided for in the Contracts, the
only limitation or prohibition on such damages is that they are reasonable in
light of the anticipated harm caused by the default. Georgia law does not
require that any excess proceeds from disposition of a leased vehicle be paid to
a lessee. Under the Georgia Motor Vehicle Warranty Rights Act, however, where a
lessor or lessee has exercised its rights against the manufacturer and obtained
a replacement vehicle and the lessor realizes a gain from disposition of the
replacement vehicle, the lessor must refund to the lessee the lesser of any
offset for use paid by the lessee to the manufacturer or the gain realized by
the lessor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws impose requirements
upon lessors and servicers involved in consumer leasing. The federal Consumer
Leasing Act of 1976 and Regulation M, issued by the Board of Governors of the
Federal Reserve System, for example, require that a number of disclosures be
made at the time a vehicle is leased, including the amount of any down payment,
a description of the lessee's liability at the end of the lease term, the amount
of any periodic payments and the circumstances under which the lessee may
terminate the lease prior to the end of the lease term, and (beginning in
October 1997) the capitalized cost of the vehicle and a warning regarding
possible charges for early termination. The various consumer protection laws
would apply to the Origination Trustee as a "co-lessor" of the Contracts and may
also apply to the Trust as holder of a beneficial interest in the Contracts. The
failure to comply with such consumer protection laws may give rise to
liabilities on the part of the Servicer, the Origination Trust and the
Origination Trustee, including liabilities for statutory damages and attorneys'
fees. In addition, claims by the Servicer, the Origination Trust and the
Origination Trustee may be subject to set-off as a result of such noncompliance.
Courts have applied general equitable principles in litigation relating to
repossession and deficiency balances. These equitable principles may have the
effect of relieving a lessee from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help remedies of
lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally found
that repossession and resale by a lessor do not involve sufficient state action
to afford constitutional protection to consumers.
Many states, including each State in the Five State Area, have adopted laws
(each, a "Lemon Law") providing redress to consumers who purchase or lease a
vehicle that remains out of conformance with its manufacturer's warranty after a
specified number of attempts to correct a problem or after a specific time
period. Should any Leased Vehicle become subject to a Lemon Law, a lessee could
compel the Origination Trust to terminate the related Contract and refund all or
a portion of payments that previously have been paid. Although the Origination
Trust may be able to assert a claim against the manufacturer of any such
defective Leased Vehicle, there can be no assurance any such claim would be
successful.
92
<PAGE> 95
Historically, less than one-half of one percent of all automobiles and
light duty trucks leased by World Omni (including lease contracts owned by the
Origination Trustee on behalf of the Origination Trust or by certain special
purpose subsidiaries of World Omni) have become the subject of an action under
any of the Lemon Laws of any jurisdiction. As noted below, World Omni will
represent and warrant to the Trustee as of the Initial Cutoff Date and as of
each Subsequent Cutoff Date that none of the Initial Leased Vehicles or the
related Subsequent Leased Vehicles, as the case may be, is out of compliance
with any law, including a Lemon Law. Nevertheless, there can be no assurance
that one or more Leased Vehicles will not become subject to return (and the
related Contract terminated) in the future under a Lemon Law.
Representations and warranties will be made in the SUBI Trust Agreement
that each Contract complies with all requirements of law in all material
respects. If any such representation and warranty proves to be incorrect with
respect to any Contract, and is not timely cured, World Omni will be required
under the Servicing Agreement to deposit an amount equal to the Reallocation
Payment (together with, in certain circumstances during the Amortization Period,
an amount equal to the Reallocation Deposit Amount) in respect of such Contract
into the SUBI Collection Account unless the breach is cured. See "Additional
Document Provisions -- The SUBI Trust Agreement -- The SUBI, the Other SUBIs and
the UTI" and "The Contracts -- Representations, Warranties and Covenants" for
further information regarding the foregoing representations and warranties.
OTHER LIMITATIONS
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including applicable Insolvency Laws, may interfere
with or affect the ability of a lessor to enforce its rights under an automobile
or light duty truck lease contract. For example, if a lessee commences
bankruptcy proceedings, the lessor's receipt of rental payments due under the
lease contract is likely to be delayed. In addition, a lessee who commences
bankruptcy proceedings might be able to assign the lease contract to another
party even though the lease prohibits assignment.
MATERIAL INCOME TAX CONSIDERATIONS
FEDERAL TAXATION
General
Set forth below is a discussion representing the opinion of Brown & Wood
LLP, special federal income tax counsel to the Transferor and counsel for the
Underwriters, as to material federal income tax consequences to holders of the
Class A Certificates who are original owners and who hold the Class A
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 or any aspects of state or local
taxation that may be relevant to Class A Certificateholders or Certificate
Owners in light of their particular circumstances, nor to certain types of Class
A Certificateholders or Certificate Owners subject to special treatment under
the federal income tax laws (for example, banks and life insurance companies).
This discussion is based upon present provisions of the Code, the regulations
promulgated thereunder and judicial and ruling authorities, all of which are
subject to change, which change may be retroactive. The parties do not intend to
seek a ruling from the Internal Revenue Service ("IRS") on any of the issues
discussed below. Moreover, there can be no assurance that if such a ruling were
sought, the IRS would rule favorably. Taxpayers and preparers of tax returns
(including those filed by any partnership or other issuer) should be aware that
under applicable Treasury Regulations a provider of advice on specific issues of
law is not considered an income tax return preparer unless the advice is (i)
given with respect to events that have occurred at the time the advice is
rendered and is not given with respect to the consequences of contemplated
actions and (ii) is directly relevant to the determination of an entry on a tax
return. Accordingly, taxpayers should consult their respective tax advisors and
tax return preparers regarding the preparation of any item on a tax return, even
where the anticipated tax treatment has been discussed herein. Prospective
investors should consult their own tax advisors with regard to the federal
income tax consequences of the purchase, ownership
93
<PAGE> 96
or disposition of the Class A Certificates, as well as the tax consequences
arising under the laws of any state, foreign country or other taxing
jurisdiction.
Characterization of the Class A Certificates as Indebtedness
The Transferor, the Trustee, each Certificateholder, and each Certificate
Owner (by acquiring a beneficial interest in a Class A Certificate) will express
in the Agreement their intent that, for federal, state and local income and
franchise tax purposes, the Class A Certificates will be indebtedness, secured
by the assets of the Trust. The Transferor and the Trustee, by entering into the
Agreement, and each Certificateholder and each Certificate Owner, by acquiring a
beneficial interest in a Class A Certificate, will agree to treat the Class A
Certificates as indebtedness for federal, state and local income and franchise
tax purposes. However, because different criteria are used to determine the
non-tax accounting characterization of the transaction, the Transferor will
treat the transaction, for financial accounting purposes, as a sale of an
ownership interest in the Origination Trust Assets and not as the issuance of a
debt obligation.
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 Class A Certificates are issued is consistent with the treatment of
the Class A 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 Agreement will not be inconsistent with
treating the Class A Certificates as debt and, accordingly, these authorities
should not be applied to require sale characterization for federal income tax
purposes. The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property depends upon
numerous factors designed to determine whether the transferor has relinquished
(and the transferee has obtained) substantial incidents of ownership in the
property. The primary factors examined are whether the transferee has the
opportunity to gain if the property increases in value, and has the risk of loss
if the property decreases in value. Based upon its analysis of such factors,
Brown & Wood LLP is of the opinion that, for federal income tax purposes the
characterization of the Class A Certificates should be governed by the substance
of the transaction and accordingly, (i) the Trust will not be treated as an
association taxable as a corporation and (ii) the Class A Certificates will
properly be characterized as indebtedness that is secured by the Trust assets.
Taxation of Interest and Discount 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 Class A
Certificates may also constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense.
Original Issue Discount. Under regulations issued with respect to the
original issue discount ("OID") provisions of the Code, the Class A Certificates
will be deemed to have been issued with OID in an amount equal to the excess of
the "stated redemption price at maturity" of the Class A-1, Class A-2, Class A-3
or Class A-4 Certificates, as the case may be (generally equal to their
principal amount as of the date of original issuance plus all interest other
than "qualified stated interest" payable prior to or at maturity), over their
original issue price (in this case, the initial offering price at which a
substantial amount of the related Class of Class A Certificates is sold to the
public). Qualified stated interest generally means interest payable at a single
fixed rate or qualified variable rate provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the Class A-1, Class A-2, Class A-3 or Class A-4 Certificates, as the case
may be. Under the OID provisions of the Code, interest will only be treated as
qualified stated interest if it is "unconditionally payable". Interest will be
treated as "unconditionally payable" only if Certificateholders have reasonable
remedies to compel payment of interest deficiencies (e.g., default and
acceleration rights). Because Class A Certificateholders will not be entitled to
penalty payments of interest on interest deficiencies, and Class A
Certificateholders will have no default and acceleration rights in
94
<PAGE> 97
the event of interest shortfalls, interest paid on the Class A Certificates may
not be treated by the IRS as qualified stated interest, and, in such event,
would be treated as OID. A Class A Certificateholder must include OID income
over the term of the related Class A Certificate under a constant yield method.
In general, OID must be included in income in advance of the receipt of cash
representing that income, regardless of the Certificateholder's method of
accounting.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Class A Certificate and its issue price. A
holder of a Class A Certificate must include such OID in gross income as
ordinary interest income as it accrues under a method taking into account an
economic accrual of the discount. In general, OID must be included in income in
advance of the receipt of the cash representing that income. The amount of OID
on a Class A Certificate will be considered to be zero if it is less than a de
minimis amount determined under the Code.
The issue price of a Class A Certificate is the first price at which a
substantial amount of Class A Certificates are sold to the public (excluding
bond, bonuses, brokers, underwriters or wholesalers). If less than a substantial
amount of a particular Class of Class A Certificates is sold for cash on or
prior to the Closing Date, the issue price of such Class will be treated as the
fair market value of such Class on the Closing Date. The issue price of a Class
A Certificate also includes the amount paid by a Class A Certificateholder for
accrued interest that relates to a period prior to the issue date of the Class A
Certificate. The stated redemption price at maturity of a Class A Certificate
includes the original principal amount of the Class A Certificate, but generally
will not include distributions of interest if such distributions constitute
"qualified stated interest."
Under the de minimis rule, OID on a Class A Certificate will be considered
to be zero if such OID is less than 0.25% of the stated redemption price at
maturity of the Class A Certificate multiplied by the weighted average maturity
of the Class A Certificate. Certificateholders generally must report de minimis
OID pro rata as principal payments are received, and such income will be capital
gain if the Class A Certificate is held as a capital asset. However, accrual
method holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.
The holder of a Class A Certificate issued with OID must include in gross
income, for all days during its taxable year on which it holds such Class A
Certificate, the sum of the "daily portions" of such original issue discount.
The amount of OID includible in income by a Certificateholder will be computed
by allocating to each day during a taxable year a pro rata portion of the
original issue discount that accrued during the relevant accrual period.
If a Certificateholder purchases a Class A Certificate issued with OID at
an "acquisition premium" (i.e., at a price in excess of the adjusted issue price
of the Class A Certificate, but less than or equal to the "stated redemption
price at maturity"), the amount includible by such Certificateholder in income
in each taxable year as OID will be reduced by that portion of the premium
properly allocable to such year.
Although the matter is not entirely clear, the Transferor currently intends
to report all stated interest on the Class A Certificates as qualified stated
interest and not as OID.
Market Discount. Certificate Owners should be aware that the resale of a
Class A Certificate 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 acquires a Class A Certificate at a market discount (i.e., at a price
below its "adjusted issue price") and thereafter recognizes gain upon a
disposition of the Class A Certificate, the lesser of such gain or the portion
of the market discount that accrued while the Class A Certificate was held by
such holder will be treated as ordinary interest income realized at the time of
the disposition. A taxpayer may elect to include market discount currently in
gross income in taxable years to which it is attributable, computed using either
a ratable accrual or a yield to maturity method.
Premium. A Certificate Owner who purchases a Class A Certificate for more
than its stated redemption price at maturity will be subject to the premium
amortization rules of the Code. Under those rules, the Certificate Owner may
elect to amortize such premium on a constant yield method. Amortizable premium
reduces interest income on the related Class A Certificate. If the Certificate
Owner does not make such an
95
<PAGE> 98
election, the premium paid for the Class A Certificate generally will be
included in the tax basis of the Class A Certificate in determining the gain or
loss on its disposition.
Each Certificate Owner should consult his own tax advisor regarding the
impact of the original issue discount, market discount, and premium amortization
rules.
Sales of Class A Certificates
In general, a Certificate Owner will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of a Class A Certificate
measured by the difference between (i) 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 (ii) the Certificate Owner's tax basis in the
Class A 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, other than qualified
stated interest payments, received with respect to such Class A Certificate).
Subject to the market discount rules discussed above and to the more than
one-year holding period requirement for long-term capital gain treatment, any
such gain or loss generally will be long-term capital gain or loss, provided
that the Class A 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
generally 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.
Federal Income Tax Consequences to Foreign Investors
The following information describes the United States federal income tax
treatment of investors that are not United States persons ("Foreign Investors")
if the Class A Certificates are treated as debt. The term "Foreign Investor"
means any person other than (i) a citizen or resident of the United States, (ii)
a corporation, partnership or other entity organized in or under the laws of the
United States or any state or political subdivision thereof, (iii) an estate or
trust the income of which is includible in gross income for United States
federal income tax purposes, regardless of its source or (iv) for trusts whose
taxable years begin after December 31, 1996, a trust whose administration is
subject to the primary supervision of a United States court and which has one or
more United States fiduciaries who have authority to control all substantial
decisions of the trust.
The Code and Treasury regulations generally subject interest paid to a
Foreign Investor to a withholding tax at a rate of 30% (unless such rate were
changed by an applicable treaty). The withholding tax, however, is eliminated
with respect to certain "portfolio debt investments" issued to Foreign
Investors. Portfolio debt investments include debt instruments issued in
registered form for which the United States payor receives a statement that the
beneficial owner of the instrument is a Foreign Investor. The Class A
Certificates will be issued in registered form; therefore, if the information
required by the Code is furnished (as described below) and no other exceptions
to the withholding tax exemption are applicable, no withholding tax will apply
to the Class A Certificates.
For the Class A Certificates to constitute portfolio debt investments
exempt from United States withholding tax, the withholding agent must receive
from the Certificate Owner an executed IRS Form W-8 signed under penalty of
perjury by the Certificate Owner stating that the Certificate Owner is a Foreign
Investor and providing such Certificate Owner's name and address. The statement
must be received by the withholding agent in the calendar year in which the
interest payment is made, or in either of the two preceding calendar years.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to United States federal income tax on gain realized on the sale,
exchange or redemption of such Class A Certificate, provided that (i) such gain
is not effectively connected with a trade or business carried on by the
Certificate Owner in the United States, (ii) 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
96
<PAGE> 99
redemption occurs and (iii) in the case of gain representing accrued interest,
the conditions described in the immediately preceding paragraph are satisfied.
Backup Withholding
A Certificate Owner may be subject to a backup withholding at the rate of
31% with respect to interest paid on the Class A Certificates if the Certificate
Owner, upon issuance, fails to supply the Trustee or his broker with such
Certificate Owner's taxpayer identification number, fails to report interest,
dividends or other "reportable payments" (as defined in the Code) properly, or
under certain circumstances, fails to provide the Trustee or his broker with a
certified statement, under penalty of perjury, that such Certificate Owner is
not subject to backup withholding. Information returns will be sent annually to
the IRS and to each Certificate Owner setting forth the amount of interest paid
on the Class A Certificates and the amount of tax withheld thereon.
Possible Alternative Treatment of the Class A Certificates
Although, as described above, it is the opinion of Brown & Wood LLP that
the Class A Certificates will properly be characterized as debt for federal
income tax purposes, such opinion will not be binding on the IRS and thus no
assurance can be given that such a characterization shall prevail. If the IRS
were to contend successfully that the Class A Certificates did not represent
debt for federal income tax purposes, certain adverse tax consequences to the
Class A Certificateholders could result. For example, the Trust generally should
be required to pay corporate income tax on its taxable income (thus reducing the
cash available to make payments on the Class A Certificates). In addition,
income to certain tax-exempt entities (including pension funds) generally should
be "unrelated business taxable income", and income to foreign holders generally
should be subject to U.S. withholding tax and reporting requirements. As part of
its regular examination process, the IRS currently is reviewing transactions
consummated in prior years that are similar to the transaction described in this
Prospectus. While World Omni strongly believes that any challenge by the IRS, if
made, would be unsuccessful, there can be no assurance of this result.
Prospective investors are advised to consult with their own tax advisors
regarding the federal income tax consequences of the purchase, ownership and
disposition of the Class A Certificates.
FLORIDA INCOME TAXATION
The Florida Administrative Code includes a rule (the "Loan Rule"),
promulgated under the Florida Income Tax Code, which provides that a financial
organization earning or receiving interest from loans secured by tangible
property located in Florida will be deemed to be conducting business or earning
or receiving income in Florida, and will be subject to Florida corporate income
tax irrespective of the place of receipt of such interest. A "financial
organization" is defined to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company or investment company. If the Loan Rule were to apply to an
investment in the Class A Certificates, then a financial organization investing
in the Class A Certificates would be subject to Florida corporate income tax on
a portion of its income at a maximum rate of 5.5%, and would be required to file
an income tax return in Florida, even if it has no other Florida contacts.
English, McCaughan & O'Bryan, P.A., special Florida counsel to the Transferor,
is of the opinion that if the matter were properly presented to a court having
jurisdiction, and assuming interpretation of relevant law on a basis consistent
with existing authority, such court would hold that the Loan Rule would not
apply to an investment in the Class A Certificates or the receipt of interest
thereon by a financial organization with no other Florida contacts.
Consequently, prospective investors are urged to consult their own tax advisers
as to the applicability of Florida taxation to their investments in the
Certificates and to their ability to offset any such Florida tax against any
other state tax liabilities that such investors might have.
97
<PAGE> 100
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit pension, profit sharing
or other employee benefit plans ("Benefit Plans") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plans. ERISA
also imposes certain duties on persons who are fiduciaries of Benefit Plans
subject to ERISA. Under ERISA, any person who exercises any authority or control
with respect to the management or disposition of the assets of a Benefit Plan is
considered to be a fiduciary of such Benefit Plan (subject to certain exceptions
not here relevant). A violation of these "prohibited transaction" rules may
result in liability under ERISA and the Code for such persons.
Neither ERISA nor the Code defines the terms "plan assets". Under Section
2510.3-101 of the United States Department of Labor ("DOL") regulations (the
"Regulation"), a Plan's assets may include an interest in the underlying assets
of an entity (such as a trust) for certain purposes, including the prohibited
transaction provisions of ERISA and the Code, if the Plan acquires an "equity
interest" in such entity. The Transferor believes that the Certificates will
give Certificateholders an equity interest in the Trust for purposes of the
Regulation. Under the Regulation, when a Plan acquires an equity interest that
is neither a "publicly offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, the underlying
assets of the entity will be considered "plan assets" unless the entity is an
"operating company" or equity participation in the entity by benefit plan
investors is not "significant". For this purpose, such participation is
significant if immediately after the most recent acquisition of any equity
interest in the entity, whether or not from an issuer or an underwriter, 25% or
more of the value of any class of equity interest is held by "benefit plan
investors", which are defined as Benefit Plans and employee benefit plans not
subject to ERISA (e.g., governmental plans).
The Trust will not be an "operating company" as defined in the Regulation,
and it will not be an investment company registered under the Investment Company
Act of 1940. A "publicly-offered security" is defined under the Regulation as a
security that is "freely transferable" (which is presumed if the face amount of
each Certificate is $10,000 or less), "widely held" (with at least 100 holders
of each of the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates and the Class A-4 Certificates independent of the Trust and of one
another as of the initial offering) and part of a class of securities registered
under Sections 12(b) or 12(g) of the Exchange Act or sold to the public pursuant
to an effective registration statement under the Securities Act, and the class
of which the Class A Certificates are a part is required to be registered under
the Exchange Act within 120 days after the end of the Trust's fiscal year. The
Transferor anticipates that the Class A Certificates will be freely
transferable, but does not expect that the registration requirements under the
Exchange Act will be met. The Underwriters can give no assurances that there
will be at least 100 holders of each of the Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates and the Class A-4 Certificates
(independent of the Trustee and each other) who will purchase the Class A
Certificates as of the initial offering in order to satisfy the "widely held"
requirement.
If at any time immediately after the most recent acquisition of any Class A
Certificates, 25% or more of the value of any Class of Certificates is held by
benefit plan investors, then all or some portion of the assets of the Trust
would constitute plan assets. There can be no assurance that less than 25% of
the value of any Class of Certificates will be held by benefit plan investors.
Accordingly, the assets of the Trust may be deemed to include the assets of
Benefit Plans that are Class A Certificateholders, and transactions between the
Trust and "parties in interest" or "disqualified persons" with respect to such
Benefit Plans might be prohibited transactions under Section 406 of ERISA and
Section 4975 of the Code. Thus, for example, if a participant in a Benefit Plan
that is a Class A Certificateholder is a lessee in respect of a Contract, a
prohibited transaction could occur.
The DOL has granted to World Omni and its affiliates, including the
Transferor, an administrative exemption (Prohibited Transaction Exemption 96-12;
Exemption Application No. D-09840, et al., 61 Fed. Reg. 10025-31 (March 12,
1996)) (the "Exemption") from certain of the prohibited transaction rules of
ERISA. The Exemption applies to the initial purchase, the holding and the
subsequent resale by Benefit Plans of certificates similar to the Class A
Certificates, provided that certain specified conditions (certain of which
98
<PAGE> 101
are specified below) are met. The Transferor believes all conditions of the
Exemption other than those within the control of the investors have been or will
be met.
For the Exemption to apply to the acquisition by a Benefit Plan of Class A
Certificates, the Class A Certificates would be required to be offered and sold
initially to the public (including Benefit Plans) pursuant to an underwriting
arrangement with one or more underwriters which have received one of a group of
administrative exemptions from certain of the prohibited transaction rules of
ERISA. Such exemptions apply with respect to the initial purchase, the holding
and the subsequent resale by Benefit Plans of certificates representing
interests in asset backed pass-through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of such exemption. The DOL has granted such an administrative
exemption to the managing Underwriter (Prohibited Transaction Exemption 90-29;
Exemption Application No. D-8012, 55 Fed. Reg. 21,459 (1990), as amended.
Among the other conditions that are required to be satisfied for the
Exemption to apply to the acquisition by a Benefit Plan of the Class A
Certificates are the following (each of which the Transferor believes has been
or will be met in connection with the Class A Certificates):
(i) The acquisition of the Class A Certificates by a Benefit Plan is
on terms (including the price for the Class A Certificates) that are at
least as favorable to the Benefit Plan as they would be in an arm's length
transaction with an unrelated party.
(ii) The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by any other Class of Certificates, and the rights and
interests evidenced by the SUBI Interest are not subordinated to the rights
and interests evidenced by Other SUBI Certificates or UTI Certificates.
(iii) The Class A Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from Standard & Poor's, Moody's,
Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Fitch Investors
Service, Inc. ("Fitch").
(iv) The sum of all payments made to the Underwriters in connection
with the distribution of the Class A Certificates represents not more than
reasonable compensation for underwriting the Class A Certificates. The sum
of all payments made to and retained by the Transferor pursuant to the sale
of the SUBI Interest to the Trust represents not more than the fair market
value of the interest in the Contracts and Leased Vehicles represented
thereby. The sum of all payments made to and retained by the Servicer with
regard to the SUBI Assets represents not more than reasonable compensation
for the Servicer's services under the Servicing Agreement and reimbursement
of the Servicer's reasonable expenses in connection therewith.
(v) The Revolving Period ends no more than 15 consecutive months from
the Closing Date and (A) all Subsequent Contracts meet the same terms and
conditions for eligibility as the Initial Contracts, and (B) the addition
of Subsequent Contracts does not result in the reduction of the ratings on
the Class A Certificates received from any of Moody's, Standard & Poor's,
Duff & Phelps or Fitch.
(vi) After the Revolving Period ends, the average Lease Rate for the
Contracts included in the SUBI Assets shall not be more than 200 basis
points greater than the average Lease Rate for the Initial Contracts.
(vii) Principal Collections that are reinvested in Subsequent
Contracts during the Revolving Period are first invested in an eligible
lease contract with the earliest origination date, then in an eligible
lease contract with the next earliest origination date and so forth,
beginning with the lease contracts that have been reserved specifically for
such purpose at the time of the initial allocation of lease contracts to
the SUBI, but excluding those specific lease contracts reserved for
allocation to or allocated to Other SUBIs.
In addition, it is a condition that the Benefit Plan investing in the Class
A Certificates be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
99
<PAGE> 102
The Exemption does not apply to Benefit Plans sponsored by the Transferor,
the Underwriters, the Trustee, the Servicer, any lessee with respect to
Contracts allocated to the SUBI Assets constituting more than 5% of the
aggregate unamortized principal balance of the SUBI Assets, or any affiliate of
such parties (the "Restricted Group"). As of the date hereof, no lessee with
respect to the Contracts allocated to the SUBI Assets constitutes more than 5%
of the aggregate unamortized principal balance of the Trust (i.e., more than 5%
of 99.8% of the Aggregate Net Investment Value as of the Initial Cutoff Date).
Moreover, the Exemption provides relief for sales, exchanges or transfers
between a Benefit Plan and the underwriter or sponsor with discretionary
investment authority over such Benefit Plan's assets, from certain
self-dealing/conflict of interest prohibited transactions, only if, among other
requirements, (i) a Benefit Plan's investment in the Class A Certificates does
not exceed 25% of all of the Class A Certificates outstanding at the time of the
acquisition, and (ii) immediately after the acquisition, no more than 25% of the
assets of a Benefit Plan with respect to which the person who has discretionary
authority or renders investment advice are invested in Class A Certificates
representing an interest in a trust containing assets sold or serviced by the
same entity.
Due to the complexities of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is important that the fiduciary
of a Benefit Plan considering the purchase of Class A Certificates consult with
its counsel regarding the applicability of Exemption and the prohibited
transaction provisions of ERISA and the Code to such investment. Moreover, each
Benefit Plan fiduciary should determine whether, under the general fiduciary
standards of investment prudence and diversification, an investment in the Class
A Certificates is appropriate for the Benefit Plan, taking into account the
overall investment policy of the Benefit Plan and the composition of the Benefit
Plan's investment portfolio.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated April , 1997 (the "Underwriting Agreement"), the Underwriters
named below (the "Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated is acting as representative (the "Representative"), have severally
but not jointly agreed to purchase from the Transferor the following respective
principal amounts of Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates and Class A-4 Certificates:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
UNDERWRITER CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............... $ $ $ $
CS First Boston Corporation.............
BA Securities, Inc......................
Salomon Brothers Inc....................
------------ ------------ ------------ ------------
Total...................... $ $ $ $
============ ============ ============ ============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent that the Underwriters
will be obligated to purchase all the Class A Certificates if any are purchased.
The Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of the
non-defaulting Underwriter may be increased or the Underwriter Agreement may be
terminated.
The Transferor has been advised by the Representative that the Underwriters
propose to offer the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates and the Class A-4 Certificates to the public initially at
the public offering prices set forth on the cover page of this Prospectus and to
certain dealers at such prices less a concession of %, %, % and
% of the principal amount per Class A-1 Certificate, Class A-2 Certificate,
Class A-3 Certificate and Class A-4 Certificate, respectively, and the
Underwriters and such dealers may allow a discount of %, %, % and
% of such principal amount per Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate and Class A-4 Certificate,
100
<PAGE> 103
respectively, on sales to certain other dealers. After the initial public
offering, the public offering price and concessions and discounts to dealers may
be changed by the Underwriters.
The Transferor and World Omni have jointly and severally agreed to
indemnify the Underwriters against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments which the
Underwriters may be required to make in respect thereof.
It is expected that delivery of the Class A Certificates will be made
against payment therefor on or about the date specified in the last paragraph of
the cover page of this Prospectus, which is the business day following the
date hereof. Under Rule 15c6-1 of the Commission under the Exchange Act, trades
in the secondary market generally are required to settle in three business days,
unless the parties to any such trade expressly agree otherwise. Accordingly,
purchasers who wish to trade Class A Certificates on the date hereof will be
required, by virtue of the fact that the Class A Certificates initially will
settle business days after the date hereof, to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement.
Purchasers of Class A Certificates who wish to trade Class A Certificates on the
date hereof should consult their own advisor.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Transferor or the Underwriters will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
Until the distribution of the Class A Certificates is complete, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase the Class A Certificates. As an exception
to these rules, the Underwriters are permitted to engage in certain transactions
that stabilize the price of the Class A Certificates. Such transactions consist
of bids or purchases for the purpose of pegging, fixing or maintaining the price
of the Class A Certificates.
Neither the Transferor nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Class A Certificates. In addition,
neither the Transferor nor any Underwriter makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Class A Certificates in Canada is being made only
on a private placement basis exempt from the requirement that the Transferor
prepare and file a prospectus with the securities regulatory authorities in each
province where trades of the Class A Certificates are effected. Accordingly, any
resale of the Class A Certificates in Canada must be made in accordance with
applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made in accordance with
available statutory exemptions or pursuant to a discretionary exemption granted
by the applicable Canadian securities regulatory authority. Purchasers are
advised to seek legal advice prior to any resale of the Class A Certificates.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Class A Certificates in Canada who receives a purchase
confirmation will be deemed to represent to the Transferor and the dealer from
whom such purchase confirmation is received that (i) such purchaser is entitled
under applicable provincial securities laws to purchase such Class A
Certificates without the benefit of a prospectus qualified under such securities
laws, (ii) where required by law, that such purchaser is purchasing as principal
and not as agent, and (iii) such purchaser has reviewed the text above under
"Notice to Canadian Residents -- Resale Restrictions".
101
<PAGE> 104
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of foreign issuers and Ontario
purchasers will not receive the contractual right of action prescribed by
Section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liabilities provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada. Following a recent decision of the U.S. Supreme
Court, it is possible that Ontario purchasers will not be able to rely upon the
remedies set out in Section 12(2) of the Securities Act if the securities are
being offered under a U.S. private placement memorandum.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Class A Certificates to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Class A Certificates acquired by such purchaser pursuant to this offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from the
Transferor. Only one such report must be filed in respect of Class A
Certificates acquired on the same date and under the same prospectus exemption.
RATINGS OF THE CLASS A CERTIFICATES
It is a condition of issuance that each of Moody's and Standard & Poor's
rates each Class of Class A Certificates in its highest rating category. The
ratings of the Class A Certificates will be based primarily upon the value of
the Initial Contracts, the Residual Value Insurance Policy, the Reserve Fund and
the terms of the Transferor Interest and the Class B Certificates. There is no
assurance that any such rating will not be lowered or withdrawn by the assigning
Rating Agency if, in its judgment, circumstances so warrant. In the event that a
rating with respect to any Class of Class A Certificates is qualified, reduced
or withdrawn, no person or entity will be obligated to provide any additional
credit enhancement with respect to such Class of Class A Certificates.
The ratings of the Class A Certificates should be evaluated independently
from similar ratings on other types of securities. A rating is not a
recommendation to buy, sell or hold the related Class A Certificates, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The ratings of each Class of Class A Certificates addresses
the likelihood of the payment of principal of and interest on such Certificates
pursuant to their terms.
There can be no assurance as to whether any rating agency other than
Moody's and Standard & Poor's will rate the Class A Certificates, or, if one
does, what rating will be assigned by such other rating agency. A rating on any
Class of Class A Certificates by another rating agency, if assigned at all, may
be lower than the ratings assigned to such Class A Certificates by each of
Moody's and Standard & Poor's.
LEGAL MATTERS
Certain legal matters with respect to the Class A Certificates will be
passed upon for the Transferor by Williams & Connolly, Washington, D.C. Certain
other legal matters will be passed upon for the Transferor with respect to New
York and Illinois law, by McDermott, Will & Emery, New York, New York and
Chicago, Illinois, with respect to Alabama law, by Hand Arendall, L.L.C.,
Birmingham, Alabama, and with
102
<PAGE> 105
respect to Florida law, by English, McCaughan & O'Bryan, P.A., Fort Lauderdale,
Florida. Brown & Wood LLP, San Francisco, California will act as special federal
income tax counsel to the Transferor and as counsel for the Underwriters.
EXPERTS
The Statement of Admitted Assets, Liabilities, Capital and Surplus
(Statutory Basis) as of December 31, 1995 and 1994, the Statement of Income and
Capital Surplus Account (Statutory Basis) for the Years Ended December 31, 1995
and 1994, the Statement of Cash Flows (Statutory Basis) for the Years Ended
December 31, 1995 and 1994, the Statement of Admitted Assets, Liabilities,
Capital and Surplus (Statutory Basis) as of December 31, 1994 and 1993, the
Statement of Income and Capital and Surplus Account (Statutory Basis) for the
Years Ended December 31, 1994 and 1993, the Statement of Cash Flows (Statutory
Basis) for the Years Ended December 31, 1994 and 1993, all of AISLIC, have been
included herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent certified public accountants (which reports express an adverse
opinion under generally accepted accounting principles and an unqualified
opinion as to the statutory basis of accounting), given on the authority of that
firm as experts in accounting and auditing.
103
<PAGE> 106
INDEX OF CAPITALIZED TERMS
Set forth below is a list of the capitalized terms used in this Prospectus
and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
ABS............................................. 47
Accelerated Principal Distribution Amount....... 14
Accounts........................................ 68
Additional Loss Amounts......................... 78
Additional Loss Contract........................ 72
Advance......................................... 21,82
Administrative Lien............................. 33
Administrative Lienholders...................... 33
Agency Agreement................................ 79
Aggregate Net Investment Value.................. 16
Agreement....................................... 5
AIG............................................. 19,73
AISLIC.......................................... 19,73
AISLIC Reserve Fund Supplemental Requirement.... 70
AISLIC Trigger Event............................ 70
ALFI............................................ 5
ALFI L.P........................................ 5
Alternate Reserve Fund Formula.................. 71
Amortization Date............................... 13
Amortization Period............................. 13
Benefit Plans................................... 98
Business Day.................................... 10
Capped Contingent and Excess Liability
Premiums...................................... 56
Capped Origination Trust Administrative
Expenses...................................... 56
Capped Trust Administrative Expenses............ 56
Cede............................................ 9
Cedel........................................... 9
Cedel Participants.............................. 63
Certificate Balance............................. 9
Certificate Distribution Amount................. 61
Certificateholders.............................. 13
Certificate Owner............................... 9
Certificate Principal Loss Amount............... 56
Certificate Rates............................... 54
Certificates.................................... 1,7
Charge-off Rate................................. 72
Charge-off Rate Test............................ 72
Charged-off Amount.............................. 52
Charged-off Contract............................ 52
Claims.......................................... 80
Class........................................... 50
Class A Certificate Balance..................... 9
Class A Certificateholders...................... 10
Class A Certificates............................ 2,7
Class A Interest................................ 8
Class A Percentage.............................. 13
Class A-1 Allocation Percentage................. 23
Class A-1 Certificate Balance................... 8
Class A-1 Certificate Factor.................... 50
Class A-1 Certificate Principal Loss Amount..... 54
Class A-1 Certificate Rate...................... 10
Class A-1 Certificateholders.................... 10
Class A-1 Certificates.......................... 2,7
Class A-1 Interest.............................. 8
Class A-1 Interest Carryover Shortfall.......... 56
Class A-2 Allocation Percentage................. 23
Class A-2 Certificate Balance................... 8
Class A-2 Certificate Factor.................... 50
Class A-2 Certificate Principal Loss Amount..... 54
Class A-2 Certificate Rate...................... 10
Class A-2 Certificateholders.................... 10
Class A-2 Certificates.......................... 2,7
Class A-2 Interest.............................. 8
Class A-2 Interest Carryover Shortfall.......... 56
Class A-3 Allocation Percentage................. 23
Class A-3 Certificate Balance................... 8
Class A-3 Certificate Factor.................... 50
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Class A-3 Certificate Principal Loss Amount..... 54
Class A-3 Certificate Rate...................... 10
Class A-3 Certificateholders.................... 10
Class A-3 Certificates.......................... 2,7
Class A-3 Interest.............................. 8
Class A-3 Interest Carryover Shortfall.......... 56
Class A-4 Allocation Percentage................. 23
Class A-4 Certificate Balance................... 8
Class A-4 Certificate Factor.................... 50
Class A-4 Certificate Principal Loss Amount..... 54
Class A-4 Certificate Rate...................... 10
Class A-4 Certificateholders.................... 10
Class A-4 Certificates.......................... 2,7
Class A-4 Interest.............................. 8
Class A-4 Interest Carryover Shortfall.......... 57
Class B Allocation Percentage................... 57
Class B Certificate Balance..................... 8
Class B Certificate Principal Carryover
Shortfall..................................... 57
Class B Certificate Principal Loss Amount....... 54
Class B Certificate Rate........................ 54
Class B Certificateholders...................... 13
Class B Certificates............................ 2,7
Class B Interest................................ 8
Class B Interest Carryover Shortfall............ 56
Class B Percentage.............................. 13
Class Certificate Balance....................... 9
Closing Date.................................... 8
Code............................................ 93
Collection Period............................... 12
Collections..................................... 12,58
Commission...................................... 2
Contingent and Excess Liability Insurance
Policies...................................... 75
Contracts....................................... 6
Cooperative..................................... 65
Current Contracts............................... 72
Cutoff Dates.................................... 57
Deerfield Office................................ 34
Dealers......................................... 5
Definitive Certificates......................... 50
Delinquency Rate................................ 72
Delinquency Test................................ 72
Deposit Date.................................... 17
Depositaries.................................... 9
Determination Date.............................. 53
Discounted Contract............................. 12
Discounted Principal Balance.................... 16
Distribution Account............................ 67
Distribution Date............................... 2,10
DOL............................................. 98
Downgrade Reserve Fund Supplemental
Requirement................................... 71
Downgrade Trigger Event......................... 71
DTC............................................. 9
DTC Participants................................ 63
Duff & Phelps................................... 99
Early Amortization Event........................ 59
Early Termination Charge........................ 41
ERISA........................................... 21,98
ERISA Compliance Test........................... 85
Euroclear....................................... 9
Euroclear Operator.............................. 65
Euroclear Participants.......................... 63
Events of Servicing Termination................. 86
Excess Collections.............................. 55
Exchange Act.................................... 2
Exemption....................................... 98
Extension Fee................................... 37
Fair, Isaac..................................... 35
</TABLE>
104
<PAGE> 107
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Final Scheduled Distribution Date............... 10
First Bank...................................... 5
Fitch........................................... 99
Five State Area................................. 7
Foreign Investors............................... 96
Full Termination Ratio.......................... 38
Global Securities............................... A-1
Indirect DTC Participants....................... 63
Initial Certificate Balance..................... 9
Initial Class A Certificate Balance............. 9
Initial Class A-1 Certificate Balance........... 8
Initial Class A-2 Certificate Balance........... 8
Initial Class A-3 Certificate Balance........... 8
Initial Class A-4 Certificate Balance........... 8
Initial Class B Certificate Balance............. 9
Initial Contracts............................... 6
Initial Cutoff Date............................. 6
Initial Deposit................................. 20
Initial Leased Vehicles......................... 6
Insolvency Event................................ 28
Insolvency Laws................................. 28
Insurance Proceeds.............................. 67
Insured Residual Value Loss Amount.............. 19
Interest Collections............................ 12,56
Interest Period................................. 10
Investor Interest............................... 8
Investor Percentage............................. 14
IRS............................................. 93
JMFE............................................ 7,34
Lease Rate...................................... 15
Leased Vehicles................................. 6
Lemon Law....................................... 92
Liquidated Contract............................. 72
Liquidation Expenses............................ 17
Liquidation Proceeds............................ 17
Loan Rule....................................... 97
Loss Amounts.................................... 23
Matured Contract................................ 16
Matured Leased Vehicle Expenses................. 17
Matured Leased Vehicle Inventory................ 16
Matured Leased Vehicle Proceeds................. 17
Maturity Date................................... 41
Mobile Center................................... 34
Monthly Payments................................ 15
Moody's......................................... 21
National Union.................................. 73
Net Liquidation Proceeds........................ 13
Net Matured Leased Vehicle Proceeds............. 18
Net Repossessed Vehicle Proceeds................ 13
Nonrecoverable Advance.......................... 82
OID............................................. 94
Omnibus Proxy................................... 64
Origination Trust............................... 1,5
Origination Trust Agreement..................... 15
Origination Trust Assets........................ 1,32
Origination Trustee............................. 5
Other SUBI Assets............................... 31
Other SUBI Certificates......................... 31
Other SUBI Supplement........................... 78
Other SUBIs..................................... 5
Outstanding Principal Balance................... 15
Participants.................................... 63
Payment Ahead................................... 17
PBGC............................................ 89
Permitted Investments........................... 69
Prepayment...................................... 67
Prepayment Assumption........................... 47
Principal Allocation............................ 14
Principal Collections........................... 12,58
Rating Agencies................................. 21
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Realized Value.................................. 41
Reallocation Deposit Amount..................... 52
Reallocation Payment............................ 45
Record Date..................................... 10
Registration Statement.......................... 2
Regulation...................................... 98
Repossessed Vehicle Expenses.................... 17
Repossessed Vehicle Proceeds.................... 17
Representative.................................. 100
Required Amount................................. 57
Required Deposit Ratings........................ 69
Reserve Fund.................................... 69
Reserve Fund Cash Requirement................... 70
Reserve Fund Deficiency......................... 70
Reserve Fund Supplemental Requirement........... 70
Reserve Fund Tests.............................. 71
Residual Value.................................. 15
Residual Value Insurance Policy................. 19,73
Residual Value Loss Amount...................... 23
Residual Value Surplus.......................... 18
Residual Value Surplus Account.................. 68
Restricted Group................................ 100
Retained SUBI Interest.......................... 7
Revolving Period................................ 11
Schedule of Contracts and Leased Vehicles....... 44
Securities Act.................................. 2
Security Deposits............................... 82
Servicer........................................ 7
Servicer Letter of Credit....................... 68
Servicer's Certificate.......................... 84
Servicing Agreement............................. 7
Servicing Fee................................... 21
SET............................................. 7,34
St. Louis Center................................ 34
Standard & Poor's............................... 21
SUBI............................................ 1,5
SUBI Assets..................................... 2,6
SUBI Certificate................................ 15
SUBI Collection Account......................... 67
SUBI Interest................................... 5
SUBI Supplement................................. 15
SUBI Trust Agreement............................ 15
Subsequent Contracts............................ 6
Subsequent Cutoff Date.......................... 57
Subsequent Leased Vehicles...................... 6
Support Agreement............................... 33
Terms and Conditions............................ 65
TMS............................................. 34
Transfer Date................................... 11
Transferor...................................... 1,5
Transferor Amounts.............................. 53
Transferor Interest............................. 2,8
Transferor Percentage........................... 52
Trust........................................... 1,5
Trust Agent..................................... 15,79
Trustee......................................... 1,5
UCC............................................. 90
Unallocated Principal Collections............... 53
Uncapped Administrative Expenses................ 55
Underwriters.................................... 100
Underwriting Agreement.......................... 100
Undistributed Transferor Excess Collections..... 55
U.S. Person..................................... A-3
UTI............................................. 5
UTI Assets...................................... 31
UTI Certificates................................ 31
Voting Interests................................ 60
WOLSI........................................... 7
World Omni...................................... 1,5
</TABLE>
105
<PAGE> 108
INDEX TO FINANCIAL STATEMENTS
OF
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
<TABLE>
<S> <C>
Report of Coopers & Lybrand L.L.P........................... F-1
Statement of Admitted Assets, Liabilities, Capital and
Surplus (Statutory Basis) of American International
Specialty Lines Insurance Company as of December 31, 1995
and 1994.................................................. F-2
Statement of Income and Capital Surplus Account (Statutory
Basis) of American International Specialty Lines Insurance
Company for the Years Ended December 31, 1995 and 1994.... F-3
Statement of Cash Flows (Statutory Basis) of American
International Specialty Lines Insurance Company for the
Years Ended December 31, 1995 and 1994.................... F-4
Notes to Financial Statements of American International
Specialty Lines Insurance Company for the Two Years Ended
December 31, 1995......................................... F-5
Report of Coopers & Lybrand L.L.P........................... F-11
Statement of Admitted Assets, Liabilities, Capital and
Surplus (Statutory Basis) of American International
Specialty Lines Insurance Company as of December 31, 1994
and 1993.................................................. F-12
Statement of Income and Capital Surplus Account (Statutory
Basis) of American International Specialty Lines Insurance
Company for the Years Ended December 31, 1994 and 1993.... F-13
Statement of Cash Flows (Statutory Basis) of American
International Specialty Lines Insurance Company for the
Years Ended December 31, 1994 and 1993.................... F-14
Notes to Financial Statements of American International
Specialty Lines Insurance Company for the Two Years Ended
December 31, 1994......................................... F-15
</TABLE>
106
<PAGE> 109
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
American International Specialty Lines Insurance Company:
We have audited the accompanying statements of admitted assets,
liabilities, capital and surplus (statutory basis) of American International
Specialty Lines Insurance Company (the "Company") as of December 31, 1995 and
1994, and related statements of income and changes in capital and surplus
account and cash flows (statutory basis) for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the State of Alaska Department of Commerce and Economic Development
Division of Insurance, which practices differ from generally accepted accounting
principles. The effects on the financial statements of the variances between the
statutory basis of accounting and generally accepted accounting principles,
although not reasonably determinable, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of American International Specialty Lines Insurance Company
as of December 31, 1995 and 1994 or the results of its operations or its cash
flows for the years then ended.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities, and capital and
surplus of American International Specialty Lines Insurance Company as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended, on the basis of accounting described in Note 1.
COOPERS & LYBRAND L.L.P.
New York, New York
May 17, 1996
F-1
<PAGE> 110
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS
(STATUTORY BASIS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
ADMITTED ASSETS
Bonds, at amortized cost (market value:
1995 -- $364,071,111; 1994 -- $337,898,167)............... $ 342,660,008 $ 346,191,559
Short-term investments at amortized cost (approximates
market)................................................... 1,816,577 4,265,432
Cash........................................................ 7,093,727 638,666
Other invested assets, at cost (approximates market)........ 13,536,699 212,499
------------- -------------
Total invested assets and cash.................... 365,107,011 351,308,156
Agents' balances or uncollected premiums:
Premiums in course of collection (net of ceded reinsurance
balances payable: 1995 -- $51,082,419;
1994 -- $59,792,510)................................... (7,984,299) (11,277,890)
Premiums and installments booked but deferred and not yet
due (net of ceded reinsurance balances payable:
1995 -- $15,045,483; 1994 -- $21,564,427)................. 73,458,478 15,638,632
Reinsurance recoverable on loss and loss adjustment expense
payments.................................................. 11,231,396 785,390
Interest and dividends due and accrued...................... 7,031,860 6,874,819
Receivable from parent and affiliates....................... -- 1,707,614
Other assets................................................ 1,258,000 119,207
------------- -------------
Total admitted assets............................. $ 450,102,446 $ 365,155,928
============= =============
LIABILITIES
Unpaid losses............................................... $ 137,464,053 $ 117,873,934
Reinsurance payable on paid loss and loss adjustment
expenses.................................................. 9,247,912 7,408,248
Unpaid loss adjustment expenses............................. 34,805,997 24,421,583
Unearned premiums........................................... 64,227,729 45,273,152
Funds held under reinsurance treaties....................... 7,315 4,063,394
Provision for reinsurance................................... 7,738,123 5,322,193
Federal income tax payable.................................. 1,981,087 263,786
Drafts outstanding.......................................... 19,581,459 9,766,673
Payable to parent and affiliates............................ 1,955,319 --
Other liabilities........................................... 2,655,650 1,218,443
------------- -------------
Total liabilities................................. $ 279,664,644 $ 215,611,406
============= =============
CAPITAL AND SURPLUS:
Capital stock, $33.35 par value, 150,000 shares authorized,
issued and outstanding.................................... $ 5,002,500 $ 5,002,500
Capital in excess of par value.............................. 98,377,500 98,377,500
Unassigned surplus.......................................... 67,057,802 46,164,522
------------- -------------
Total capital and surplus......................... 170,437,802 149,544,522
============= =============
Total liabilities, capital and surplus............ $ 450,102,446 $ 365,155,928
============= =============
</TABLE>
See Notes to Financial Statements
F-2
<PAGE> 111
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF INCOME AND CAPITAL SURPLUS ACCOUNT
(STATUTORY BASIS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
Underwriting income:
Premiums earned........................................... $ 81,810,517 $ 68,811,681
Deductions:
Losses incurred........................................ 48,588,886 52,678,015
Loss adjustment expenses incurred...................... 17,797,396 5,529,561
Other underwriting expenses incurred................... 8,604,097 7,754,832
------------- -------------
Total underwriting deductions..................... 74,990,379 65,962,408
------------- -------------
Net underwriting gains...................................... 6,820,138 2,849,273
------------- -------------
Investment income:
Net investment income earned.............................. 22,771,754 18,601,805
Net realized capital gains (losses)......................... 301,028 (79,435)
------------- -------------
Net investment gain......................................... 23,072,782 18,522,370
------------- -------------
Net income before Federal income taxes...................... 29,892,920 21,371,643
Federal income taxes........................................ 6,900,296 5,364,568
------------- -------------
Net income........................................ $ 22,992,624 $ 16,007,075
------------- -------------
CAPITAL and SURPLUS ACCOUNT:
Total capital and surplus, December 31, previous year....... $ 149,544,522 $ 132,405,702
Gains and (losses) in surplus:
Net income.................................................. 22,992,624 16,007,075
Change in non-admitted assets............................... 316,586 2,182,688
Change in provision for reinsurance......................... (2,415,930) (1,050,943)
------------- -------------
Change in surplus as regards policyholders for the year..... 20,893,280 17,138,820
------------- -------------
Total capital and surplus, December 31, current
year............................................ $ 170,437,802 $ 149,544,522
============= =============
</TABLE>
See Notes to Financial Statements
F-3
<PAGE> 112
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF CASH FLOWS
(STATUTORY BASIS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Premiums collected (net of reinsurance)..................... $ 39,968,249 $ 86,830,498
Loss and loss adjustment expenses paid (net of salvage,
subrogation and reinsurance).............................. 35,203,305 14,255,116
Underwriting expenses paid.................................. 8,866,433 7,498,564
------------ ------------
Net cash flow from underwriting............................. (4,101,489) 65,076,818
Investment income collected (net of investment expenses
paid)..................................................... 22,659,696 17,352,918
Federal income taxes paid................................... (5,182,995) (3,842,441)
------------ ------------
Net cash flow from operations..................... 13,375,212 78,587,295
Proceeds from investments sold, matured or repaid:
Bonds..................................................... 95,416,214 37,259,908
Other invested assets..................................... 89,750,000 --
------------ ------------
Total investment proceeds......................... 185,166,214 37,259,908
------------ ------------
Other cash provided:
Net transfers to affiliates............................... 3,662,933 --
Other sources............................................. -- 2,276,874
------------ ------------
Total other cash provided......................... 3,662,933 2,276,874
------------ ------------
Total............................................. 202,204,359 118,124,077
------------ ------------
Cost of investments acquired (long-term only):
Bonds..................................................... 91,338,032 110,886,243
Other invested assets..................................... 103,364,787 7,183
------------ ------------
Total investments acquired........................ 194,702,819 110,893,426
------------ ------------
Other cash applied:
Net transfers to affiliates............................... -- 119,959
Other applications........................................ 3,495,334 9,686,196
------------ ------------
Total other cash applied.......................... 3,495,334 9,806,155
------------ ------------
Total............................................. 198,198,153 120,699,581
------------ ------------
Net change in cash and short-term investments............... 4,006,206 (2,575,504)
RECONCILIATION:
Cash and short-term investments:
Beginning of year...................................... 4,904,098 7,479,602
------------ ------------
End of year............................................ $ 8,910,304 $ 4,904,098
------------ ------------
</TABLE>
See Notes to Financial Statements
F-4
<PAGE> 113
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT POLICIES:
(A) ORGANIZATION
American International Specialty Lines Insurance Company ("the Company") is
owned by the following wholly owned subsidiaries of American International
Group, Inc. ("the Parent"): National Union Fire Insurance Company of Pittsburgh,
PA (National Union) (70%); The Insurance Company of the State of Pennsylvania
(20%); and Birmingham Fire Insurance Company of Pennsylvania (10%). The Company
has significant transactions with the Parent and affiliates (see Notes 3 and 4).
The Company is predominantly a writer of property and casualty excess and
surplus lines.
(B) BASIS OF PRESENTATION
The accompanying financial statements were prepared in conformity with the
statutory accounting practices (SAP) of the National Association of Insurance
Commissioners (NAIC) and prescribed or permitted by the State of Alaska
Department of Commerce and Economic Development Division of Insurance, which is
a comprehensive basis of accounting other than generally accepted accounting
principles (GAAP). SAP varies in certain respects from GAAP. Under GAAP: (1)
costs incidental to acquiring business related to premiums written and costs
allowed by assuming reinsurers related to premiums ceded are deferred and
amortized over the periods covered by the underlying policies or reinsurance
agreements; (2) provision is made for deferred income taxes relating to
temporary differences between financial reporting and taxable income; (3)
non-admitted assets and statutory basis reserves are restored to surplus; (4)
the reserve for losses and loss expenses and reserve for unearned premiums are
presented gross of ceded reinsurance by establishing a reinsurance asset; (5)
debt securities deemed to be available for sale and trading are reported at fair
value.
Other significant accounting practices are as follows:
A. The preparation of the financial statements in conformity with the
accounting practices prescribed or permitted by the State of Alaska
Department of Commerce and Economic Development, Division of Insurance,
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the period. Actual results
could differ from those estimates.
B. Investments are carried at values designated by the NAIC. Bonds are
carried at amortized cost, except those bonds not in good standing, which
are carried at NAIC-designated values. Investment income is recorded as
earned. Realized gains or losses on the disposition of investments are
determined on the basis of specific identification.
C. Premiums written are primarily earned on a daily pro-rata basis
over the terms of the policies to which they relate. Accordingly, unearned
premiums represent the portion of premiums written which is applicable to
the unexpired terms of policies in force. Premium estimates for
retrospectively rated policies are recognized within the periods in which
the related losses are incurred.
D. Certain assets, principally furniture, equipment, and leasehold
improvements and certain overdue agents' balances, are designated
"non-admitted assets" and are directly charged to unassigned surplus.
E. The liabilities for unpaid losses and loss adjustment expenses,
including incurred but not reported losses, are determined on the basis of
claims adjusters' evaluations and other estimates, including historical
loss experience. The methods of making such estimates and for establishing
the resulting
F-5
<PAGE> 114
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
reserves are continually reviewed and updated, and any resulting
adjustments are recorded in the current period. Accordingly, losses and
loss adjustment expenses are charged to income as incurred.
F. Certain required statutory basis reserves, principally the
provision for reinsurance, are charged to surplus and reflected as a
liability of the Company.
G. Commissions, premium taxes, and certain other underwriting expenses
related to premiums written are charged to income at the time the premiums
are written and are included in "Other underwriting expenses incurred."
H. Unpaid losses and loss adjustment expenses have been reduced by
anticipated salvage and subrogation in the amount of approximately $686,000
and $485,000 at December 31, 1995 and December 31, 1994, respectively.
I. The Company considers all highly liquid debt securities with
maturities of twelve months or less to be short-term investments. Such
investments are deemed to be cash equivalents for purposes of the statement
of cash flows.
J. Other invested assets consist primarily of shares of an
intermediate bond mutual fund. The intermediate bond mutual fund is carried
principally at cost which approximates market.
K. Federal income taxes are provided on the basis of amounts currently
payable. Adjustments relating to the difference between the amount recorded
for financial statement purposes and the amount subsequently filed on the
tax return are charged or credited directly to federal income taxes on the
statement of income.
Certain amounts have been reclassified in order to conform with the current
year presentation.
2. FEDERAL INCOME TAXES:
The Company files a consolidated U.S. federal income tax return with the
Parent pursuant to a consolidated tax sharing agreement. The agreement provides
that the Parent will not charge the Company a greater portion of the
consolidated tax liability than would have been paid by the Company if it had
filed a separate federal income tax return. In addition, the agreement provides
that the Company will be reimbursed by the Parent for tax benefits relating to
any net losses of the Company utilized in filing the consolidated return. The
"Federal income tax payable" in the accompanying statement of admitted assets,
liabilities, capital and surplus are due to/due from the Parent.
The U.S. federal income tax rate applicable to ordinary income is 35% for
1995 and 1994. Actual tax expense on income from operations differs from the
"expected" amount principally as a result of tax-exempt investment income,
unearned premiums and the discounting of unpaid losses and loss adjustment
expenses.
3. MANAGEMENT AGREEMENT:
The Company is managed and operated by American International Surplus Lines
Agency, Inc. (Agency), a wholly owned subsidiary of the Parent. The management
agreement provides the Agency with the authority to conduct all business affairs
of the Company. As compensation for these services, the management agreement
provides that the Company pay the Agency an annual management fee of $100,000
plus actual expenses incurred on behalf of managing the Company. The management
fee and expense reimbursement paid to the Agency was $2,257,932 and $1,574,912
in 1995 and 1994, respectively.
4. RELATED PARTY TRANSACTIONS:
The Company cedes all agency business written in the State of Alaska to the
New Hampshire Insurance Company (a wholly owned subsidiary of the Parent). The
Company cedes 80% of its surplus lines insurance to National Union Fire
Insurance Company of Pittsburgh, PA (a wholly owned subsidiary of the Parent)
F-6
<PAGE> 115
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
through a reinsurance quota share agreement. The Company also assumes
reinsurance from Lexington Insurance Company, an affiliate.
5. INVESTMENTS:
The amortized cost and NAIC market values of investments in fixed
maturities carried at December 31, 1995 and December 31, 1994, are as follows:
<TABLE>
<CAPTION>
GROSS GROSS NAIC
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1995
Fixed maturities:
States, municipalities and political
subdivisions....................... $342,660 $21,765 $ 354 $364,071
-------- ------- ------- --------
Total bonds................... $342,660 $21,765 $ 354 $364,071
======== ======= ======= ========
1994
Fixed maturities:
States, municipalities and political
subdivisions....................... $346,192 $ 4,038 $12,332 $337,898
-------- ------- ------- --------
Total bonds................... $346,192 $ 4,038 $12,332 $337,898
======== ======= ======= ========
</TABLE>
The amortized cost and NAIC market values of fixed maturities at December
31, 1995, by contractual maturity, are shown below. Actual maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay certain obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED NAIC MARKET
COST VALUE
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Due after one year through five years....................... $ 29,305 $ 31,136
Due after five years through ten years...................... 60,958 64,767
Due after ten years......................................... 252,397 268,168
-------- --------
Total............................................. $342,660 $364,071
======== ========
</TABLE>
Proceeds from sales of investments in fixed maturities during 1995 and 1994
were $91,960,014 and $11,785,392, respectively. Gross gains of $1,822,167 and $0
and gross losses of $1,155,012 and $239,200 were realized on those sales in 1995
and 1994, respectively.
Securities carried at amortized cost, of $10,020,220 and $9,935,076 were
deposited with regulatory authorities, as required by law, at December 31, 1995
and December 31, 1994, respectively.
Included in "Net investment income earned" are investment expenses of
$200,564 and $184,557 for 1995 and 1994, respectively.
6. REINSURANCE:
In the ordinary course of business, the Company reinsures certain risks
with affiliated and non-affiliated companies. Such arrangements serve to limit
the Company's maximum loss on catastrophes, large risks and unusually hazardous
risks. To the extent that any reinsuring company might be unable to meet its
obligations, the Company would be liable for its respective participation in
such defaulted amounts.
F-7
<PAGE> 116
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Reserves for unearned premiums and reinsurance recoverables on paid and
unpaid losses and loss adjustment expenses, including those incurred but not
reported to the Company, have been reduced for reinsurance ceded as follows:
<TABLE>
<CAPTION>
UNEARNED PREMIUM LOSSES AND LOSS
RESERVES ADJUSTMENT EXPENSES
---------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
1995
Affiliates...................................... $ 330,190 $1,126,806
Non-affiliates.................................. 52,364 161,213
--------- ----------
Total................................... $ 382,554 $1,288,019
========= ==========
1994
Affiliated...................................... $ 251,556 $ 820,440
Non-affiliates.................................. 31,323 58,993
--------- ----------
Total................................... $ 282,879 $ 879,433
========= ==========
</TABLE>
Net premiums written and earned comprise the following:
<TABLE>
<CAPTION>
WRITTEN EARNED
---------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
1995
Direct business................................... $ 793,131 $ 672,857
Reinsurance assumed
Affiliates...................................... 18,966 20,634
Non-affiliates.................................. 45 22
Reinsurance ceded
Affiliates...................................... (621,827) (543,193)
Non-affiliates.................................. (89,550) (68,509)
--------- ----------
Net premiums............................ $ 100,765 $ 81,811
--------- ----------
1994
Direct business................................... $ 606,103 $ 497,818
Reinsurance assumed
Affiliates...................................... 18,111 17,327
Non-affiliates.................................. 0 0
Reinsurance ceded
Affiliates...................................... (485,279) (399,575)
Non-affiliates.................................. (59,016) (46,758)
--------- ----------
Net premiums............................ $ 79,919 $ 68,812
--------- ----------
</TABLE>
For the years ended December 31, 1995 and 1994, reinsurance recoveries,
which reduced loss and loss expenses incurred, amounted to $588,295,952 and
$430,310,953, respectively.
F-8
<PAGE> 117
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following unsecured reinsurance recoverables exceeded 3% of the capital
and surplus of the Company at December 31, 1995:
<TABLE>
<CAPTION>
REINSURER AMOUNT
- --------- ----------
(IN
THOUSANDS)
<S> <C>
Affiliates.................................................. $1,390,188
General Reinsurance Company................................. 58,375
Lloyd's Underwriters........................................ 12,989
Transatlantic Reinsurance Company........................... 32,275
American Re-Insurance Company............................... 9,368
Skandian America Reinsurance Corporation.................... 8,335
St Paul Fire & Marine Insurance Company..................... 5,661
TIG......................................................... 5,518
Overseas Partners, Ltd...................................... 14,787
----------
Total............................................. $1,537,496
==========
</TABLE>
7. DIVIDEND RESTRICTION:
Under Alaska law, the Company may pay cash dividends only from earned
surplus determined on a statutory basis. Further, the Company is restricted (on
the basis of the lower of 10% of the Company's statutory surplus at the end of
the preceding twelve-month period or 100% of the Company's adjusted net
investment income for the preceding twelve-month period) as to the amount of
dividends it may declare or pay in any twelve-month period without the prior
approval of the State of Alaska Department of Commerce and Economic Development
Division of Insurance. The maximum dividend payable without prior approval at
December 31, 1995, amounted to approximately $17,044,000.
8. PENSION PLANS AND DEFERRED COMPENSATION:
The Company's employees participate in benefit plans sponsored by the
Parent, including a noncontributory defined benefit pension plan, and a
voluntary savings plan (a 401(k) plan) which provides certain matching
contributions. These plans cover substantially all of the Company's employees.
The Parent's plans do not separately identify plan benefits and plan assets
attributable to employees of participating companies.
Some of the Company's officers and key employees are participants in the
Parent's Stock Option Plan.
9. CONTINGENCY:
The Company, in common with the insurance industry in general, is subject
to litigation, including claims for punitive damages, in the normal course of
its business. The Company does not believe that such litigation will have a
material adverse affect on its financial condition.
F-9
<PAGE> 118
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES:
Activity in the liability for unpaid claims and claim adjustment expenses
is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net Balance at January 1.................................... $142,296 $110,314
Incurred related to:
Current year.............................................. 71,109 58,215
Prior years............................................... (4,723) (7)
-------- --------
Total incurred.................................... 66,386 58,208
-------- --------
Paid related to:
Current year.............................................. 3,277 5,163
Prior years............................................... 33,135 21,063
-------- --------
Total paid........................................ 36,412 26,226
-------- --------
Net Balance at December 31.................................. $172,270 $142,296
-------- --------
</TABLE>
F-10
<PAGE> 119
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
American International Specialty Lines Insurance Company:
We have audited the accompanying statements of admitted assets,
liabilities, capital and surplus (statutory basis) of American International
Specialty Lines Insurance Company (the "Company") as of December 31, 1994 and
1993, and related statements of income and changes in capital and surplus
account and cash flows (statutory basis) for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the State of Alaska Department of Commerce and Economic Development
Division of Insurance, which practices differ from generally accepted accounting
principles. The effects on the financial statements of the variances between the
statutory basis of accounting and generally accepted accounting principles,
although not reasonably determinable, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of American International Specialty Lines Insurance Company
as of December 31, 1994 and 1993 or the results of its operations or its cash
flows for the years then ended.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities, and capital and
surplus of American International Specialty Lines Insurance Company as of
December 31, 1994 and 1993, and the results of its operations and its cash flows
for the years then ended, on the basis of accounting described in Note 1.
COOPERS & LYBRAND L.L.P.
New York, New York
May 22, 1995
F-11
<PAGE> 120
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS
(STATUTORY BASIS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1994 1993
------------ ------------
<S> <C> <C>
ADMITTED ASSETS:
Bonds, at amortized cost (market value:
1994 -- $337,898,167; 1993 -- $289,545,115)............... $346,191,559 $272,781,270
Short-term investments, at amortized cost (approximates
market)................................................... 4,265,432 3,715,436
Cash........................................................ 638,666 3,764,166
Other invested assets, at cost (approximates market)........ 212,499 205,316
------------ ------------
Total invested assets and cash.................... 351,308,156 280,466,188
Agents' balances or uncollected premiums:
Premiums in course of collection (net of ceded reinsurance
balances payable: 1994 -- $59,792,510;
1993 -- $17,507,295)................................... (11,277,890) 5,410,876
Premiums and installments booked but deferred and not yet
due (net of ceded reinsurance balances payable:
1994 -- $21,564,427; 1993 -- $0)....................... 15,638,632 3,678,562
Reinsurance recoverable on loss and loss adjustment expense
payments.................................................. 785,390 1,869,731
Federal income tax recoverable.............................. 0 1,258,341
Interest and dividends due and accrued...................... 6,874,819 5,489,320
Receivable from parent and affiliates....................... 1,707,614 1,587,655
Other assets................................................ 119,207 2,058
------------ ------------
Total admitted assets............................. $365,155,928 $299,762,731
============ ============
LIABILITIES:
Unpaid losses............................................... $117,873,934 $ 87,101,311
Reinsurance payable on paid loss and loss adjustment
expenses.................................................. 7,408,248 4,420,404
Unpaid loss adjustment expenses............................. 24,421,583 23,212,238
Payable to parent and affiliates............................ 774,078 517,805
Unearned premiums........................................... 45,273,152 34,165,723
Funds held under reinsurance treaties....................... 4,063,394 1,795,761
Provision for reinsurance................................... 5,322,193 4,271,250
Federal income tax payable.................................. 263,786 0
Drafts outstanding.......................................... 9,766,673 1,868,366
Brokers balance on investments.............................. 0 8,083,547
Other liabilities........................................... 444,365 1,920,624
------------ ------------
Total liabilities................................. 215,611,406 167,357,029
------------ ------------
CAPITAL AND SURPLUS:
Capital stock, $33.35 par value, 150,000 shares
authorized, issued and outstanding..................... 5,002,500 5,002,500
Capital in excess of par value............................ 98,377,500 98,377,500
Unassigned surplus........................................ 46,164,522 29,025,702
------------ ------------
Total capital and surplus......................... 149,544,522 132,405,702
------------ ------------
Total liabilities, capital and surplus............ $365,155,928 $299,762,731
============ ============
</TABLE>
See Notes to Financial Statements
F-12
<PAGE> 121
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF INCOME AND CAPITAL AND SURPLUS ACCOUNT
(STATUTORY BASIS)
FOR THE YEARS ENDED, DECEMBER 31,
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Underwriting income:
Premiums earned........................................... $ 68,811,681 $ 63,528,607
------------ ------------
Deductions:
Losses incurred........................................... 52,678,015 42,738,686
Loss adjustment expenses incurred......................... 5,529,561 11,955,107
Other underwriting expenses incurred...................... 7,754,832 6,425,284
------------ ------------
Total underwriting deductions..................... 65,962,408 61,119,077
------------ ------------
Net underwriting gain....................................... 2,849,273 2,409,530
------------ ------------
Investment income:
Net investment income earned.............................. 18,601,805 15,238,282
Net realized capital losses............................... (79,435) (103,896)
------------ ------------
Net investment gain......................................... 18,522,370 15,134,386
------------ ------------
Net income before federal income taxes...................... 21,371,643 17,543,916
Federal income taxes........................................ 5,364,568 6,197,273
------------ ------------
Net income........................................ $ 16,007,075 $ 11,346,643
============ ============
CAPITAL and SURPLUS ACCOUNT:
Total capital and surplus, December 31, previous year..... $132,405,702 $127,658,819
Gains and (losses) in surplus:
Net income................................................ 16,007,075 11,346,643
Change in non-admitted assets............................. 2,182,688 (4,332,648)
Change in provision for reinsurance....................... (1,050,943) (2,267,112)
------------ ------------
Change in surplus as regards policyholders for the year... 17,138,820 4,746,883
------------ ------------
Total capital and surplus, December 31, current
year........................................... $149,544,522 $132,405,702
============ ============
</TABLE>
See Notes to Financial Statements
F-13
<PAGE> 122
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF CASH FLOWS
(STATUTORY BASIS)
FOR THE YEARS ENDED, DECEMBER 31,
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Premiums collected (net of reinsurance)..................... $ 86,830,498 $ 68,317,237
Loss and loss adjustment expenses paid (net of salvage,
subrogation and reinsurance).............................. 14,255,116 5,766,917
Underwriting expenses paid.................................. 7,498,564 6,484,100
Other underwriting income received.......................... 0 1,795,761
------------ ------------
Net cash flows from underwriting.................. 65,076,818 57,861,981
Investment income collected (net of investment expense
paid)..................................................... 17,352,918 14,431,261
Federal income taxes paid................................... (3,842,441) (7,801,097)
------------ ------------
Net cash flows from operations.................... 78,587,295 64,492,145
Proceeds from investments sold, matured or repaid:
Bonds..................................................... 37,259,908 2,695,000
Other invested assets..................................... 0 1,117,824
------------ ------------
Total investment proceeds......................... 37,259,908 3,812,824
------------ ------------
Other cash provided:
Other sources............................................. 2,276,874 0
------------ ------------
Total other cash provided......................... 2,276,874 0
------------ ------------
Total............................................. 118,124,077 68,304,969
------------ ------------
Cost of investments acquired (long term only):
Bonds..................................................... 110,886,243 62,124,749
Other invested assets..................................... 7,183 87,434
------------ ------------
Total investments acquired........................ 110,893,426 62,212,183
------------ ------------
Other cash applied:
Net transfers to affiliates............................... 119,959 15,179,218
Other applications........................................ 9,686,196 1,395,700
------------ ------------
Total other cash applied.......................... 9,806,155 16,574,918
------------ ------------
Total............................................. 120,699,581 78,787,101
------------ ------------
Net change in cash and short-term investments............... (2,575,504) (10,482,132)
RECONCILIATION:
Cash and short-term investments:
Beginning of year...................................... 7,479,602 17,961,734
------------ ------------
End of year............................................ $ 4,904,098 $ 7,479,602
============ ============
</TABLE>
See Notes to Financial Statements
F-14
<PAGE> 123
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING PRACTICES:
American International Specialty Lines Insurance Company (Company) is owned
by the following wholly owned subsidiaries of American International Group, Inc.
(Parent): National Union Fire Insurance Company of Pittsburgh, PA (National
Union) (70%); The Insurance Company of the State of Pennsylvania (20%); and
Birmingham Fire Insurance Company of Pennsylvania (10%). The Company has
significant transactions with the Parent and affiliates (see Notes 3 and 4).
The accompanying financial statements were prepared in conformity with the
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners (NAIC) and the State of Alaska Department of Commerce
and Economic Development Division of Insurance, which is a comprehensive basis
of accounting other than generally accepted accounting principles. Certain
accounts have been reclassified in the 1993 financial statements to conform to
the 1994 presentation.
The following is a description of the significant accounting practices
employed by the Company:
A. Investments are carried at values designated by the NAIC. Bonds are
carried at amortized cost. Investment income is recorded as earned.
Realized gains or losses on the disposition of investments are determined
on the basis of specific identification.
B. Premiums written are primarily earned on a daily pro-rata basis
over the terms of the policies to which they relate. Accordingly, unearned
premiums represent the portion of premiums written which is applicable to
the unexpired terms of policies in force. Premium estimates for
retrospectively rated policies are recognized within the periods in which
the related losses are incurred.
C. Certain assets, principally furniture, equipment, and leasehold
improvements and certain overdue agents' balances, are designated
"non-admitted assets" and are charged directly to unassigned surplus.
D. The liabilities for unpaid losses and loss adjustment expenses are
determined on the basis of claims adjusters' evaluations and various
actuarial procedures. An amount is included for losses and loss expenses
incurred but not reported on the basis of past experience of the Company.
The methods of making such estimates and for establishing the resulting
reserves are continually reviewed and updated, and any resulting
adjustments are recorded in the current period. Accordingly, losses and
loss adjustment expenses are charged to income as incurred.
E. Certain required statutory basis reserves, principally the
provision for reinsurance, are charged to surplus and reflected as a
liability of the Company.
F. Federal income taxes are provided on the basis of amounts currently
payable. Adjustments relating to the difference between the amount recorded
for financial statement purposes and the amount subsequently filed on the
tax return are charged or credited directly to federal income taxes on the
statement of income.
G. Acquisition costs related to premiums written are charged to income
at the time the premiums are written and are included in "Other
underwriting expenses incurred."
H. Unpaid losses and loss adjustment expenses have been reduced by
anticipated salvage and subrogation in the amount of approximately $485,000
and $244,000 at December 31, 1994 and December 31, 1993, respectively.
I. The Company considers all highly liquid debt securities with
maturities of twelve months or less to be short-term investments. Such
investments are deemed to be cash equivalents for purposes of the statement
of cash flows.
F-15
<PAGE> 124
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Statutory accounting practices vary in certain respects from generally
accepted accounting principles. Under generally accepted accounting principles:
(1) costs incidental to acquiring business related to premiums written and costs
allowed by assuming reinsurers related to premiums ceded are deferred and
amortized over the periods covered by the underlying policies or reinsurance
agreements; (2) provision is made for deferred income taxes relating to
temporary differences between financial reporting and taxable income; (3) non-
admitted assets and statutory basis reserves are restored to surplus; (4) the
reserve for losses and loss expenses and reserve for unearned premiums are
presented gross of ceded reinsurance by establishing a reinsurance asset; and
(5) debt securities deemed to be available for sale or trading are reported at
fair value.
2. FEDERAL INCOME TAXES:
The Company files a consolidated U.S. federal income tax return with the
Parent pursuant to a consolidated tax sharing agreement. The agreement provides
that the Parent will not charge the Company a greater portion of the
consolidated tax liability than would have been paid by the Company if it had
filed a separate federal income tax return. In addition, the agreement provides
that the Company will be reimbursed by the Parent for tax benefits relating to
any net losses of the Company utilized in filing the consolidated return. The
"Federal income tax payable" and "Federal income tax recoverable" in the
accompanying statement of admitted assets, liabilities, capital and surplus are
due to/due from the Parent.
The U.S. federal income tax rate applicable to ordinary income is 35% for
1994 and 1993. Actual tax expense on income from operations differs from the
"expected" amount principally as a result of tax-exempt investment income,
unearned premiums and the discounting of unpaid losses and loss adjustment
expenses.
3. MANAGEMENT AGREEMENT:
The Company is managed and operated by American International Surplus Lines
Agency, Inc. (Agency), a wholly owned subsidiary of the Parent. The management
agreement provides the Agency with the authority to conduct all business affairs
of the Company. As compensation for these services, the management agreement
provides that the Company pay the Agency an annual management fee of $100,000
plus actual expenses incurred on behalf of managing the Company. The management
fee and expense reimbursement paid to the Agency was $1,574,912 and $1,602,069
in 1994 and 1993, respectively.
4. RELATED PARTY TRANSACTIONS:
The Company cedes all agency business written in the State of Alaska to the
New Hampshire Insurance Company (a wholly owned subsidiary of the Parent). The
Company cedes 80% of its surplus lines insurance to National Union Fire
Insurance Company of Pittsburgh, PA (a wholly owned subsidiary of the Parent)
through a reinsurance quota share agreement. The Company also assumes
reinsurance from Lexington Insurance Company, an affiliate.
F-16
<PAGE> 125
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. INVESTMENTS:
The amortized cost and NAIC market values of investments in fixed
maturities carried at December 31, 1994 and December 31, 1993, are as follows:
<TABLE>
<CAPTION>
GROSS GROSS NAIC
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1994
Fixed maturities:
States, municipalities and political
subdivisions........................... $346,192 $ 4,038 $12,332 $337,898
-------- ------- ------- --------
Total bonds....................... $346,192 $ 4,038 $12,332 $337,898
-------- ------- ------- --------
1993
Fixed maturities:
States, municipalities and political
subdivisions........................... $272,781 $16,985 $ 221 $289,545
-------- ------- ------- --------
Total bonds....................... $272,781 $16,985 $ 221 $289,545
======== ======= ======= ========
</TABLE>
The amortized cost and NAIC market values of fixed maturities at December
31, 1994, by contractual maturity, are shown below. Actual maturities could
differ from contractual maturities because borrowers may have the right to call
or prepay certain obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED NAIC MARKET
COST VALUE
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Due after one year through five years....................... $ 18,959 $ 19,537
Due after five years through ten years...................... 60,960 63,010
Due after ten years......................................... 266,273 255,352
-------- --------
Total............................................. $346,192 $337,899
======== ========
</TABLE>
Proceeds from sales of investments in fixed maturities during 1994 and 1993
were $11,785,392 and $0, respectively. Gross gains of $0 and gross losses of
$239,200 were realized on those sales in 1994.
Securities carried at $9,935,076 and $6,669,965 were deposited with
regulatory authorities, as required by law, at December 31, 1994 and December
31, 1993, respectively. Included in "Net investment income earned" are
investment expenses of $184,557 and $168,922 for 1994 and 1993, respectively.
6. REINSURANCE:
In the ordinary course of business, the Company reinsures certain risks
with affiliated and non-affiliated companies. Such arrangements serve to limit
the Company's maximum loss on catastrophes, large risks and unusually hazardous
risks. To the extent that any reinsuring company might be unable to meet its
obligations, the Company would be liable for its respective participation in
such defaulted amounts.
F-17
<PAGE> 126
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Reserves for unearned premiums and reinsurance recoverables on paid and
unpaid losses and loss adjustment expenses, including those incurred but not
reported to the Company, have been reduced for reinsurance ceded as follows:
<TABLE>
<CAPTION>
UNEARNED PREMIUM REINSURANCE
RESERVES RECOVERABLES
---------------- ------------
(IN THOUSANDS)
<S> <C> <C>
1994
Affiliates............................................ $251,556 $820,440
Non-affiliates........................................ 31,323 58,993
-------- --------
Total......................................... $282,879 $879,433
======== ========
1993
Affiliated............................................ $165,851 $558,452
Non-affiliates........................................ 19,066 37,746
-------- --------
Total......................................... $184,917 $596,198
======== ========
</TABLE>
Net premiums written and earned comprise the following:
<TABLE>
<CAPTION>
WRITTEN EARNED
--------- --------
(IN THOUSANDS)
<S> <C> <C>
1994
Direct business............................................. $ 606,103 $497,818
Reinsurance assumed
Affiliates................................................ 18,111 17,327
Non-affiliates............................................ -- --
Reinsurance ceded
Affiliates................................................ (485,279) (399,575)
Non-affiliates............................................ (59,016) (46,758)
--------- --------
Net premiums...................................... $ 79,919 $ 68,812
========= ========
1993
Direct business............................................. $ 453,706 $388,162
Reinsurance assumed
Affiliates................................................ 15,876 17,245
Non-affiliates............................................ -- --
Reinsurance ceded
Affiliates................................................ (359,640) (310,605)
Non-affiliates............................................ (40,776) (31,273)
--------- --------
Net premiums...................................... $ 69,166 $ 63,529
========= ========
</TABLE>
For the years ended December 31, 1994 and 1993, reinsurance recoveries,
which reduced loss and loss expenses incurred, amounted to $430,310,953 and
$303,963,684, respectively.
F-18
<PAGE> 127
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following unsecured reinsurance recoverables exceeded 3% of the capital
and surplus of the Company at December 31, 1994:
<TABLE>
<CAPTION>
REINSURER AMOUNT
- --------- --------------
(IN THOUSANDS)
<S> <C>
Affiliates.................................................. $1,002,260
General Reinsurance Company................................. 15,107
Lloyd's Underwriters........................................ 6,372
Transatlantic Reinsurance Company........................... 20,014
----------
Total............................................. $1,043,753
==========
</TABLE>
7. DIVIDEND RESTRICTION:
Under Alaska law, the Company may pay cash dividends only from earned
surplus determined on a statutory basis. Further, the Company is restricted (on
the basis of the lower of 10% of the Company's statutory surplus at the end of
the preceding twelve-month period or 100% of the Company's adjusted net
investment income for the preceding twelve-month period) as to the amount of
dividends it may declare or pay in any twelve-month period without the prior
approval of the State of Alaska Department of Commerce and Economic Development
Division of Insurance. The maximum dividend payable without prior approval at
December 31, 1994, amounted to approximately $14,954,000.
8. PENSION PLANS AND DEFERRED COMPENSATION:
The Company's employees participate in benefit plans sponsored by the
Parent, including a noncontributory defined benefit pension plan, and a
voluntary savings plan (a 401(k) plan) which provides certain matching
contributions. These plans cover substantially all of the Company's employees.
The Parent's plans do not separately identify plan benefits and plan assets
attributable to employees of participating companies.
Some of the Company's officers and key employees are participants in the
Parent's Stock Option Plan.
9. CONTINGENCY:
The Company, in common with the insurance industry in general, is subject
to litigation, including claims for punitive damages, in the normal course of
its business. The Company does not believe that such litigation will have a
material adverse effect on its financial condition.
10. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES:
Activity in the liability for unpaid claims and claim adjustment expenses
is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net Balance at January 1.................................... $110,314 $ 61,187
Incurred related to:
Current year.............................................. 58,215 54,769
Prior years............................................... (7) (75)
-------- --------
Total incurred.................................... 58,208 54,694
-------- --------
Paid related to:
Current year.............................................. 5,163 889
Prior years............................................... 21,063 4,678
-------- --------
Total paid........................................ 26,226 5,567
-------- --------
Net Balance at December 31........................ $142,296 $110,314
======== ========
</TABLE>
F-19
<PAGE> 128
ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A
Certificates (the "Global Securities") will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
any of DTC, Cedel or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name of
Cede, as nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional eurobonds, except that there
will be no temporary global security and no "lock-up" or restricted period.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in the
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 Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear Purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
accounts of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
A-1
<PAGE> 129
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of actual days elapsed and a
360 day year. Payment will then be made by the respective Depositary to the DTC
Participant account against delivery of the Global Securities. After settlement
has been completed, the Global Securities will be credited to the respective
clearing system and by the clearing system, in accordance with its usual
procedures, to the Cedel Participant's or Euroclear Participant's account. The
Global Securities credit will appear the next day (European time) and the cash
debit will be back-valued to, and the interest on the Global Securities will
accrue from, the value date (which would be the preceding day when settlement
occurred in New York). If settlement is not completed on the intended value date
(i.e., the trade fails), the Cedel or Euroclear cash debit will be valued
instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participants a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing systems, through the
respective Depositaries, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositaries, as appropriate, to deliver the bonds
to the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date on the basis of actual days elapsed and a
360 day year. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Cedel Participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
debit in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would instead be value as of the actual
settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would
A-2
<PAGE> 130
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding through Cedel or Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons 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 or the Tax Certificate changes, a new Form W-8
or Tax Certificate, as the case may be, must be filed within 30 days of such
change.
Exemption for non-U.S. Person 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 beneficial owners of Global Securities
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate, the
income of which is includible in gross income for United States tax purposes,
regardless of its source, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States trustees have authority to control all substantial decisions
of the trust. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.
A-3
<PAGE> 131
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE TRANSFEROR SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Index................................. 3
Overview of Transaction............... 4
Summary............................... 5
Risk Factors.......................... 23
The Trust and the SUBI................ 29
The Origination Trust................. 31
Use of Proceeds....................... 33
The Transferor........................ 33
World Omni............................ 34
The Contracts......................... 39
Maturity, Prepayment and Yield
Considerations...................... 45
Class A Certificate Factors and
Trading Information; Reports to
Class A Certificateholders.......... 50
Description of the Certificates....... 50
Security for the Certificates......... 66
Additional Document Provisions........ 75
Certain Legal Aspects of the
Origination Trust and the SUBI...... 88
Certain Legal Aspects of the Contracts
and the Leased Vehicles............. 89
Material Income Tax Considerations.... 93
ERISA Considerations.................. 98
Underwriting.......................... 100
Notice to Canadian Residents.......... 101
Ratings of the Class A Certificates... 102
Legal Matters......................... 102
Experts............................... 103
Index of Capitalized Terms............ 104
Index to Financial Statements of
American International Specialty
Lines Insurance Company............. 106
Global Clearance, Settlement and Tax
Documentation Procedures............ A-1
</TABLE>
------------------
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO
HAS RECEIVED AN ELECTRONIC PROSPECTUS OR A REQUEST BY SUCH INVESTOR'S
REPRESENTATIVE WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY
OBLIGATION, THE TRANSFEROR OR THE UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE
TO BE DELIVERED, WITHOUT CHARGE, A PAPER COPY OF THE PROSPECTUS.
======================================================
======================================================
[WORLD OMNI LOGO]
WORLD OMNI
1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
$1,107,297,857 (APPROXIMATE)
$250,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE
ASSET BACKED CERTIFICATES,
CLASS A-1
$290,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE
ASSET BACKED CERTIFICATES,
CLASS A-2
$290,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE
ASSET BACKED CERTIFICATES,
CLASS A-3
$277,297,857 (APPROXIMATE)
% AUTOMOBILE LEASE
ASSET BACKED CERTIFICATES,
CLASS A-4
WORLD OMNI LEASE
SECURITIZATION L.P.
(TRANSFEROR)
WORLD OMNI FINANCIAL CORP.
(SERVICER)
--------------------
PROSPECTUS
--------------------
MERRILL LYNCH & CO.
CS FIRST BOSTON
BA SECURITIES, INC.
SALOMON BROTHERS INC
APRIL _ , 1997
======================================================
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND PAYMENT.
Expenses in connection with the offering of the Class A Certificates being
registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $335,500
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 60,000
Blue sky fees and expenses.................................. 25,000
Rating agency fees.......................................... 175,000
Trustee fees and expenses................................... 25,000
Printing.................................................... 70,000
Miscellaneous............................................... 9,500
--------
Total............................................. $950,000*
========
</TABLE>
- ---------------
*Does not include premium (4.0% of total residual values of all Contracts) for
Residual Value Insurance Policy, which will be paid by the Servicer.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
provides that, subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, a limited partnership may, and shall have
the power to, indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever.
Pursuant to Section 4.08 of the Agreement of Limited Partnership of World
Omni Lease Securitization L.P. (the "Transferor"), the Transferor will, to the
fullest extent permitted by law, indemnify World Omni Lease Securitization,
Inc., the general partner of the Transferor, and its directors, officers,
shareholders, agents, affiliates and employees acting within the scope of their
authority against their losses and expenses sustained by reason of their acts on
behalf of the Transferor or in furtherance of the interests of the Transferor,
if the acts were not fraudulent or in bad faith and did not constitute willful
or wanton misconduct or gross negligence.
Pursuant to Section 4.08 of the Agreement of Limited Partnership of Auto
Lease Finance L.P. ("ALFI L.P."), ALFI L.P. will, to the fullest extent
permitted by law, indemnify Auto Lease Finance, Inc., the general partner of
ALFI L.P., and its directors, officers, shareholders, agents, affiliates and
employees acting within the scope of their authority against their losses and
expenses sustained by reason of their acts on behalf of ALFI L.P. or in
furtherance of the interests of ALFI L.P., if the acts were not fraudulent or in
bad faith and did not constitute willful or wanton misconduct or gross
negligence.
Reference is also made to Section 7 of the Underwriting Agreement (see
Exhibit 1.1), which provides for indemnification by the Transferor under certain
circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
II-1
<PAGE> 133
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. Exhibits:
<TABLE>
<S> <C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Articles of Incorporation of World Omni Lease
Securitization, Inc. (incorporated by reference from Exhibit
3.1 to Registration Statement on Form S-1, File No. 33-85036
(the "1994-B Registration Statement"))
3.2 -- Bylaws of World Omni Lease Securitization, Inc.
(incorporated by reference from Exhibit 3.2 to the 1994-B
Registration Statement)
3.3 -- Amended and Restated Agreement of Limited Partnership of
World Omni Lease Securitization L.P. between World Omni
Lease Securitization, Inc. and World Omni Financial Corp.,
dated as of July 1, 1994 (incorporated by reference from
Exhibit 3.3 to the 1994-B Registration Statement)
3.4 -- Articles of Incorporation of Auto Lease Finance Inc.
(incorporated by reference from Exhibit 10.5 to the 1994-B
Registration Statement)
3.5 -- Bylaws of Auto Lease Finance, Inc. (incorporated by
reference from Exhibit 10.6 to the 1994-B Registration
Statement)
3.6 -- Amended and Restated Agreement of Limited Partnership of
Auto Lease Finance L.P. between Auto Lease Finance Inc. and
World Omni Financial Corp., dated as of July 1, 1994
(incorporated by reference from Exhibit 10.7 to the 1994-B
Registration Statement)
4.1 -- Form of Securitization Trust Agreement between World Omni
Lease Securitization L.P. and First Bank National
Association, as Trustee (including forms of Class A
Certificates)*
5.1 -- Opinion of McDermott, Will & Emery with respect to legality
8.1 -- Opinion of Brown & Wood LLP with respect to federal income
tax matters
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect
to certain Florida tax matters
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease
Finance L.P., VT Inc. and First Bank National Association
(as successor to Bank of America Illinois), dated as of July
1, 1994 (incorporated by reference from Exhibit 10.1 to the
1994-B Registration Statement)
10.2 -- Form of Supplement 1997-A to Trust Agreement among Auto
Lease Finance L.P., VT Inc. and First Bank National
Association (as successor to Bank of America Illinois)
(including form of the SUBI Certificate)
10.3 -- Second Amended and Restated Servicing Agreement between VT
Inc. and World Omni Financial Corp., dated as of July 1,
1994 (incorporated by reference from Exhibit 10.3 to the
1994-B Registration Statement)
10.4 -- Form of Supplement 1997-A to Servicing Agreement between VT
Inc. and World Omni Financial Corp.
10.5 -- Amendment No. 1 to Second Amended and Restated Trust
Agreement among Auto Lease Finance L.P., VT Inc. and First
Bank National Association (as successor to Bank of America
Illinois), dated as of November 1, 1994 (incorporated by
reference from Exhibit 10.8 to the 1994-B Registration
Statement)
10.6 -- Second Amended and Restated Assignment Agreement among World
Omni Financial Corp., Auto Lease Finance L.P. and VT Inc.,
dated as of July 1, 1994 (incorporated by reference from
Exhibit 10.9 to Registration Statement on Form S-1, File No.
33-95404)
10.7 -- Amendment No. 1 to Second Amended and Restated Assignment
Agreement among World Omni Financial Corp., Auto Lease
Finance L.P. and VT Inc., dated as of October 1, 1995
(incorporated by reference from Exhibit 10.10 to
Registration Statement on Form S-1, File No. 333-00794 (the
"1996-A Registration Statement"))
10.8 -- Support Agreement, dated as of October 1, 1995 between World
Omni Financial Corp. and World Omni Lease Securitization
L.P. (incorporated by reference from Exhibit 10.11 to the
1996-A Registration Statement)
</TABLE>
II-2
<PAGE> 134
10.9 -- Amendment No. 1 to Support Agreement between World Omni
Financial Corp. and World Omni Lease Securitization L.P.,
dated as of May 1, 1996 (incorporated by reference from
Exhibit 10.12 to Registration Statement on Form S-1, File
No. 333-11449 (the "1996-B Registration Statement"))
10.10 -- Amendment No. 2 to Support Agreement, dated as of October 1,
1996 between World Omni Financial Corp., and World Omni
Lease Securitization L.P., dated as of October 1, 1996
10.11 -- Form of Amendment No. 3 to Support Agreement between World
Omni Financial Corp. and World Omni Lease Securitization
L.P.
10.12 -- Form of Residual Value Insurance Policy*
23.1 -- Consent of McDermott, Will & Emery (included as part of
Exhibit 5.1)
23.2 -- Consent of Brown & Wood LLP (included as part of Exhibit
8.1)
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as
part of Exhibit 8.2)
23.4 -- Consent of Williams & Connolly
23.5 -- Consent of Hand Arendall, L.L.C.
23.6 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Power of Attorney*
- ---------------
* Previously filed.
b. Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake as follows:
(a) To provide to the Underwriters at the closing date specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriters to provide prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
each registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by a registrant of
expenses incurred or paid by a director, officer or controlling person of such
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by each registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act will be deemed to be part of this registration statement as of the
time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 135
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, EACH REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT ON FORM S-1 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DEERFIELD BEACH AND STATE OF FLORIDA, ON THE 22ND DAY OF APRIL, 1997.
WORLD OMNI LEASE SECURITIZATION L.P.,
on behalf of itself and as originator of
the World Omni
1997-A Automobile Lease Securitization
Trust
By: WORLD OMNI LEASE SECURITIZATION, INC.,
as General Partner
By: /s/ A. TUCKER ALLEN
---------------------------------------
Name: A. Tucker Allen
Title: Vice President and Corporate
Treasurer
(Principal Financial and Accounting
Officer)
AUTO LEASE FINANCE L.P., on behalf of
itself and as originator of World Omni LT
By: AUTO LEASE FINANCE, INC.,
as General Partner
By: /s/ A. TUCKER ALLEN
---------------------------------------
Name: A. Tucker Allen
Title: Vice President and Corporate
Treasurer
(Principal Financial and Accounting
Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BELOW
BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ A. TUCKER ALLEN Director and Vice President and April 22, 1997
- --------------------------------------------------- Corporate Treasurer of the
A. Tucker Allen General Partner of each of World
Omni Lease Securitization L.P.
and Auto Lease Finance L.P.
(Principal Financial and
Accounting Officer)
* Director of the General Partner of April 22, 1997
- --------------------------------------------------- each of World Omni Lease
Colin W. Brown Securitization L.P. and Auto
Lease Finance L.P.
* Director of the General Partner of April 22, 1997
- --------------------------------------------------- each of World Omni Lease
Jeffrey B. Shapiro Securitization L.P. and Auto
Lease Finance L.P.
* Director of the General Partner of April 22, 1997
- --------------------------------------------------- each of World Omni Lease
Christopher C. Wheeler Securitization L.P. and Auto
Lease Finance L.P.
</TABLE>
II-4
<PAGE> 136
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director and President of the April 22, 1997
- --------------------------------------------------- General Partner of each of World
Daryl P. Smith Omni Lease Securitization L.P.
and Auto Lease Finance L.P.
(Principal Executive Officer)
</TABLE>
* /s/ A. TUCKER ALLEN
----------------------------------
A. Tucker Allen
Attorney-in-Fact
II-5
<PAGE> 137
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement
3.1 -- Articles of Incorporation of World Omni Lease
Securitization, Inc. (incorporated by reference from Exhibit
3.1 to Registration Statement on Form S-1, File No. 33-85036
(the "1994-B Registration Statement"))
3.2 -- Bylaws of World Omni Lease Securitization, Inc.
(incorporated by reference from Exhibit 3.2 to the 1994-B
Registration Statement)
3.3 -- Amended and Restated Agreement of Limited Partnership of
World Omni Lease Securitization L.P. between World Omni
Lease Securitization, Inc. and World Omni Financial Corp.,
dated as of July 1, 1994 (incorporated by reference from
Exhibit 3.3 to the 1994-B Registration Statement)
3.4 -- Articles of Incorporation of Auto Lease Finance Inc.
(incorporated by reference from Exhibit 10.5 to the 1994-B
Registration Statement)
3.5 -- Bylaws of Auto Lease Finance, Inc. (incorporated by
reference from Exhibit 10.6 to the 1994-B Registration
Statement)
3.6 -- Amended and Restated Agreement of Limited Partnership of
Auto Lease Finance L.P. between Auto Lease Finance Inc. and
World Omni Financial Corp., dated as of July 1, 1994
(incorporated by reference from Exhibit 10.7 to the 1994-B
Registration Statement)
4.1 -- Form of Securitization Trust Agreement between World Omni
Lease Securitization L.P. and First Bank National
Association, as Trustee (including forms of Class A
Certificates)
5.1 -- Opinion of McDermott, Will & Emery with respect to legality
8.1 -- Opinion of Brown & Wood LLP with respect to federal income
tax matters
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect
to certain Florida tax matters
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease
Finance L.P., VT Inc. and First Bank National Association
(as successor to Bank of America Illinois), dated as of July
1, 1994 (incorporated by reference from Exhibit 10.1 to the
1994-B Registration Statement)
10.2 -- Form of Supplement 1997-A to Trust Agreement among Auto
Lease Finance L.P., VT Inc. and First Bank National
Association (as successor to Bank of America Illinois)
(including form of the SUBI Certificate)
10.3 -- Second Amended and Restated Servicing Agreement between VT
Inc. and World Omni Financial Corp., dated as of July 1,
1994 (incorporated by reference from Exhibit 10.3 to the
1994-B Registration Statement)
10.4 -- Form of Supplement 1997-A to Servicing Agreement between VT
Inc. and World Omni Financial Corp.
10.5 -- Amendment No. 1 to Second Amended and Restated Trust
Agreement among Auto Lease Finance L.P., VT Inc. and First
Bank National Association (as successor to Bank of America
Illinois), dated as of November 1, 1994 (incorporated by
reference from Exhibit 10.8 to the 1994-B Registration
Statement)
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
10.6 -- Second Amended and Restated Assignment Agreement among World
Omni Financial Corp., Auto Lease Finance L.P. and VT Inc.,
dated as of July 1, 1994 (incorporated by reference from
Exhibit 10.9 to Registration Statement on Form S-1, File No.
33-95404)
10.7 -- Amendment No. 1 to Second Amended and Restated Assignment
Agreement among World Omni Financial Corp., Auto Lease
Finance L.P. and VT Inc., dated as of October 1, 1995
(incorporated by reference from Exhibit 10.10 to
Registration Statement on Form S-1, File No. 333-00794 (the
"1996-A Registration Statement"))
10.8 -- Support Agreement, dated as of October 1, 1995 between World
Omni Financial Corp. and World Omni Lease Securitization
L.P. (incorporated by reference from Exhibit 10.11 to the
1996-A Registration Statement)
10.9 -- Amendment No. 1 to Support Agreement between World Omni
Financial Corp. and World Omni Lease Securitization L.P.,
dated as of May 1, 1996 (incorporated by reference from
Exhibit 10.12 to Registration Statement on Form S-1, File
No. 333-11449 (the "1996-B Registration Statement"))
10.10 -- Amendment No. 2 to Support Agreement between World Omni
Financial Corp. and World Omni Lease Securitization L.P.,
dated as of October 1, 1996
10.11 -- Form of Amendment No. 3 to Support Agreement between World
Omni Financial Corp. and World Omni Lease Securitization
L.P.
10.12 -- Form of Residual Value Insurance Policy*
23.1 -- Consent of McDermott, Will & Emery (included as part of
Exhibit 5.1)
23.2 -- Consent of Brown & Wood LLP (included as part of Exhibit
8.1)
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as
part of Exhibit 8.2)
23.4 -- Consent of Williams & Connolly
23.5 -- Consent of Hand Arendall, L.L.C.
23.6 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Power of Attorney*
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
$250,000,000
______% Automobile Lease Asset Backed Certificates, Class A-1
$290,000,000
______% Automobile Lease Asset Backed Certificates, Class A-2
$290,000,000
______% Automobile Lease Asset Backed Certificates, Class A-3
$277,297,857
______% Automobile Lease Asset Backed Certificates, Class A-4
UNDERWRITING AGREEMENT
April __, 1997
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
As Representative of the
Several Underwriters
World Financial Center
North Tower
New York, New York 10281-1201
Dear Sirs:
I. Introductory. World Omni Lease Securitization L.P., a
Delaware limited partnership (the "Transferor"), Auto Lease Finance
L.P., a Delaware limited partnership ("ALFI L.P."), and World Omni
Financial Corp., a Florida corporation ("World Omni"), hereby
confirm their respective agreements with you and each of the other
underwriters named in Schedule I hereto (the "Underwriters"), for
whom you are acting as representative (the "Representative"), with
respect to the sale by the Transferor to the Underwriters of
$250,000,000 aggregate principal amount of ____% Automobile Lease
Asset Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
$290,000,000 aggregate principal amount of ____% Automobile Lease
Asset Backed Certificates, Class A-2 (the "Class A-2 Certificates"),
$290,000,000 aggregate principal amount of ____% Automobile Lease
Asset Backed Certificates, Class A- 3 (the "Class A-3 Certificates")
and $277,297,857 aggregate principal
<PAGE> 2
amount of ____% Automobile Lease Asset Backed Certificates, Class
A-4 (the "Class A-4 Certificates" and, together with the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3
Certificates, the "Class A Certificates") of the World Omni 1997-A
Automobile Lease Securitization Trust (the "Trust") under the terms
and conditions herein contained. The sole general partner of the
Transferor is World Omni Lease Securitization, Inc. ("WOLSI" or the
"WOLSI General Partner"), a Delaware corporation and a wholly owned,
special purpose finance subsidiary of World Omni, and the sole
limited partner of the Transferor is World Omni (in such capacity,
the "WOLSI Limited Partner"). The sole general partner of ALFI L.P.
is Auto Lease Finance, Inc. ("ALFI" or the "ALFI General Partner"),
a Delaware corporation and a wholly owned, special purpose finance
subsidiary of World Omni, and the sole limited partner of ALFI L.P.
is World Omni (in such capacity, the "ALFI Limited Partner").
Simultaneously with the issuance of the Class A Certificates,
the Transferor will cause the Trust to issue $65,839,332 aggregate
principal amount of Automobile Lease Asset Backed Certificates,
Class B (the "Class B Certificates" and, together with the Class A
Certificates, the "Investor Certificates"). The Investor
Certificates will be issued pursuant to a securitization trust
agreement, dated as of April 1, 1997 (the "Securitization Trust
Agreement"), between the Transferor and First Bank National
Association ("First Bank"), as trustee (in such capacity, the
"Trustee"). The Investor Certificates will represent undivided
interests in the Trust. The Transferor will own the undivided
interest in the Trust not evidenced by the Investor Certificates
(the "Transferor Interest"). The Class B Certificates will be
subordinated to the Class A Certificates, and the certificate
evidencing the Transferor Interest (the "Transferor Certificate"
and, together with the Investor Certificates, the "Certificates")
will be subordinated to the Investor Certificates, in each case to
the extent described in the Securitization Trust Agreement.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Securitization Trust
Agreement.
The property of the Trust will consist primarily of an
undivided 99.8% interest (the "SUBI Interest") in a special unit of
beneficial interest (the "SUBI"), which, in turn, will evidence a
beneficial interest in certain specified assets of World Omni LT, an
Alabama business trust (the "Origination Trust"), and monies on
deposit in the Reserve Fund, the Residual Value Surplus Account and
in certain other accounts (collectively, the "SUBI Assets"). The
assets of the Origination Trust (the "Origination Trust Assets")
will consist primarily of retail closed-end lease contracts assigned
to the Origination Trust by motor vehicle dealers in the World Omni
network of dealers, the automobiles and light duty trucks relating
thereto and the proceeds thereof, and payments made under certain
insurance policies relating to such lease contracts, the related
lessees or such leased vehicles, including payments made under a
residual value insurance policy dated as of April 30, 1997 (the
"Residual Value Insurance Policy") issued by American International
Specialty Lines Insurance Company (the "Insurer") in respect of the
Leased Vehicles. The SUBI will not evidence a direct interest in
the SUBI Assets, nor will it represent a beneficial interest in any
Origination Trust Assets other than the SUBI Assets.
2
<PAGE> 3
The SUBI Interest will be evidenced by a certificate (the
"SUBI Certificate") issued to ALFI L.P. by the Origination Trust
pursuant to a trust agreement as amended and restated as of July 1,
1994, as amended by Amendment No. 1 thereto dated as of November 1,
1994, and as supplemented by a supplement dated as of April 1, 1997
(collectively, the "SUBI Trust Agreement"), in each case among ALFI
L.P., as initial grantor and initial beneficiary, VT Inc., as
trustee (the "Origination Trustee"), and (for certain limited
purposes only) First Bank, as trust agent (in such capacity, the
"Trust Agent"). The SUBI Certificate will be sold by ALFI L.P. to
the Transferor pursuant to the SUBI certificate purchase and sale
agreement, dated as of April 1, 1997 (the "Certificate Purchase and
Sale Agreement"), between the Transferor and ALFI L.P. The
Origination Trust Assets (including the SUBI Assets) will be
serviced by World Omni pursuant to a second amended and restated
servicing agreement dated as of July 1, 1994, as supplemented by a
servicing supplement dated as of April 1, 1997 (collectively, the
"Servicing Agreement"), in each case between the Origination Trustee
and World Omni. The Securitization Trust Agreement, the SUBI Trust
Agreement, the Certificate Purchase and Sale Agreement, the
Servicing Agreement, the backup security agreement, dated as of
April 1, 1997 (the "Backup Security Agreement"), among World Omni,
ALFI L.P., the Origination Trustee, the Transferor and the Trustee,
the support agreement, dated as of October 1, 1995, as amended (the
"Support Agreement"), by World Omni in favor of the Transferor, the
intercreditor agreement, dated as of November 1, 1994, among World
Omni, ALFI L.P., the Transferor, the Trustee, the Origination
Trustee, the Trust Agent and the other parties named in Appendix A
thereto, together with an accession agreement thereto (collectively,
the "Intercreditor Agreement"), between the Trustee and the
Transferor, and the premium payment agreement, dated as of April 30,
1997 (the "Insurance Agreement"), between World Omni and the
Insurer, are referred to herein collectively as the "Basic
Documents".
2. Representations and Warranties of the Transferor, ALFI
L.P. and World Omni.
(a) Each of the Transferor, ALFI L.P. and World Omni,
jointly and severally, represents and warrants to, and agrees with,
each of the Underwriters that:
(i) A registration statement on Form S-1 (No.
333-21917), including a form of prospectus, relating to
the Class A Certificates has been filed with the Securities
and Exchange Commission (the "Commission") and either (1) has
been declared effective under the Securities Act of 1933, as
amended (the "Act"), and is not proposed to be amended or (2)
is proposed to be amended by amendment or post-effective
amendment. If the Transferor or ALFI L.P. does not propose to
amend such registration statement and if any post-effective
amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of this
Agreement, the most recent such post-effective amendment has
been declared effective by the Commission. For purposes of
this Agreement, "Effective Time" means if the Transferor and
ALFI L.P. have advised the Representative that they (1) do not
propose to amend such registration statement, the date and
time as of which such registration statement, or the most
recent post-effective amendment thereto (if any) filed prior
to the execution and delivery of this Agreement, was declared
effective by the Commission or (2) propose to file an
amendment or post-effective amendment to such
3
<PAGE> 4
registration statement, the date and time as of which such
registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is declared
effective by the Commission. "Effective Date" means the date
of the Effective Time. Such registration statement, as
amended at the Effective Time, including all information, if
any, deemed to be a part of such registration statement as of
the Effective Time pursuant to Rule 430A(b) under the Act, and
including the exhibits thereto, is hereinafter referred to as
the "Registration Statement", and the form of prospectus
relating to the Class A Certificates, in the form transmitted
to the Commission for filing pursuant to and in accordance
with Rule 424(b) under the Act ("Rule 424(b)"), or (if no such
filing is required) as included in the Registration Statement,
is hereinafter referred to as the "Prospectus". The
Prospectus delivered to you for use in connection with the
offering of the Class A Certificates will be identical to the
electronically transmitted copies thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval ("EDGAR") system, except to the extent permitted
by Regulation S-T.
(ii) If the Effective Time is prior to the execution
and delivery of this Agreement: (A) on the Effective
Date, the Registration Statement conformed, and on the date of
this Agreement the Registration Statement will conform, in all
material respects with the requirements of the Act and the
rules and regulations of the Commission promulgated under the
Act (the "Rules and Regulations") and at such times did not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading and
(B) on the date of this Agreement, at the time of the filing
of the Prospectus pursuant to Rule 424(b) and at the Closing
Date (as such term is defined in Section 3 hereof), the
Prospectus will conform in all material respects to the
requirements of the Act and the Rules and Regulations and does
not include, or will not include, any untrue statement of a
material fact, nor does the Prospectus omit, nor will it omit,
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading. If the Effective Time is
subsequent to the execution and delivery of this Agreement:
(A) on the Effective Date, the Registration Statement and the
Prospectus will conform in all material respects to the
requirements of the Act and the Rules and Regulations and the
Registration Statement will not include any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading and (B) on the Effective Date, at the
time of the filing of the Prospectus pursuant to Rule 424(b),
if required, and at the Closing Date, the Prospectus will not
include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. The two immediately
preceding sentences do not apply to statements in or omissions
from the Registration Statement or Prospectus based upon
written information furnished to the Transferor and ALFI L.P.
by any Underwriter through the Representative specifically for
use therein. The Prospectus delivered to you for use in
connection with the offering of the Class A Certificates will
be identical to the electronically transmitted copies thereof
4
<PAGE> 5
filed with the Commission pursuant to the EDGAR system, except
to the extent permitted by Regulation S-T.
(iii) The Basic Documents, the SUBI Certificate, the
certificate evidencing the remaining 0.2% undivided interest
in the SUBI other than the SUBI Interest (the "Retained SUBI
Certificate") and the Residual Value Insurance Policy conform
in all material respects to the descriptions thereof and the
statements in relation thereto contained in the Prospectus;
the SUBI Certificate and the Retained SUBI Certificate have
been duly and validly authorized and, when executed, issued,
authenticated and delivered in accordance with the SUBI Trust
Agreement, will be duly and validly issued and outstanding and
entitled to the benefits of the SUBI Trust Agreement.
(iv) The Certificates conform in all material respects
to the description thereof and the statements in relation
thereto contained in the Prospectus; the Certificates have
been duly and validly authorized and, when executed, issued,
authenticated and delivered in accordance with the
Securitization Trust Agreement and, in the case of the Class A
Certificates, when delivered to the Underwriters, against
payment of the consideration specified herein, will be duly
and validly issued and outstanding and entitled to the
benefits of the Securitization Trust Agreement.
(v) None of the Transferor, World Omni, WOLSI, ALFI,
ALFI L.P., the Origination Trust or the Trust is now or, as a
result of the transactions contemplated by this Agreement,
will become, an "investment company", nor is any of them
"controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(vi) Each of the Contracts and Leased Vehicles
allocated as a SUBI Asset on the Closing Date or on the
related Transfer Date will meet the eligibility criteria for
selection described in the SUBI Trust Agreement.
(vii) Each Initial Contract is, and each Subsequent
Contract will be, in substantially one of the forms attached
as an Exhibit to the SUBI Trust Agreement and constitutes or
will constitute on the related Transfer Date the legal, valid,
binding and enforceable agreement of the parties thereto; and
each Contract complies or will comply on the Closing Date or
on the related Transfer Date in all material respects as to
content and form with all applicable state and federal laws,
including without limitation, consumer protection laws.
(viii) At or prior to the Closing Date, the Origination
Trustee will have allocated Contracts and Leased Vehicles as
SUBI Assets that have an Aggregate Net Investment Value as of
the Initial Cutoff Date equal to $1,199,477,720.
(b) The Transferor and, to the extent specified below, World
Omni, as WOLSI Limited Partner, as ALFI Limited Partner and on
behalf of WOLSI as WOLSI General Partner and on behalf of ALFI L.P.
as ALFI General Partner, jointly and severally represent and warrant
to, and agree with, each of the Underwriters that:
5
<PAGE> 6
(i) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus,
except as otherwise set forth therein, (A) there has been no
material adverse change or development resulting in a
prospective material adverse change in the condition,
financial or otherwise, of the Transferor, the WOLSI General
Partner, ALFI L.P. or the ALFI General Partner, whether or not
arising in the ordinary course of business and (B) there have
been no transactions entered into by the Transferor, the WOLSI
General Partner, ALFI L.P. or the ALFI General Partner, other
than those in the ordinary course of their respective
businesses, that are material with respect to the Transferor,
the WOLSI General Partner, ALFI L.P. or the ALFI General
Partner.
(ii) Each of the Transferor and ALFI L.P. has been duly
formed and is validly existing as a limited partnership under
the Delaware Revised Uniform Limited Partnership Act, 6 Del.
C. Section 17-101 et seq. (the "Delaware Act"), and all
filings required at the date hereof under the Delaware Act
with respect to the due formation and valid existence of the
Transferor and ALFI L.P. as a limited partnership have been
made; each of the Transferor and ALFI L.P. has all requisite
power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus or
in the World Omni Lease Securitization L.P. Amended and
Restated Limited Partnership Agreement, dated as of July 1,
1994 (the "WOLSI Partnership Agreement"), between the WOLSI
General Partner and the WOLSI Limited Partner or the Auto
Lease Finance L.P. Amended and Restated Limited Partnership
Agreement, dated as of July 1, 1994 (the "ALFI Partnership
Agreement" and, together with the WOLSI Partnership Agreement,
the "Partnership Agreements"), between the ALFI General
Partner and the ALFI Limited Partner, as the case may be, and
to enter into and to perform its obligations under the related
Partnership Agreement, this Agreement, each Basic Document to
which the Transferor or ALFI L.P. is a party or by which it
may be bound and the Certificates; each of the Transferor and
ALFI L.P. is duly qualified or registered as a foreign
partnership to transact business and is in good standing in
each jurisdiction in which such qualification or registration
is required, whether by reason of the ownership of property or
the conduct of business, except where the failure to so
qualify would not have a material adverse effect on its
condition, financial or otherwise.
(iii) The WOLSI General Partner is the sole general
partner of the Transferor and the WOLSI Limited Partner is the
sole limited partner of the Transferor and, at the Closing
Date, each of the WOLSI General Partner and the WOLSI Limited
Partner will own its respective partnership interest in the
Transferor (each of which is a nontransferable interest to the
extent provided under the WOLSI Partnership Agreement) free
and clear of any lien, mortgage, pledge, charge, encumbrance,
adverse claim or other security interest (collectively,
"Liens") except as permitted by the Basic Documents.
(iv) The ALFI General Partner is the sole general
partner of ALFI L.P. and the ALFI Limited Partner is the sole
limited partner of ALFI L.P. and, at the Closing Date, each of
the ALFI General Partner and the ALFI Limited Partner will own
its
6
<PAGE> 7
respective partnership interests in ALFI L.P. (each of which
is a nontransferable interest to the extent provided under the
ALFI Partnership Agreement) free and clear of any Lien except
as permitted by the Basic Documents.
(v) None of the Transferor, the WOLSI General Partner,
ALFI L.P. or the ALFI General Partner is in violation of its
organizational or charter documents, bylaws or the related
Partnership Agreement, as the case may be, or in default in
the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it may be bound,
or to which any of its properties or assets is subject; the
execution, delivery and performance by each of the Transferor,
the WOLSI General Partner, ALFI L.P. and the ALFI General
Partner, as the case may be, of this Agreement, the related
Partnership Agreement, each Basic Document to which it is a
party and the Certificates, the consummation of the
transactions contemplated herein and therein and compliance by
it with its obligations hereunder and thereunder have been
duly and validly authorized by all necessary action (corporate
or otherwise) and will not conflict with or constitute a
breach of or default under, or result in the creation or
imposition of any Lien (except as permitted by the Basic
Documents) upon any of its property or assets pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it may be a party, by which it may
be bound or to which any of its properties or assets is
subject, nor will such action result in any violation of the
provisions of its charter or organizational documents, bylaws
or the related Partnership Agreement, or any applicable law,
administrative regulation or administrative or court decree.
(vi) There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or
foreign, now pending or, to the knowledge of each of the
Transferor, the WOLSI General Partner, the WOLSI Limited
Partner, ALFI L.P., the ALFI General Partner, the ALFI Limited
Partner and World Omni, threatened, against or affecting the
Transferor, the WOLSI General Partner, ALFI L.P. or the ALFI
General Partner that is required to be disclosed in the
Registration Statement and that is not disclosed or that might
result in any material adverse change in its condition,
financial or otherwise, or in its earnings, business affairs
or business prospects or that might materially and adversely
affect its properties or assets or that might materially and
adversely affect the consummation of this Agreement, either
Partnership Agreement or any Basic Document to which any of
such entities is a party or by which it may be bound; all
pending legal or governmental proceedings to which the
Transferor, the WOLSI General Partner, ALFI L.P. or the ALFI
General Partner is a party or of which any of their respective
properties or assets is the subject that are not described in
the Registration Statement, including ordinary routine
litigation incidental to their respective businesses, are,
considered in the aggregate, not material; and there are no
contracts or documents of the Transferor, the WOLSI General
Partner, the WOLSI Limited Partner, ALFI L.P., the ALFI
General Partner or the ALFI Limited Partner that are
required to be filed as exhibits to the Registration Statement
by the Act or by the Rules and Regulations that have not been
so filed.
7
<PAGE> 8
(vii) Except such as may be required by the Act, the
Rules and Regulations or state securities laws, no
authorization, approval or consent of any court, governmental
authority or agency or any other person is necessary in
connection with (A) the issuance of the SUBI Certificate or
the Retained SUBI Certificate, (B) the issuance of the
Certificates or the offering and sale of the Investor
Certificates, (C) the execution, delivery and performance by
the Transferor or ALFI L.P. of this Agreement or any Basic
Document to which it is a party and the Certificates or (D)
the consummation by the Transferor or ALFI L.P. of the
transactions contemplated hereby or thereby, except such
authorizations, approvals or consents as will have been
obtained and are in full force and effect as of the Closing
Date.
(viii) Each of the Transferor, the WOLSI General Partner,
ALFI L.P. and the ALFI General Partner possesses all material
certificates, authorities, licenses and permits issued by the
appropriate state, federal or foreign regulatory agencies or
bodies as are necessary to conduct the business now operated
by it, and none of such entities has received notice of any
proceedings relating to the revocation or modification of any
such certificate, authority, license or permit which, singly
or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely
affect its condition, financial or otherwise.
(ix) This Agreement has been duly executed and
delivered by the WOLSI General Partner for the Transferor and
by the ALFI General Partner for ALFI L.P.
(x) As of the Closing Date, each of the Basic
Documents to which any of the Transferor, the WOLSI General
Partner, ALFI L.P. or the ALFI General Partner is a party and
the WOLSI Partnership Agreement or the ALFI Partnership
Agreement, as the case may be, has been duly executed and
delivered by each such entity, and, assuming the due
authorization, execution and delivery thereof by the other
parties thereto, will constitute the legal, valid and binding
agreement of the Transferor, the WOLSI General Partner, ALFI
L.P. or the ALFI General Partner, as the case may be,
enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(xi) The Transferor will use the proceeds of the Class
A Certificates as described in the Prospectus under the
caption "Use of Proceeds".
(xii) As of the Closing Date, the representations and
warranties of each of the Transferor, the WOLSI General
Partner, ALFI L.P. and the ALFI General Partner in the related
Partnership Agreement and in each Basic Document to which it
is a party and in Officer's Certificates of each of the
Transferor, the WOLSI General Partner, ALFI L.P. and the
ALFI General Partner delivered on the Closing Date or on each
Transfer Date, as the case may be, will be true and correct,
and each Underwriter may rely on such representations and
warranties as if they were set forth herein in full.
8
<PAGE> 9
(xiii) None of the Transferor, the WOLSI General Partner,
the WOLSI Limited Partner, ALFI L.P., the ALFI General Partner
or the ALFI Limited Partner conducts business or has
affiliates who conduct business in Cuba or with the government
of Cuba within the meaning of Section 517.075 of the Florida
Securities and Investors Protection Act or Regulation Section
3E-900.001 promulgated thereunder.
(c) World Omni, on its own behalf and on behalf of ALFI,
WOLSI and the Origination Trustee, each to the extent indicated
below, represents and warrants to, and agrees with, each of the
Underwriters that:
(i) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus,
except as otherwise set forth therein, (A) there has been no
material adverse change or development resulting in a
prospective material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs
of the Origination Trustee (in its capacity as trustee of the
Origination Trust) or World Omni and its subsidiaries
considered as one enterprise, whether or not arising in the
ordinary course of business and (B) there have been no
transactions entered into by the Origination Trustee (in its
capacity as trustee of the Origination Trust), World Omni or
any other subsidiary of World Omni, other than those in the
ordinary course of business, that are material with respect to
the condition, financial or otherwise, or the earnings or
business affairs of the Origination Trustee (in its capacity
as trustee of the Origination Trust) or World Omni and its
subsidiaries considered as one enterprise.
(ii) World Omni has been duly incorporated, is current
in the payment of taxes to the State of Florida and fees to
the Florida Department of State and its status is "active";
World Omni has corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Prospectus and to enter into and to perform
its obligations under this Agreement, the Partnership
Agreements and each Basic Document to which World Omni is a
party or by which it may be bound; and World Omni is duly
qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure so to qualify would not have a material
adverse effect on its condition, financial or otherwise, or
its earnings, business affairs or business prospects or its
ability to perform its obligations under each Basic Document
to which it is a party or by which it may be bound.
(iii) Each of WOLSI and ALFI has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the State of Delaware, in each case with
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and to enter into and to perform its obligations
under each Basic Document to which it is a party or by which
it may be bound; each of WOLSI and ALFI is duly qualified as a
foreign corporation to transact business and is in good
standing in each jurisdiction in which such
9
<PAGE> 10
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material
adverse effect on its condition, financial or otherwise, or
its earnings or business affairs; all of the issued and
outstanding capital stock of each of WOLSI and ALFI is owned
by World Omni, free and clear of Liens and neither WOLSI nor
ALFI has any subsidiaries.
(iv) The Origination Trust has been qualified as a
business trust under applicable Alabama law and all filings
required to be made in respect of the Origination Trust's
status as a business trust under the laws of each state in
which such filings are required have been made and are in full
force and effect on the Closing Date, except where the failure
so to file would not have a material adverse effect on its
condition, financial or otherwise, or its earnings, business
affairs or business prospects.
(v) World Omni is not in violation of its
organizational or charter documents, bylaws or either
Partnership Agreement, or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a
party or by which it may be bound, or to which any of its
property or assets is subject; the execution, delivery and
performance by World Omni of this Agreement, each Partnership
Agreement and each Basic Document to which it is a party and
the consummation of the transactions contemplated herein and
therein and compliance by it with its obligations hereunder
and thereunder have been duly and validly authorized by all
necessary action (corporate or otherwise) and will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any Lien (except as
permitted by the Basic Documents) upon any of its properties
or assets pursuant to, any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which it is a party or by which it may be bound, or to which
any of its properties or assets is subject, nor will such
action result in any violation of the provisions of its
charter or organizational documents, bylaws or each
Partnership Agreement, as the case may be, or any applicable
law, administrative regulation or administrative or court
decree.
(vi) There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic
or foreign, now pending, or, to the knowledge of World Omni,
threatened against or affecting World Omni or the Origination
Trustee (in its capacity as trustee of the Origination Trust),
that is required to be disclosed in the Registration Statement
and that is not disclosed or that might result in any material
adverse change in its condition, financial or otherwise, or in
its earnings, business affairs or business prospects or that
might materially and adversely affect its properties or assets
or that might materially and adversely affect the consummation
of this Agreement, either Partnership Agreement or any Basic
Document to which it is a party or by which it may be bound;
and all pending legal or governmental proceedings to which
World Omni or the Origination Trustee (in its capacity as
trustee of the Origination Trust) is a party or of which any
of their respective properties or assets is
10
<PAGE> 11
the subject that are not described in the Prospectus,
including ordinary routine litigation incidental to their
respective businesses, are, considered in the aggregate, not
material.
(vii) No authorization, approval or consent of any
court, governmental authority or agency or any other person is
necessary in connection with the execution, delivery and
performance by World Omni, ALFI, WOLSI or the Origination
Trustee (in its capacity as trustee of the Origination Trust)
of this Agreement, each applicable Partnership Agreement or
any Basic Document to which any of them is a party or the
consummation by any of them of the transactions contemplated
hereby or thereby, except such authorizations, approvals or
consents as will have been obtained and are in full force and
effect as of the Closing Date.
(viii) Each of World Omni and the Origination Trustee (in
its capacity as trustee of the Origination Trust) possesses
all material certificates, authorities, licenses or permits
issued by the appropriate state, federal or foreign regulatory
agencies or bodies as are necessary to conduct the business
now operated by it, and neither of such entities has received
any notice of proceedings relating to the revocation or
modification of any such certificate, authority, license or
permit that, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect its condition, financial or otherwise, or its
earnings, business affairs or business prospects or its
ability to perform its obligations under each Basic Document
to which it is a party or by which it may be bound.
(ix) This Agreement has been duly executed and
delivered by World Omni.
(x) As of the Closing Date, each Basic Document to
which World Omni is a party and the Partnership Agreements has
been duly executed and delivered by World Omni and, assuming
the due authorization, execution and delivery thereof by the
other parties thereto, will constitute the legal, valid and
binding agreement of World Omni, enforceable in accordance
with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization
or other similar laws affecting enforcement of creditors'
rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(xi) At the time of execution and delivery of the
1997-A SUBI Supplement on the Closing Date, the
Origination Trustee on behalf of the Origination Trust will
have good and marketable title to the Initial Contracts, the
related Contract Rights, the Initial Leased Vehicles and other
rights relating to the Initial Contracts and the Initial
Leased Vehicles being allocated as SUBI Assets pursuant
thereto, free and clear of Liens (except as permitted by the
Basic Documents and other than the administrative lien in
favor of Bank of America Trust Company of Florida, N.A. or AL
Holding Corp. (the "Administrative Lien")) and will not have
assigned to any person any of its right, title or interest in
any such Contracts, Contract Rights, Leased Vehicles or other
rights, or shall have obtained the release of any such prior
assignment.
11
<PAGE> 12
(xii) On each Transfer Date the Origination Trustee on
behalf of the Origination Trust will have good and marketable
title to the related Subsequent Contracts, the related
Contract Rights, the related Subsequent Leased Vehicles and
other rights relating to such Subsequent Contracts and
Subsequent Leased Vehicles being allocated as SUBI Assets
pursuant thereto, free and clear of Liens (other than the
Administrative Lien), and will not have assigned to any person
any of its right, title or interest in any such Subsequent
Contracts, Contract Rights, Subsequent Leased Vehicles or
other rights, or shall have obtained the release of any such
prior assignment.
(xiii) As of the Closing Date, the representations and
warranties of World Omni in the Partnership Agreements and in
each Basic Document to which it is a party and in Officer's
Certificates of World Omni delivered on the Closing Date or on
each Transfer Date, as the case may be, will be true and
correct, and each Underwriter may rely on such representations
and warranties as if they were set forth herein in full.
(xiv) At or prior to the Closing Date, World Omni, as
Servicer under the Servicing Agreement, has made the
appropriate allocation of assets within the estate of the
Origination Trust as the SUBI Assets required by the SUBI
Trust Agreement.
(xv) As of the Closing Date, the Origination Trustee
has not assigned to any person any of its right, title or
interest in any of the Contracts, Contract Rights, Leased
Vehicles or other related rights constituting the SUBI Assets,
or has obtained the release of each such prior assignment.
(d) Any Officer's Certificate signed by any officer of the
Transferor, World Omni, WOLSI, ALFI or ALFI L.P. and delivered to
the Representative or counsel for the Underwriters shall be deemed a
representation and warranty of the Transferor, World Omni, WOLSI,
ALFI or ALFI L.P., as the case may be, to each Underwriter as to the
matters covered thereby.
3. Purchase, Sale and Delivery of the Class A Certificates.
On the basis of and in reliance on the representations, warranties
and agreements herein contained, but subject to the terms and
conditions herein set forth, the Transferor agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Transferor
the aggregate principal amount of each Class of Class A Certificates
set forth in Schedule I opposite the name of such Underwriter, at a
purchase price equal to the following percentages of the aggregate
initial principal balances thereof, (i) in the case of the Class A-1
Certificates, ____________%, (ii) in the case of the Class A-2
Certificates, ___________%, (iii) in the case of the Class A-3
Certificates, ____________% and (iv) in the case of the Class A-4
Certificates, ____________%.
Each Class of Class A Certificates will initially be
represented by one or more certificates registered in the name
of Cede & Co., as the nominee of The Depository Trust Company
("DTC"). The interests of beneficial owners of each Class of Class A
Certificates will be represented by book entries on the records of
DTC and participating members thereof.
12
<PAGE> 13
Definitive certificates evidencing the Class A Certificates will be
available only under the limited circumstances specified in the
Securitization Trust Agreement.
The Transferor will deliver the Class A Certificates to the
Representative for the respective accounts of the Underwriters,
against payment of the purchase price therefor in immediately
available funds payable to the order of the Transferor, at the
office of Williams & Connolly, 725 Twelfth Street, N.W., Washington,
D.C. 20005 (or at such other location as agreed upon among the
Transferor, ALFI L.P., World Omni and the Representative) at 10:00
A.M., Washington D.C. time, on April 30, 1997, or at such other time
not later than five full business days thereafter, as the
Transferor, ALFI L.P., World Omni and the Representative determine,
such time being herein referred to as the "Closing Date". The
certificates evidencing the Certificates will be made available for
inspection at the above offices of Williams & Connolly (or at such
other location agreed upon among the Transferor, ALFI L.P., World
Omni and the Representative) at least 24 hours prior to the Closing
Date.
Pursuant to Rule 15c6-1(d) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Transferor, ALFI L.P.,
World Omni and the Underwriters have agreed that the Closing Date
will be not less than five business days following the date hereof.
The Transferor, ALFI L.P., World Omni and the Underwriters further
agree that upon receipt by an investor who has received an
electronic Prospectus or a request by such investor's representative
(whether such request is delivered to an Underwriter, the Transferor
or ALFI L.P.) during the period during which there is an obligation
to deliver a Prospectus, the Underwriters will promptly deliver or
cause to be delivered without charge, a paper copy of the
Prospectus.
4. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Class A Certificates for sale to
the public as set forth in the Prospectus.
5. Certain Agreements of the Transferor, ALFI L.P. and
World Omni. Each of the Transferor, ALFI L.P. and World Omni, as
the case may be, jointly and severally covenants and agrees with
each of the Underwriters that:
(a) If the Effective Time is prior to the execution
and delivery of this Agreement, the Transferor and ALFI L.P.
will file the Prospectus with the Commission pursuant to and
in accordance with subparagraph (1) (or, if applicable and if
consented to by the Representative, subparagraph (4)) of Rule
424(b), not later than the second business day following the
execution and delivery of this Agreement. The Transferor and
ALFI L.P. will advise the Representative promptly of any such
filing pursuant to Rule 424(b).
(b) The Transferor and ALFI L.P. will advise the
Representative promptly of any proposal to amend or
supplement the registration statement as filed or the related
prospectus or the Registration Statement or the Prospectus and
will not effect any such amendment or supplement without the
consent of the Representative. The Transferor and ALFI L.P.
will advise the Representative promptly of the effectiveness
of the Registration Statement (if the Effective Time is
subsequent to the execution and
13
<PAGE> 14
delivery of this Agreement), of any amendment or supplement of
the Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in
respect of the Registration Statement. The Transferor and
ALFI L.P. will use their best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its
lifting, if issued.
(c) If, at any time when a prospectus relating to the
Class A Certificates is required to be delivered under the
Act, any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with the Act, the
Transferor and ALFI L.P. promptly will prepare and file, or
cause to be prepared and filed, with the Commission an
amendment or supplement that will correct such statement or
omission or effect such compliance. Neither the consent of
the Representative to, nor the delivery by any Underwriter of,
any such amendment or supplement shall constitute a waiver of
any of the conditions set forth in Section 6 hereof.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Transferor and ALFI
L.P. will cause the Trustee to make generally available to the
Class A Certificateholders an earnings statement covering a
period of at least 12 months beginning after the Effective
Date that will satisfy the provisions of Section 11(a) of the
Act. For the purpose of the preceding sentence, "Availability
Date" means the 45th day after the end of the fourth fiscal
quarter following the fiscal quarter that includes the
Effective Date, except that, if such fourth fiscal quarter is
the last quarter of the fiscal year of the Transferor and ALFI
L.P., "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Transferor and ALFI L.P. will furnish to the
Representative copies of the registration statement as
originally filed with the Commission and each amendment
thereto (in each case at least one of which will be signed and
will include all exhibits), each related preliminary
prospectus, the Prospectus and all amendments and supplements
to such documents, in each case as soon as available and in
such quantities as the Representative may reasonably request.
(f) The Transferor and ALFI L.P. will arrange for the
qualification of the Class A Certificates for sale under the
laws of such jurisdictions in the United States as the
Representative may designate and will continue such
qualifications in effect so long as required for the
distribution of the Class A Certificates, provided that
neither the Transferor nor ALFI L.P. shall be obligated to
qualify to do business nor become subject to service of
process generally, but only to the extent required for such
qualification, in any jurisdiction in which it is not
currently so qualified.
(g) So long as any Investor Certificates are
outstanding, the Transferor, ALFI L.P. or World Omni, as the
case may be, will make good faith efforts to deliver
14
<PAGE> 15
or cause to be delivered to the Representative, as soon as
each becomes available, copies of (i) each report relating to
the Investor Certificates delivered to Certificateholders
pursuant to Section 3.06 of the Securitization Trust
Agreement, (ii) the annual statement as to compliance and the
annual statement of a firm of independent public accountants
furnished pursuant to Sections 3.02, 3.03 or 10.02 of the
Servicing Agreement, (iii) each certificate or notice
delivered by the Servicer pursuant to Section 10.03 of the
Servicing Agreement, (iv) each periodic report required to be
filed by the Transferor or ALFI L.P. with the Commission
pursuant to the Exchange Act, or any order of the Commission
thereunder and (v) such other information concerning the
Transferor, World Omni, ALFI, WOLSI, ALFI L.P., the
Origination Trustee (in its capacity as trustee of the
Origination Trust), the Origination Trust, the Trust or the
Certificates as the Representative may reasonably request from
time to time.
(h) The Transferor, ALFI L.P. and World Omni will pay
all expenses incident to the performance of their respective
obligations under this Agreement, including without
limitation, (i) expenses incident to the word processing,
printing, reproduction and distribution of the registration
statement as originally filed with the Commission and each
amendment thereto, preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto), (ii) the
fees and disbursements of the Origination Trustee, the
Trustee, the Trust Agent, the Insurer and their respective
counsel, (iii) the fees and disbursements of counsel and the
independent public accountants of the Transferor, ALFI L.P.,
World Omni and the Insurer, (iv) the fees charged by each of
Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services ("Standard & Poor's" and, together
with Moody's, the "Rating Agencies") in connection with the
rating of each Class of Investor Certificates, (v) the fees of
DTC in connection with the book-entry registration of the
Class A Certificates and (vi) expenses incurred in
distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) by the
Underwriters, and will reimburse the Underwriters for any
expenses (including reasonable fees and disbursements of
counsel) incurred by the Underwriters pursuant to Section 5(f)
hereof in connection with the qualification of the Class A
Certificates for sale under the laws of such jurisdictions in
the United States as the Representative may designate. If
this Agreement is terminated by the Representative in
accordance with the provisions of Section 6 or clause (i) or
clause (ii) of Section 10 hereof, the Transferor, ALFI L.P.
and World Omni shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees
and disbursements of counsel to the Underwriters.
(i) For a period of 45 days from the date hereof, none
of the Transferor, ALFI L.P., World Omni or any of their
respective affiliates will, without the prior written consent
of the Representative, directly or indirectly, offer, sell or
contract to sell or announce the offering of, in a public or
private transaction, any other collateralized securities
similar to the Class A Certificates.
15
<PAGE> 16
(j) So long as any Class A Certificates are
outstanding, the Transferor, ALFI L.P. and World Omni will
cause to be delivered to the Representative a reliance letter
relating to each Opinion of Counsel delivered to the Trustee,
the Origination Trustee or either Rating Agency by counsel to
the Transferor, ALFI L.P. or World Omni relating to the
transactions contemplated by this Agreement or the Basic
Documents.
(k) To the extent, if any, that the rating provided
with respect to any Class of Class A Certificates by any
Rating Agency or the Insurer is conditional upon the
furnishing of documents or the taking of any other actions by
the Transferor, ALFI L.P. or World Omni, the Transferor, ALFI
L.P. or World Omni, as the case may be, shall furnish such
documents and take any such other actions.
(l) The Transferor and ALFI L.P. will file with the
Commission such report on Form SR as may be required pursuant
to Rule 463 under the Act.
6. Conditions of the Obligations of the Underwriters. The
obligation of the several Underwriters to purchase and pay for the
Class A Certificates will be subject to the accuracy of the
respective representations and warranties on the part of the
Transferor, ALFI L.P. and World Omni herein, to the accuracy of the
statements of the respective officers of the Transferor, ALFI L.P.
and World Omni made pursuant to the provisions hereof, to the
performance by the Transferor, ALFI L.P. and World Omni of their
respective obligations hereunder and to the following additional
conditions precedent:
(a) On (i) the date of this Agreement, the Representative,
ALFI L.P. and the Transferor shall have received a letter or
letters, dated the date of delivery thereof (which, if the Effective
Time is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective
Time is subsequent to the execution and delivery of this Agreement,
shall be prior to the filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to
the Effective Time), of Arthur Andersen LLP ("Arthur Andersen")
confirming that they are independent public accountants within the
meaning of the Act and the Rules and Regulations, substantially in
the form of the draft or drafts to which the Representative has
previously agreed and otherwise in form and in substance
satisfactory to the Representative and counsel for the Underwriters
and (ii) on the Closing Date, the Representative, ALFI L.P. and the
Transferor shall have received a letter or letters, dated as of the
Closing Date, from Arthur Andersen, updating each letter delivered
pursuant to clause (i) above, in form and substance satisfactory to
the Representative and counsel for the Underwriters.
(b) If the Effective Time has not occurred prior to the date
of this Agreement, the Effective Time shall be the date of
execution and delivery of this Agreement, or the next business day
after the date of this Agreement or such later date as shall have
been consented to by the Representative. If the Effective Time is
prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a) hereof. Prior to
the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
16
<PAGE> 17
proceedings for that purpose shall have been instituted or, to
the knowledge of the Transferor, ALFI L.P., World Omni or the
Representative, shall be contemplated by the Commission.
(c) The Representative shall have received certificates of
the President, any Vice President or the Treasurer or any Assistant
Treasurer of (i) the WOLSI General Partner on behalf of the
Transferor, (ii) the ALFI General Partner on behalf of ALFI L.P. and
(iii) World Omni, each dated the Closing Date, in which such officer
shall state, in the case of (A) the Transferor and ALFI L.P., that
(1) the representations and warranties of the Transferor or ALFI
L.P., as the case may be, in each Basic Document to which it is a
party and in this Agreement are true and correct, (2) to the best
knowledge of such officer after reasonable investigation, the
Transferor or ALFI L.P., as the case may be, has complied with all
agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are contemplated by the Commission and (3) subsequent to the date
of this Agreement, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Transferor or ALFI L.P., as the
case may be, except as set forth in or contemplated by the
Prospectus and (B) World Omni, that (1) the representations and
warranties of World Omni in each Basic Document to which it is a
party and in this Agreement are true and correct, (2) to the best
knowledge of such officer after reasonable investigation, World Omni
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder and (3) subsequent to
the date of this Agreement, there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of World Omni except as set
forth in or contemplated by the Prospectus.
(d) The Representative shall have received a certificate,
dated the Closing Date, of a Vice President or another duly
authorized officer of the Insurer, satisfactory in form and
substance to the Representative and counsel for the Underwriters,
substantially to the effect of the draft opinion previously
delivered to the Representative, to the effect that, among other
things, (i) the information provided by the Insurer for use in the
Registration Statement and the Prospectus is true and correct in all
material respects and (ii) since the date of the financial
statements of the Insurer included in the Prospectus, there has been
no change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Insurer that
would have a material adverse effect on the ability of the Insurer
to meet its obligations under the Residual Value Insurance Policy.
(e) The Representative shall have received:
(1) The favorable opinions of (A) Williams & Connolly,
counsel to the Transferor, ALFI L.P. and World Omni,
(B) Hand Arendall, L.L.C., special Alabama counsel to the
Transferor, ALFI L.P. and World Omni, (C) English, McCaughan &
O'Bryan, P.A., special Florida counsel to the Transferor, ALFI
L.P. and World Omni, (D) McDermott, Will & Emery, special
Illinois and New York counsel to the Transferor, ALFI L.P. and
World Omni, (E) Richards, Layton & Finger, special Delaware
counsel to the Transferor, ALFI L.P. and World Omni, (F)
Burbage &
17
<PAGE> 18
Weddell L.L.C., special Georgia counsel to the Transferor,
ALFI L.P. and World Omni and (G) Kilpatrick Stockton L.L.P.,
special North Carolina counsel to the Transferor, ALFI L.P.
and World Omni, in each case dated the Closing Date and
satisfactory in form and substance to the Representative and
counsel for the Underwriters, and, in the aggregate
substantially to the effect that:
(i) World Omni has been incorporated under
the Florida General Corporation Act, is current in the
payment of fees due to the Florida Department of State
and its status is active; World Omni has corporate power
and authority to own, lease and operate its properties,
to conduct its business as presently conducted and to
enter into and perform its obligations under this
Agreement, each Partnership Agreement and each Basic
Document to which it is a party; to the best of their
knowledge, World Omni is duly qualified as a foreign
corporation to transact business and is in good standing
in Alabama, Georgia, North Carolina and South Carolina;
and, to the best of their knowledge, all of the issued
and outstanding capital stock of WOLSI and ALFI is owned
by World Omni, free and clear of Liens.
(ii) Each of WOLSI and ALFI has been duly
incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware,
with corporate power and authority to own, lease and
operate its properties, to conduct its business as
described in the Registration Statement and to enter
into and perform its obligations under the related
Partnership Agreement and each Basic Document to which
it is a party; to the best of such counsel's knowledge
and information, each of WOLSI and ALFI is duly
qualified as a foreign corporation to transact business
in Florida and Alabama; and the shares of issued and
outstanding capital stock of each of WOLSI and ALFI have
been duly authorized and validly issued and are fully
paid and non-assessable.
(iii) Each of the Transferor and ALFI L.P.
is duly qualified and registered as a foreign
partnership to transact business and is in good standing
in Alabama and Florida.
(iv) This Agreement has been duly
authorized, executed and delivered by WOLSI, as WOLSI
General Partner, ALFI, as ALFI General Partner and World
Omni.
(v) The Origination Trust has been
qualified as a business trust under applicable Alabama
law and what is commonly known as a business trust under
Chapter 609 of the Florida Statutes, and all filings
required to be made in respect of the Origination
Trust's status as a business trust under the laws of the
States of Alabama and Florida have been made and are in
full force and effect on the Closing Date.
18
<PAGE> 19
(vi) The Certificates are in due and proper
form, all conditions precedent provided for in the
Securitization Trust Agreement relating to the issuance,
authentication and delivery of the Certificates have
been complied with and the Certificates have been duly
and validly authorized and, when executed, issued,
authenticated and delivered pursuant to the
Securitization Trust Agreement, and, in the case of the
Class A Certificates, when delivered to the Underwriters
against payment of the consideration set forth in this
Agreement, will be duly and validly issued and
outstanding and entitled to the benefits of the
Securitization Trust Agreement.
(vii) Each Partnership Agreement and each
Basic Document to which the Transferor, WOLSI, ALFI,
ALFI L.P. and World Omni is a party has been duly
authorized, executed and delivered by the Transferor,
WOLSI, ALFI, ALFI L.P. and World Omni, as the case may
be, and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, will
constitute the legal, valid and binding agreement of
such entity enforceable against such entity in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws
affecting enforcement of creditors' rights generally and
by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in
equity or at law). (In rendering such opinion as to the
enforceability of a Basic Document, counsel shall state
that in the event of a conflict of law arising under
such Basic Document, the governing law of such Basic
Document will apply without regard to any otherwise
applicable principles of conflicts of laws in the
related state).
(viii) To the best knowledge and information
of such counsel, (A) there are no legal or governmental
proceedings pending or threatened that are required to
be disclosed in the Registration Statement other than
those disclosed therein and (B) all pending legal or
governmental proceedings to which the Transferor, WOLSI,
ALFI, ALFI L.P., the Origination Trustee (in its
capacity as trustee of the Origination Trust) or World
Omni is a party or to which any of their respective
properties or assets is subject that are not described
in the Registration Statement, including ordinary
routine litigation incidental to the business of such
entity, are, considered in the aggregate with respect to
the Transferor, WOLSI, ALFI, ALFI L.P., the Origination
Trustee (in its capacity as trustee of the Origination
Trust) or World Omni as the case may be, not material.
(ix) The statements in the Prospectus under
the captions "Summary", "Risk Factors", "Description of
the Certificates", "Security for the Certificates",
"The Residual Value Insurance Policy" and "Additional
Document Provisions", insofar as such statements
purport to summarize certain terms or provisions of the
SUBI Interest, the Retained SUBI Interest, the
Certificates, the Basic Documents, the Residual Value
Insurance Policy and the Contingent and Excess
Liability Insurance Policies, provide a fair summary of
such
19
<PAGE> 20
provisions, and the statements in the Prospectus under
"Risk Factors -- SUBI Assets May Be Subject to Liens of
Origination Trust Creditors", "-- Consumer Protection
Laws", "-- ERISA Liabilities", "-- Vicarious Tort
Liability" and "-- Insolvency of World Omni; Substantive
Consolidation with World Omni", "Additional Document
Provisions", "Certain Legal Aspects of the Origination
Trust and the SUBI", "Certain Legal Aspects of the
Contracts and the Leased Vehicles" and "ERISA
Considerations", to the extent that they constitute
matters of law, summaries of legal matters, documents or
proceedings or legal conclusions relating to U.S.
federal law or the laws of the States of Florida,
Georgia or North Carolina have been prepared or reviewed
by such counsel and are correct in all material
respects.
(x) To the best knowledge and information
of such counsel, (A) there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits
thereto other than those described or referred to
therein or filed as exhibits thereto, (B) the
descriptions thereof or references thereto are correct
and (C) no default exists in the due performance or
observance of any material obligation, agreement,
covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or
other instrument so described, referred to or filed.
(xi) No authorization, approval, consent or
order of any court or governmental authority or agency
is required in connection with the issuance of the SUBI
Certificate, the Retained SUBI Certificate or the
Certificates, the offering of the Investor Certificates
or the sale of the Class A Certificates to the
Underwriters, except those authorizations, approvals,
consents and orders which have previously been obtained
and are in full force and effect as of the Closing Date;
provided, that such counsel need express no opinion as
to state securities laws.
(xii) None of (A) the execution, delivery
and performance by the Transferor, ALFI L.P. or World
Omni of this Agreement or by the Transferor, WOLSI,
ALFI, ALFI L.P. or World Omni of any applicable
Partnership Agreement or any Basic Document to which
such entity is a party, (B) the consummation of the
transactions contemplated herein or therein by any such
entity or (C) the fulfillment of the terms hereof or
thereof by any such entity will conflict with, result in
a breach of or constitute a default under, or with the
giving of notice or the passage of time or both, would
constitute a default under or result in the creation or
imposition of any Lien (except as permitted by the Basic
Documents) upon any property or assets of such entity
pursuant to the terms of (i) the organizational, charter
or partnership documents or bylaws of such entity, (ii)
to the best knowledge and information of such counsel
and except as otherwise provided in the Basic Documents,
any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which such entity is a
party or by which it may be bound, or to which any of
the
20
<PAGE> 21
properties or assets of such entity is subject or (iii)
any applicable law, statute or regulation or, to the
best knowledge and information of such counsel, any
judgment, order or decree applicable to such entity of
any court, regulatory body or other governmental
instrumentality having jurisdiction over such entity
except, in the case of clauses (ii) and (iii) above, for
defaults, breaches or violations that do not, in the
aggregate, have a material adverse effect on such
entity.
(xiii) None of the Transferor, WOLSI, ALFI,
ALFI L.P., World Omni, the Origination Trust or the
Trust is an "investment company" or is "controlled" by
an "investment company" as such terms are defined in the
Investment Company Act.
(xiv) The Registration Statement has become
effective under the Act, and, to the best knowledge and
information of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act,
and the Registration Statement and the Prospectus, and
each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form
in all material respects with the requirements of the
Act and the Rules and Regulations. Such counsel has no
reason to believe that either the Registration
Statement, at the Effective Time, or any such amendment
or supplement, as of its effective date, contained any
untrue statement of a material fact or omitted to state
any material fact required to be stated therein or
necessary to make the statements therein not misleading,
or that the Prospectus, at the date of this Agreement
(or any such amendment or supplement, as of its
respective date) or at the Closing Date included or
includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading; it being understood that such counsel need
express no opinion as to the financial statements or
other financial or statistical data contained in the
Registration Statement or the Prospectus.
(xv) Neither the SUBI Trust Agreement nor
the Securitization Trust Agreement is required to be
qualified under the Trust Indenture Act of 1939, as
amended.
(xvi) The Origination Trustee will own or
have a first priority perfected security interest in the
SUBI Collection Account, the Residual Value Surplus
Account and the proceeds thereof (including Permitted
Investments) for so long as they are held in such
accounts, and the Trustee will own or have a first
priority perfected security interest in the Distribution
Account and the Reserve Fund and the proceeds thereof
(including Permitted Investments) for so long as they
are held in such accounts.
21
<PAGE> 22
(xvii) The transfer of the SUBI Certificate
by ALFI L.P. to the Transferor constitutes a sale of the
SUBI Certificate and the SUBI Assets evidenced thereby.
The transfer of the SUBI Certificate by the Transferor
to the Trust (A) constitutes a sale of the SUBI
Certificate and the SUBI Assets evidenced thereby or (B)
if such transfer does not constitute a sale, then the
Securitization Trust Agreement and the delivery to and
possession by the Securitization Trustee of the SUBI
Certificate creates a valid first priority perfected
security interest, for the benefit of the Securitization
Trustee on behalf of the Certificateholders, in ALFI
L.P.'s and the Transferor's right, title and interest in
the SUBI Certificate.
(xviii) Each of the Transferor, WOLSI, ALFI,
ALFI L.P., World Omni and the Origination Trustee (in
its capacity as trustee of the Origination Trust)
possesses such certificates, authorities, licenses,
permits and other governmental authorizations issued by
Alabama and Florida, in the case of the Transferor,
WOLSI, ALFI, ALFI L.P. and World Omni, and by the States
of Alabama, Florida, Georgia and North Carolina, in the
case of the Origination Trustee (on behalf of the
Origination Trust), materially necessary to conduct the
business now operated by it, and none of such entities
has received any notice of proceedings relating to the
revocation or modification of any such certificate,
authority, license or permit that, singly or in the
aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings,
business affairs or business prospects of such entity.
(xix) The choice of law provisions contained in
each dealer agreement between World Omni and a dealer
that originates lease contracts comprising Origination
Trust Assets are valid and enforceable under the laws of
Alabama, Georgia and North Carolina.
(xx) The assignment provisions contained in
each dealer agreement between World Omni and a dealer
that originates lease contracts comprising Origination
Trust Assets are valid and enforceable under the laws of
the State in which such dealer originates such lease
contracts.
(xxi) In the event that the transaction
contemplated by the Basic Documents is deemed to be a
secured loan, assuming the chief executive office of the
Origination Trustee is located in the State of Illinois
and the timely filing of an appropriate UCC Financing
Statement with the Secretary of the State of Illinois,
the grant by the Origination Trustee to the
Securitization Trustee of a security interest in the
1997-A Leases pursuant to the Backup Security Agreement
will create a valid, first priority perfected security
interest in the 1997-A Leases.
(2) The favorable opinion of Hand Arendall, L.L.C.,
special Alabama counsel to the Transferor, ALFI L.P. and World
Omni, dated the Closing Date and
22
<PAGE> 23
satisfactory in form and substance to the Representative and
counsel to the Underwriters, and substantially to the effect
that:
(i) The SUBI Certificate and the Retained
SUBI Certificate have been duly and validly authorized
and, when executed, issued, authenticated and delivered
pursuant to the SUBI Trust Agreement, will be duly and
validly issued and outstanding and entitled to the
benefits of the SUBI Trust Agreement.
(ii) The lease contracts originated in
Alabama are "true leases" for purposes of Alabama law.
(iii) In the event that the transaction
contemplated by the Basic Documents is deemed to be a
secured loan, assuming the chief executive office of the
Origination Trustee is located in the State of Alabama
and the timely filing of an appropriate UCC Financing
Statement with the Secretary of the State of Alabama,
the grant by the Origination Trustee to the
Securitization Trustee of a security interest in the
1997-A Leases pursuant to the Backup Security Agreement
will create a valid, first priority perfected security
interest in the 1997-A Leases.
(3) The favorable opinion of Richards, Layton &
Finger, special Delaware counsel to the Transferor, ALFI L.P.
and World Omni, dated the Closing Date and satisfactory in
form and substance to the Representative and counsel to the
Underwriters, to the effect that:
(i) Each of the Transferor and ALFI L.P.
has been duly formed and is validly existing in good
standing as a limited partnership under the Delaware Act
with all requisite power under the Delaware Act and the
related Partnership Agreement to enter into and perform
its obligations under this Agreement, the related
Partnership Agreement and each Basic Document to which
it is a party.
(ii) The execution and delivery of and
performance under the related Partnership Agreement and
each Basic Document to which the Transferor or ALFI L.P.
is a party (A) have been duly authorized by all
requisite partnership action on the part of the
Transferor or ALFI L.P., (B) are permitted under the
Delaware Act and the related Partnership Agreement and
(C) will not violate any Delaware statute or regulation;
provided that such counsel need express no opinion
regarding state securities laws.
(iii) No consent, approval, authorization or
order of, or registration or filing or declaration with,
any Delaware court or governmental agency or body is
required in connection with either the Transferor's or
ALFI L.P.'s execution or delivery of or performance
under the related Partnership Agreement and each Basic
Document to which it is a party.
23
<PAGE> 24
(4) The favorable opinion of English, McCaughan &
O'Bryan, P.A., special Florida counsel to the Transferor, ALFI
L.P. and World Omni, dated the Closing Date and satisfactory
in form and substance to the Representative and counsel for
the Underwriters, and substantially to the effect that:
(i) The Class A Certificates will constitute
"indebtedness" for purposes of Florida income tax law,
and the Class B Certificates should constitute
"indebtedness" for purposes of Florida income tax law.
(ii) The loan rule promulgated under the Florida
Corporate Income Tax Code and included in the Florida
Administrative Code relating to interest on loans by
"financial organizations" (as such term is defined
therein), should not apply to an investment in the
Investor Certificates by such a financial organization.
(iii) The statements in the Prospectus under
"Material Income Tax Considerations -- Florida Income
Taxation", to the extent that they constitute matters of
law, summaries of legal matters, documents or
proceedings or legal conclusions, have been reviewed by
such counsel and are correct in all material respects.
(iv) The lease contracts originated in Florida
are "true leases" for purposes of Florida law.
(v) Assuming that all other elements necessary
to render a lease contract legal, valid, binding and
enforceable were present in connection with the
execution, delivery and performance of each lease
contract, and assuming that no action was taken in
connection with the execution, delivery and performance
of each lease contract that would give rise to a defense
to the legality, validity, binding effect and
enforceability of such lease contract, nothing in the
forms of such lease contracts, as attached as an Exhibit
to the Servicing Agreement, would render such lease
contract other than legal, valid, binding and
enforceable; assuming the validity, binding effect and
enforceability in all other respects, such forms of
lease contracts are in sufficient compliance with
applicable federal and Florida state consumer protection
laws so as not to be rendered void or voidable at the
election of the related lessee.
(5) The favorable opinion of Brown & Wood LLP, special
federal income tax counsel to the Transferor and ALFI L.P.,
dated the Closing Date and satisfactory in form and substance
to the Representative and counsel to the Underwriters, to the
effect that (i) the Class A Certificates will constitute
"indebtedness" for federal income tax purposes and the Class B
Certificates should constitute "indebtedness" for federal
income tax purposes and (ii) the statements in the Prospectus
under the captions "Summary -- Tax Status" and "Material
Income Tax Considerations -- Federal Taxation", to the extent
that they constitute matters of law, summaries of legal
matters
24
<PAGE> 25
or legal conclusions, have been reviewed by such counsel and
are correct in all material respects.
(6) Reliance letters relating to each legal opinion
relating to the transactions contemplated by this Agreement
and the Basic Documents rendered by counsel to the Transferor,
ALFI L.P. or World Omni to the Trustee, the Origination
Trustee or either Rating Agency.
(7) The favorable opinion of Dorsey & Whitney, counsel
to the Trustee, dated the Closing Date and satisfactory in
form and substance to the Representative and counsel to the
Underwriters, to the effect that:
(i) First Bank has been duly incorporated
and is validly existing as an national banking
association, in good standing under the laws of United
States with full power and authority (corporate and
other) to own its properties and conduct its business,
as presently conducted by it, and to enter into and
perform its obligations as Trustee and Trust Agent under
each Basic Document to which First Bank is a party.
(ii) Each Basic Document to which First
Bank is a party has been duly authorized, executed and
delivered by First Bank and, assuming the due
authorization, execution and delivery thereof by the
other parties thereto, will constitute a legal, valid
and binding obligation of First Bank enforceable in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws
affecting enforcement of creditors' rights generally and
by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in
equity or at law).
(iii) The Certificates have been duly
executed, authenticated and delivered by the Trustee.
(iv) Neither the execution nor delivery by
First Bank of each Basic Document to which it is a party
nor the consummation of any of the transactions by First
Bank contemplated thereby require the consent or
approval of, the giving of notice to, the registration
with or the taking of any other action with respect to,
any governmental authority or agency under any existing
federal or state law governing the banking or trust
powers of First Bank.
(v) The execution and delivery of each
Basic Document to which First Bank is a party and the
performance by First Bank of its terms do not conflict
with or result in a violation of (A) any federal or
state law or regulation governing the banking or trust
powers of First Bank, (B) the Articles of Association or
By-Laws of First Bank or (C) to the best knowledge
of such counsel, any indenture, lease or material
agreement to which First Bank is a party or to which its
assets are subject.
25
<PAGE> 26
(vi) All of the issued and outstanding
capital stock of the Origination Trustee is owned by
First Bank, free and clear of any Liens.
(8) The favorable opinion of Dorsey & Whitney, counsel
to the Origination Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and
counsel for the Underwriters, to the effect that:
(i) The Origination Trustee has been duly
incorporated and is validly existing as a corporation in
good standing under the laws of the State of Alabama
with corporate power and authority to own, lease and
operate its properties, to conduct its business as
described in the Registration Statement and to enter
into and perform its obligations under each Basic
Document to which it is a party; to the best of their
knowledge and information, the Origination Trustee is
duly qualified as a foreign corporation to transact
business and is in good standing in Georgia, Florida,
North Carolina, South Carolina, California, New Jersey,
New York and Pennsylvania; and the shares of issued and
outstanding capital stock of the Origination Trustee
have been duly authorized and validly issued, are fully
paid and non- assessable and are owned by First Bank.
(ii) Each Basic Document to which the
Origination Trustee is a party has been duly authorized,
executed and delivered by the Origination Trustee and,
assuming the due authorization, execution and delivery
thereof by the other parties thereto, will constitute
legal, valid and binding obligations of the Origination
Trustee enforceable in accordance with their respective
terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting
enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity
or at law).
(iii) The SUBI Certificate and the Retained
SUBI Certificate have been duly executed, authenticated
and delivered by the Origination Trustee.
(iv) Neither the execution nor delivery by
the Origination Trustee of each Basic Document to which
it is a party nor the consummation of any of the
transactions by the Origination Trustee contemplated
thereby require the consent or approval of, the giving
of notice to, the registration with or the taking of any
other action with respect to, any person or entity,
including any governmental authority or agency under any
existing federal or state law.
(v) The execution and delivery of each
Basic Document to which the Organization Trustee is a
party and the performance by the Origination Trustee of
their respective terms do not conflict with or result in
a violation of its articles of incorporation or bylaws
of the Origination Trustee or, to the best of such
counsel's knowledge, any contract, indenture, mortgage,
26
<PAGE> 27
loan agreement, note, lease or other instrument to which
it is a party, by which it may be bound or to which any
of its property or assets is subject.
(9) The favorable opinion of James B. Goodman, Esq.,
Assistant Vice President and Counsel of the Insurer, dated the
Closing Date and satisfactory in form and substance to the
Representative and counsel to the Underwriters, substantially
to the effect of the draft opinion previously delivered to the
Representative, to the effect that, among other things, (i)
the Insurer has been duly incorporated and is in good standing
in the jurisdiction of its incorporation, (ii) the Insurer has
the corporate power and authority to issue, execute, deliver
and perform its obligations under the Residual Value Insurance
Policy, (iii) no consent, approval, authorization or order of,
or registration or filing or declaration with, any entity is
required in connection with the issuance of the Residual Value
Insurance Policy, (iv) the Residual Value Insurance Policy is
enforceable in accordance with its terms, (v) the Residual
Value Insurance Policy is not required to be registered under
the Act and (vi) although the information in the Prospectus
under "The Residual Value Insurer" is limited and does not
purport to provide the scope of disclosure required to be
included in a prospectus with respect to a registrant under
the Act in connection with the public offering of securities
of such registrant, such counsel has no reason to believe that
the information in the Prospectus under "The Residual Value
Insurance Policy" or, within such limited scope of disclosure,
under "The Residual Value Insurer", contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(10) The favorable opinion of Brown & Wood LLP, counsel
for the Underwriters, dated the Closing Date, with respect to
the existence of the Transferor, ALFI L.P. and World Omni, the
validity of the Certificates and such other related matters as
the Representative shall request. In rendering such opinion,
Brown & Wood LLP may rely on the opinions of (i) Hand
Arendall, L.L.C., as to all matters of Alabama law, (ii)
Richards, Layton & Finger, as to all matters of Delaware law,
(iii) English, McCaughan & O'Bryan, P.A., as to all matters of
Florida law and (iv) McDermott, Will & Emery and/or Dorsey &
Whitney, as to all matters of Illinois law, which opinions
shall be satisfactory in form and substance to the
Representative and counsel for the Underwriters.
(f) The Insurer shall have issued the Residual Value
Insurance Policy.
(g) Each Class of Class A Certificates shall be rated in the
highest rating category by each of Moody's and Standard & Poor's and
the Class B Certificates shall be rated at least Baa2 by Moody's and
BBB by Standard & Poor's.
(h) On or prior to the Closing Date, counsel for the
Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of enabling
them to pass upon the issuance of the Certificates and sale of the
Class A Certificates as herein contemplated and related proceedings,
or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the
27
<PAGE> 28
conditions, herein contained; and all proceedings taken by the
parties to the Basic Documents in connection with the issuance of
the Certificates and sale of the Class A Certificates as herein
contemplated shall be satisfactory in form and substance to the
Representative and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may
be terminated by the Representative by notice to the Transferor,
ALFI L.P. and World Omni at any time at or prior to the Closing
Date, and such termination shall be without liability of any party
to any other party except as provided in Section 5(h) hereof.
7. Indemnification and Contribution.
(a) Each of the Transferor and World Omni agrees, jointly
and severally, to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning
of Section 15 of the Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), including the information deemed to be part of the
Registration Statement pursuant to Rule 430A(b) of the Rules
and Regulations, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Transferor and World
Omni; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 7(c) hereof, the fees
and disbursements of counsel chosen by the Representative),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under clause (i)
or (ii) above;
provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged
28
<PAGE> 29
untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Transferor by any
Underwriter through the Representative expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Transferor and World Omni, each of their respective
directors, each of their respective officers who signed the
Registration Statement and each person, if any, who controls each of
the Transferor and World Omni, respectively, within the meaning of
Section 15 of the Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), in reliance upon and in conformity
with written information furnished to the Transferor by such
Underwriter through the Representative expressly for use in the
Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it with respect to which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have other than on
account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action. In no
event shall an indemnifying party be liable for the fees and
expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances.
8. Contribution. If the indemnification provided for in
Section 7 hereof is unavailable or insufficient to hold harmless an
indemnified party under subsection (a) or (b) thereof, then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the loss, liability, claim,
damage or expense referred to in subsection (a) or (b) of Section 7
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Transferor and World Omni on the one hand
and the Underwriters on the other from the offering of the Class A
Certificates or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Transferor and
World Omni on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such
loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relative benefits received
by the Transferor and World Omni on the one hand and the
Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before
deducting expenses) received by the Transferor bear
to the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates
29
<PAGE> 30
to information supplied by the Transferor, World Omni or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a
result of the loss, liability, claim, damage or expense referred to
in the first sentence of this Section shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or
claim which is the subject of this Section. Notwithstanding the
provisions of this Section, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the Class A Certificates underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Notwithstanding the other
provisions of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have
the same rights to contribution as such Underwriter and each
director of the Transferor and World Omni, each officer of the
Transferor who signed the Registration Statement and each person, if
any, who controls either the Transferor or World Omni within the
meaning of Section 15 of the Act shall have the same rights to
contribution as the Transferor or World Omni, as the case may be.
The Underwriters' respective obligations to contribute pursuant to
this Section are several in proportion to the principal amount of
the Class A Certificates set forth opposite their respective names
in Schedule I hereto and not joint.
9. Survival of Certain Representations and Obligations.
The respective indemnities, agreements, representations, warranties
and other statements of the Transferor, ALFI L.P. and World Omni or
their respective officers and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, the
Transferor, ALFI L.P., World Omni or any of their respective
representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Class A
Certificates. If for any reason the purchase of the Class A
Certificates by the Underwriters is not consummated, the Transferor,
ALFI L.P. and World Omni shall remain responsible for the expenses
to be paid or reimbursed by them pursuant to Section 5(h) hereof and
the respective obligations of the Transferor, World Omni, ALFI L.P.
and the Underwriters pursuant to Section 7 hereof shall remain in
effect. If the purchase of the Class A Certificates by the
Underwriters is not consummated for any reason other than solely
because of the occurrence of any event specified in clause (iii),
(iv) or (v) of Section 10 hereof, the Transferor, ALFI L.P. and
World Omni will reimburse the Underwriters for all out-of-pocket
expenses (included the reasonable fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the
Class A Certificates.
10. Termination of Agreement. The Representative may
terminate this Agreement, by notice to the Transferor, ALFI
L.P. and World Omni, at any time prior to or at the Closing Date (i)
if there has been, since the date of this Agreement or since the
respective dates as of which information is given in the
Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business
30
<PAGE> 31
prospects of the Transferor, World Omni, ALFI L.P., the Origination
Trust or the Insurer, whether or not arising in the ordinary course
of business; (ii) if there has occurred any downgrading in the
rating of the debt securities of the Transferor, ALFI L.P., World
Omni or the Insurer by any "nationally recognized statistical rating
organization" (as such term is defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Transferor, ALFI L.P., World Omni or the Insurer
(other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such
rating); (iii) if there has occurred any material adverse change in
the financial markets in the United States or any outbreak of
hostilities or other calamity or crisis, the effect of which is such
as to make it, in the judgment of the Representative, impracticable
to market any Class of Investor Certificates or to enforce contracts
for the sale of any Class of Investor Certificates; (iv) if trading
generally on either the American Stock Exchange or the New York
Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed or maximum ranges for prices for securities
have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority; or (v) if a banking
moratorium has been declared by either federal, New York, Florida,
Illinois or Alabama authorities.
11. Default By One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Date to purchase
the Class A Certificates which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the
Representative shall have the right, but not the obligation, within
24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth;
if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted
Securities does not exceed 10% of the total aggregate
principal amount of the Class A Certificates, the
non-defaulting Underwriters shall be obligated to purchase the
full amount thereof in such proportions that their respective
underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted
Securities exceeds 10% of the total aggregate principal amount
of the Class A Certificates, this Agreement shall terminate
without liability on the part of any non-defaulting
Underwriter.
No action pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representative or
ALFI L.P. and the Transferor shall have the right to postpone the
Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangement.
31
<PAGE> 32
12. Notices. All communications hereunder will be in
writing and, if sent to (i) the Underwriters, shall be directed to
the Representative and will be mailed, delivered or sent by
facsimile and confirmed to it at Merrill Lynch & Co., North Tower,
World Financial Center, New York, New York 10281-1201, Attention:
Geoffrey R. Witt, Managing Director (facsimile number (212)
449-9015); (ii) the Transferor, will be mailed, delivered or sent by
facsimile and confirmed to it at World Omni Lease Securitization
L.P., c/o World Omni Lease Securitization, Inc., 120 N.W. 12th
Avenue, Deerfield Beach, Florida 33442, Attention: A. Tucker Allen,
Vice President and Corporate Treasurer (facsimile number (954)
429-2685); (iii) ALFI L.P., will be mailed, delivered or sent by
facsimile and confirmed to it at Auto Lease Finance L.P., c/o Auto
Lease Finance, Inc., 120 N.W. 12th Avenue, Deerfield Beach, Florida
33442, Attention: A. Tucker Allen, Vice President and Corporate
Treasurer (facsimile number (954) 429-2685); or (iv) World Omni,
will be mailed, delivered or sent by facsimile and confirmed to it
at World Omni Financial Corp., 120 N.W. 12th Avenue, Deerfield
Beach, Florida 33442, Attention: A. Tucker Allen, Vice President
and Corporate Treasurer (facsimile number (954) 429-2685).
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons
referred to in Sections 7 and 8 hereof, and no other person will
have any right or obligation hereunder.
14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one
and the same Agreement.
15. Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York
without regard to any otherwise applicable principles of conflicts
of laws.
32
<PAGE> 33
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us one of the counterparts
duplicate hereof, whereupon it will become a binding agreement
between the Transferor, ALFI L.P. and World Omni and the
Underwriters in accordance with its terms.
Very truly yours,
WORLD OMNI LEASE SECURITIZATION L.P.
By: WORLD OMNI LEASE SECURITIZATION,
INC., as General Partner
By:
----------------------------------
Name:
Title:
AUTO LEASE FINANCE L.P.
By: AUTO LEASE FINANCE INC.,
as General Partner
By:
----------------------------------
Name:
Title:
WORLD OMNI FINANCIAL CORP.
By:
----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------
Name:
Title:
For itself and as Representative of the other
Underwriters named in Schedule I hereto.
<PAGE> 34
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal Principal Principal
Amount of Amount of Amount of Amount
Class A-1 Class A-2 Class A-3 of Class A-4
Name of Underwriter Certificates Certificates Certificates Certificates
- ------------------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated . . . . . $ $ $ $
CS First Boston
Corporation . . . . . .
BA Securities, Inc. . .
------------ ------------ ------------ ------------
Total . . . . . . . $250,000,000 $250,000,000 $290,000,000 $277,297,857
============ ============ ============ ============
</TABLE>
SI-1
<PAGE> 1
EXHIBIT 4.1
_________________________________________________________________
WORLD OMNI LEASE SECURITIZATION L.P.
AND
FIRST BANK NATIONAL ASSOCIATION, AS TRUSTEE
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
AUTOMOBILE LEASE ASSET-BACKED CERTIFICATES
SECURITIZATION TRUST AGREEMENT
DATED AS OF APRIL 1, 1997
_________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Article and Section References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE TWO
CREATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.01. Creation of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.02. Conveyance of 99.8% 1997-A SUBI Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.03. Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.01. Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.02. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.03. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.04. Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.05. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 3.06. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE FOUR
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.02. Authentication and Delivery of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.03. Registration of Transfer and Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.06. Access to List of Certificateholders' Names and Addresses . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.07. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.08. Temporary Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.09. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 4.10. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 4.11. Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 4.12. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE FIVE
THE TRANSFEROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.01. Representations of Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.02. Liability of Transferor; Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of, Transferor; Certain
Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.04. Limitation on Liability of Transferor and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 5.05. Transferor May Own Investor Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 5.06. No Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.07. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE SIX
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.03. Trustee Not Liable for Certificates
or Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 6.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 6.05. Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 6.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.07. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.10. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.11. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 6.12. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 6.13. Trustee May Enforce Claims Without Possession of Certificates. . . . . . . . . . . . . . . . . . . . . 75
Section 6.14. Suit for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 6.15. Rights of Certificateholders to Direct Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 6.16. No Petition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE SEVEN
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 7.01. Termination of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 7.02. Optional Purchase of 99.8% 1997-A SUBI Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.01. Early Amortization Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.02. Additional Rights Upon the Occurrence
of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE NINE
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ESection 9.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 9.02. Protection of Title to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 9.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 9.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.06. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.08. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE TEN
AGENT FOR SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 10.01. Agent for Service of Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 10.02. Agent of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
EXHIBITS:
Exhibit A-1 - Form of Class A-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1-1
Exhibit A-2 - Form of Class A-2 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2-1
Exhibit A-3 - Form of Class A-3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3-1
Exhibit A-4 - Form of Class A-4 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4-1
Exhibit B - Form of Class B Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Transferor Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D-1 - Form of Non-Rule 144-A Representation
Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1-1
Exhibit D-2 - Form of Rule 144-A Representation
Letter . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-2-1
</TABLE>
iii
<PAGE> 5
SECURITIZATION TRUST AGREEMENT
THIS SECURITIZATION TRUST AGREEMENT, dated as of April 1, 1997, is
made with respect to the formation of the WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST (the "Trust"), between WORLD OMNI LEASE SECURITIZATION
L.P., a Delaware limited partnership ("WOLSI LP" or, in its capacity as
transferor hereunder, the "Transferor"), and FIRST BANK NATIONAL ASSOCIATION, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation), as trustee (the "Trustee").
RECITALS
A. Auto Lease Finance L.P., a Delaware limited partnership ("ALFI
LP"), VT Inc., an Alabama corporation (the "Origination Trustee"), and, for
certain limited purposes set forth therein, First Bank National Association, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation) (together with its successors, "First Bank"),
have entered into that certain Second Amended and Restated Trust Agreement
dated as of July 1, 1994, as amended by that certain Amendment No. 1 to Second
Amended and Restated Trust Agreement dated as of November 1, 1994 (as the same
may be further amended, supplemented or modified, the "Origination Trust
Agreement"), amending and restating that certain original Trust Agreement dated
as of November 1, 1993 among Auto Lease Finance, Inc. ("ALFI"), the
Origination Trustee and First Bank, and that certain Amended and Restated Trust
Agreement dated as of June 1, 1994 among ALFI, ALFI LP, the Origination Trustee
and First Bank, pursuant to which ALFI LP and the Origination Trustee formed
World Omni LT, an Alabama trust (the "Origination Trust"), for the purpose of
taking assignments and conveyances of, holding in trust and dealing in various
Trust Assets (as defined in the Origination Trust Agreement) in accordance with
the Origination Trust Agreement. ALFI and World Omni Financial Corp., a
Florida corporation ("WOFCO"), ALFI's parent, have entered into that certain
Limited Partnership Agreement dated as of June 1, 1994, as amended and restated
pursuant to that certain Amended and Restated Limited Partnership Agreement
dated as of July 1, 1994, pursuant to which ALFI LP was formed and ALFI
contributed to ALFI LP all of its right, title and interest in and to the
Origination Trust.
B. The Origination Trustee, on behalf of the Origination Trust,
and WOFCO (in its capacity as servicer, the "Servicer") also have entered into
that certain Second Amended and Restated Servicing Agreement dated as of July
1, 1994 (the "Servicing Agreement"), amending and restating that certain
original Servicing Agreement dated as of November 1, 1993, and that certain
Amended and Restated Servicing Agreement dated as of
<PAGE> 6
June 1, 1994, which provides for, among other things, the servicing of the
Trust Assets by the Servicer.
C. Concurrently herewith, and as contemplated by the terms of the
Origination Trust Agreement, ALFI LP, the Origination Trustee, First Bank and
WOLSI LP have entered into a Supplement 1997-A to Trust Agreement dated as of
April 1, 1997 (the "1997-A SUBI Supplement") pursuant to which the Origination
Trustee, on behalf of the Origination Trust and at the direction of ALFI LP,
will create and issue to ALFI LP a special unit of beneficial interest in the
Origination Trust, or "SUBI" (as defined in the Origination Trust Agreement)
(such SUBI, the "1997-A SUBI"), whose beneficiaries generally will be entitled
to the net cash flow arising from, but only from, the related SUBI Portfolio
(as defined in the Origination Trust Agreement) (such SUBI Portfolio, the
"1997-A SUBI Portfolio"), which 1997-A SUBI will be evidenced by one SUBI
Certificate (as defined in the Origination Trust Agreement) representing a
99.8% beneficial interest in the 1997-A SUBI (the "99.8% 1997-A SUBI
Certificate") and a second SUBI Certificate representing the remaining 0.2%
beneficial interest in the 1997-A SUBI (the "0.2% 1997-A SUBI Certificate" and,
together with the 99.8% 1997-A SUBI Certificate, the "1997-A SUBI
Certificates"), all as set forth in the Origination Trust Agreement and the
1997-A SUBI Supplement.
D. Also concurrently herewith, and as contemplated by the terms
of the Servicing Agreement, the Origination Trustee, on behalf of the
Origination Trust, and the Servicer also have entered into a Supplement 1997-A
to Servicing Agreement dated as of April 1, 1997 (the "1997-A Servicing
Supplement"), pursuant to which the terms of the Servicing Agreement will be
supplemented insofar as they apply to the 1997-A SUBI Portfolio, providing for
further specific servicing obligations that will benefit the holders of the
1997-A SUBI Certificates and the parties to the Securitized Financing (as
defined in the Origination Trust Agreement) contemplated by this Agreement.
E. Also concurrently herewith, ALFI LP and the Transferor have
entered into that certain SUBI Certificate Purchase and Sale Agreement dated as
of April 1, 1997 (the "SUBI Certificate Agreement"), pursuant to which ALFI LP
sold to the Transferor, without recourse, all of ALFI LP's right, title and
interest in and to the 1997-A SUBI and the 1997-A SUBI Certificates, all monies
due thereon and paid thereon in respect thereof and the right to realize on any
property that may be deemed to secure the 1997-A SUBI, and all proceeds
thereof, all in consideration of the cash payment to ALFI LP of an amount equal
to the Aggregate Net Investment Value (as defined below) of the 1997-A SUBI
Portfolio as of the Initial Cutoff Date (as defined in the 1997-A SUBI
Supplement).
2
<PAGE> 7
F. The parties desire to enter into this Agreement to create the
Trust, to provide for the issuance by the Trustee of certain Certificates and
to provide for the exchange of those Certificates for the 99.8% 1997-A SUBI
Certificate in connection with a Securitized Financing (as defined in the
Origination Trust Agreement) by the Transferor.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (a) unless otherwise defined
herein, all capitalized terms used herein shall have the meanings attributed to
them by Section 0.01 of the Origination Trust Agreement, by Section 10.01 of
the 1997-A SUBI Supplement or Section 6.01 of the 1997-A Servicing Supplement,
as applicable, (b) the capitalized terms defined in this Agreement have the
meanings assigned to them in this Agreement and include (i) all genders and
(ii) the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Agreement as a whole and
not to any particular article or section within this Agreement, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
"Accelerated Principal Distribution Amount" has the meaning set forth
in Section 3.03(c)(ii).
"Additional Loss Lease" means a 1997-A Lease that has been sold or
otherwise disposed of to pay an Additional Loss Amount.
"Administrative Expense" means any reasonable administrative cost or
expense associated with the Trust or the Origination Trust, including
reasonable fees and expenses of attorneys and accountants.
"Advance" means those advances required or permitted to be made by the
Servicer pursuant to Section 9.04 of the 1997-A Servicing Supplement.
"Aggregate Net Investment Value" means, as of any day, the sum of (i)
the aggregate of the Discounted Principal Balances
3
<PAGE> 8
of all 1997-A Leases at such date, each such Discounted Principal Balance being
derived from the Schedule of Leases and Leased Vehicles as in effect on such
date; provided that as of the last day of any Collection Period, there shall be
eliminated from the Schedule of Leases and Leased Vehicles for the purpose of
this definition (including, without limitation, the determination at any
subsequent time of the Aggregate Net Investment Value as of the last day of any
Collection Period) each 1997-A Lease that became a Charged-off, Liquidated,
Matured or Additional Loss Lease before the end of such Collection Period, (ii)
the aggregate of the Booked Residual Values of those Leased Vehicles that have
been added to Matured Leased Vehicle Inventory within the three immediately
preceding Collection Periods but have not been sold or otherwise disposed of as
of the last day of the most recent Collection Period for no more than two full
Collection Periods, each such Booked Residual Value being derived from the
Schedule of Leases and Leased Vehicles as in effect on such date, and (iii)
prior to the last Transfer Date, the aggregate amount of Principal Collections
that have not been reinvested in additional 1997-A Leases and 1997-A Leased
Vehicles pursuant to Section 11.02 of the 1997-A SUBI Supplement.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Discounted Principal Balances of all 1997-A
Leases that became Charged-off Leases during such Collection Period minus all
Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds collected
during such Collection Period with respect to Charged-off Leases.
"Agreement" means this Trust Agreement and all amendments hereof and
supplements hereto.
"ALFI" means Auto Lease Finance, Inc. and its successors.
"AISLIC" means American International Specialty Lines Insurance
Company.
"AISLIC Reserve Fund Supplemental Requirement" means, at any time, the
difference between (i) the greater of (A) the Reserve Fund Initial Deposit and
(B) the amount then on deposit in the Reserve Fund, and (ii) $41,897,757.
"AISLIC Trigger Event" means any of the following:
(a) AISLIC shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or AISLIC shall
file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or AISLIC shall appoint, or consent to
the
4
<PAGE> 9
appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator or other similar official in bankruptcy or insolvency of
it or of any substantial part of its property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due;
(b) any order for relief against AISLIC shall have been
entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws; or a decree or order by a
court having jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of AISLIC under any other
similar applicable Federal law; or a decree or order of a court having
jurisdiction in the premises for the appointment of a custodian,
receiver, liquidator, trustee, assignee, sequestrator or other similar
official in bankruptcy or insolvency of AISLIC or of any substantial
part of its property, or for the winding up or liquidation of its
affairs, shall have been entered; or
(c) the Residual Value Insurance Policy shall have been
declared void or unenforceable in a final judgment by a court of
competent jurisdiction in a final judgment as to which the time for
noting an appeal has expired and all appeals have been decided;
in each case without: (i) one or more policies with substantially similar
coverage and provisions to the Residual Value Insurance Policy having issued by
an insurer acceptable to each Rating Agency (as evidenced by confirmation
(written or oral) from each to the effect that such change would not result in
its then-current rating of any Rated Certificates being qualified, reduced or
withdrawn), provided that the Origination Trustee and the Trustee shall at all
times have the same rights with respect to any replacement policy as with
respect to the original policy; or (ii) an alternative mechanism to support the
Booked Residual Values of the 1997-A Leased Vehicles having been approved in
accordance with the procedures set forth in Section 9.01 for the amendment
hereof.
"AISLIC Trigger Event Reserve Fund Formula" means $41,897,757.
"Alternate Reserve Fund Formula" means that formula pursuant to which
the Reserve Fund Cash Requirement is to be calculated if any Reserve Fund Test
is not satisfied as of any Distribution Date. Pursuant to the Alternate
Reserve Fund Formula, the Reserve Fund Cash Requirement shall equal two times
the Base Reserve Fund Formula, but which amount shall in no event be
5
<PAGE> 10
greater than the Certificate Balance (after giving effect to reductions in the
Certificate Balance) on such Distribution Date.
"Amortization Date" means May 1, 1998.
"Amortization Period" means the period beginning with the day
immediately succeeding the last day of the Revolving Period and ending on the
day the Certificates have been paid in full and all unpaid Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss
Amounts, Class A-3 Certificate Principal Loss Amounts, Class A-4 Certificate
Principal Loss Amounts, Class B Certificate Principal Loss Amounts and unpaid
Class B Certificate Principal Carryover Shortfalls have been paid in full, in
each case with accrued interest thereon, or the Trust otherwise terminates.
"Applicants" shall have the meaning specified in Section 4.06.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Base Reserve Fund Formula" means that formula pursuant to which the
Reserve Fund Cash Requirement is to be calculated if all Reserve Fund Tests are
satisfied as of any Distribution Date. Pursuant to the Base Reserve Fund
Formula the Reserve Fund Cash Requirement with respect to any Distribution Date
will equal the lesser of (i) $11,994,777 and (ii) the Certificate Balance as of
the related Distribution Date (after giving effect to reductions in the
Certificate Balance on such Distribution Date).
"Book-Entry Certificates" means a beneficial interest in the Class A
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 4.09.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Chicago, Illinois,
Deerfield Beach, Florida, or Mobile, Alabama are authorized or obligated by
law, executive order or governmental decree to be closed.
"Capped Securitization Trust Administrative Expenses" means the
Trustee's compensation pursuant to Section 6.05 and those other Administrative
Expenses with respect to the Trust, including those due under Section 6.05, as
are due on such Distribution Date that, together with all such Administrative
Expenses paid since the beginning of the calendar year in which
6
<PAGE> 11
such Distribution Date occurs, do not exceed $_________ (or $__________ in any
year in which an Early Amortization Event set forth in Section 8.01(d) or (e)
occurs and the Trustee sells the property of the Trust pursuant to Section
8.02).
"Certificate Balance" initially means the Initial Certificate Balance
and, as of any date, means the sum of the Class A Certificate Balance and the
Class B Certificate Balance as of the close of business on such date, after
giving effect to any changes therein on such date.
"Certificate Factor" means, with respect to any Distribution Date, a
seven-digit decimal figure equal to the Certificate Balance as of the last day
of the related Collection Period divided by the Initial Certificate Balance.
"Certificate Owner" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on
the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant in
accordance with the rules of such Clearing Agency) and shall mean, with respect
to a Definitive Certificate, the related Certificateholder.
"Certificate Rate" means the Class A-1 Certificate Rate, the Class A-2
Certificate Rate, the Class A-3 Certificate Rate, the Class A-4 Certificate
Rate or the Class B Certificate Rate, as the case may be.
"Certificate Register" means the register maintained pursuant to
Section 4.03.
"Certificate Registrar" means the Trustee unless a successor thereto
is appointed pursuant to Section 4.03.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
the Transferor, ALFI LP or WOFCO, or any Person controlling, controlled by or
under common control with the Transferor, ALFI LP or WOFCO, shall not be taken
into account in determining whether the requisite percentage necessary to
effect any such consent, waiver, request or demand shall have been obtained.
"Certificates" means the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
B Certificates and the Transferor Certificate.
7
<PAGE> 12
"Charged-off Amount" means, as of any Distribution Date, an amount
equal to the sum of the Discounted Principal Balances, as of the end of the
related Collection Period, of any Charged-off Leases that became Charged-off
Leases during that related Collection Period.
"Charge-off Rate" means, with respect to any Collection Period, a
percentage equivalent to a fraction, the numerator of which is the product of
(a) 12 and (b) the Aggregate Net Losses with respect to such Collection Period,
and the denominator of which is the quotient of (a) the Aggregate Net
Investment Value as of the last day of such Collection Period plus the
Aggregate Net Investment Value as of the last day of the immediately preceding
Collection Period, divided by (b) 2.
"Charge-off Rate Test" means that determination, made on each
Determination Date, of the average of the Charge-off Rates for each of the
immediately preceding three Collection Periods (or the months of March and
April 1997 in the case of the May 1997 Determination Date, the months of March
and April 1997 and the May 1997 Collection Period in the case of June 1997
Determination Date, and the month of April 1997 and the May and June 1997
Collection Periods in the case of the July 1997 Distribution Date). The
Charge-off Rate Test will be satisfied if such average is 2.75% or less.
"Class" means all Certificates whose form is identical except for
variation in denomination, principal amount or owner.
"Class A Certificates" means the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class A-4 Certificates.
"Class A Certificate Balance" means the sum of the Class A-1
Certificate Balance, the Class A-2 Certificate Balance, Class A-3 Certificate
Balance and the Class A-4 Certificate Balance.
"Class A Certificateholder" means any Holder of a Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate or Class A-4
Certificate.
"Class A Percentage" means the Class A Certificate Balance immediately
after the Class A-3 Certificates have been paid in full as a percentage of the
Certificate Balance at such time.
"Class A-1 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in
8
<PAGE> 13
respect of such Collection Period that is allocable to the 99.8% 1997-A SUBI
Interest.
"Class A-1 Allocation Percentage" means, as of any Distribution Date,
the Class A-1 Certificate Balance as of the last day of the related Collection
Period as a percentage of the Certificate Balance as of such date.
"Class A-1 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-1
to this Agreement.
"Class A-1 Certificate Balance" shall initially equal the Initial
Class A-1 Certificate Balance and, on any date, shall equal the Initial Class
A-1 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-1 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-1
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-1 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
"Class A-1 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-1 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-1 Certificate Balance made on that date) divided by
the Initial Class A-1 Certificate Balance.
"Class A-1 Certificateholder" means any Holder of a Class A-1
Certificate.
"Class A-1 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-1 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-1 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-1 Certificates
pursuant to Section 3.03(b)(vi) or (b)(vii) on such Distribution Date.
"Class A-1 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-1 Certificate Rate) on the aggregate amount of
unreimbursed Class A-1 Certificate Principal Loss Amounts.
"Class A-1 Certificate Rate" means ____% per annum.
9
<PAGE> 14
"Class A-1 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-1 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Principal Distributable Amount and
the Class A-1 Interest Distributable Amount.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-1 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-1
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-1 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-1 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest distributed to Class A-1
Certificateholders on such current Distribution Date.
"Class A-1 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class A-1 Certificate
Rate or, in the case of the first Distribution Date, nine-tenths of such
amount, and (ii) the Class A-1 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to changes in the Class A-1
Certificate Balance made on such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, the Initial Class A-1 Certificate
Balance.
"Class A-1 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-1 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1997-A SUBI Interest.
"Class A-1 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-1 Certificateholders
pursuant to Section 3.03(d).
"Class A-1 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-1 Allocation
Percentage, (ii) the Investor Percentage
10
<PAGE> 15
with respect to Loss Amounts for the related Collection Period and (iii) the
portion of the Residual Value Loss Amount incurred in respect of such
Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-2 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-2 Allocation Percentage" means, as of any Distribution Date,
the Class A-2 Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class A-2 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-2
to this Agreement.
"Class A-2 Certificate Balance" shall initially equal the Initial
Class A-2 Certificate Balance and, on any date, shall equal the Initial Class
A-2 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-2 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-2
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-2 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
"Class A-2 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-2 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-2 Certificate Balance made on that date) divided by
the Initial Class A-2 Certificate Balance.
"Class A-2 Certificateholder" means any Holder of a Class
A-2 Certificate.
"Class A-2 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-2 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-2 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-2 Certificates
pursuant to Section 3.03(b)(vi) or (b)(vii) on such Distribution Date.
11
<PAGE> 16
"Class A-2 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-2 Certificate Rate) on the aggregate amount of
unreimbursed Class A-2 Certificate Principal Loss Amounts outstanding from time
to time.
"Class A-2 Certificate Rate" means ____% per annum.
"Class A-2 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-2 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Principal Distributable Amount and
the Class A-2 Interest Distributable Amount.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-2 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-2
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-2 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-2 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest distributed to Class A-2
Certificateholders on such current Distribution Date.
"Class A-2 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class A-2 Certificate
Rate or, in the case of the first Distribution Date, nine-tenths of such
amount, and (ii) the Class A-2 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to changes in the Class A-2
Certificate Balance made on such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, the Initial Class A-2 Certificate
Balance.
"Class A-2 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-2 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1997-A SUBI Interest.
12
<PAGE> 17
"Class A-2 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-2 Certificateholders
pursuant to Section 3.03(d).
"Class A-2 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-2 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the portion of the Residual Value Loss
Amount incurred in respect of such Collection Period that is allocable to the
99.8% 1997-A SUBI Interest.
"Class A-3 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-3 Allocation Percentage" means, as of any Distribution Date,
the Class A-3 Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class A-3 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-3
to this Agreement.
"Class A-3 Certificate Balance" shall initially equal the Initial
Class A-3 Certificate Balance and, on any date, shall equal the Initial Class
A-3 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-3 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-3
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-3 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
"Class A-3 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-3 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-3 Certificate Balance made on that date) divided by
the Initial Class A-3 Certificate Balance.
"Class A-3 Certificateholder" means any Holder of a Class
A-3 Certificate.
13
<PAGE> 18
"Class A-3 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-3 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-3 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-3 Certificates
pursuant to Section 3.03(b)(v) or (b)(vi) on such Distribution Date.
"Class A-3 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-3 Certificate Rate) on the aggregate amount of
unreimbursed Class A-3 Certificate Principal Loss Amounts outstanding from time
to time.
"Class A-3 Certificate Rate" means ____% per annum.
"Class A-3 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-3 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-3 Principal Distributable Amount and
the Class A-3 Interest Distributable Amount.
"Class A-3 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-3 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-3
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-3 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-3 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest distributed to Class A-3
Certificateholders on such current Distribution Date.
"Class A-3 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class A-3 Certificate
Rate or, in the case of the first Distribution Date, nine-tenths of such
amount, and (ii) the Class A-3 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to changes in the Class A-3
Certificate Balance made on such immediately preceding
14
<PAGE> 19
Distribution Date) or, in the case of the first Distribution Date, the Initial
Class A-3 Certificate Balance.
"Class A-3 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-3 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1997-A SUBI Interest.
"Class A-3 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-3 Certificateholders
pursuant to Section 3.03(d).
"Class A-3 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-3 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the portion of the Residual Value Loss
Amount incurred in respect of such Collection Period that is allocable to the
99.8% 1997-A SUBI Interest.
"Class A-4 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-4 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-4 Allocation Percentage" means, as of any Distribution Date,
the Class A-4 Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class A-4 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-4
to this Agreement.
"Class A-4 Certificate Balance" shall initially equal the Initial
Class A-4 Certificate Balance and, on any date, shall equal the Initial Class
A-4 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-4 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-4
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-4 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
15
<PAGE> 20
"Class A-4 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-4 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-4 Certificate Balance made on that date) divided by
the Initial Class A-4 Certificate Balance.
"Class A-4 Certificateholder" means any Holder of a Class
A-4 Certificate.
"Class A-4 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-4 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-4 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-4 Certificates
pursuant to Section 3.03(b)(vi) or (b)(vii) on such Distribution Date.
"Class A-4 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-4 Certificate Rate) on the aggregate amount of
unreimbursed Class A-4 Certificate Principal Loss Amounts outstanding from time
to time.
"Class A-4 Certificate Rate" means ____% per annum.
"Class A-4 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-4 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class A-4 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-4 Principal Distributable Amount and
the Class A-4 Interest Distributable Amount.
"Class A-4 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-4 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-4
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-4 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-4 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest
16
<PAGE> 21
distributed to Class A-4 Certificateholders on such current Distribution Date.
"Class A-4 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class A-4 Certificate
Rate or, in the case of the first Distribution Date, nine-tenths of such
amount, and (ii) the Class A-4 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to changes in the Class A-4
Certificate Balance made on such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, the Initial Class A-4 Certificate
Balance.
"Class A-4 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-4 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1997-A SUBI Interest.
"Class A-4 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-4 Certificateholders
pursuant to Section 3.03(d).
"Class A-4 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-4 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the portion of the Residual Value Loss
Amount incurred in respect of such Collection Period that is allocable to the
99.8% 1997-A SUBI Interest.
"Class B Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class B Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class B Allocation Percentage" means, as of any Distribution Date,
the Class B Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class B Certificate" means any one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit B
to this Agreement.
17
<PAGE> 22
"Class B Certificate Balance" shall initially equal the Initial Class
B Certificate Balance and, on any date, shall equal the Initial Class B
Certificate Balance, reduced by the sum of (i) all amounts distributed to Class
B Certificateholders and allocable to principal on or prior to such date, (ii)
the amount, if any, by which (a) the aggregate of all Class B Certificate
Principal Loss Amounts on or prior to such date exceeds (b) the aggregate of
all Class B Certificate Principal Loss Amounts reimbursed on or prior to such
date, and (iii) the amount, if any, by which (a) the aggregate of all Class B
Certificate Principal Carryover Shortfalls on or prior to such Distribution
Date exceeds (b) the aggregate of all Class B Certificate Principal Carryover
Shortfall reimbursed on or prior to such date.
"Class B Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class B Certificate Balance as
of the close of business on such Distribution Date (after giving effect to all
changes in the Class B Certificate Balance made on that date) divided by the
Initial Class B Certificate Balance.
"Class B Certificate Principal Carryover Shortfall" means, with
respect to any Distribution Date, the amount that otherwise would have been
made available for reinvestment in additional 1997-A SUBI Assets pursuant to
Section 11.02 of the 1997-A SUBI Supplement (if on a Distribution Date related
to a Collection Period in the Revolving Period) or distributed to the Class B
Certificateholders (if on a Distribution Date related to a Collection Period in
the Amortization Period), in each case in respect of Principal Collections
pursuant to Section 3.03(d), but instead is applied as set forth in clauses
(vi), (vii) and (viii) of Section 3.03(b) pursuant to Section 3.03(e).
"Class B Certificate Principal Carryover Shortfall Interest Amount"
means, with respect to any Distribution Date, the aggregate amount of accrued
and compounded interest (at the Class B Certificate Rate) on the aggregate
amount of unreimbursed Class B Certificate Principal Carryover Shortfall as of
the immediately preceding Distribution Date.
"Class B Certificate Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class B Loss
Amount for the related Collection Period and any previously unreimbursed Class
B Certificate Principal Loss Amount exceeds (ii) the amount available to be
distributed pursuant to Section 3.03(b)(ix) or (b)(x) on such Distribution
Date.
"Class B Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate
18
<PAGE> 23
amount of accrued and unpaid interest (at the Class B Certificate Rate) on the
aggregate amount of unreimbursed Class B Certificate Principal Loss Amounts.
"Class B Certificate Rate" means ____% per annum.
"Class B Certificateholder" means any Holder of a Class B Certificate.
"Class B Charged-Off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class B Allocation Percentage, (ii) the
Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1997-A SUBI Interest.
"Class B Distributable Amount" means, with respect to any Distribution
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class B Interest
Distributable Amount for such Distribution Date plus any outstanding Class B
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class B Interest Carryover Shortfall, to the
extent permitted by law, at the Class B Certificate Rate from such immediately
preceding Distribution Date to but not including the current Distribution Date
over (ii) the amount of interest distributed to Class B Certificateholders on
such current Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class B Certificate
Rate or, in the case of the first Distribution Date, nine-tenths of such
amount, and (ii) the Class B Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to changes in the Class B
Certificate Balance made on such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, the Initial Class B Certificate
Balance.
"Class B Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class B Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1997-A SUBI Interest.
19
<PAGE> 24
"Class B Percentage" means the Class B Certificate Balance immediately
after the Class A-3 Certificates have been paid in full as a percentage of the
Certificate Balance at such time.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class B Certificateholders
pursuant to Section 3.03(d).
"Class B Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class B Allocation Percentage,
(ii) the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the portion of the Residual Value Loss Amount
incurred in respect of such Collection Period that is allocable to the 99.8%
1997-A SUBI Interest.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means April 30, 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Corporate Trust Office" means, as of the date hereof, the office of
the Trustee located at One Illinois Center, 111 East Wacker, Suite 3000,
Chicago, Illinois 60601, Attention: Corporate Trust Office, or hereafter any
corporate trust office designated by the Trustee or any Successor Trustee.
"Current Lease" means each 1997-A Lease that is not a Charged-off
Lease, a Matured Lease, a Liquidated Lease or an Additional Loss Lease.
"Definitive Certificates" shall have the meaning specified in Section
4.09.
"Delinquency Rate" means, with respect to any Collection Period, the
percentage equivalent to a fraction, the numerator of which is the number of
outstanding 1997-A Leases as to which, as of the last day of such Collection
Period, all or any part of a Monthly Lease Payment in excess of $40 is unpaid
(including
20
<PAGE> 25
without limitation because of a check being returned for insufficient funds) 61
days or more after its Due Date (other than a 1997-A Lease as to which an
extension has been granted with respect to such Due Date by the Servicer
pursuant to clause (ii) of Section 2.02(b) of the Servicing Agreement and
Section 9.02(a) of the 1997-A Servicing Supplement), whether or not (a) the
related 1997-A Leased Vehicle has been repossessed (or the process of
repossession has been commenced) but has not yet sold or otherwise disposed of
during such Collection Period, or (b) the related Obligor is the subject of
bankruptcy or similar proceedings, and the denominator of which is the
aggregate number of Current Leases on the last day of such Collection Period.
"Delinquency Rate Test" means that determination, made on each
Determination Date, of the average of the Delinquency Rates for each of the
three immediately preceding Collection Periods (or the months of March and
April 1997 in the case of the May 1997 Determination Date, the months of March
and April 1997 and the May 1997 Collection Period in the case of the June 1997
Determination Date, and the month of April 1997 and the May and June 1997
Collection Periods in the case of the July 1997 Distribution Date. The
Delinquency Rate Test will be satisfied if such average is 1.75% or less.
"Determination Date" means, with respect to any Distribution Date, the
second Business Day prior to such Distribution Date.
"Distribution Account" means the account or accounts designated as
such and established and maintained pursuant to Section 3.01.
"Distribution Date" means, with respect to a Collection Period, the
twenty-fifth day of the following month, or if that day is not a Business Day,
the next Business Day, beginning with May 27, 1997.
"Downgrade Reserve Fund Formula" means the greatest amount that any
Rating Agency shall require for calculation of the Reserve Fund Cash
Requirement in order to maintain its then-current ratings on any Class of
Investor Certificates.
"Downgrade Reserve Fund Supplemental Requirement" means the greatest
amount that any Rating Agency shall require to be deposited into the Reserve
Fund in order to maintain its then-current ratings on any Class of Investor
Certificates.
"Downgrade Trigger Event" means that AISLIC's claims paying ability is
downgraded to "AAA" or lower by Moody's, or below "AAA" by Standard & Poors.
"DTC" means The Depository Trust Company and its successors.
21
<PAGE> 26
"Early Amortization Event" has the meaning set forth in Section 8.01.
"Early Termination Amount" means, as of any Distribution Date, an
amount equal to the sum of the Discounted Principal Balances, as of the end of
the related Collection Period, of any Early Termination Leases that became
Early Termination Leases during that related Collection Period, such Discounted
Principal Balances calculated without reference to payments received in the
form of non-cash items, but only to the extent that such sum exceeds the amount
transferred to the 1997-A SUBI Collection Account from the Residual Value
Surplus Account on the related Deposit Date pursuant to clause (z) of Section
12.03(b) of the 1997-A SUBI Supplement.
"Entitlement Holder" has the meaning set forth in Section 8-102(a)(7)
of the UCC.
"Entitlement Orders" has the meaning set forth in Section 8-102(a)(8)
of the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Compliance Test" means the timely, true and accurate
certification, on or before each Determination Date, by the Servicer to the
Trustee and each Rating Agency to the effect set forth in Section 10.03(c) of
the 1997-A Servicing Supplement.
"Excess Collections" means, with respect to any Distribution Date, the
remaining amount on deposit in the Distribution Account in respect of such
Distribution Date after all distributions pursuant to Section 3.03(b) have been
made, net of any amount required to maintain the Distribution Account in good
standing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Scheduled Distribution Date" means the June 2003 Distribution
Date.
"Financial Intermediary" means a financial intermediary, as such term
is defined in Section 8-313(4) of the UCC.
"First Bank" has the meaning set forth in Recital A.
"Flow-Through Entity" has the meaning set forth in Section 4.03(a).
22
<PAGE> 27
"Independent Director" means a director of the general partner of the
Transferor who shall at no time be (i) a director, officer, employee or former
employee of any Affiliate of the Transferor, (ii) a natural person related to
any director, officer, employee or former employee of any Affiliate, (iii) a
holder (directly or indirectly) of any voting securities of any Affiliate, or
(iv) a natural person related to a holder (directly or indirectly) of any
voting securities of any Affiliate. For these purposes, "Affiliate" shall mean
any entity other than the Transferor or any similarly organized special purpose
finance subsidiary of an Affiliate (i) which owns beneficially, directly or
indirectly, more than 10% of the outstanding shares of the common stock or
partnership interests of the Transferor, (ii) which is in control of the
Transferor, as currently defined under Section 230.405 of the Rules and
Regulations of the Commission, 17 C.F.R. Section 230.405, (iii) of which 10%
or more of the outstanding shares of its common stock or partnership interests
are owned beneficially, directly or indirectly, by any entity described in
clause (i) or (ii) above, or (iv) which is controlled by an entity described in
clause (i) or (ii) above, as currently defined under Section 230.405 of the
Rules and Regulations of the Commission, 17 C.F.R. Section 230.405.
"Indorsement" has the meaning set forth in Section 8-304 of the UCC.
"Initial Certificate Balance" means the sum of the Initial Class A
Certificate Balance and the Initial Class B Certificate Balance.
"Initial Class A Certificate Balance" means the sum of the Initial
Class A-1 Certificate Balance, the Initial Class A-2 Certificate Balance, the
Initial Class A-3 Certificate Balance and the Initial Class A-4 Certificate
Balance.
"Initial Class A-1 Certificate Balance" means $250,000,000.
"Initial Class A-2 Certificate Balance" means $290,000,000.
"Initial Class A-3 Certificate Balance" means $290,000,000.
"Initial Class A-4 Certificate Balance" means $277,297,857.
"Initial Class B Certificate Balance" means $65,839,532.
"Insolvency Event" has the meaning set forth in Section 8.02.
"Insurance Policy" means, with respect to a 1997-A Lease, 1997-A
Leased Vehicle or Obligor under a 1997-A Lease, any policy of comprehensive,
collision, public liability, physical damage,
23
<PAGE> 28
personal liability, credit health or accident, credit life or employment
insurance, or any other form of insurance.
"Insured Residual Value Loss Amount" means, as of any Distribution
Date, the lesser of: (i) the product of (A) the Investor Percentage with
respect to Loss Amounts for the related Collection Period, and (B) the portion
of the Residual Value Loss Amount incurred during such Collection Period that
is allocable to the 99.8% 1997-A SUBI Interest; and (ii) the shortfall if any,
described in clause (ii) of Section 3.03(e).
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investor Certificateholder" means a Class A Certificate-holder or a
Class B Certificateholder.
"Investor Certificates" means the Class A Certificates and the Class B
Certificates.
"Investor Percentage" means, with respect to any Collection Period,
(a) as used with respect to Interest Collections and Loss
Amounts allocable to the 99.8% 1997-A SUBI Interest, the percentage
equivalent of a fraction (not to exceed 100%), the numerator of which
is the Certificate Balance as of the last day of the immediately
preceding Collection Period (or, in the case of the first Collection
Period, the Initial Certificate Balance), and the denominator of which
is 99.8% of the Aggregate Net Investment Value as of the last day of
the immediately preceding Collection Period (or, in the case of the
first Collection Period, the Initial Cutoff Date); and
(b) as used with respect to Principal Collections
allocable to the 99.8% 1997-A SUBI Interest, the percentage equivalent
of a fraction (not to exceed 100%), the numerator of which is the
Certificate Balance and the denominator of which is 99.8% of the
Aggregate Net Investment Value, each as of the last day of the last
full Collection Period preceding the first to occur of the
Amortization Date or any Early Amortization Event.
"Liquidated Lease" means a 1997-A Lease that (a) has been the subject
of a Prepayment in full, or (b) has been paid in full, regardless of whether
all or any part of such payment has been made by the Obligor under the related
1997- A Lease, the Servicer pursuant to the Servicing Agreement or 1997-A
Servicing Supplement, an insurer pursuant to an Insurance Policy or the
Residual Value Insurance Policy or otherwise.
24
<PAGE> 29
"Liquidation Expenses" means reasonable out-of-pocket expenses
incurred by the Servicer in connection with the realization of the full amounts
due or to become due under any 1997-A Lease, including expenses incurred in
connection with the repossession of any 1997-A Leased Vehicle, the sale or
other disposition of a 1997-A Leased Vehicle, whether upon repossession or upon
return of a 1997-A Leased Vehicle related to a Matured Lease, any collection
effort (whether or not resulting in a lawsuit against the Obligor under such
1997-A Lease) or any application for Insurance Proceeds.
"Loss Amount" means, with respect to any Distribution Date, an amount
equal to the sum of the Charged-off Amount, the Residual Value Loss Amount and
the Additional Loss Amount, in each case for the related Collection Period.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"1997-A Servicing Supplement" has the meaning set forth in Recital D.
"1997-A SUBI" has the meaning set forth in Recital C.
"1997-A SUBI Portfolio" has the meaning set forth in Recital C.
"1997-A SUBI Supplement" has the meaning set forth in Recital C.
"99.8% 1997-A SUBI Certificate" has the meaning set forth in Recital C.
"99.8% 1997-A SUBI Interest" has the meaning set forth in Section 2.02.
"Notice of Adverse Claim" has the meaning set forth in Section
8-102(a)(1) and 8-105 of the UCC.
"Officer's Certificate" means a certificate signed by the President,
any Vice President, the Treasurer or any Assistant Treasurer, the Secretary or
any Assistant Secretary of the general partner of the Transferor or the
Servicer, as the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel (who, in the
case of counsel to the Transferor or the Servicer, may be an employee of or
outside counsel to the Transferor or the Servicer), which counsel shall be
reasonably acceptable to the Trustee.
25
<PAGE> 30
"Origination Trust" has the meaning set forth in Recital A.
"Origination Trust Agreement" has the meaning set forth in Recital A.
"Origination Trustee" has the meaning set forth in Recital A.
"Outstanding Advances" means, with respect to a Distribution Date, the
sum of all Advances made as of or prior to such date minus all payments or
collections as of or prior to such date that are specified in Section 9.02(g)
of the 1997-A Servicing Supplement as applied to reimburse such Advance as are
unreimbursed or are Nonrecoverable Advances.
"Percentage Interest" means, as to any Investor Certificate, the
percentage obtained by dividing the outstanding principal balance of such
Investor Certificate by the Certificate Balance or by the Class A Certificate
Balance, the Class A-1 Certificate Balance, the Class A-2 Certificate Balance,
the Class A-3 Certificate Balance, the Class A-4 Certificate Balance or the
Class B Certificate Balance, as the context may require; provided, however,
that where the Percentage Interest is relevant in determining whether the vote
of the requisite percentage of Investor Certificateholders necessary to effect
any consent, waiver, request or demand shall have been obtained, the aggregate
Percentage Interest shall be deemed to be reduced by the amount equal to the
Percentage Interest (without giving effect to this provision) represented by
the interests evidenced by any such Investor Certificate that is registered in
the name of the Transferor, WOFCO or any Person controlling, controlled by or
under common control with the Transferor or WOFCO.
"Permitted Investments" means any one or more of the following
instruments, obligations or securities, in each case with a remaining term to
maturity of no more than one year:
(a)(i) direct obligations of, and obligations guaranteed as
to full and timely payment of principal and interest by, the United
States or any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the
United States (other than the Government National Mortgage
Association), and (ii) direct obligations of, or obligations fully
guaranteed by, the Federal National Mortgage Association or any State
then rated with the highest available credit rating of each Rating
Agency for such obligations, which obligations are, at the time of
investment, otherwise acceptable to each Rating Agency for securities
having a rating at least
26
<PAGE> 31
equivalent to the rating of the Class A Certificates at the Closing
Date;
(b) certificates of deposit, demand or time deposits of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee)
incorporated under the laws of the United States or any State and
subject to supervision and examination by federal and/or State banking
authorities and the deposits of which are fully insured by the Federal
Deposit Insurance Corporation, so long as at the time of such
investment or contractual commitment providing for such investment
either such depository institution or trust company has the Required
Rating or the Trustee shall have received a letter from each Rating
Agency to the effect that such investment would not result in the
qualification, downgrading or withdrawal of the ratings then assigned
to any Rated Certificates;
(c) repurchase obligations held by the Trustee that are
acceptable to the Trustee with respect to (i) any security described
in clause (a) above or (e) below, or (ii) any other security issued or
guaranteed by any agency or instrumentality of the United States, in
either case entered into with a federal agency or depository
institution or trust company (including the Trustee) acting as
principal, whose obligations having the same maturity as that of the
repurchase agreement would be Permitted Investments under clause (b)
above; provided, however, that repurchase obligations entered into
with any particular depository institution or trust company (including
the Trustee) will not be Permitted Investments to the extent that the
aggregate principal amount of such repurchase obligations with such
depository institution or trust company held by the Trustee on behalf
of the Trust shall exceed 10% of either the Aggregate Net Investment
Value or the aggregate unpaid principal balance or face amount, as the
case may be, of all Permitted Investments held by the Trustee on
behalf of the Trust;
(d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States or any State so long as at the time of such investment or
contractual commitment providing for such investment either the
long-term, unsecured debt of such corporation has the highest
available rating from each Rating Agency or the Trustee shall have
received a letter from each Rating Agency to the effect that such
investment would not result in the qualification, downgrading or
withdrawal
27
<PAGE> 32
of the ratings then assigned to any Rated Certificates, or commercial
paper or other short-term debt having the Required Rating; provided,
however, that any such commercial paper or other short-term debt may
have a remaining term to maturity of no longer than 30 days after the
date of such investment or contractual commitment providing for such
investment, and that securities issued by any particular corporation
will not be Permitted Investments to the extent that investment
therein will cause the then outstanding principal amount or face
amount, as the case may be, of securities issued by such corporation
and held by the Trustee on behalf of the Trust to exceed 10% of either
the Aggregate Net Investment Value or the aggregate unpaid principal
balance or face amount, as the case may be, of all Permitted
Investments held by the Trustee on behalf of the Trust;
(e) interests in any open-end or closed-end management
type investment company or investment trust (i) registered under the
Investment Company Act, the portfolio of which is limited to the
obligations of, or guaranteed by, the United States and to agreements
to repurchase such obligations, which agreements, with respect to
principal and interest, are at least 100% collateralized by such
obligations marked to market on a daily basis and the investment
company or investment trust shall take delivery of such obligations
either directly or through an independent custodian designated in
accordance with the Investment Company Act and (ii) acceptable to each
Rating Agency (as approved in writing by each Rating Agency) as
collateral for securities having ratings equivalent to the ratings of
the Rated Certificates on the Closing Date;
(f) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation (as approved in writing
by each Rating Agency) as will not result in the qualification,
downgrading or withdrawal of the ratings then assigned to any Rated
Certificates by each Rating Agency;
(g) investments in Permitted Investments maintained in
"sweep accounts," short-term asset management accounts and the like
utilized for the investment, on an overnight basis, of residual
balances in investment accounts maintained at the Trustee, Bank of
America Illinois, an Illinois banking corporation or any other
depository institution or trust company organized under the laws of
the United States or any state that is a member of the Federal Deposit
Insurance Corporation, the short-term debt of which has the highest
available credit rating of each Rating
28
<PAGE> 33
Agency; provided, however, that any such account must be maintained
with an institution meeting the requirements of Section 3.01
applicable to the Distribution Account;
(h) guaranteed investment contracts entered into with any
financial institution having a final maturity of not more than one
month from the date of acquisition, the short-term debt securities of
which institution have the Required Rating;
(i) funds classified as money market funds or invested in
money market instruments consisting of: U.S. Treasury bills, other
obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities; certificates of deposit; banker's acceptances;
and commercial paper (including variable master demand notes);
provided, however, that the fund or the investment in the fund shall
be rated with the highest available credit rating of each Rating
Agency, and redemptions shall be permitted on a daily or next business
day basis; and
(j) such other investments acceptable to each Rating
Agency (as approved in writing by each Rating Agency) as will not
result in the qualification, downgrading or withdrawal of the ratings
then assigned to any Rated Certificates by such Rating Agency.
Notwithstanding anything to the contrary contained in the foregoing definition:
(a) no Permitted Investment may be purchased at a premium;
(b) any of the foregoing which constitutes a certificated
security shall not be considered a Permitted Investment unless
(i) in the case of a certificated security that is
in bearer form, (A) the Trustee acquires physical possession
of such certificated security, or (B) a person, other than a
Securities Intermediary, acquires possession of such
certificated security on behalf of the Trustee; and
(ii) in the case of a certificated security that is
in registered form, (A)(1) the Trustee acquires physical
possession of such certificated security, (2) a person, other
than a Securities Intermediary, acquires possession of such
certificated security on behalf of the Trustee, or (3) a
Securities Intermediary acting on behalf of the Trustee
acquires possession of
29
<PAGE> 34
such certificated security and such certificated security has
been specially indorsed to the Trustee, and (B) (1) such
certificated security is indorsed to the Trustee or in blank
by an effective Indorsement, or (2) such certificated security
is registered in the name of the Trustee;
(c) any of the foregoing that constitutes an uncertificated
security shall not be considered a Permitted Investment unless (A) the
Trustee is registered by the issuer as the owner thereof, (B) a
person, other than a Securities Intermediary, becomes the registered
owner of such uncertificated security on behalf of the Trustee, or (C)
the issuer of such uncertificated security agrees that it will comply
with the instructions originated by the Trustee without further
consent by any registered owner of such uncertificated security;
(d) any of the foregoing that constitutes a Security
Entitlement shall not be considered a Permitted Investment unless (A)
the Trustee becomes the Entitlement Holder thereof, or (B) the
Securities Intermediary has agreed to comply with the Entitlement
Orders originated by the Trustee without further consent by the
Entitlement Holder; and
(e) any of the foregoing shall not constitute a Permitted
Investment unless the Trustee (A) has given value, and (B) does not
have Notice of an Adverse Claim.
For purposes of this definition, any reference to the highest
available credit rating of an obligation shall mean the highest available
credit rating for such obligation (excluding any "+" signs associated with such
rating), or such lower credit rating (as approved in writing by each Rating
Agency) as will not result in the qualification, downgrading or withdrawal of
the rating then assigned to any Rated Certificates by such Rating Agency.
"Rated Certificates" means each Class of Certificates that has been
rated by a Rating Agency at the request of the Transferor.
"Rating Agency" means each of Moody's and Standard & Poor's and each
other nationally recognized statistical rating agency, but only if it has rated
any Class of Certificates as of the Closing Date at the request of the
Transferor and continues to do so.
"Reallocation Deposit Amount" means any amount required to be
deposited by the Servicer into the 1997-A SUBI Collection
30
<PAGE> 35
Account pursuant to the last sentence of Section 8.03(a) of the 1997-A
Servicing Supplement.
"Record Date" means, with respect to each Distribution Date, (i) in
the case of the Class A-1 Certificates, the Class A-2 Certificates, the Class
A-3 Certificates or the Class A-4 Certificates, the calendar day immediately
preceding such Distribution Date (or, if Definitive Certificates have been
issued, the last day of the immediately preceding calendar month) and (ii) in
the case of the Class B Certificates, the last day of the calendar month
immediately preceding the month in which such Distribution Date occurs.
"Required Amount" means, as of any Deposit Date, the lesser of: (a)
the excess of (i) the sum of any anticipated amounts to be payable as set forth
in clauses (i) through (iv) and (vi) through (xii) of Section 3.03(b) with
respect to the related Distribution Date (plus those amounts included in
clauses (a) through (c) of the definition of "Interest Collections" in the
1997-A SUBI Supplement), over (ii) the sum of (A) the product of (x) the
Investor Percentage with respect to Interest Collections and (y) the Interest
Collections collected during or received with respect to the related Collection
Period and allocable to the 99.8% 1997-A SUBI Interest, (B) any Transferor
Amounts for the related Distribution Date applied pursuant to Section
3.03(e)(i), and (C) the proceeds of any claim under the Residual Value
Insurance Policy pursuant to Section 9.10(b) of the 1997-A Servicing
Supplement, as applied pursuant to clause (ii) of Section 3.03(e); and (b) the
total amount on deposit in the Reserve Fund after all deposits thereto pursuant
to clause (v) of Section 3.03(b).
"Required Rating" means a rating on commercial paper or other short
term unsecured debt obligations of Prime-1 by Moody's so long as Moody's is a
Rating Agency and A-1 by Standard & Poor's so long as Standard & Poor's is a
Rating Agency; and any requirement that deposits or debt obligations have the
"Required Rating" shall mean that such deposits or debt obligations have the
foregoing required ratings from Moody's and Standard & Poor's.
"Reserve Fund" means the account designated as such and established
and maintained pursuant to Section 3.04.
"Reserve Fund Cash Requirement" means with respect to any Distribution
Date the maximum sum of money required to be on deposit in the Reserve Fund at
any one time and shall be calculated as follows: (a) if the ERISA Compliance
Test is not satisfied as of such Distribution Date, there shall be no such
maximum and the Reserve Fund Cash Requirement shall be unlimited; (b) if the
ERISA Compliance Test is satisfied as of such
31
<PAGE> 36
Distribution Date but an AISLIC Trigger Event or Downgrade Trigger Event shall
have occurred and be continuing, (i) if only one of the AISLIC Trigger Event or
Downgrade Trigger Event shall have occurred and be continuing (and, with
respect to a Downgrade Trigger Event, the 60 day period set forth in the fourth
sentence of Section 3.04(b) has elapsed and the Transferor has elected to
comply with the requirements of clause (ii) thereof rather than clause (i)),
then in accordance with the AISLIC Reserve Fund Formula or Downgrade Reserve
Fund Formula, as applicable, or (ii) if both the AISLIC Trigger Event and the
Downgrade Trigger Event shall have occurred and be continuing (and, with
respect to a Downgrade Trigger Event, the 60 day period set forth in the fourth
sentence of Section 3.04(b) has elapsed and the Transferor has elected to
comply with the requirements of clause (ii) thereof rather than clause (i)),
then in accordance with the greater of the AISLIC Reserve Fund Formula or
Downgrade Reserve Fund Formula from time to time; or (c) if the ERISA
Compliance Test is satisfied as of such Distribution Date and no AISLIC Trigger
Event or Downgrade Trigger Event shall have occurred and be continuing, (i) if
all applicable Reserve Fund Tests are satisfied as of the related Determination
Date, in accordance with the Base Reserve Fund Formula, or (ii) if any Reserve
Fund Test is unsatisfied as of any Distribution Date, in accordance with the
Alternate Reserve Fund Formula.
"Reserve Fund Deficiency" means, as of any Deposit Date, the excess,
if any, of (a) the sum of any Required Amount (considered without regard to
clause (b) of the definition thereof) and any other amounts payable out of the
Reserve Fund pursuant hereto on such Deposit Date or the related Distribution
Date, over (b) the total amount on deposit in the Reserve Fund, prior to any
deposit therein by, or on behalf of, the Transferor pursuant to Section
3.04(b).
"Reserve Fund Initial Deposit" means $11,970,788.
"Reserve Fund Test" means either of the Charge-off Rate Test or the
Delinquency Rate Test.
"Reserve Fund Supplemental Requirement" means, as of any Deposit Date
on which there is a Reserve Fund Deficiency, the lesser of (a) such
Reserve Fund Deficiency and (b) (i) $5,997,389 plus (ii) the aggregate of all
sums previously released to the Transferor from the Reserve Fund pursuant to
Section 3.04(b) hereof as a result of a reduction for any reason (other than by
reason of the Certificate Balance being less than $11,994,777) of the Reserve
Fund Cash Requirement below the amount of the Reserve Fund Initial Deposit,
less (iii) the aggregate of all amounts previously deposited by or on behalf of
the Transferor into the Reserve Fund to satisfy a Reserve Fund Deficiency.
32
<PAGE> 37
"Residual Certificate" shall have the meaning specified in Section
4.01(a).
"Residual Value Insurance Policy" means that certain Residual Value
Insurance Policy number 819-27-331 issued effective April 1, 1997 by AISLIC, in
favor of the Servicer, the Transferor, the Trustee, the Origination Trustee and
ALFI LP.
"Residual Value Loss Amount" means, as of any Distribution Date, the
sum of the following, but only to the extent that such sum exceeds the amount
transferred to the 1997-A SUBI Collection Account from the Residual Value
Surplus Account on the related Deposit Date pursuant to clauses (x) and (y) of
Section 12.03(b) of the 1997-A SUBI Supplement: (a) the Booked Residual Values
of all 1997-A Leased Vehicles included in Matured Leased Vehicle Inventory as
of the last day of the related Collection Period but which as of such day had
remained unsold and not otherwise disposed of by the Servicer for at least two
full Collection Periods; (b) any excess of the sum of the Booked Residual
Values of all Matured Vehicles sold or otherwise disposed of from Matured
Leased Vehicle Inventory during the related Collection Period over Net Matured
Vehicle Proceeds; and (c) any Early Termination Amount for the related
Collection Period.
"Responsible Officer" means an officer of the Trustee assigned to the
Corporate Trust Office, including any Vice President, any trust officer or any
other officer performing functions similar to those performed by the persons
who at the time shall be such officers, and any other officer of the Trustee to
whom a matter is referred because of his or her knowledge of and familiarity
with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Intermediary" has the meaning set forth in Section
8-102(a)(14) of the UCC.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the UCC.
"Servicer" means WOFCO, in its capacity as servicer of the 1997-A
Leases and 1997-A Leased Vehicles, and each successor thereto (in the same
capacity) appointed pursuant to Sections 2.10 of the Servicing Agreement and
9.11 of the 1997-A Servicing Supplement, respectively.
"Servicer's Certificate" means an Officer's Certificate of the
Servicer completed and executed pursuant to Section 10.01(b) of the 1997-A
Servicing Supplement.
33
<PAGE> 38
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of McGraw Hill, Incorporated, and its successors.
"State" means any state of the United States, the District of Columbia
and the Commonwealth of Puerto Rico.
"SUBI Certificates" has the meaning set forth in Recital C.
"SUBI Certificate Agreement" has the meaning set forth in Recital E.
"Transaction Documents" has the meaning attributed to the term
"Securitization Trust Documents" in the 1997-A SUBI Supplement.
"Transferor" means WOLSI LP, in its capacity as seller of the
Certificates under this Agreement, and each successor thereto (in the same
capacity) pursuant to Section 5.03.
"Transferor Amounts" means, with respect to any Distribution Date,
amounts available for distribution to the Transferor in respect of the
Transferor Distributable Amount for such Distribution Date that are instead
distributed pursuant to Section 3.03(e) because of an insufficiency in the
amount of Interest Collections available to make such distributions on such
Distribution Date (as determined pursuant to Section 3.03(e)).
"Transferor Certificate" means the Certificate executed and
authenticated by the Trustee in substantially the form set forth in Exhibit C
to this Agreement.
"Transferor Distributable Amount" means, with respect to any
Distribution Date, the sum of the Transferor Principal Distributable Amount and
the Transferor Interest Distributable Amount.
"Transferor Interest" means, as of any date, an amount equal to (i)
99.8% of the Aggregate Net Investment Value less (ii) the Certificate Balance.
"Transferor Interest Distributable Amount" means, with respect to any
Distribution Date, the amount equal to the Transferor Percentage (with respect
to Interest Collections) of all Interest Collections collected during or
received in respect of the related Collection Period allocable to the 99.8%
1997-A SUBI Interest, less the Transferor Percentage of Capped Securitization
Trust Administrative Expenses and Uncapped Administrative Expenses.
34
<PAGE> 39
"Transferor Percentage" means, with respect to Interest Collections
and Principal Collections allocable to the 99.8% 1997-A SUBI Interest,
respectively, received in or with respect to any Collection Period, 100% minus
the Investor Percentage as applied for such Collection Period with respect to
such items, respectively.
"Transferor Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount equal to the Transferor Percentage (with respect to Principal
Collections) of all Principal Collections collected during or received in
respect of the related Collection Period allocable to the 99.8% 1997-A SUBI
Interest.
"Trust" means the trust created by this Agreement, the estate of which
consists or will consist of (i) a 99.8% interest in the 1997-A SUBI, the 99.8%
1997-A SUBI Certificate, and all monies due and to become due thereunder on and
after the Initial Cutoff Date; (ii) such monies as are from time to time
deposited in the Distribution Account and the Reserve Fund; (iii) all rights
accruing to the holder of the 99.8% 1997-A SUBI Interest as a third-party
beneficiary of the Origination Trust Agreement, the 1997-A SUBI Supplement, the
Servicing Agreement and the Servicing Supplement; and (iv) all proceeds of the
foregoing.
"Trustee" means the Person acting as Trustee under the Agreement, its
successor in interest, and any successor trustee appointed pursuant to Section
6.08.
"UCC" (a) in the case of Permitted Investments, the Uniform Commercial
Code as in effect in the State of Illinois, and (b) in all other cases, means
the Uniform Commercial Code as in effect in the relevant jurisdiction.
"Uncapped Administrative Expenses" means Administrative Expenses that
would be Capped Contingent and Excess Liability Premiums, Capped Origination
Trust Administrative Expenses or Capped Securitization Trust Administrative
Expenses, respectively, except that they exceed $_______, $_______ or $______
(or $_______, as applicable) in any calendar year, respectively.
"Undistributed Transferor Excess Collections" has the meaning set
forth in Section 3.03(c).
"Uninvested Principal Collections" means, as of the end of the
Revolving Period, any Principal Collections with respect to the Revolving
Period (or amounts treated as Principal Collections pursuant to Section
3.03(b)) then on deposit in the 1997-A SUBI Collection Account that have not
been reinvested in
35
<PAGE> 40
additional 1997-A Leases and 1997-A Leased Contracts as contemplated by Section
8.02 of the 1997-A Servicing Supplement.
"United States" means the United States of America, its territories
and possessions and areas subject to its jurisdiction.
"Vice President" of any Person means any vice president of such
Person, whether or not designated by a number or words before or after the
title "Vice President."
"WOFCO" means World Omni Financial Corp. and its successors.
"WOLSI LP" means World Omni Lease Securitization L.P. and its
successors.
"0.2% 1997-A SUBI Certificate" has the meaning set forth in Recital C.
SECTION 1.02. ARTICLE AND SECTION REFERENCES.
Except as otherwise specified herein, all article and section
references shall be to Articles and Sections in this Agreement.
ARTICLE TWO
CREATION OF TRUST
SECTION 2.01. CREATION OF TRUST.
Upon the execution of this Agreement by the parties hereto, there is
hereby created the World Omni 1997-A Automobile Lease Securitization Trust.
SECTION 2.02. CONVEYANCE OF 99.8% 1997-A SUBI INTEREST.
In consideration of the Trustee's delivery to, or upon the order of,
the Transferor of executed and authenticated Investor Certificates, in
authorized denominations, in an aggregate amount equal to the sum of the
Initial Class A Certificate Balance and the Initial Class B Certificate
Balance, and of the executed and authenticated Transferor Certificate, the
Transferor does hereby transfer, assign and otherwise convey to the Trustee, in
trust for the benefit of the Certificateholders, to the full extent of the
Transferor's interest therein, without recourse (subject to the Transferor's
obligations herein):
(i) all right, title and interest of the Transferor in
and to a 99.8% interest in the 1997-A SUBI and the 99.8% 1997-A SUBI
Certificate evidencing that interest in the
36
<PAGE> 41
1997-A SUBI (such interest, the "99.8% 1997-A SUBI Interest") and all
monies due thereon and paid thereon or in respect thereof;
(ii) the right to realize upon any property that may be deemed to
secure the 99.8% 1997-A SUBI Interest;
(iii) all rights accruing to the holder of the 99.8% 1997-A SUBI
Interest as a third-party beneficiary under the Origination Trust
Agreement, the 1997-A SUBI Supplement, the Servicing Agreement and the
1997-A Servicing Supplement; and
(iv) all proceeds of the foregoing.
The Transferor also does hereby grant to the Trustee a security
interest in all of the foregoing, and the Trustee shall have all the rights,
powers and privileges of a secured party under the UCC.
SECTION 2.03. ACCEPTANCE BY TRUSTEE.
The Trustee does hereby accept all consideration conveyed by the
Transferor pursuant to Section 2.02 and declares that the Trustee shall hold
such consideration in trust as herein set forth for the benefit of the
Certificateholders, subject to the terms and provisions of this Agreement.
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 3.01. DISTRIBUTION ACCOUNT.
(a) Pursuant to Section 9.02(d) of the 1997-A Servicing
Supplement, the Servicer shall establish the Distribution Account in the name
of the Trustee for the benefit of the Certificateholders. The Distribution
Account shall be an account initially established with the Trustee and
maintained with the Trustee so long as (i) the commercial paper or other
short-term unsecured debt obligations of the Trustee have the Required Rating,
or (ii) the Distribution Account is a segregated trust account bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Certificateholders, which Distribution Account is
located in the corporate trust department of the Trustee and, so long as
Moody's is a Rating Agency, the Trustee has a long term deposit rating from
Moody's of at least Baa3 (or such lower rating as Moody's shall approve in
writing) and corporate trust powers under applicable federal and state laws and
is organized under the laws of the United States or any State. In the event
that the Trustee no longer meets either of the requirements stated above, then
the
37
<PAGE> 42
Servicer shall, with the Trustee's assistance as necessary, cause the
Distribution Account to be moved to a bank or trust company that satisfies the
above-mentioned requirements.
(b) For so long as the depository institution or trust company
then maintaining the Distribution Account meets the requirements of either
Section 3.01(a)(i) or (ii), all amounts held in the Distribution Account shall,
to the extent permitted by applicable laws, rules and regulations, be invested,
as directed by the Servicer pursuant to Section 9.02(i) of the 1997-A Servicing
Supplement, in Permitted Investments; otherwise such amounts shall be
maintained in cash. Earnings on investment of funds in the Distribution
Account shall be retained in the Distribution Account and shall constitute part
of the Trust, and losses shall be charged against the funds on deposit therein.
SECTION 3.02. COLLECTIONS.
(a) Pursuant to Sections 9.02(b) and 9.10(b) of the 1997-A
Servicing Supplement, the Servicer shall deposit all proceeds of claims made
under the Residual Value Insurance Policy into the Distribution Account within
one (1) Business Day after receipt. Pursuant to Section 12.01(c) of the 1997-A
SUBI Supplement and Section 9.02(f) of the 1997-A Servicing Supplement, on
each Deposit Date the Servicer shall cause the transfer from the 1997-A SUBI
Collection Account to the Distribution Account of 99.8% of all Interest
Collections and, on each Deposit Date related to the Collection Period in which
the Amortization Date or any Early Amortization Event occurs, and each
subsequent Collection Period, 99.8% of all Principal Collections, in each case
for the preceding Collection Period (including, on the Deposit Date related to
the Collection Period in which an Early Amortization Event occurs, 99.8% of all
Principal Collections with respect to such Collection Period prior to the Early
Amortization Event). Further, on the Deposit Date related to the Collection
Period in which the Amortization Date or any Early Amortization Event occurs,
the Servicer also shall transfer from the 1997-A SUBI Collection Account to the
Distribution Account 99.8% of all Reallocation Deposit Amounts and Uninvested
Principal Collections on deposit in the 1997-A SUBI Collection Account at the
time the Amortization Period commences. Such deposit may be made in the form
of a single deposit and shall be made in immediately available funds, no later
than 3:00 p.m., New York City time, on the relevant Deposit Date.
(b) The Trustee shall retain, subject to the provisions of this
Agreement and the other Transaction Documents, all collections on or in respect
of the 99.8% 1997-A SUBI Interest transferred to the Trustee, on behalf of the
Trust, in accordance with such provisions, in the Distribution Account or the
Reserve Fund, as the case may be. The Trustee shall be deemed to have
38
<PAGE> 43
possession of such monies and collections for purposes of Section 9-305 of the
UCC of the jurisdiction in which such property is located.
SECTION 3.03. DISTRIBUTIONS.
(a) On each Determination Date, pursuant to Section 9.02(e) of the
1997-A Servicing Supplement, the Servicer shall calculate the amounts to be
distributed to the holders of the 1997-A SUBI Certificates, the Class A-1
Distributable Amount, the Class A-2 Distributable Amount, the Class A-3
Distributable Amount, the Class A-4 Distributable Amount, the Class B
Distributable Amount, the Transferor Distributable Amount, and all other
distributions to be made on the related Distribution Date.
(b) The rights of the Class B Certificateholders to receive
distributions of Interest Collections allocable to the 99.8% 1997-A SUBI
Interest in respect of the Class B Certificates shall be and hereby are
subordinated to the rights of the Class A-1 Certificateholders, the Class A-2
Certificateholders, the Class A-3 Certificateholders and the Class A-4
Certificateholders to receive distributions of Interest Collections allocable
to the 99.8% 1997-A SUBI Interest in respect of the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates and the Class A-4
Certificates to the extent provided in this subsection. On each Distribution
Date the Trustee shall distribute the product of (i) the Investor Percentage
with respect to Interest Collections, multiplied by (ii) the Interest
Collections paid over to the Trustee from the 1997-A SUBI Collection Account
pursuant to Section 3.02(a), together with any Transferor Amounts, any proceeds
of a claim made under the Residual Value Insurance Policy pursuant to Section
9.10(b) of the 1997-A Servicing Supplement, and the Required Amount, if any,
for such Distribution Date, and any amount of Principal Collections that
otherwise would be distributed to the Class B Certificateholders pursuant to
subsection (d) below but is required to be applied to the payment of clauses
(v), (vi) and (vii) below pursuant to subsection (e)(iv) below, in the
following amounts and otherwise in the following order of priority to the
following Persons:
(i) in the event of an Early Amortization Event involving
an Insolvency Event, as a result of which the Trustee has elected or
has been instructed to sell the property of the Trust pursuant to
Section 8.02(a), to the Trustee, the Investor Percentage of Capped
Securitization Trust Administrative Expenses;
(ii) the Class A-1 Interest Distributable Amount for such
Distribution Date together with any unpaid Class A-1 Interest
Carryover Shortfall, the Class A-2 Interest
39
<PAGE> 44
Distributable Amount for such Distribution Date together with any
Class A-2 Interest Carryover Shortfall, the Class A-3 Interest
Distributable Amount for such Distribution Date together with any
Class A-3 Interest Carryover Shortfall and the Class A-4 Interest
Distributable Amount for such Distribution Date together with any
unpaid Class A-4 Interest Carryover Shortfall, to the Class A-1, the
Class A-2, the Class A-3 and the Class A-4 Certificateholders,
respectively;
(iii) the Class B Interest Distributable Amount for such
Distribution Date, together with any unpaid Class B Interest Carryover
Shortfall, to the Class B Certificateholders;
(iv) in circumstances other than those set forth in clause (i),
the Investor Percentage of Capped Securitization Trust Administrative
Expenses for the preceding Collection Period, to the Trustee;
(v) an amount equal to any negative difference between the
amount on deposit in the Reserve Fund and the Reserve Fund Cash
Requirement, to the Reserve Fund;
(vi) the Class A-1 Loss Amount, the Class A-2 Loss Amount, the
Class A-3 Loss Amount and the Class A-4 Loss Amount to the Class A-1,
the Class A-2, the Class A-3 and the Class A-4 Certificateholders
respectively;
(vii) to the Class A-1, the Class A-2, the Class A-3 and the
Class A-4 Certificateholders, respectively, the aggregate amounts of
the Class A-1 Certificate Principal Loss Amounts, Class A-2 Certificate
Principal Loss Amounts, Class A-3 Certificate Principal Loss Amounts,
and Class A-4 Certificate Principal Loss Amounts, if any, for previous
Distribution Dates that have not been previously reimbursed to the
Class A-1, Class A-2, Class A-3 or Class A-4 Certificateholders
pursuant to this clause (vii);
(viii) the Class A-1 Certificate Principal Loss Interest
Amount, the Class A-2 Certificate Principal Loss Interest Amount, the
Class A-3 Certificate Principal Loss Interest Amount and the Class A-4
Certificate Principal Loss Interest Amount, if any, for such
Distribution Date to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificateholders, respectively;
(ix) the Class B Loss Amount to the Class B Certificateholders;
(x) to the Class B Certificateholders the aggregate amount of
the Class B Certificate Principal Loss Amounts and
40
<PAGE> 45
Class B Certificate Principal Carryover Shortfall, if any, for
previous Distribution Dates that has not been previously reimbursed to
the Class B Certificateholders pursuant to this clause (x);
(xi) the Class B Certificate Principal Loss Interest Amount and
the Class B Certificate Principal Carryover Shortfall Interest Amount,
if any, for such Distribution Date to the Class B Certificateholders;
(xii) the Investor Percentage of Uncapped Administrative Expenses,
(A) to the Origination Trustee or the Trustee, as applicable, and then
(B) to the Servicer, reimbursement of any previous advance of
Administrative Expenses that was made by the Servicer pursuant to
Section 9.05(a) of the 1997-A Servicing Supplement and has not yet
been reimbursed; and
(xiii) the balance, if any, shall constitute Excess Collections and
shall be applied as set forth in subsection (c) below.
Notwithstanding the foregoing, on any Distribution Date related to a Collection
Period in the Revolving Period, the amounts set forth in clauses (vi) through
(xi) above shall not be paid to the Investor Certificateholders, but shall be
treated as Principal Collections for purposes of Section 11.02 of the 1997-A
SUBI Supplement.
(c) On each Distribution Date, the Trustee shall distribute any
Excess Collections in the following amounts and in the following order of
priority:
(i) if the Distribution Date relates to a Collection Period in
the Revolving Period, any remainder to the Transferor; and
(ii) if the Distribution Date relates to a Collection Period
in the Amortization Period, any remainder up to but not exceeding the
product of one-twelfth of .25% and 99.8% of the Aggregate Net
Investment Value as of the last day of the related Collection Period
(the "Accelerated Principal Distribution Amount") as an additional
principal distribution to the Certificateholders as follows: the
Accelerated Principal Distribution Amount will be distributed first to
the Class A-1 Certificateholders until the Class A-1 Certificates have
been paid in full, second, to the Class A-2 Certificateholders until
the Class A-2 Certificates have been paid in full, third, to the Class
A-3 Certificateholders until the Class A-3 Certificates have been paid
in full and fourth, the Class A Percentage and the
41
<PAGE> 46
Class B Percentage of any remaining amount will be distributed to the
Class A-4 Certificateholders and the Class B Certificateholders,
respectively, until such Certificates have been paid in full. The
balance of any remainder will then be paid to the Transferor.
Notwithstanding the foregoing, the Transferor may instruct the Trustee and the
Servicer to redeposit into the 1997-A SUBI Collection Account any Excess
Collections that otherwise would be payable to the Transferor pursuant to the
foregoing "Undistributed Transferor Excess Collections"), for treatment as
Collections with respect to the Collection Period during which such
Distribution Date occurs.
(d) On each Distribution Date beginning with the Distribution
Date related to the Collection Period in which the Amortization Period
commences and ending on the Distribution Date before the Distribution Date on
which the Class A-3 Certificates have been paid in full, the Trustee shall
distribute an amount equal to the Investor Percentage of all Principal
Collections collected or received in respect of the related Collection Period
allocable to the SUBI Interest to (w) the Class A-1 Certificateholders until
the Class A-1 Certificates have been paid in full, (x) the Class A-2
Certificateholders until the Class A-2 Certificates have been paid in full, (y)
the Class A-3 Certificateholders until the Class A-3 Certificates have been
paid in full and (z) the Class A Percentage and the Class B Percentage thereof
to the Class A-4 Certificateholders and Class B Certificateholders,
respectively. On each Distribution Date after the Class A-3 Certificates have
been paid in full, the Trustee shall distribute (i) to the Class A-4
Certificateholders, the Class A Percentage of Principal Collections collected
or received in respect of the related Collection Period allocable to the SUBI
Interest and (ii) subject to subsection (e) below, to the Class B
Certificateholders, the Class B Percentage of such Principal Collections.
Distributions to Investor Certificateholders pursuant to Sections 3.03(b)(vi),
(vii), (ix), and (x) also shall constitute distributions of principal. The
aggregate amount of principal distributed to any Class of Investor
Certificateholders shall not exceed the Initial Certificate Balance
attributable to that Class of Investor Certificates.
(e) If and to the extent that the amount of Interest Collections
(measured for these purposes without regard to any deduction therefrom provided
for in clauses (a) through (c) of the definition of "Interest Collections" in
the 1997-A SUBI Supplement) available to make distributions on a Distribution
Date is insufficient to make distributions (or, on a Distribution Date related
to a Collection Period in the Revolving Period, applications as if such amounts
were Principal Collections)
42
<PAGE> 47
pursuant to Section 3.03(b) and clauses (a) through (c) of the definition of
the term "Interest Collections" in the 1997-A SUBI Supplement, then:
(i) amounts otherwise available for distribution to the
Transferor in respect of the Transferor Interest Distributable Amount
for such Distribution Date, and then in respect of the Transferor
Principal Distributable Amount, will be applied towards such
insufficiency;
(ii) if after giving effect to clause (i), there is still a
shortfall in amounts available to make all distributions (or, on a
Distribution Date related to a Collection Period in the Revolving
Period, applications as if such amounts were Principal Collections)
pursuant to Section 3.03(b) (other than any shortfall in amounts
available to apply as set forth in clause (v) thereof) and clauses (a)
through (c) of the definition of the term "Interest Collections" in
the 1997-A SUBI Supplement, the proceeds of any claim made by the
Servicer pursuant to Section 9.10(b) of the 1997-A Servicing
Supplement will be applied towards such shortfall;
(iii) if after giving effect to clauses (i) and (ii), there is
still a shortfall in amounts available to make all distributions (or,
on a Distribution Date related to a Collection Period in the Revolving
Period, applications as if such amounts were Principal Collections)
pursuant to Section 3.03(b) (other than any shortfall in amounts
available to apply as set forth in clause (v) thereof) and clauses (a)
through (c) of the definition of the term "Interest Collections" in
the 1997-A SUBI Supplement, the Required Amount will be withdrawn
from the Reserve Fund and applied towards such shortfall; and
(iv) if, on a Distribution Date related to a Collection Period
during the Amortization Period, after giving effect to clauses (i),
(ii) and (iii), there is still a shortfall in amounts required to make
the distributions (or, on a Distribution Date related to a Collection
Period in the Revolving Period, available for reinvestment in
additional 1997-A SUBI Assets pursuant to Section 11.02 of the 1997-A
SUBI Supplement) pursuant to clause (vi), (vii) or (viii) of Section
3.03(b), amounts otherwise available for distribution to the Class B
Certificateholders in respect of principal pursuant to subsection (d)
above will be applied toward such insufficiency.
In the event that there remain shortfalls in the amounts required to be
distributed pursuant to Sections 3.03(b)(ii), (vi), (vii) or (viii) to the
Class A-1 Certificateholders, the Class A-2
43
<PAGE> 48
Certificateholders, the Class A-3 Certificateholders and the Class A-4
Certificateholders, the amounts available will be distributed pro rata to Class
A-1 Certificateholders, Class A-2 Certificateholders, Class A-3
Certificateholders and Class A-4 Certificateholders based on the Class A-1
Allocation Percentage, the Class A-2 Allocation Percentage, the Class A-3
Allocation Percentage and the Class A-4 Allocation Percentage, respectively.
(f) On each Distribution Date, amounts that otherwise would be
payable to the Transferor in respect of the Transferor Distributable Amount
(other than Transferor Amounts) will be distributed to the Transferor by the
Trustee as follows: (A) if such Distribution Date relates to a Collection
Period during the Revolving Period, the interest component of such remaining
amounts will be paid in respect of the Transferor Interest Distributable Amount
and (B) if such Distribution Date relates to a Collection Period during the
Amortization Period, (1) the interest component of such remaining amounts will
be paid in respect of the Transferor Interest Distributable Amount and (2) if
and to the extent that the Transferor Interest will be equal to or greater than
zero, after all required distributions have been made on such Distribution
Date, the principal component of such remaining amounts will be paid in respect
of the Transferor Principal Distributable Amount. Any amounts that would
otherwise be payable to the Transferor pursuant to the foregoing as the
Transferor Principal Distributable Amount, but may not be so paid because the
Transferor Interest would be less than or equal to zero, shall instead be
distributed to the Investor Certificateholders pursuant to Section 3.03(d).
Upon any distribution of amounts to the Transferor, the Investor
Certificateholders will have no further rights, in, or claims to, such amounts.
(g) Subject to Section 7.01 respecting the final payment upon
retirement of each Certificate, the Trustee shall on each Distribution Date
distribute to each Certificateholder of any Class of record on the related
Record Date by check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register (or, if DTC, its nominee or a
Clearing Agency is the relevant Certificateholder, by wire transfer of
immediately available funds or pursuant to other arrangements), the amount to
be distributed to such Certificateholder pursuant to such Holder's
Certificates.
SECTION 3.04. RESERVE FUND.
(a) (i) In order to assure that sufficient amounts to make required
distributions to Investor Certificateholders will be available, pursuant to
Section 9.02(d) of the 1997-A Servicing Supplement the Servicer shall establish
and maintain with the Trustee a separate trust account to be known as the
"Reserve
44
<PAGE> 49
Fund", which will include the money and other property deposited and held
therein pursuant to Section 3.03(c)(i) and this Section. The Reserve Fund
shall be an account initially established with the Trustee and maintained with
the Trustee so long as (A) the commercial paper or other short-term unsecured
debt obligations of the Trustee have the Required Rating, or (B) the Reserve
Fund is a segregated trust account bearing a designation clearly indicating the
funds deposited therein are held in trust for the benefit of the
Certificateholders, which Reserve Fund is located in the corporate trust
department of the Trustee and, so long as Moody's is a Rating Agency, the
Trustee has a long-term deposit rating from Moody's of at least Baa3 (or such
lower rating as Moody's shall approve in writing) and corporate trust powers
under applicable federal and state laws and is organized under the laws of the
United States or any State. In the event that the Trustee no longer meets
either of the requirements stated above, then the Servicer shall, with the
Trustee's assistance as necessary, cause the Reserve Fund to be moved to a bank
or trust company that satisfies the above-mentioned requirements.
(ii) For so long as the depository institution or trust
company then maintaining the Reserve Fund meets the requirements of either
Section 3.04(a)(i)(A) or (B), all amounts held in the Reserve Fund shall, to
the extent permitted by applicable laws, rules and regulations, be invested, as
directed by the Servicer pursuant to Section 9.02(i) of the 1997-A Servicing
Supplement, in Permitted Investments; otherwise such amounts shall be
maintained in cash. Earnings on investment of funds in the Reserve Fund shall
be retained in the Reserve Fund and shall constitute part of the Trust, and
losses shall be charged against the funds on deposit therein.
(b) On or prior to the Closing Date, the Transferor shall deposit
an amount equal to the Reserve Fund Initial Deposit into the Reserve Fund. The
Transferor also does hereby grant to the Trustee a security interest in such
initial deposit, and the Trustee shall have all the rights, powers and
privileges of a secured party under the UCC. Amounts on deposit in the Reserve
Fund shall be supplemented from time to time by the deposit therein of Excess
Collections otherwise distributable to the Transferor pursuant to Section
3.03(c), and amounts that otherwise would be payable to the Transferor pursuant
to Section 3.03(e) but for the fact that the amount on deposit in the Reserve
Fund is less than the Reserve Fund Cash Requirement, to the extent described in
this subparagraph (b). Within 60 days after receipt of notice that an AISLIC
Trigger Event exists and is continuing, the Transferor shall deposit into the
Reserve Fund an additional cash amount equal to the AISLIC Reserve Fund
Supplemental Requirement. Within 60 days after the occurrence of a Downgrade
Trigger Event, the Transferor shall either: (i)(A)
45
<PAGE> 50
cause one or more policies with substantially similar coverage and provisions
to the Residual Value Insurance Policy having issued by an insurer acceptable
to each Rating Agency (as evidenced by confirmation (written or oral) from each
to the effect that such change would not result in its then-current rating of
any Rated Certificates being qualified, reduced or withdrawn), provided that
the Origination Trustee and the Trustee shall at all times have the same rights
with respect to any replacement policy as with respect to the original policy,
or (B) cause an alternative mechanism to support the Booked Residual Values of
the 1997-A Leased Vehicles to be implemented and approved in accordance with
the procedures set forth in Section 9.01 for the amendment hereof; or (ii)
deposit into the Reserve Fund an additional cash amount equal to the Downgrade
Reserve Fund Supplemental Requirement. In addition, on each Deposit Date
relating to a Distribution Date on which a Reserve Fund Deficiency will exist,
the Transferor shall deposit into the Reserve Fund an additional cash amount
equal to the lesser of (i) such Reserve Fund Deficiency and (ii) the Reserve
Fund Supplemental Requirement. On each Distribution Date the amounts on
deposit in the Reserve Fund shall be available for distribution as provided in
Section 3.03 and, on each Distribution Date, if the amount on deposit in the
Reserve Fund (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date) is greater than the Reserve Fund Cash
Requirement, the Trustee will distribute any remaining amounts to the
Transferor.
(c) In the event there is a Downgrade Trigger Event, the 60 day
period set forth in the fourth sentence of Section 3.04(b) has elapsed and the
Transferor has elected to comply with the requirements of clause (ii) thereof
rather than clause (i), the Rating Agencies may impose additional conditions to
the maintenance of their then-current ratings on any Class of Investor
Certificates, including conditions that may require that this Agreement or any
other Transaction Document be amended in accordance with the provisions of
Section 9.01(b) hereof or the relevant provisions thereof.
(d) Upon termination of the Trust pursuant to Section 7.01, any
amounts on deposit in the Reserve Fund shall be available for payment of any
remaining amounts due to the Investor Certificateholders, and for payment of
any remaining amounts due to the Trustee, and after payment of such amounts
due, shall be paid to the Transferor.
(e) Amounts properly received by the Transferor pursuant to this
Agreement shall be free of any claim of the Trust, the Trustee or the Investor
Certificateholders and shall not be available to the Trustee or the Trust for
the purpose of making deposits to the Reserve Fund or making payments to the
Investor
46
<PAGE> 51
Certificateholders, nor shall the Transferor be required to refund any amount
properly received by it.
SECTION 3.05. NET DEPOSITS.
For so long as WOFCO shall be the Servicer, the Servicer and the
Trustee may make all remittances to the Distribution Account pursuant to this
Article net of amounts to be distributed by the applicable recipient to such
remitting party. The Transferor may make remittances to the Distribution
Account pursuant to this Article net of amounts distributable to the Transferor
on the related Distribution Date, provided that such amounts were to be paid
directly to the Transferor on such Distribution Date rather than deposited into
the Reserve Fund pursuant to Section 3.04. Nonetheless, each such party shall
account for all of the above described remittances and distributions as if the
amounts were deposited and/or transferred separately, and the net remittance
may only be made to the extent that the net result thereof is the same as if
the amounts were deposited and/or transferred separately.
SECTION 3.06. STATEMENTS TO CERTIFICATEHOLDERS.
(a) On each Distribution Date, the Trustee shall include with each
distribution to each Certificateholder of record, a statement, prepared by the
Servicer, based on information in the Servicer's Certificate furnished pursuant
to Section 10.01(b) of the 1997-A Servicing Supplement, setting forth for the
related Collection Period and distribution the following information as of the
related Record Date or Deposit Date or such Distribution Date, as the case may
be:
(i) the Investor Percentage for such Collection Period, stated
separately for Interest Collections and Loss Amounts, and for
Principal Collections;
(ii) the total amount being distributed to Investor
Certificateholders in such distribution;
(iii)the total amount being distributed to each Class of
Investor Certificateholders in such distribution;
(iv) the total amount of interest being distributed to each
Class of Investor Certificateholders in such distribution;
(v) the amount, if any, of Class A-1 Interest Carryover
Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest
Carryover Shortfall, Class A-4 Interest Carryover Shortfall and Class
B Interest Carryover Shortfall included in such distribution;
47
<PAGE> 52
(vi) the amount, if any, of the remaining unpaid Class A-1
Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall,
Class A-3 Interest Carryover Shortfall, Class A-4 Interest Carryover
Shortfall and Class B Interest Carryover Shortfall after giving effect
to such distribution;
(vii) the total amount of principal being distributed to each
Class of Investor Certificateholders in such distribution;
(viii) the Class A-1 Allocation Percentage, the Class A-2
Allocation Percentage, the Class A-3 Allocation Percentage, the Class
A-4 Allocation Percentage, the Class B Allocation Percentage and the
amount, if any, of the reimbursement of Class A-1 Charged-off Amounts,
Class A-1 Residual Value Loss Amounts and Class A-1 Additional Loss
Amounts, Class A-2 Charged-off Amounts, Class A-2 Residual Value Loss
Amounts and Class A-2 Additional Loss Amounts, Class A-3 Charged-off
Amounts, Class A-3 Residual Value Loss Amounts and Class A-3
Additional Loss Amounts, Class A-4 Charged-off Amounts, Class A-4
Residual Value Loss Amounts and Class A-4 Additional Loss Amounts and
Class B Charged-off Amounts, Class B Residual Value Loss Amounts and
Class B Additional Loss Amounts being included in such distribution;
(ix) the amount, if any, of the reimbursement of Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal
Loss Amounts, Class A-3 Certificate Principal Loss Amounts, Class A-4
Certificate Principal Loss Amounts and Class B Certificate Principal
Loss Amounts included in such distribution;
(x) the amount, if any, of the aggregate of unreimbursed Class
A-1 Certificate Principal Loss Amounts, Class A-2 Certificate
Principal Loss Amounts, Class A-3 Certificate Principal Loss Amounts,
Class A-4 Certificate Principal Loss Amounts and Class B Certificate
Principal Loss Amounts after giving effect to such distribution;
(xi) the amount, if any, of accrued Class A-1 Certificate
Principal Loss Interest Amounts, Class A-2 Certificate Principal Loss
Interest Amounts, Class A-3 Certificate Principal Loss Interest
Amounts, Class A-4 Certificate Principal Loss Interest Amounts and
Class B Certificate Principal Loss Interest Amounts included in such
distribution;
(xii) the amount, if any, of accrued and unpaid Class A-1
Certificate Principal Loss Interest Amounts, Class A-2 Certificate
Principal Loss Interest Amounts, Class A-3,
48
<PAGE> 53
Certificate Principal Loss Interest Amounts Class A-4 Certificate
Principal Loss Interest Amounts and Class B Certificate Principal Loss
Interest Amounts after giving effect to such distribution;
(xiii) the amount, if any, of accrued and unpaid Class B
Certificate Principal Carryover Shortfall after giving effect to such
distribution;
(xiv) the Investor Percentage of the Servicing Fee allocable
to the 99.8% 1997-A SUBI Interest for such Distribution Date and any
unpaid previous such amounts with respect to prior Distribution Dates;
(xv) the Certificate Balance, the Class A-1 Certificate
Balance, the Class A-2 Certificate Balance, the Class A-3 Certificate
Balance, the Class A-4 Certificate Balance, the Class B Certificate
Balance, the Class A-1 Certificate Factor, the Class A-2 Certificate
Factor, the Class A-3 Certificate Factor, the Class A-4 Certificate
Factor and the Class B Certificate Factor, each after giving effect to
such distribution;
(xvi) the Transferor Amount, if any, included in such
distribution and the amount of the Transferor Interest, after giving
effect to all payments made on such Distribution Date;
(xvii) the Required Amount, if any, included in such
distribution;
(xviii) the Aggregate Net Investment Value as of the end of
such Collection Period;
(xix) the amount on deposit in the Reserve Fund on such
Distribution Date, after giving effect to such distributions, the
change in such balance from the immediately preceding Distribution
Date, the Reserve Fund Cash Requirement, the Reserve Fund Supplemental
Requirement (if any), the AISLIC Reserve Fund Supplemental Requirement
(if any) and the Downgrade Reserve Fund Supplemental Requirement (if
any);
(xx) the amount of Payments Ahead on deposit in the 1997-A
SUBI Collection Account and representing Monthly Lease Payments due in
one or more immediately subsequent Collection Periods and the change
in such balance from the immediately preceding Distribution Date;
49
<PAGE> 54
(xxi) the amount of Outstanding Advances on such Distribution
Date and the changes in such amount from the immediately preceding
Distribution Date;
(xxii) the balance on deposit in the Residual Value Surplus
Account on the related Deposit Date, after giving effect to
distributions therefrom made on that date, the change in such balance
from the immediately preceding Deposit Date, the aggregate amount
deposited into the Residual Value Surplus Account on such Deposit
Date, and the aggregate amount withdrawn from the Residual Value
Surplus Account on such Deposit Date;
(xxiii) the weighted average Lease Rate of the Leases in the
1997-A SUBI Portfolio for the immediately preceding Collection Period
and the Charge-off Rate and Delinquency Rate for each of the three
immediately preceding Collection Periods; and
(xxiv) the Insured Residual Value Loss Amount, if any, for
such Distribution Date.
Each amount set forth pursuant to subclauses (ii) through (xiii) above shall be
expressed as a dollar amount per $1,000 of original principal balance of an
Investor Certificate. Any Certificate Owner may obtain a copy of any such
statement, of any Servicer's Certificate required pursuant to Section 10.01)(b)
of the 1997-A Servicing Supplement, any annual report of Independent
Accountants required pursuant to Section 3.02 of the Servicing Agreement and
Section 10.02 of the 1997-A Servicing Supplement, and of any annual Officer's
Certificate required pursuant to Section 3.03 of the Servicing Agreement and
Section 10.03(a) of the 1997-A Servicing Supplement, upon written request to
the Trustee at the Corporate Trust Office.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of an Investor Certificate, a statement or statements which in
the aggregate contain the sum of the amounts set forth in clauses (a)(ii)
through (vii), (viii) through (xiv) above for such calendar year or, in the
event such Person shall have been a Holder of an Investor Certificate during a
portion of such calendar year, for the applicable portion of such year, for the
purposes of such Certificateholder's preparation of federal income tax returns.
In addition, the Servicer shall furnish to the Trustee for distribution to such
Person at such time any other information reasonably necessary under applicable
law for the preparation of such income tax returns.
50
<PAGE> 55
ARTICLE FOUR
THE CERTIFICATES
SECTION 4.01. THE CERTIFICATES.
(a) The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class B Certificates and the Transferor Certificate
shall be substantially in the form of Exhibits A-1, A-2, A-3, A-4, B and C,
respectively, to this Agreement. The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class A-4 Certificates shall
be issuable in minimum denominations of $1,000 and integral multiples in excess
thereof and the Class B Certificates shall be issuable in minimum denominations
of $250,000 and integral multiples of $1,000 in excess thereof (provided that
no Class B Certificate may be issued or transferred in a denomination that
would cause there to be, immediately after such issuance or transfer, one
hundred (100) or more Class B Certificateholders); provided, however, that one
Class A-1 Certificate, one Class A-2 Certificate, one Class A-3 Certificate,
one Class A-4 Certificate and one Class B Certificate may be issued in a
denomination that includes any remaining portion of the Initial Class A-1
Certificate Balance, the Initial Class A-2 Certificate Balance, the Initial
Class A-3 Certificate Balance, the Initial Class A-4 Certificate Balance and
the Initial Class B Certificate Balance, respectively (each, a "Residual
Certificate"). A single Transferor Certificate shall be issued. The
Certificates shall be executed on behalf of the Trustee by manual or facsimile
signature of a Responsible Officer under the Trustee's seal imprinted thereon
and attested on behalf of the Trustee by the manual or facsimile signature of a
Responsible Officer. Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Trustee shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of
such Certificates or did not hold such offices at the date of such
Certificates. All Certificates shall be dated the date of their
authentication.
(b) The Investor Certificates shall represent fractional undivided
interests in the Trust, including the benefits of the Reserve Fund and the
right to receive the Investor Percentage of Interest Collections and Principal
Collections and the other amounts at the times and in the amounts specified in
this Agreement. The Transferor Certificate shall represent the interest in the
Trust not represented by the Investor Certificates.
51
<PAGE> 56
SECTION 4.02. AUTHENTICATION AND DELIVERY OF CERTIFICATES.
In exchange for, and simultaneously with the sale, assignment and
transfer to the Trustee of the 99.8% 1997-A SUBI Interest, the 99.8% 1997-A
SUBI Certificate and the other assets of the Trust, the Trustee shall cause to
be executed, authenticated and delivered to or upon the order of the Transferor
Investor Certificates in authorized denominations equaling in the aggregate the
sum of the Initial Class A-1 Certificate Balance, the Initial Class A-2
Certificate Balance, the Initial Class A-3 Certificate Balance, the Initial
Class A-4 Certificate Balance and the Initial Class B Certificate Balance, and
the Transferor Certificate, each duly authorized by the Trustee, and evidencing
the entire ownership of the Trust. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
set forth in Exhibit A-1, A-2, A-3, A-4, B or C to this Agreement, as the case
may be, executed by the Trustee by manual signature, and such certificate upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered under this Agreement.
SECTION 4.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Certificate Registrar shall maintain a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Certificate Register shall provide for the registration of Certificates and
transfers and exchanges of Certificates as provided in this Agreement. The
Trustee is hereby initially appointed Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as
provided in this Agreement. In the event that, subsequent to the Closing Date,
the Trustee notifies the Servicer that it is unable to act as Certificate
Registrar, the Servicer shall appoint another bank or trust company, having an
office or agency located in the Borough of Manhattan, The City of New York,
agreeing to act in accordance with the provisions of this Agreement applicable
to it, and otherwise acceptable to the Trustee, to act as successor Certificate
Registrar under this Agreement.
The Transferor Certificate shall be owned by the Transferor and may
not be transferred, as provided by Section 5.06. No transfer of a Class B
Certificate shall be made unless the registration requirements of the
Securities Act and any applicable state securities laws are complied with, or
such transfer is exempt from the registration requirements under the Securities
Act and such state securities laws. In the event that
52
<PAGE> 57
a transfer is to be made in reliance upon an exemption from the Securities Act
and such state securities laws, the Trustee shall require one of the following,
at the option of the Certificateholder desiring to effect such transfer: (i)
that such Certificateholder and its prospective transferee jointly deliver an
Opinion of Counsel with respect to the Securities Act and a memorandum of law
with respect to any applicable state securities laws acceptable to and in form
and substance satisfactory to the Trustee and the Transferor upon which the
Trustee and the Transferor may conclusively rely, to the effect that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the Securities Act and such state
securities laws or is being made pursuant to the Securities Act and such state
securities laws, which Opinion of Counsel and memorandum of law, as the case
may be, shall not be an expense of the Trustee, the Transferor or the Servicer;
or (ii) that the transferee execute a representation letter acceptable to and
in form and substance satisfactory to the Trustee (provided that the forms
attached as Exhibits D-1 and D-2 shall be deemed acceptable if they are
completed in a manner acceptable to the Trustee) certifying to the Trustee the
facts surrounding such transfer, which representation letter shall not be an
expense of the Trustee, the Transferor or the Servicer. The Holder of a Class
B Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Transferor and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with the Securities Act and such state laws. Neither the Transferor, the
Servicer nor the Trustee is under any obligation to register the Class B
Certificates under the Securities Act or any state securities laws.
Notwithstanding anything to the contrary contained herein, no resale
or other transfer of a Class B Certificate or any interest therein shall be
made unless (i) immediately after giving effect to such resale or other
transfer, there would be less than 100 Class B Certificateholders and (ii) the
Trustee shall have received either a representation letter or Opinion of
Counsel from the prospective transferee of such Class B Certificate, in form
and substance satisfactory to the Transferor and the Trustee (provided that the
forms attached as Exhibits D-1 and D-2 shall be deemed acceptable), to the
effect that (A) (1) such transferee will not acquire such Class B Certificate
on behalf of or with the assets of any "employee benefit plan" as defined in
Section 3(3) of ERISA, (2) no "prohibited transaction" under ERISA or the Code
will occur in connection with such prospective transferee's acquisition of such
Class B Certificate, or (3) the acquisition of such Class B Certificate is
subject to a statutory or administrative exemption, specified in such letter or
opinion, from the "prohibited transaction" provisions of ERISA
53
<PAGE> 58
and the Code, and (B) if the transferee (or any person or entity for whom such
transferee is acting as agent or custodian in connection with the acquisition
of such Class B Certificate) is a partnership, grantor trust or S corporation
for federal income tax purposes (a "Flow-Through Entity"), any Class B
Certificates owned by or on behalf of such Flow-Through Entity will represent
less than 50% of the value of all the assets owned by or on behalf of such
Flow-Through Entity and no special allocation of income, gain, loss, deduction
or credit from such Class B Certificates will be made among the beneficial
owners of such Flow-Through Entity. Each prospective transferee of any Class B
Certificate will be required to represent to the Trustee whether it will
purchase such Class B Certificate with the assets of an "employee benefit plan"
as defined under ERISA or other benefit plan investor.
The Class B Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class B Certificates to
reflect any change in applicable law or regulation (or the interpretation
thereof) or practices relating to the resale or transfer of restricted
securities generally.
(b) Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office of the Trustee in its capacity as Certificate
Registrar, or at the office of the agent of the Trustee as Certificate
Registrar, who shall initially be First Trust of New York, National
Association, 100 Wall Street, 20th Floor, New York, New York 10005, in the
Borough of Manhattan, the City of New York, or the appropriate office of any
successor Certificate Registrar, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class in authorized denominations of a like
aggregate principal amount.
(c) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class of authorized denominations
of a like aggregate principal amount, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee on behalf of the Trust shall execute,
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder thereof or his attorney duly authorized
in writing.
54
<PAGE> 59
(d) No service charge shall be made to any Holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of
Certificates.
(e) All Certificates surrendered for registration of transfer and
exchange shall be canceled and subsequently destroyed by the Trustee.
(f) No Class B Certificate shall be listed for trading on any
recognized securities exchange.
SECTION 4.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to the Certificate Registrar and the Trustee such security or
indemnity as may be required by them to save each of them and the Trust
harmless, then, in the absence of notice that such Certificate has been
acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and fractional undivided interest. In connection
with the issuance of any new Certificate under this Section, the Trustee may
require the payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time, and any such lost, stolen or destroyed Certificate shall, upon issuance
of any such duplicate Certificate, be null, void and of no effect.
SECTION 4.05. PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 3.03 and for all other purposes whatsoever, and neither the Trustee,
the Certificate Registrar nor any of their respective agents shall be affected
by any notice to the contrary.
55
<PAGE> 60
SECTION 4.06. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
The Certificate Registrar shall furnish or cause to be furnished to
the Servicer, within 15 days after receipt by the Certificate Registrar of a
written request therefor from the Servicer, a list, in such form as the
Servicer may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or holders of Investor Certificates evidencing not less than
25% of the aggregate Percentage Interests of any Class (hereinafter referred to
as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Investor
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such Applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
Applicants access, during normal business hours, to the current list of
Investor Certificateholders. Every Certificateholder, by receiving and holding
a Certificate, agrees with the Servicer and the Trustee that neither the
Servicer nor the Trustee shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Certificateholders
under the Agreement, regardless of the source from which such information was
derived.
SECTION 4.07. MAINTENANCE OF OFFICE OR AGENCY.
The Trustee shall maintain in the Borough of Manhattan, The City of
New York, an office or offices or agency or agencies where Certificates may be
surrendered for registration of transfer or exchange. The initial such agency
shall be c/o First Trust of New York, National Association, 100 Wall Street,
20th Floor, New York, New York 10005; provided that a copy of any such
Certificate surrendered shall be sent to the Trustee at the Corporate Trust
Office. The Trustee shall give prompt written notice to the Transferor, the
Servicer and the Certificateholders of any change in the location of any such
office or agency. Notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement shall not be sent to such office or agency, but
shall be sent as set forth in Section 10.02.
SECTION 4.08. TEMPORARY CERTIFICATES.
Pending the preparation of definitive Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, or Class A-4 Certificates the
Trustee, on behalf of the Trust, may execute, authenticate and deliver,
temporary Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates or
56
<PAGE> 61
Class A-4 Certificates that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates or Class A-4 Certificates in lieu of which
they are issued. If temporary Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates or Class A-4 Certificates are issued, the Transferor
will cause definitive Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates or Class A-4 Certificates to be prepared without unreasonable
delay. After the preparation of definitive Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates or Class A-4 Certificates, the temporary
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates or Class
A-4 Certificates shall be exchangeable for definitive Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates or Class A-4 Certificates upon
surrender of the temporary Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates or Class A-4 Certificates at the office or agency to be
maintained as provided in Section 4.07, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Class A Certificates,
the Trustee shall execute and authenticate and deliver in exchange therefor a
like principal amount of definitive Class A Certificates in authorized
denominations. Until so exchanged the temporary Class A Certificates shall in
all respects be entitled to the same benefits under the Agreement as definitive
Class A Certificates.
SECTION 4.09. BOOK-ENTRY CERTIFICATES.
The Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates and Class A-4 Certificates, upon original issuance (except for the
Residual Certificates with respect to the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates and Class A-4 Certificates) will be issued
in the form of one or more typewritten certificates representing the Book-Entry
Certificates, to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Transferor. The certificate or certificates delivered to DTC
evidencing such Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates and Class A-4 Certificates shall initially be registered on the
Certificate Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates or Class A-4 Certificates,
except as provided in Section 4.11. Unless otherwise specified in this
Agreement, unless and until definitive, fully registered Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates and Class A-4
Certificates (the "Definitive
57
<PAGE> 62
Certificates") have been issued to Certificate Owners pursuant to Section 4.11:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Transferor, the Servicer, the Certificate Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including
the making of distributions on the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class A-4 Certificates) as
the authorized representative of the Certificate Owners;
(iii)to the extent that the provisions of this Section conflict with
any other provisions of the Agreement, the provisions of this Section
shall control;
(iv) the rights of Certificate Owners shall be exercised only through
(or through procedures established by) the Clearing Agency and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued pursuant to Section
4.11, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class A-4 Certificates to
such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates or Class A-4
Certificates evidencing a specified aggregate Percentage Interest thereof
the Clearing Agency shall be deemed to represent such percentage (if and
to the extent that it will act on behalf of Certificate Owners and/or
Clearing Agency Participants) only to the extent that it has received
instructions to such effect from Certificate Owners and/or Clearing Agency
Participants owning or representing, respectively, such required
percentages of the beneficial interest in Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates or Class A-4 Certificates and has
delivered such instructions to the Trustee.
SECTION 4.10. NOTICES TO CLEARING AGENCY.
Whenever notice or other communication to the Class A-1
Certificateholders, the Class A-2 Certificateholders, the Class
58
<PAGE> 63
A-3 Certificateholders or the Class A-4 Certificateholders is required under
this Agreement, other than to the Holder of the Residual Certificate with
respect to the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates or Class A-4 Certificates, respectively, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant
to Section 4.11, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates or Class A-4
Certificates to the Clearing Agency.
SECTION 4.11. DEFINITIVE CERTIFICATES.
If (i)(A) the Transferor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities as described in the letter of representations among the
Transferor, the Trustee and the Clearing Agency and (B) the Trustee or the
Transferor is unable to locate a qualified successor, (ii) the Transferor at
its option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (iii) after the occurrence of
an Early Amortization Event, Certificate Owners representing beneficial
interests in the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates and Class A-4 Certificates (voting together as a single class)
aggregating not less than 51% of the Percentage Interests advise the Trustee
and the Clearing Agency through the Clearing Agency Participants in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Owners, then the Trustee shall
notify all Certificate Owners, through the Clearing Agency, of the occurrence
of such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates or Class A-4
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates and deliver such Definitive Certificates in accordance
with the instructions of the Clearing Agency. None of the Transferor, the
Certificate Registrar or the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates,
the Trustee shall recognize the Holders of the Definitive Certificates as Class
A-1 Certificateholders, Class A-2 Certificateholders, Class A-3
Certificateholders or Class A-3 Certificateholders hereunder, as applicable.
The Trustee shall not be liable if the Trustee or the Transferor is unable to
locate a qualified successor Clearing Agency.
59
<PAGE> 64
SECTION 4.12. TAX TREATMENT.
(a) It is the intention of the Transferor and the Investor
Certificateholders that the Investor Certificates will be indebtedness of the
Transferor for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. The
Transferor, the Trustee and each Holder of an Investor Certificate (or
Certificate Owner) by acceptance of its Investor Certificate (or, in the case
of a Certificate Owner, by virtue of such Certificate Owner's acquisition of a
beneficial interest therein) agree to treat the Investor Certificates (or
beneficial interest therein), for purposes of federal, state and local income
or franchise taxes and any other tax imposed on or measured by income, as
secured indebtedness of the Transferor and to report the transactions
contemplated by this Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of an Investor Certificate agrees
that it will cause any Certificate Owner acquiring an interest in a Certificate
through it to comply with this Agreement as to treatment as secured
indebtedness for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. Each Holder of
an Investor Certificate also agrees that it will not be entitled to any of the
tax benefits related to the Contracts and Leased Vehicles, including any of the
depreciation deductions resulting therefrom.
(b) In the event that, notwithstanding the statement of intentions
and undertakings set forth in Section 4.12(a), it is finally determined that
the Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates and/or Class B Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then the Transferor,
the Trustee, each Holder of such Investor Certificate and each Certificate
Owner thereof, by virtue of acquiring a beneficial interest therein, all agree
(i) to treat such Investor Certificates, together with the Transferor
Certificate, as representing an interest in a partnership for all tax purposes,
(ii) to treat all payments in respect of such Investor Certificates (to the
extent not a return of capital) as a "guaranteed payment" thereon made pursuant
to Section 707(c) of the Code, and (iii) to allocate all other items of income,
gain, deduction, loss or credit with respect to the assets and operations of
the Trust to the Transferor.
60
<PAGE> 65
ARTICLE FIVE
THE TRANSFEROR
SECTION 5.01. REPRESENTATIONS OF TRANSFEROR.
The Transferor hereby makes the following representations on which the
Trustee relies in accepting the 99.8% 1997-A SUBI Interest and 99.8% 1997-A
SUBI Certificate in trust and executing and authenticating the Certificates.
The representations speak as of the execution and delivery of this Agreement,
but shall survive the sale, transfer and assignment of the 99.8% 1997-A SUBI
Interest and 99.8% 1997-A SUBI Certificate to the Trustee.
(a) Organization and Good Standing. The Transferor is a limited
partnership validly organized and existing and in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and has power,
authority and legal right to acquire, own and sell the 99.8% 1997-A SUBI
Interest and 99.8% 1997-A SUBI Certificate.
(b) Due Registration. The Transferor is duly registered as a foreign
limited partnership in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such qualifications,
except where the failure to so qualify or to have obtained such licenses
and approvals would not have a material adverse effect on the earnings,
business affairs or business prospects of the Transferor.
(c) Power and Authority. The Transferor has the power and authority
to execute and deliver this Agreement and to carry out its terms, the
Transferor has full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Trustee as part of the Trust
and has duly authorized such sale and assignment to the Trustee by all
necessary partnership action; and the execution, delivery and performance
of this Agreement have been duly authorized by the Transferor by all
necessary partnership action.
(d) Valid Sale; Binding Obligations. This Agreement evidences a
valid sale, transfer and assignment of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate, enforceable against creditors of and
purchasers from the Transferor; and constitutes a legal, valid and binding
obligation of the Transferor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar
61
<PAGE> 66
laws affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
certificate of limited partnership or limited partnership agreement of the
Transferor, or conflict with or violate any of the material terms or provisions
of, or constitute (with or without notice or lapse of time) a default under,
any indenture, agreement or other instrument to which the Transferor is a party
or by which it is bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate any law
or, to the best of the Transferor's knowledge, any order, rule or regulation
applicable to the Transferor of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties; which breach, default,
conflict, lien or violation would have a material adverse effect on the
earnings, business affairs or business prospects of the Transferor.
(f) No Proceedings. There are no proceedings or investigations
pending, or to the Transferor's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Transferor or its properties: (i) asserting the
invalidity of this Agreement or the Certificates, (ii) seeking to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, (iii) seeking any determination or ruling that
might materially and adversely affect the performance by the Transferor of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates or (iv) relating to the Transferor and which might adversely
affect the federal or Alabama income tax attributes of the Certificates.
(g) Title to 99.8% 1997-A SUBI Certificate. The Transferor has
good title to, and is the sole legal and beneficial owner of, the 99.8% 1997-A
SUBI Certificate, free and clear of Liens.
62
<PAGE> 67
(h) Consents and Approvals. The Transferor has obtained or made
all necessary licenses, consents, approvals, waivers and notifications
of creditors, lessors and other nongovernmental Persons, in each case in
connection with the execution and delivery of this Agreement and the
consummation of all the transactions herein contemplated, and the
Transferor is not required to obtain the consent of any other party or the
consent, license, approval, or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
SECTION 5.02. LIABILITY OF TRANSFEROR; INDEMNITIES.
(a) The Transferor shall be liable in accordance with this
Agreement only to the extent of the obligations in this Agreement specifically
undertaken by the Transferor in such capacity under this Agreement and shall
have no other obligations or liabilities hereunder.
(b) The Transferor agrees to be, and shall be, liable without
limitation for all liabilities (including taxes), contracts, expenses,
indemnity payments and other charges of the Trust, other than distributions to
Certificateholders.
SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, TRANSFEROR; CERTAIN LIMITATIONS.
(a) Any corporation or partnership (i) into which the Transferor
may be merged or consolidated, (ii) which may result from any merger,
conversion or consolidation to which the Transferor shall be a party or (ii)
which may succeed to all or substantially all of the business of the
Transferor, shall be the successor to the Transferor under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties to this Agreement, except that if the Transferor in any
of the foregoing cases is not the surviving entity, then the surviving entity
shall execute an agreement of assumption to perform every obligation of the
Transferor either generally or specifically as provided herein. The Transferor
shall provide notice of any merger, consolidation or succession pursuant to
this Section to each Rating Agency and shall receive from each Rating Agency a
letter to the effect that such merger, consolidation, or succession will not
result in a qualification, downgrading or withdrawal of the then- current
rating assigned to any Rated Certificates.
(b) (i) Subject to subparagraph (ii) below, the purpose of the
Transferor shall be to engage in any lawful activity for
63
<PAGE> 68
which a limited partnership may be formed under the laws of the State of
Delaware other than the practice of a profession permitted to be operated
through a limited partnership under Delaware law.
(ii) Notwithstanding subparagraph (b)(i) above, the purpose of
the Transferor shall be limited to the following purposes:
(A) to act as settlor or grantor of one or more
securitization trusts formed pursuant to a trust agreement or other
agreement for the purpose of acquiring interests in the Origination
Trust, which securitization trust may issue certificates of beneficial
interest in the assets of such securitization trust;
(B) to acquire, own, hold, sell, transfer, convey,
dispose of, pledge, assign, borrow money against, finance, refinance
or otherwise deal with, publicly or privately and whether with
unrelated third parties or with affiliated entities, beneficial
interests in the Origination Trust, including without limitation any
undivided trust interests or special units of beneficial interest
created with respect to the Origination Trust, and certificates of the
securitization trust;
(C) to loan or otherwise invest funds received as a
result of the Transferor's beneficial interest in the Origination
Trust or certificates in the securitization trust and any other
income, as determined by the general partner of the Transferor from
time to time;
(D) to borrow money other than pursuant to clause (B)
above, but only to the extent that any such borrowing is permitted by
the terms of the transactions contemplated by clauses (A) and (B); and
(E) to engage in any lawful act or activity and to
exercise any powers permitted to limited partnerships organized under
Delaware law that are incidental to and necessary or convenient for
the accomplishment of the foregoing purposes.
(c) Notwithstanding any other provision of this Section and any
provision of law, neither the Transferor nor its general partner, on behalf of
the Transferor, shall do any of the following:
(i) engage in any business or activity other than as set
forth in clause (b) above;
64
<PAGE> 69
(ii) without the affirmative vote of a majority of the
members of the Board of Directors of the Transferor's general partner
(which must include the affirmative vote of all Independent Directors
of the Transferor's general partner, as required by limited
partnership agreement of the Transferor), (A) dissolve or liquidate,
in whole or in part, or institute proceedings to be adjudicated
bankrupt or insolvent, (B) consent to the institution of bankruptcy or
insolvency proceedings against it, (C) file a petition seeking or
consent to reorganization or relief under any applicable federal or
state law relating to bankruptcy, (D) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Transferor or a substantial part of its
property, (E) make a general assignment for the benefit of creditors,
(F) admit in writing its inability to pay its debts generally as they
become due, or (G) take any corporate action or partnership action in
furtherance of the actions set forth in clauses (A) through (F) above;
provided, however, that the general partner shall in no event consent
to the institution of bankruptcy or insolvency proceedings against the
Transferor so long as it is solvent; or
(iii) merge or consolidate with any other limited
partnership, corporation, company or entity or sell all or
substantially all of its assets or acquire all or substantially all
of the assets or partnership interests or capital stock or other
ownership interest of any other limited partnership, corporation,
company or entity (except for the acquisition of beneficial interests
in the Origination Trust and the sale, transfer, conveyance,
disposition, pledge, assignment, financing, and refinancing of, or
otherwise dealing with, beneficial interests in the Origination Trust
in accordance with the terms of subparagraph (b)(ii) above, which
shall not be otherwise restricted by this Section 5.03(c)).
SECTION 5.04. LIMITATION ON LIABILITY OF TRANSFEROR AND OTHERS.
The Transferor and any director or officer or employee or agent of the
Transferor may rely in good faith on the advice of counsel or on any document
of any kind, prima facie properly executed and submitted by any Person
respecting any matters arising under this Agreement.
SECTION 5.05. TRANSFEROR MAY OWN INVESTOR CERTIFICATES.
Each of the Transferor and any Person controlling, controlled by or
under common control with the Transferor may in its individual or any other
capacity become the owner or pledgee
65
<PAGE> 70
of Investor Certificates with the same rights as it would have if it were not
the Transferor or such an affiliate thereof except as otherwise specifically
provided in the definition of the term "Certificateholder." Investor
Certificates so owned by or pledged to the Transferor or such controlling or
commonly controlled Person shall have an equal and proportionate benefit under
the provisions of this Agreement, without preference, priority or distinction
as among all of the Investor Certificates. The Transferor will give notice to
each Rating Agency if any such controlling or commonly controlled Person shall
at any time become the owner or pledgee of Investor Certificates.
SECTION 5.06. NO TRANSFER.
The Transferor on behalf of itself and its successors and assigns
hereby covenants that it will not transfer, pledge or assign to any Person the
Transferor Certificate or any part of its right to receive any Excess
Collections pursuant to Section 3.03(c).
SECTION 5.07. TAX MATTERS PARTNER.
In the event that the Trust is recharacterized as a partnership for
tax purposes, the Transferor shall act as "Tax Matters Partner" (i) to
represent the Transferor and the Class B Certificateholders, in their
capacities as partners in a partnership for tax purposes, before taxing
authorities or courts of competent jurisdiction in any tax matters affecting
the Trust as a tax partnership; and (ii) to execute any agreements or other
documents relating to or affecting such tax matters, including agreements or
other documents binding the Class B Certificateholders with respect to such tax
matters or otherwise affecting their rights, including, but not limited to,
extending the statute of limitations for assessment of tax deficiencies against
the Class B Certificateholders and adjusting the Trust's federal, state or
local tax returns. The Transferor shall not be liable to the Trust or to any
Certificateholder for any action taken or omitted by the Transferor with regard
to such tax matters or otherwise as a result of its holding the position of Tax
Matters Partner.
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. DUTIES OF TRUSTEE.
(a) The Trustee, both prior to and after the occurrence of a
1997-A Event of Default under the Servicing Agreement and the 1997-A Servicing
Supplement, undertakes to perform such duties
66
<PAGE> 71
and only such duties as are specifically set forth in this Agreement.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, its own bad faith or its own willful misfeasance; provided,
however, that
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee, the permissive right of the Trustee to do things
enumerated in this Agreement shall not be construed as a duty and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Trustee was negligent in performing its duties
in accordance with the terms of this Agreement; and
(iii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing not less than 51% of the aggregate Percentage Interest
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement or the Origination
Trust Agreement (as supplemented by the 1997-A SUBI Supplement).
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties under this Agreement, or in the exercise of any of its rights or powers,
if there shall be
67
<PAGE> 72
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) All information obtained by the Trustee regarding the Obligors
and the Leases contained in the 1997-A SUBI, whether upon the exercise of its
rights under this Agreement or otherwise, shall be maintained by the Trustee in
confidence and shall not be disclosed to any other Person, unless such
disclosure is required by any applicable law or regulation or pursuant to
subpoena.
SECTION 6.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 6.01:
(i) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this
Agreement in good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement or the
Origination Trust Agreement (as supplemented by the 1997-A SUBI
Supplement), or to institute, conduct or defend any litigation under
this Agreement or the Origination Trust Agreement (as supplemented by
the 1997-A SUBI Supplement), or in relation to this Agreement or the
Origination Trust Agreement (as supplemented by the 1997-A SUBI
Supplement), at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement or the
Origination Trust Agreement (as supplemented by the 1997-A SUBI
Supplement), unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby;
(iv) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
68
<PAGE> 73
(v) the Trustee shall not be bound to recalculate,
reverify, or make any investigation into the facts of matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by Holders of Investor
Certificates evidencing not less than 25% of the aggregate Percentage
Interest of any Class; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of
every such examination shall be paid by the Transferor or, if paid by
the Trustee, shall be reimbursed by the Transferor upon demand; and
nothing in this clause shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors; and
(vi) the Trustee may execute any of the trusts or powers
under this Agreement or perform any duties under this Agreement
either directly or by or through agents or attorneys or a custodian.
(b) No Certificateholder will have any right to institute any
proceeding with respect to this Agreement except upon satisfying the conditions
set forth in Section 9.03(c).
SECTION 6.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR LEASES.
The Trustee shall make no representations as to the validity or
sufficiency of this Agreement or of the Certificates (other than the execution
by the Trustee on behalf of the Trust of, and the certificate of authentication
on, the Certificates), or of the 99.8% 1997-A SUBI Interest or 99.8% 1997-A
SUBI Certificate. The Trustee shall have no obligation to perform any of the
duties of the Transferor unless explicitly set forth in this Agreement. The
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of the 99.8% 1997-A SUBI
Interest or 99.8% 1997-A SUBI Certificate or any 1997-A Lease, any ownership
interest in any 1997-A Leased Vehicle, or the maintenance of any such ownership
interest, or for or with respect to the efficacy of the Trust or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement, including without limitation the validity of the assignment of the
99.8% 1997-A SUBI Interest or 99.8% 1997-A SUBI Certificate to the Trust or of
69
<PAGE> 74
any intervening assignment; the existence, condition, location and ownership of
any 1997-A Lease or 1997-A Leased Vehicle; the existence and enforceability of
any physical damage or credit life or credit disability insurance; the
existence and contents of any 1997-A Lease or any computer or other record
thereof; the completeness of any 1997-A Lease; the performance or enforcement
of any Lease; the compliance by the Transferor with any covenant or the breach
by the Transferor of any warranty or representation made under this Agreement
or in any related document and the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any noncompliance therewith or any breach thereof; the acts or omissions of the
Transferor or the Servicer; or any action by the Trustee taken at the
instruction of the Servicer; provided, however, that the foregoing shall not
relieve the Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of the Trustee
to perform its duties under this Agreement or based on the Trustee's willful
misconduct, bad faith or negligence, no recourse shall be had for any claim
based on any provision of this Agreement, the Certificates, the 99.8% 1997-A
SUBI Interest or 99.8% 1997-A SUBI Certificate or assignment thereof against
the institution serving as Trustee in its individual capacity. The Trustee
shall not have any personal obligation, liability or duty whatsoever to any
Certificateholder or any other Person with respect to any such claim, and any
such claim shall be asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided in this Agreement. The Trustee shall not
be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the 99.8% 1997-A
SUBI Interest or 99.8% 1997-A SUBI Certificate.
SECTION 6.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee.
SECTION 6.05. TRUSTEE'S FEES AND EXPENSES.
The Trustee shall be entitled to reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution
of the trusts created by this Agreement and in the exercise and performance of
any of the powers and duties of the Trustee under this Agreement, and payment
or reimbursement upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in its capacity as Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable
70
<PAGE> 75
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) except any such expense, disbursement or
advance as may arise from its negligence, willful misfeasance or bad faith or
that is the responsibility of Certificateholders under this Agreement. Such
compensation and reimbursement shall be paid as set forth in Section 3.03(b)
hereof or Section 10.01 of the 1997-A SUBI Supplement (in the definitions of
the terms "Principal Collections" and "Interest Collections"). Additionally,
the Certificateholders, pursuant to Section 6.02(a)(iii) or (v), may agree to
indemnify the Trustee under certain circumstances.
SECTION 6.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee under this Agreement shall at all times be a national
banking association or corporation having its corporate trust office in the
same State as the location of the Corporate Trust Office as specified in this
Agreement; and organized and doing business under the laws of such State or the
United States; authorized under such laws to exercise corporate trust powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and having a
long-term deposit rating no lower than Baa3 by Moody's, so long as Moody's is a
Rating Agency, or be otherwise acceptable to each Rating Agency, as evidenced
by a letter to such effect from each of them.
If the Trustee shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.07.
SECTION 6.07. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign and be discharged from the
trusts created by this Agreement by giving written notice thereof to the
Transferor. Upon receiving such notice of resignation, the Transferor shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
71
<PAGE> 76
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.06 and shall fail to resign after
written request therefor by the Transferor, or if at any time the Trustee shall
be legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Transferor may remove the Trustee. If it shall remove the Trustee under
the authority of the immediately preceding sentence, the Transferor shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee, and payment of all fees owed to the outgoing
Trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 6.08. The Servicer shall give each Rating Agency notice of
any such resignation or removal of the Trustee and appointment and acceptance
of a successor Trustee.
SECTION 6.08. SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 6.07 shall
execute, acknowledge and deliver to the Transferor and to its predecessor
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Trustee. The predecessor Trustee shall deliver to the
successor Trustee all documents and statements held by it under this Agreement;
and the Transferor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations. No successor Trustee shall accept appointment
as provided in this Section unless at the time of such acceptance such
successor Trustee shall be eligible under the provisions of Section 6.06. Upon
acceptance of appointment by a successor Trustee as provided in this Section,
the Transferor shall cause notice of the successor of such Trustee under this
Agreement to be mailed to all Certificateholders at their addresses as shown in
the Certificate Register and shall give notice by mail to each Rating Agency.
If the Transferor fails to mail or cause to be mailed such notice within ten
days after acceptance of
72
<PAGE> 77
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Transferor.
SECTION 6.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation (i) into which the Trustee may be merged or
consolidated, (ii) which may result from any merger, conversion, or
consolidation to which the Trustee shall be a party, or (iii) which may succeed
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible pursuant to
Section 6.06, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except that if the Trustee in any of the foregoing cases is
not the surviving entity, then the surviving entity shall execute an agreement
of assumption to perform every obligation of the Trustee, either generally or
particularly as provided herein. Notice of any such event shall be given by
the Trustee to each Rating Agency.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE
TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust may at the time be located, the Transferor and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Transferor and the
Trustee may consider necessary or desirable. If the Transferor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Trustee pursuant to Section 6.06 and no
notice of a successor Trustee pursuant to Section 6.08 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 6.08.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
73
<PAGE> 78
(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Transferor and the Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Section. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall be filed with the
Trustee and a copy thereof given to the Transferor and the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement
on its behalf and in its name. If any separate trustee or co-trustee shall
die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Agreement,
the appointment of any separate trustee or co-trustee shall
74
<PAGE> 79
not relieve the Trustee of its obligations and duties under this Agreement.
SECTION 6.11. REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee makes the following representations and warranties on
which the Transferor and Certificateholders may rely:
(i) Organization and Good Standing. The Trustee is a
national banking association organized, existing and in good standing
under the laws of the United States of America.
(ii) Power and Authority. The Trustee has full power,
authority and right to execute, deliver and perform this Agreement and
has taken all necessary action to authorize the execution, delivery
and performance by it of this Agreement.
(iii) Due Execution. This Agreement has been duly executed
and delivered by the Trustee.
(iv) Enforceability. This Agreement constitutes the
legal, valid and binding obligation of the Trustee, enforceable
against it in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity.
SECTION 6.12. TAX RETURNS.
The Trustee shall, at the direction of the Servicer and on behalf of
the Transferor, prepare or shall cause to be prepared any required federal tax
information returns (in a manner consistent with the treatment of the Investor
Certificates as indebtedness) and shall file and distribute such forms as
required by law. The Servicer shall prepare or cause to be prepared any
federal and state tax returns that may be required with respect to the Trust or
the Trust assets and shall deliver any such returns to the Trustee for
signature at least five days prior to the date such returns are required by law
to be filed.
SECTION 6.13. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.
All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any
75
<PAGE> 80
such proceeding instituted by the Trustee shall be brought in its own name as
trustee. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been obtained.
SECTION 6.14. SUIT FOR ENFORCEMENT.
If a 1997-A Event of Default shall occur and be continuing under the
Servicing Agreement, as supplemented by the 1997-A Servicing Supplement with
respect to the 1997-A SUBI Portfolio, or if AISLIC shall have failed to comply
with its obligations to the Trustee as an insured party under the Residual
Value Insurance Policy, the Trustee, in its discretion may, subject to the
provisions of Sections 6.01 and 6.02 hereof, and Section 11.01(b) of the 1997-A
Servicing Supplement (with respect to the Servicer), and the terms of the
Residual Value Insurance Policy (with respect to AISLIC) proceed to protect and
enforce its rights and the rights of the Certificateholders under this
Agreement, the Servicing Agreement and the 1997-A Servicing Supplement, or the
Residual Value Insurance Policy, as applicable, by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained herein or therein or in aid
of the execution of any power granted herein or therein or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
SECTION 6.15. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
Holders of Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interest, shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
under this Agreement, or exercising any trust or power conferred on the Trustee
by this Agreement; provided, however, that (a) if any greater Percentage
Interest is required to cause any action to be taken under the Origination
Trust Agreement or the 1997-A SUBI Supplement by the Trustee in its capacity as
a transferee of the 99.8% 1997-A SUBI Certificate, the greater Percentage
Interest shall prevail; (b) subject to Sections 6.01 and 6.02, the Trustee
shall have the right to decline to follow any such direction if the Trustee
being advised by counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by a Responsible
Officer, determine that the proceedings so directed would be illegal or subject
it to personal liability or be unduly prejudicial to the rights of
Certificateholders not
76
<PAGE> 81
parties to such direction; and (c) nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by the Certificateholders.
SECTION 6.16. NO PETITION.
The Trustee covenants and agrees that prior to the date which is one
year and one day after the last date upon which (a) each Class of Investor
Certificates has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Trustee will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Trustee's right
to file any claim in or otherwise take actions with respect to any such
proceeding instituted by any Person not under such a constraint. This Section
shall survive the termination of this Agreement or the resignation or removal
of the Trustee under this Agreement.
ARTICLE SEVEN
TERMINATION
SECTION 7.01. TERMINATION OF THE TRUST.
(a) The Trust and the respective obligations and responsibilities
of the Transferor and the Trustee shall terminate upon the earliest of (i) the
purchase as of any Distribution Date by the Transferor of the corpus of the
Trust as described in Section 7.02 (except that the Trust shall continue solely
for the limited purposes set forth in (b) and (c) below), (ii) the day
following the Distribution Date upon which all Investor Certificates have been
paid in full and after which there is no unreimbursed Class A-1 Certificate
Principal Loss Amount, Class A-2 Certificate Principal Loss Amount, Class A-3
Certificate Principal Loss Amount, Class A-4 Certificate Principal Loss Amount,
Class B Certificate Principal Loss Amount, Class A-1 Certificate Principal Loss
Interest Amount, Class A-2 Certificate Principal Loss Interest Amount, Class
A-3 Certificate Principal Loss Interest Amount, Class A-4 Certificate Principal
Loss Interest Amount, Class B Certificate Principal Loss Interest Amount, Class
B Certificate Principal Carryover Shortfall or Class B Certificate Principal
Carryover Shortfall Interest Amount or (iii) the expiration, disposition or
termination of the 99.8% 1997-A SUBI Interest; provided, however, that in no
event shall the trust created by this Agreement continue beyond the
77
<PAGE> 82
expiration of 21 years from the death of the last survivor of the descendants
of William Jefferson Clinton of the State of Arkansas, living on the date of
the Agreement. The Transferor shall promptly notify the Trustee and each
Rating Agency of any prospective termination of the Trust.
(b) Notice of any termination, specifying the Distribution Date
upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and retirement of the
Certificates, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
30th day prior to the date on which such final distribution is expected to
occur specifying (i) the Distribution Date upon which final payment of the
Certificates shall be made upon presentation and surrender of Certificates at
the Corporate Trust Office or such other office of the Trustee therein
specified, (ii) the amount of any such final payment and (iii) if applicable,
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the Corporate Trust Office or such other office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. In the event such notice is given, in the case of an
optional purchase of the Trust corpus pursuant to Section 7.02, the Transferor
shall deposit the amount specified in Section 7.02. Upon presentation and
surrender of the Certificates, the Trustee shall cause to be distributed to
Certificateholders so surrendering amounts distributable on such Distribution
Date pursuant to Section 3.03. No further interest will accrue with respect to
any Investor Certificate from and after the final Distribution Date with
respect thereto.
(c) In the event that all of the Certificateholders shall not have
surrendered their Certificates for retirement within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for retirement and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for retirement, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificate holders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion
of such remedies shall be distributed by the Trustee to the United Way.
78
<PAGE> 83
SECTION 7.02. OPTIONAL PURCHASE OF 99.8% 1997-A SUBI INTEREST.
(a) On each Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance, the Transferor
shall have the option to purchase the Investor Certificateholders' interest in
the corpus of the Trust. To exercise such option, the Transferor shall notify
the Trustee and the Servicer, in writing, no later than the tenth day of the
month preceding the month in which the Distribution Date as of which such
purchase is to be effected and shall deposit in the Distribution Account an
amount equal to the greater of (i) 99.8% of the Aggregate Net Investment Value
as of the last day of the related Collection Period, and (ii) the sum of (A)
the Certificate Balance, (B) the accrued and unpaid Class A-1 Interest
Distributable Amount, Class A-2 Interest Distributable Amount, Class A-3
Interest Distributable Amount, Class A-4 Interest Distributable Amount and
Class B Interest Distributable Amount, (C) any accrued and unpaid Class A-1
Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3
Interest Carryover Shortfall, Class A-4 Interest Carryover Shortfall and Class
B Interest Carryover Shortfall, (D) any unpaid Class A-1 Certificate Principal
Loss Amount, unpaid Class A-2 Certificate Principal Loss Amount, unpaid Class
A-3 Certificate Principal Loss Amount, unpaid Class A-4 Certificate Principal
Loss Amount, unpaid Class B Certificate Principal Loss Amount and unpaid Class
B Certificate Principal Carryover Shortfall, and (E) any accrued and unpaid
Class A-1 Certificate Principal Loss Interest Amount, unpaid Class A-2
Certificate Principal Loss Interest Amount, unpaid Class A-3 Certificate
Principal Loss Interest Amount, unpaid Class A-4 Certificate Principal Loss
Interest Amount, unpaid Class B Certificate Principal Loss Interest Amount and
Class B Certificate Principal Carryover Shortfall Interest Amount through the
day preceding the final Distribution Date. The Transferor also shall pay to
the Servicer the aggregate amount of any unreimbursed Advances. Thereupon the
Transferor shall succeed to all of the Investor Certificateholders' interests
in and to the Trust corpus.
(b) The Investor Certificateholders' interest in the corpus of the
Trust may only be purchased pursuant to this Section 7.02 if the Trustee and
each Rating Agency receives an Opinion of Counsel from the Transferor's counsel
to the effect that such purchase would not constitute a fraudulent conveyance,
or each Rating Agency is otherwise satisfied (as evidenced by written notice
from each to the Trustee).
79
<PAGE> 84
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS
SECTION 8.01.
EARLY AMORTIZATION EVENTS.
If any one of the following events shall occur during the Revolving
Period:
(a) failure on the part of the Servicer (i) to make any
payment or deposit required with respect to the 1997-A SUBI, the 99.8%
1997-A SUBI Interest, or the Investor Certificates under this
Agreement, the Origination Trust Agreement or the 1997-A SUBI
Supplement, or the Servicing Agreement or the 1997-A Servicing
Supplement, on or before the date occurring five Business Days after
the payment or deposit is required to be made, or (ii) to deliver a
Servicer's Certificate within ten Business Days after any
Determination Date;
(b) failure on the part of the Transferor or the Servicer duly
to observe or perform in any material respect any other covenants or
agreements of the Transferor or the Servicer set forth in this
Agreement, the Origination Trust Agreement or the 1997-A SUBI
Supplement, or the Servicing Agreement or the 1997-A Servicing
Supplement, which failure materially and adversely affects the rights
of the holder of the 99.8% 1997-A SUBI Interest or of the Investor
Certificateholders and which continues unremedied and continues to
affect materially and adversely the rights of the holder of the 99.8%
1997-A SUBI Interest or of the Investor Certificateholders for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, is given (i) to the
Transferor or the Servicer, as the case may be, by the Trustee or the
Origination Trustee, or (ii) to the Transferor or the Servicer, as the
case may be, and to the Trustee by the Holders of Investor
Certificates evidencing not less than 25% of the aggregate Percentage
Interest;
(c) any representation or warranty made by ALFI LP in the
SUBI Certificate Agreement, by the Transferor in this Agreement, or
the representation and warranty made by the Servicer in Section
8.01(c) of the 1997-A Servicing Supplement or any certificate given
pursuant to Section 8.02(b) of the 1997-A Servicing Supplement, shall
prove to have been incorrect in any material respect when made or
given, as a result of which the interests of the holder of the 99.8%
1997-A SUBI Interest or of the Investor Certificateholders are
materially and adversely affected and which continues to be incorrect
in any material respect and continues to affect materially and
adversely affect the
80
<PAGE> 85
interests of the holder of the 99.8% 1997-A SUBI Interest or of the
Certificateholders for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, is
given (i) to ALFI LP, the Transferor or the Servicer, as the case may
be, by the Trustee or the Origination Trustee, or (ii) to ALFI LP, the
Transferor or the Servicer, as the case may be, and to the Trustee by
the Holders of Investor Certificates evidencing not less than 25% of
the aggregate Percentage Interest; provided, however, that an Early
Amortization Event pursuant to this subparagraph (b) shall not be
deemed to have occurred hereunder if the Servicer has made the
deposit contemplated by Section 8.03 of the 1997-A Servicing Supplement
and has reallocated the relevant 1997-A Lease and 1997-A Leased
Vehicle to the UTI Portfolio within the time provided therefor;
(d) the Transferor shall file a petition commencing a
voluntary case under any chapter of the Federal bankruptcy laws; or
the Transferor shall file a petition or answer or consent seeking
reorganization, arrangement, adjustment, or composition under any
other similar applicable Federal law, or shall consent to the filing
of any such petition, answer, or consent; or the Transferor shall
appoint, or consent to the appointment of a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other similar official
in bankruptcy or insolvency of it or of any substantial part of its
property, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as
they become due;
(e) any order for relief against the Transferor shall
have been entered by a court having jurisdiction in the premises under
any chapter of the Federal bankruptcy laws; or a decree or order by a
court having jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of the Transferor under any
other similar applicable Federal law; or a decree or order of a court
having jurisdiction in the premises for the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator or
other similar official in bankruptcy or insolvency of the Transferor
or of any substantial part of its property, or for the winding up or
liquidation of its affairs, shall have been entered;
(f) any Lien, other than Liens permitted under this Agreement,
the Origination Trust Agreement or the 1997-A SUBI Supplement, the
Servicing Agreement or the 1997-A Servicing Supplement, or the Backup
Security Agreement, shall be created on or extend to or otherwise
arise upon or
81
<PAGE> 86
burden the 99.8% 1997-A SUBI Interest, the 99.8% 1997-A SUBI
Certificate, or the 1997-A Leases or 1997-A Leased Vehicles, or any
part thereof or any interest therein or the proceeds thereof, and not
be released or bonded over within 60 days thereafter;
(g) the 0.2% interest in the 1997-A SUBI held by the
Transferor or the SUBI Certificate evidencing such interest is
transferred, or any Lien, other than Liens permitted under this
Agreement, the Origination Trust Agreement or the 1997-A SUBI
Supplement, the Servicing Agreement or the 1997-A Servicing
Supplement, or the Backup Security Agreement, shall be created on or
extend to or otherwise arise upon or burden such 0.2% interest or SUBI
Certificate, or any part thereof or any interest therein or the
proceeds thereof, and not be released or bonded over within 30 days
thereafter;
(h) the Transferor, the Trust or the Origination Trust
shall become subject to registration as an "investment company" under
the Investment Company Act;
(i) on the twenty-fifth calendar day of any calendar month
(commencing May 1997) the aggregate amount of Principal Collections
collected through the last day of the related Collection Period that
have not been reinvested in new 1997-A Leases and 1997-A Leased
Vehicles, as contemplated by Section 11.02 of the 1997-A SUBI
Supplement, exceeds $1,000,000;
(j) a 1997-A Event of Default has occurred;
(k) on any Distribution Date the aggregate amount withdrawn
from the Reserve Fund and deposited in the Distribution Account on or
prior to such Distribution Date (without reference to any subsequent
deposits to the Reserve Fund from any source) exceeds $_________; or
(l) any 1997-A Leased Vehicle shall no longer be covered by
(i) the Residual Value Insurance Policy, (ii) one or more
policies with substantially similar coverage and provisions issued by
an insurer acceptable to each Rating Agency (as evidenced by a letter
from each to the effect that such change would not result in its
then-current rating of any Rated Certificates being qualified, reduced
or withdrawn); provided that the Origination Trustee and the Trustee
shall at all times have the same rights with respect to any
replacement policy as with respect to the original policy, or (iii)
any alternative mechanism to support the Booked Residual Value of such
1997-A Leased Vehicle that has
82
<PAGE> 87
been approved in accordance with the procedures set forth in Section
9.01 for the amendment hereof;
then (but in the case of any event described in subparagraph (a), (b), (c), (f)
or (g) after any applicable grace period) an early amortization event (an
"Early Amortization Event") shall have occurred.
SECTION 8.02. ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS.
(a) Following the occurrence of an Early Amortization Event
described in Section 8.01(d) or (e) (such event, an "Insolvency Event"), the
Transferor shall promptly give notice to the Trustee of such Insolvency Event.
Within 15 days of the receipt by the Trustee of the notice, the Trustee may
and, upon receipt of a notice from Investor Certificateholders evidencing more
than 51% of the aggregate Percentage Interest of the Class A Certificates or
51% of the aggregate Percentage Interests of the Class A Certificates and the
Class B Certificates (voting together as a single class), shall (i) publish a
notice in Authorized Newspapers that an Insolvency Event has occurred and that
the Trustee intends to sell, dispose of or otherwise liquidate the 99.8% 1997-A
SUBI Interest, the 99.8% 1997-A SUBI Certificate and the other property of the
Trust in a commercially reasonable manner. Following such publication, the
Trustee shall, unless otherwise prohibited by applicable law from any such
action, sell, dispose of, or otherwise liquidate the 99.8% 1997-A SUBI
Interest, the 99.8% 1997-A SUBI Certificate and the other property of the
Trust, in a commercially reasonable manner and on commercially reasonable
terms, which shall include the solicitation of competitive bids, and shall
proceed to consummate the sale, liquidation or disposition thereof as provided
above with the highest bidder; provided, however, that such sale, disposition
or other liquidation shall not be made without the consent of all Holders of
Investor Certificates if a net loss would be realized. The Transferor and the
Servicer shall be permitted to bid for the Trust property. The Trustee may
obtain a prior determination from the conservator, receiver, or trustee in
bankruptcy of the Transferor that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable. The provisions of
Sections 8.01 and 8.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
99.8% 1997-A SUBI Interest, the 99.8% 1997-A SUBI Certificate and the other
property of the Trust pursuant to Section 8.02(a) above, net of expenses
incurred in such sale, disposition or liquidation, shall be treated as
Principal Collections and Interest Collections received during the Amortization
Period; provided that such Principal Collections,
83
<PAGE> 88
will be distributed, first, on a pro rata basis, to the Class A-1
Certificateholders, the Class A-2 Certificateholders, the Class A-3
Certificateholders and the Class A-4 Certificateholders based on their
respective Certificate Balances, and second, to the Class B Certificateholders;
further provided that the Servicer on behalf of the Trustee shall determine
conclusively without liability for such determination the amount of such
proceeds which are allocable to Interest Collections and the amount of such
proceeds which are allocable to Principal Collections. On the day following
the Distribution Date on which such proceeds are distributed to the Investor
Certificateholders, the Trust shall terminate.
ARTICLE NINE
MISCELLANEOUS PROVISIONS
SECTION 9.01. AMENDMENT.
(a) This Agreement and the other Transaction Documents may be
amended by the respective parties thereto, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein, to add, change or eliminate any other provisions
hereof or thereof with respect to matters or questions arising hereunder or
thereunder that shall not be inconsistent with the provisions hereof or
thereof, or to add or amend any provision therein in connection with permitting
transfers of the Class B Certificates; provided, however, that any such action
shall not, in the good faith judgment or the parties hereto or thereto,
adversely affect in any material respect the interests of the
Certificateholders and the Origination Trustee and the Trustee shall have
received an Opinion of Counsel to the effect that such action shall not affect
the legal interests or positions of the Certificate-holders.
(b) This Agreement and the other Transaction Documents may also be
amended from time to time by the respective parties hereto or thereto including
with respect to (i) changing the formula for determining the Reserve Fund Cash
Requirement, the Reserve Fund Supplemental Requirement, the AISLIC Reserve Fund
Supplemental Requirement and/or the Downgrade Reserve Fund Supplemental
Requirement (including changing the Reserve Fund Tests) which change would
result in a decrease in the amount of the Reserve Fund Cash Requirement, the
Reserve Fund Supplemental Requirement, the AISLIC Reserve Fund Supplemental
Requirement and/or the Downgrade Reserve Fund Supplemental Requirement, (ii)
changing the manner by which the Reserve Fund or the Residual Value Surplus
Account is funded, which changes could include borrowings by the Transferor to
fund all or a portion of the Reserve Fund Initial Deposit (which borrowings
would be payable
84
<PAGE> 89
from assets or cash flow otherwise payable to the Transferor), (iii) the need
for the Residual Value Surplus Account, (iv) changing the remittance schedule
for collection deposits in the Distribution Account, (v) changing the
definition of "Permitted Investments"), or (vi) replacing the Residual Value
Insurance Policy with an alternate mechanism to support the Booked Residual
Value of the 1997-A Leased Vehicles and Early Termination Amounts, if either
(A) the Trustee has been furnished with confirmation (written or oral) from
each Rating Agency to the effect that such amendment would not cause its
then-current rating of any Rated Certificate to be qualified, reduced or
withdrawn, or (B) the Trustee has received the consent of the Holders of
Investor Certificates representing not less than 51% of the aggregate
Percentage Interests (which consent of any Holder of an Investor Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Investor Certificate and of any Investor Certificate issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Investor Certificate); provided,
however, that: (A) any amendment eliminating the Reserve Fund or the Residual
Value Insurance Policy or eliminating or reducing the AISLIC Reserve Fund
Supplemental Requirement shall also require that the Trustee and each Rating
Agency receive an Opinion of Counsel to the effect that, after such amendment,
for Federal income tax purposes the Trust will not be treated as an association
taxable as a corporation, and the Class A Certificates will properly be
characterized as indebtedness that is secured by the assets of the Trust; and
(B) no such amendment shall (y) except as otherwise provided in Section
9.01(a), increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the 1997-A SUBI or any 1997-A SUBI
Certificate or distributions that shall be required to be made on any Investor
Certificate or the applicable Certificate Rate or (z) reduce the aforesaid
percentage of the aggregate Percentage Interest of the Investor Certificates of
each Class required to consent to any such amendment, without the consent of
the Holders of all Certificates of such Class then outstanding.
(c) The Trustee shall provide each Rating Agency prior notice of
any proposed amendment hereto and copies of an Opinion of Counsel, if relevant,
whether or not such amendment requires its approval. Any notice of any such
amendment or modification as to which notice is required to be given to any
Rating Agency shall contain both the substance and substantial form of the
proposed amendment or modification.
(d) Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder.
85
<PAGE> 90
It shall not be necessary for the consent of Certificateholders pursuant to
Section 9.01(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization by Certificateholders of the execution thereof shall be subject
to such reasonable requirements as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Transferor shall execute and file, or cause to be executed
and filed, such financing statements and such continuation and other
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Certificateholders
and the Trustee under this Agreement in the 99.8% 1997-A SUBI Interest, the
99.8% 1997-A SUBI Certificate and in the proceeds thereof. The Transferor
shall deliver (or cause to be delivered) to the Trustee file-stamped copies of,
or filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) The Transferor shall not change its name, identity or
partnership structure in any manner that would, could or might make any
financing statement or continuation statement filed by the Transferor in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trustee written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) The Transferor shall give the Trustee prior written notice of
any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of
any amendment of any previously filed financing or continuation statement or of
any new financing statement and shall promptly make any such filing.
(d) The Transferor shall deliver to the Trustee promptly after the
execution and delivery of each amendment to this Agreement, an Opinion of
Counsel either (i) stating that, in the opinion of such Counsel, all financing
statements and
86
<PAGE> 91
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Trustee in the 99.8% 1997-A SUBI
Interest, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) stating that, in
the opinion of such Counsel, no such action is necessary to preserve and
protect such interest.
(e) The Transferor shall, to the extent required by applicable law,
cause the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates and Class A-4 Certificates to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time
periods specified in such Sections.
(f) This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
SECTION 9.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties to this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as
provided in Section 9.01) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to this Agreement,
nor shall anything set forth in this Agreement, or contained in the terms of
the Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action pursuant to any provision of this Agreement.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement or any other Transaction Document, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Investor Certificates evidencing not less than 25% of the aggregate Percentage
Interest, shall have made written
87
<PAGE> 92
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee under this Agreement and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit, or proceeding and
during such 30-day period, no request or waiver inconsistent with such written
request has been given to the Trustee pursuant to this Section; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement or any other Transaction Document to affect, disturb, or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or
seek to obtain priority over or preference to any other such Holder, or to
enforce any right under this Agreement or any other Transaction Document,
except in the manner provided in this Agreement and for the equal, ratable, and
common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 9.04. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 9.05. NOTICES.
All demands, notices and communications under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (i) in the
case of the Transferor, to the agent for service as specified in this
Agreement, or at such other address as shall be designated by the Transferor in
a written notice to the Trustee; (ii) in the case of the Trustee, at the
Corporate Trust Office; (iii) in the case of Standard & Poor's, at 25 Broadway,
20th Floor, New York, New York 10004, Attention: Asset Backed Surveillance
Department; and (iv) in the case of Moody's, at 99 Church Street, New York, New
York 10007 Attention: ABS Monitoring Department. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be
88
<PAGE> 93
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
SECTION 9.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 9.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Section 5.03, this Agreement may not be assigned by the
Transferor without the prior written consent of Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest.
The Transferor shall provide a copy of any such assignment to each Rating
Agency.
SECTION 9.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Except as provided in Section 5.02(b) with regard to the Transferor,
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon the
execution and authentication thereof by the Trustee pursuant to Section 4.02,
4.03 or 4.04, the Certificates are and shall be deemed fully paid.
ARTICLE TEN
AGENT FOR SERVICE
SECTION 10.01. AGENT FOR SERVICE OF TRANSFEROR.
The agent for service of process for the Transferor shall be its
Treasurer, at 6150 Omni Park Drive, Mobile, Alabama 36609.
SECTION 10.02. AGENT OF TRUSTEE.
The Trustee shall maintain an office or offices or agency or agencies
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The initial such office shall be the
Corporate Trust Office. The Trustee shall give prompt written notice to the
Transferor,
89
<PAGE> 94
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency. Certificates shall be
surrendered for transfer or exchange not at this office, but as set forth in
Section 4.07.
[SIGNATURES ON NEXT PAGE]
90
<PAGE> 95
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
WORLD OMNI LEASE SECURITIZATION
L.P., as Transferor
By: World Omni Lease Securitization,
Inc., its general partner
By:
-----------------------------------
A. Tucker Allen
Treasurer
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
91
<PAGE> 96
EXHIBIT A-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-1
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which
includes, among other things, a 99.8% interest in a special unit of
beneficial interest (the "99.8% 1997-A SUBI Interest") in World Omni
LT, an Alabama business trust, which 99.8% SUBI Interest represents a
beneficial interest in a pool of retail lease contracts for new and
used automobiles and light duty trucks (and the related automobiles
and light-duty trucks) entered into by various automobile and light
duty truck dealers pursuant to contractual arrangements with World
Omni Financial Corp. and thereafter assigned to World Omni LT, and
which 99.8% 1997-A SUBI Interest was originally issued to Auto Lease
Finance L.P. and then sold to World Omni Lease Securitization L.P. and
then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni
Lease Securitization, Inc., World Omni Lease Securitization L.P.,
World Omni LT, World Omni Financial Corp., or any of their respective
affiliates.)
Aggregate Denominations of
all Class A-1 Certificates: CUSIP # _________
$250,000,000
Number A-1-__ Denomination: $___________
A-1-1
<PAGE> 97
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
__________________________ ($___________) nonassessable, fully-paid, fractional
undivided interest in the World Omni 1997-A Automobile Lease Securitization
Trust (the "Trust") formed by World Omni Lease Securitization L.P., a Delaware
limited partnership, as Transferor (the "Transferor"). The Trust was created
pursuant to a Securitization Trust Agreement dated as of April 1, 1997 (the
"Agreement"), between the Transferor and First Bank National Association, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation), as trustee (the "Trustee"). A summary of
certain of the pertinent provisions of the Agreement is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued
under the Agreement and designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-1" (the "Class A-1 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1997-A Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class
A-2 Certificates"), Certificates designated as "World Omni 1997-A Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-3" (the "Class A-3 Certificates", Certificates designated are "World
Omni 1997-A Automobile Lease Securitization Trust __ % Automobile Lease Asset
Backed Certificates, Class A-4" (the "Class A-4 Certificates" and, together
with the Class A-1 Certificates, Class A-2 Certificates and the Class A-3
Certificates, the "Class A Certificates"), Certificates designated as "World
Omni 1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class B" (the "Class B Certificates" and, together with
the Class A Certificates, the "Investor Certificates") and a Certificate
designated as the "World Omni 1997-A Automobile Lease Securitization Trust
Asset Backed Transferor Certificate" (the "Transferor Certificate" and,
together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent
described in the Agreement. This Class A-1 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A-1 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8%
interest in a special unit of beneficial interest (the "99.8% 1997-A SUBI
Interest") in World Omni LT, an Alabama
A-1-2
<PAGE> 98
business trust (the "Origination Trust"), which 99.8% 1997-A SUBI Interest
represents a beneficial interest in a pool of retail automobile and light duty
truck lease contracts ("Leases") and the new and used automobiles and light
duty trucks leased thereby ("Leased Vehicles") (such pool of Leases and Leased
Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and
light duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1997-A SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1997-A SUBI Interest generally will be
applied towards the allocation to the 1997-A SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the twenty-fifth day
of each month or, if such twenty-fifth day is not a Business Day, the next
succeeding Business Day (each, a "Distribution Date"), commencing on May 27,
1997, to the Person in whose name this Class A-1 Certificate is registered at
the close of business on the last calendar day immediately preceding the
related Distribution Date or, if Definitive Certificates are issued, the last
day of the immediately preceding calendar month (each a "Record Date"), such
Class A-1 Certificateholder's percentage interest in (i) the Class A-1
Distributable Amount for such Distribution Date and (ii) the amount of any
repayment of any outstanding Class A-1 Interest Carryover Shortfall, Class A-1
Loss Amounts, Class A-1 Certificate Principal Loss Amounts and Class A-1
Certificate Principal Loss Interest Amounts being made on such Distribution
Date, all to the extent and as more specifically set forth in the Agreement.
To the extent provided in the Agreement, no principal payments shall be made in
respect of the Class A-2 Certificates until the Class A-1 Certificates have
been paid in full, no principal payments shall be made in respect of the Class
A-3 Certificates until the Class A-2 Certificates have been paid in full, and
no principal payments shall be made in respect of the Class A-4 Certificates or
the Class B Certificates until the Class A-3 Certificates have been paid in
full.
Distributions on this Class A-1 Certificate will be made by the
Trustee by check mailed to the Class A-1 Certificateholder of record in the
Certificate Register without the presentation or surrender of this Class A-1
Certificate or the making of any notation hereon except that with respect to
Class A-1 Certificates registered in the name of Cede & Co., the nominee for
The Depository Trust Company, distributions will be made in the form of
immediately available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-1
Certificate will be
A-1-3
<PAGE> 99
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Class A-1 Certificate at the
Corporate Trust Office of the Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Trustee and the
Holder of this Certificate (or Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interests therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1997-A SUBI Portfolio as 1997-A SUBI
Assets and those proceeds or assets derived from or earned by such 1997-A SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-1 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then the Holder (and
each Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein), agrees (i) to treat such Certificates, together
with the Transferor Certificate, as representing an interest in a partnership
for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Trust to the Transferor.
A-1-4
<PAGE> 100
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1997-A SUBI Interest and 99.8%
1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Trustee. In certain limited circumstances,
the Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Trustee in its
capacity as Certificate Registrar, who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, the City of New York, or at the appropriate
office of any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A-1 Certificates of
authorized denominations and of a like aggregate fractional undivided interest
will be issued to the designated transferee.
The Class A-1 Certificates are issuable only as registered
Certificates without coupons in denominations of $1,000 and integral multiples
thereof (except for one Class A-1 Certificate in a smaller minimum denomination
representing any remaining
A-1-5
<PAGE> 101
portion of the Initial Class A-1 Certificate Balance). As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class, of authorized
denominations of a like aggregate principal amount, as requested by the Holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charges payable in connection
therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name this Class A-1 Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Transferor may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate and other property of the Trust will effect
early retirement of the Certificates; provided, however, such right of purchase
is exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
A-1-6
<PAGE> 102
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class A-1 Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-1 Certificate to be duly executed.
Dated: _________ __, 199__ WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as Trustee
(SEAL) By:
----------------------------
Authorized Officer
ATTEST:
- --------------------------
Authorized Officer
A-1-7
<PAGE> 103
This is one of the Class A-1 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:
--------------------------
A-1-8
<PAGE> 104
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
---------------------------------
Signature Guaranteed:
*
---------------------------------
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a
commercial bank or trust company.
A-1-9
<PAGE> 105
EXHIBIT A-2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-2
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which includes,
among other things, a 99.8% interest in a special unit of beneficial
interest (the "99.8% 1997-A SUBI Interest") in World Omni LT, an Alabama
business trust, which 99.8% SUBI Interest represents a beneficial
interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and
light-duty trucks) entered into by various automobile and light duty
truck dealers pursuant to contractual arrangements with World Omni
Financial Corp. and thereafter assigned to World Omni LT, and which
99.8% 1997-A SUBI Interest was originally issued to Auto Lease Finance
L.P. and then sold to World Omni Lease Securitization L.P. and then to
the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations of
all Class A-2 Certificates: CUSIP # _________
$290,000,000
Number A-2-__ Denomination: $___________
A-2-1
<PAGE> 106
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
___________________________ ($___________) nonassessable, fully-paid,
fractional undivided interest in the World Omni 1997-A Automobile Lease
Securitization Trust (the "Trust") formed by World Omni Lease Securitization
L.P., a Delaware limited partnership, as Transferor (the "Transferor"). The
Trust was created pursuant to a Securitization Trust Agreement dated as of
April 1, 1997 (the "Agreement"), between the Transferor and First Bank National
Association, a national banking association (successor trustee to Bank of
America Illinois, an Illinois banking corporation), as trustee (the "Trustee").
A summary of certain of the pertinent provisions of the Agreement is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-2" (the "Class A-2 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1997-A Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class
A-1 Certificates"), Certificates designated as "World Omni 1997-A Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-3" (the "Class A-3 Certificates"), Certificates designated as the
"World Omni 1997-a Automobile Lease Securitization Trust ___% Automobile Lease
Asset Backed Certificates, Class A-4" (the "Class A-4 Certificates" and,
together with the Class A-2 Certificates Class A-1 Certificates and Class A-3
Certificates, the "Class A Certificates"), Certificates designated as "World
Omni 1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class B" (the "Class B Certificates" and, together with
the Class A Certificates, the "Investor Certificates") and a Certificate
designated as the "World Omni 1997-A Automobile Lease Securitization Trust
Asset Backed Transferor Certificate" (the "Transferor Certificate" and,
together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent
described in the Agreement. This Class A-2 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A-2 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1997-A SUBI Interest") in
World Omni LT, an Alabama
A-2-2
<PAGE> 107
business trust (the "Origination Trust"), which 99.8% 1997-A SUBI Interest
represents a beneficial interest in a pool of retail automobile and light duty
truck lease contracts ("Leases") and the new and used automobiles and light
duty trucks leased thereby ("Leased Vehicles") (such pool of Leases and Leased
Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and
light duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1997-A SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1997-A SUBI Interest generally will be
applied towards the allocation to the 1997-A SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the twenty-fifth day
of each month or, if such twenty-fifth day is not a Business Day, the next
succeeding Business Day (each, a "Distribution Date"), commencing on May 27,
1997, to the Person in whose name this Class A-2 Certificate is registered at
the close of business on the last calendar day immediately preceding the
related Distribution Date or, if Definitive Certificates are issued, the last
day of the immediately preceding calendar month (each a "Record Date"), such
Class A-2 Certificateholder's percentage interest in (i) the Class A-2
Distributable Amount for such Distribution Date and (ii) the amount of any
repayment of any outstanding Class A-2 Interest Carryover Shortfall, Class A-2
Loss Amounts, Class A-2 Certificate Principal Loss Amounts and Class A-2
Certificate Principal Loss Interest Amounts being made on such Distribution
Date, all to the extent and as more specifically set forth in the Agreement.
To the extent provided in the Agreement, no principal payments shall be made in
respect of the Class A-2 Certificates until the Class A-1 Certificates have
been paid in full, no principal payments shall be made in respect of the Class
A-3 Certificates until the Class A-2 Certificates have been paid in full, and
no principal payments shall be made in respect of the Class A-4 Certificates or
the Class B Certificates until the Class A-3 Certificates have been paid in
full.
Distributions on this Class A-2 Certificate will be made by the Trustee
by check mailed to the Class A-2 Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class A-2 Certificate or
the making of any notation hereon except that with respect to Class A-2
Certificates registered in the name of Cede & Co., the nominee for The
Depository Trust Company, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-2
Certificate will be
A-2-3
<PAGE> 108
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Class A-2 Certificate at the
Corporate Trust Office of the Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Trustee and the
Holder of this Certificate (or Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1997-A SUBI Portfolio as 1997-A SUBI
Assets and those proceeds or assets derived from or earned by such 1997-A SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-2 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then the Holder (and
each Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein), agrees (i) to treat such Certificates, together
with the Transferor Certificate, as representing an interest in a partnership
for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Trust to the Transferor.
A-2-4
<PAGE> 109
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1997-A SUBI Interest and 99.8%
1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Trustee. In certain limited circumstances,
the Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Trustee in its
capacity as Certificate Registrar, who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, the City of New York, or at the appropriate
office of any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A-2 Certificates of
authorized denominations and of a like aggregate fractional undivided interest
will be issued to the designated transferee.
The Class A-2 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-2 Certificate in a smaller minimum denomination
representing any remaining
A-2-5
<PAGE> 110
portion of the Initial Class A-2 Certificate Balance). As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class, of authorized
denominations of a like aggregate principal amount, as requested by the Holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charges payable in connection
therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name this Class A-2 Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Transferor may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate and other property of the Trust will effect
early retirement of the Certificates; provided, however, such right of purchase
is exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
A-2-6
<PAGE> 111
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A-2
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-2 Certificate to be duly executed.
Dated: __________ __, 199__ WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as Trustee
(SEAL) By:
----------------------------
Authorized Officer
ATTEST:
- --------------------------
Authorized Officer
A-2-7
<PAGE> 112
This is one of the Class A-2 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:
--------------------------
A-2-8
<PAGE> 113
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
---------------------------------------------------
Signature Guaranteed:
*
---------------------------------------------------
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a
commercial bank or trust company.
A-2-9
<PAGE> 114
EXHIBIT A-3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-3
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which includes,
among other things, a 99.8% interest in a special unit of beneficial
interest (the "99.8% 1997-A SUBI Interest") in World Omni LT, an Alabama
business trust, which 99.8% SUBI Interest represents a beneficial
interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and
light-duty trucks) entered into by various automobile and light duty
truck dealers pursuant to contractual arrangements with World Omni
Financial Corp. and thereafter assigned to World Omni LT, and which
99.8% 1997-A SUBI Interest was originally issued to Auto Lease Finance
L.P. and then sold to World Omni Lease Securitization L.P. and then to
the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations of
all Class A-3 Certificates: CUSIP # _________
$290,000,000
Number A-3-__ Denomination: $___________
A-3-1
<PAGE> 115
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
___________________________ ($___________) nonassessable, fully-paid,
fractional undivided interest in the World Omni 1997-A Automobile Lease
Securitization Trust (the "Trust") formed by World Omni Lease Securitization
L.P., a Delaware limited partnership, as Transferor (the "Transferor"). The
Trust was created pursuant to a Securitization Trust Agreement dated as of
April 1, 1997 (the "Agreement"), between the Transferor and First Bank National
Association, a national banking association (successor trustee to Bank of
America Illinois, an Illinois banking corporation), as trustee (the "Trustee").
A summary of certain of the pertinent provisions of the Agreement is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-3" (the "Class A-3 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1997-A Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class
A-1 Certificates"), Certificates designated as "World Omni 1997-A Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-2" (the "Class A-2 Certificates""), Certificates designated as the
"World Omni 1997-A Automobile Lease Securitization Trust ___% Automobile Lease
Asset Backed Certificates, Class A-4" (the "Class A-4 Certificates" and,
together with the Class A-3 Certificates, Class A-1 Certificates and Class A-2
Certificates, the "Class A Certificates"), Certificates designated as "World
Omni 1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class B" (the "Class B Certificates" and, together with
the Class A Certificates, the "Investor Certificates") and a Certificate
designated as the "World Omni 1997-A Automobile Lease Securitization Trust
Asset Backed Transferor Certificate" (the "Transferor Certificate" and,
together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent
described in the Agreement. This Class A-3 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A-3 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1997-A SUBI Interest") in
World Omni LT, an Alabama
A-3-2
<PAGE> 116
business trust (the "Origination Trust"), which 99.8% 1997-A SUBI Interest
represents a beneficial interest in a pool of retail automobile and light duty
truck lease contracts ("Leases") and the new and used automobiles and light
duty trucks leased thereby ("Leased Vehicles") (such pool of Leases and Leased
Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and
light duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1997-A SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1997-A SUBI Interest generally will be
applied towards the allocation to the 1997-A SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the twenty-fifth day
of each month or, if such twenty-fifth day is not a Business Day, the next
succeeding Business Day (each, a "Distribution Date"), commencing on May 27,
1997, to the Person in whose name this Class A-3 Certificate is registered at
the close of business on the last calendar day immediately preceding the
related Distribution Date or, if Definitive Certificates are issued, the last
day of the immediately preceding calendar month (each a "Record Date"), such
Class A-3 Certificateholder's percentage interest in (i) the Class A-3
Distributable Amount for such Distribution Date and (ii) the amount of any
repayment of any outstanding Class A-3 Interest Carryover Shortfall, Class A-3
Loss Amounts, Class A-3 Certificate Principal Loss Amounts and Class A-3
Certificate Principal Loss Interest Amounts being made on such Distribution
Date, all to the extent and as more specifically set forth in the Agreement.
To the extent provided in the Agreement, no principal payments shall be made in
respect of the Class A-2 Certificates until the Class A-1 Certificates have
been paid in full, no principal payments shall be made in respect of the Class
A-3 Certificates until the Class A-2 Certificates have been paid in full, and
no principal payments shall be made in respect of the Class A-4 Certificates or
the Class B Certificates until the Class A-3 Certificates have been paid in
full.
Distributions on this Class A-3 Certificate will be made by the Trustee
by check mailed to the Class A-3 Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class A-3 Certificate or
the making of any notation hereon except that with respect to Class A-3
Certificates registered in the name of Cede & Co., the nominee for The
Depository Trust Company, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-3
Certificate will be
A-3-3
<PAGE> 117
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Class A-3 Certificate at the
Corporate Trust Office of the Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Trustee and the
Holder of this Certificate (or Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1997-A SUBI Portfolio as 1997-A SUBI
Assets and those proceeds or assets derived from or earned by such 1997-A SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-3 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then the Holder (and
each Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein), agrees (i) to treat such Certificates, together
with the Transferor Certificate, as representing an interest in a partnership
for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Trust to the Transferor.
A-3-4
<PAGE> 118
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1997-A SUBI Interest and 99.8%
1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Trustee. In certain limited circumstances,
the Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Trustee in its
capacity as Certificate Registrar, who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, the City of New York, or at the appropriate
office of any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A-3 Certificates of
authorized denominations and of a like aggregate fractional undivided interest
will be issued to the designated transferee.
The Class A-3 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-3 Certificate in a smaller minimum denomination
representing any remaining
A-3-5
<PAGE> 119
portion of the Initial Class A-3 Certificate Balance). As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class, of authorized
denominations of a like aggregate principal amount, as requested by the Holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charges payable in connection
therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name this Class A-3 Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Transferor may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate and other property of the Trust will effect
early retirement of the Certificates; provided, however, such right of purchase
is exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
A-3-6
<PAGE> 120
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A-3
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-3 Certificate to be duly executed.
Dated: __________ __, 199__ WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as Trustee
(SEAL) By:
----------------------------
Authorized Officer
ATTEST:
- --------------------------
Authorized Officer
A-3-7
<PAGE> 121
This is one of the Class A-3 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:
--------------------------
A-3-8
<PAGE> 122
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
-----------------------------------
Signature Guaranteed:
*
-----------------------------------
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a
commercial bank or trust company.
A-3-9
<PAGE> 123
EXHIBIT A-4
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-4
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which includes,
among other things, a 99.8% interest in a special unit of beneficial
interest (the "99.8% 1997-A SUBI Interest") in World Omni LT, an Alabama
business trust, which 99.8% SUBI Interest represents a beneficial
interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and
light-duty trucks) entered into by various automobile and light duty
truck dealers pursuant to contractual arrangements with World Omni
Financial Corp. and thereafter assigned to World Omni LT, and which
99.8% 1997-A SUBI Interest was originally issued to Auto Lease Finance
L.P. and then sold to World Omni Lease Securitization L.P. and then to
the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations of
all Class A-4 Certificates: CUSIP # _________
$277,297,857
Number A-4-__ Denomination: $___________
A-4-1
<PAGE> 124
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
___________________________ ($___________) nonassessable, fully-paid,
fractional undivided interest in the World Omni 1997-A Automobile Lease
Securitization Trust (the "Trust") formed by World Omni Lease Securitization
L.P., a Delaware limited partnership, as Transferor (the "Transferor"). The
Trust was created pursuant to a Securitization Trust Agreement dated as of
April 1, 1997 (the "Agreement"), between the Transferor and First Bank National
Association, a national banking association (successor trustee to Bank of
America Illinois, an Illinois banking corporation), as trustee (the "Trustee").
A summary of certain of the pertinent provisions of the Agreement is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-4" (the "Class A-4 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1997-A Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class
A-1 Certificates"), Certificates designated as "World Omni 1997-A Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-2" (the "Class A-2 Certificates"), Certificates designated as "World
Omni 1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together
with the Class A-4 Certificates, the Class A-1 Certificates and Class A-2
Certificates, the "Class A Certificates"), Certificates designated as "World
Omni 1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class B" (the "Class B Certificates" and, together with
the Class A Certificates, the "Investor Certificates") and a Certificate
designated as the "World Omni 1997-A Automobile Lease Securitization Trust
Asset Backed Transferor Certificate" (the "Transferor Certificate" and,
together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent
described in the Agreement. This Class A-4 Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A-4 Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1997-A SUBI Interest") in
World Omni LT, an Alabama
A-4-2
<PAGE> 125
business trust (the "Origination Trust"), which 99.8% 1997-A SUBI Interest
represents a beneficial interest in a pool of retail automobile and light duty
truck lease contracts ("Leases") and the new and used automobiles and light
duty trucks leased thereby ("Leased Vehicles") (such pool of Leases and Leased
Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and
light duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1997-A SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1997-A SUBI Interest generally will be
applied towards the allocation to the 1997-A SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the twenty-fifth day
of each month or, if such twenty-fifth day is not a Business Day, the next
succeeding Business Day (each, a "Distribution Date"), commencing on May 27,
1997, to the Person in whose name this Class A-4 Certificate is registered at
the close of business on the last calendar day immediately preceding the
related Distribution Date or, if Definitive Certificates are issued, the last
day of the immediately preceding calendar month (each a "Record Date"), such
Class A-4 Certificateholder's percentage interest in (i) the Class A-4
Distributable Amount for such Distribution Date and (ii) the amount of any
repayment of any outstanding Class A-4 Interest Carryover Shortfall, Class A-4
Loss Amounts, Class A-4 Certificate Principal Loss Amounts and Class A-4
Certificate Principal Loss Interest Amounts being made on such Distribution
Date, all to the extent and as more specifically set forth in the Agreement.
To the extent provided in the Agreement, no principal payments shall be made in
respect of the Class A-2 Certificates until the Class A-1 Certificates have
been paid in full, no principal payments shall be made in respect of the Class
A-3 Certificates until the Class A-2 Certificates have been paid in full, and
no principal payments shall be made in respect of the Class A-4 Certificates or
the Class B Certificates until the Class A-3 Certificates have been paid in
full.
Distributions on this Class A-4 Certificate will be made by the Trustee
by check mailed to the Class A-4 Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class A-4 Certificate or
the making of any notation hereon except that with respect to Class A-4
Certificates registered in the name of Cede & Co., the nominee for The
Depository Trust Company, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-4
Certificate will be
A-4-3
<PAGE> 126
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Class A-4 Certificate at the
Corporate Trust Office of the Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Trustee and the
Holder of this Certificate (or Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1997-A SUBI Portfolio as 1997-A SUBI
Assets and those proceeds or assets derived from or earned by such 1997-A SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-4 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then the Holder (and
each Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein), agrees (i) to treat such Certificates, together
with the Transferor Certificate, as representing an interest in a partnership
for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Trust to the Transferor.
A-4-4
<PAGE> 127
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1997-A SUBI Interest and 99.8%
1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Trustee. In certain limited circumstances,
the Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Trustee in its
capacity as Certificate Registrar, who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, the City of New York, or at the appropriate
office of any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A-4 Certificates of
authorized denominations and of a like aggregate fractional undivided interest
will be issued to the designated transferee.
The Class A-4 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-4 Certificate in a smaller minimum denomination
representing any remaining
A-4-5
<PAGE> 128
portion of the Initial Class A-4 Certificate Balance). As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class, of authorized
denominations of a like aggregate principal amount, as requested by the Holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charges payable in connection
therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name this Class A-4 Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Transferor may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate and other property of the Trust will effect
early retirement of the Certificates; provided, however, such right of purchase
is exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
A-4-6
<PAGE> 129
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A-4
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
A-4-7
<PAGE> 130
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-4 Certificate to be duly executed.
Dated: __________ __, 199__ WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as Trustee
(SEAL) By:
----------------------------
Authorized Officer
ATTEST:
- --------------------------
Authorized Officer
A-4-8
<PAGE> 131
This is one of the Class A-4 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By:
-----------------------
A-4-9
<PAGE> 132
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
---------------------------------------------------
Signature Guaranteed:
*
---------------------------------------------------
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a
commercial bank or trust company.
A-4-10
<PAGE> 133
EXHIBIT B
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1
CERTIFICATES, THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES AND THE
CLASS A-4 CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS
PROVIDED BY THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS. NO RESALE OR
OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS SUCH RESALE OR TRANSFER
(A) IS MADE IN ACCORDANCE WITH SECTION 4.03 OF THE AGREEMENT REFERRED TO HEREIN
AND (B) IS MADE (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (II) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, (III) TO WORLD OMNI
LEASE SECURITIZATION, L.P. (THE "TRANSFEROR") OR (IV) TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A. NEITHER THE TRANSFEROR
NOR FIRST BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE "TRUSTEE"), IS OBLIGATED
TO REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS. IN THE EVENT THAT THE TRANSFER OF A CLASS B CERTIFICATE IS TO
BE MADE, EITHER (A) AN OPINION OF COUNSEL OR (B) A REPRESENTATION LETTER FROM
THE PROSPECTIVE INVESTOR, IN EITHER CASE IN FORM AND SUBSTANCE SATISFACTORY TO
THE TRUSTEE AND THE TRANSFEROR, IS REQUIRED TO BE DELIVERED TO THE TRUSTEE AND
THE TRANSFEROR, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER OR OPINION OF COUNSEL FROM
THE TRANSFEREE OF THIS CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRANSFEROR AND THE TRUSTEE, TO THE EFFECT THAT: (A)(1) SUCH
TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE ON BEHALF OR WITH THE ASSETS OF
ANY "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), (2) NO
"PROHIBITED TRANSACTION" UNDER ERISA OR THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), WILL OCCUR IN CONNECTION WITH SUCH TRANSFEREE'S
ACQUISITION OF THIS CERTIFICATE OR (3) THE ACQUISITION OF THIS CERTIFICATE IS
SUBJECT TO A STATUTORY OR ADMINISTRATIVE EXEMPTION, SPECIFIED IN SUCH LETTER OR
OPINION, FROM THE "PROHIBITED TRANSACTION" PROVISIONS OF ERISA AND THE CODE;
AND (B) IF SUCH TRANSFEREE (OR ANY PERSON OR ENTITY FOR WHOM SUCH TRANSFEREE IS
ACTING AS AGENT OR CUSTODIAN IN CONNECTION WITH THE ACQUISITION OF THIS
CERTIFICATE)
B-1
<PAGE> 134
IS A PARTNERSHIP, GRANTOR TRUST OR S CORPORATION FOR FEDERAL INCOME TAX
PURPOSES (A "FLOW-THROUGH ENTITY"), ANY CLASS B CERTIFICATES OWNED BY OR ON
BEHALF OF SUCH FLOW-THROUGH ENTITY WILL REPRESENT LESS THAN 50% OF THE VALUE OF
ALL THE ASSETS OWNED BY SUCH FLOW-THROUGH ENTITY AND NO SPECIAL ALLOCATION OF
INCOME, GAIN, LOSS, DEDUCTION OR CREDIT FROM SUCH CLASS B CERTIFICATES WILL BE
MADE AMONG THE BENEFICIAL OWNERS OF SUCH FLOW-THROUGH ENTITY.
THE RESTRICTIONS ON RESALE OR TRANSFER DESCRIBED ABOVE ARE SUBJECT TO
ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE HOLDER'S PROPERTY SHALL AT
ALL TIMES BE AND REMAIN WITHIN ITS CONTROL.
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS B
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidence an undivided interest
in the Trust, as defined below, the property of which includes, among
other things, a 99.8% interest in a special unit of beneficial interest
(the "99.8% 1997-A SUBI Interest") in World Omni LT, an Alabama business
trust, which 99.8% 1997-A SUBI Interest represents a beneficial interest
in a pool of retail lease contracts for new and used automobiles and
light duty trucks (and the related automobiles and light-duty trucks)
entered into by various automobile and light duty truck dealers pursuant
to contractual arrangements with World Omni Financial Corp. and
thereafter assigned to World Omni LT, and which special unit of
beneficial interest was originally issued to Auto Lease Finance L.P.,
and then sold to World Omni Lease Securitization L.P. and then to the
Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations
of all Class B Certificates: CUSIP # _________
$65,839,532
Number B-__ Denomination: $__________
B-2
<PAGE> 135
THIS CERTIFIES THAT _______________ is the registered owner of a
_______________________________________________ DOLLAR and _____________ CENTS
($_____________) nonassessable, fully-paid, fractional undivided interest in
the World Omni 1997-A Automobile Lease Securitization Trust (the "Trust")
formed by World Omni Lease Securitization L.P., a Delaware limited partnership,
as Transferor (the "Transferor"). The Trust was created pursuant to a
Securitization Trust Agreement dated as of April, 1997 (the "Agreement"),
between the Transferor and First Bank National Association, a national banking
association (successor trustee to Bank of America Illinois, an Illinois banking
corporation), as trustee (the "Trustee"). A summary of certain of the
pertinent provisions of the Agreement is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class B"
(the "Class B Certificates"). Also issued under the Agreement are Certificates
designated as "World Omni 1997-A Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1
Certificates"), Certificates designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-2" (the "Class A-2 Certificates"), Certificates designated as "World Omni
1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class A-3" (the "Class A-3 Certificates""), Certificates
designated as "World Omni 1997-A Automobile Lease Securitization Trust ___%
Automobile Lease Asset Backed Certificates, Class A-4" (the "Class A-4
Certificates and, together with the Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates, the "Class A Certificates" and,
together with the Class B Certificates, the "Investor Certificates") and a
Certificate designated as the "World Omni 1997-A Automobile Lease
Securitization Trust Automobile Asset Backed Transferor Certificate" (the
"Transferor Certificate" and, together with the Investor Certificates, the
"Certificates"). The Class B Certificates are subordinated to the Class A
Certificates, and the Transferor Certificate is subordinated to the Investor
Certificates, to the extent described in the Agreement. This Class B
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class B
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1997-A SUBI Interest") in
World Omni LT, an Alabama
B-3
<PAGE> 136
business trust (the "Origination Trust"), which 99.8% 1997-A SUBI Interest
represents a beneficial interest in a pool of retail automobile and light duty
truck lease contracts ("Leases") and the new and used automobiles and light
duty trucks leased thereby ("Leased Vehicles") (such pool of Leases and Leased
Vehicles, the "1997-A SUBI Portfolio") entered into by various automobile and
light duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1997-A SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1997-A SUBI Interest generally will be
applied towards the allocation to the 1997-A SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the twenty-fifth day
of each month or, if such twenty-fifth day is not a Business Day, the next
succeeding Business Day (each, a "Distribution Date"), commencing on May 27,
1997 to the Person in whose name this Class B Certificate is registered at the
close of business on the last day of the immediately preceding calendar month
(each a "Record Date"), such Class B Certificateholder's percentage interest in
(i) the Class B Distributable Amount for such Distribution Date, and (ii) the
amount of any repayment of any outstanding Class B Interest Carryover
Shortfall, Class B Certificate Principal Carryover Shortfall, Class B Loss
Amounts, Class B Certificate Principal Loss Amounts, Class B Certificate
Principal Loss Interest Amounts and Class B Certificate Principal Carryover
Shortfall Interest Amounts being made on such Distribution Date, all to the
extent and as more specifically set forth in the Agreement. To the extent
provided in the Agreement, no principal payments shall be made in respect of
the Class A-2 Certificates until the Class A-1 Certificates have been paid in
full, no principal payments shall be made in respect of the Class A-3
Certificates until the Class A-2 Certificates have been paid in full, and no
principal payments shall be made in respect of the Class A-4 Certificates or
the Class B Certificates until the Class A-3 Certificates have been paid in
full.
Distributions on this Class B Certificate will be made by the Trustee by
check mailed to the Class B Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class B Certificate or
the making of any notation hereon or, at the option of a Holder who owns Class
B Certificates having an aggregate initial denomination of $250,000 or more,
upon written instructions received by the Trustee not later than five days
prior to the related Record Date, by wire transfer of immediately available
funds to an account maintained by such Holder at a depository institution in
the United States having appropriate facilities therefor. Except as otherwise
B-4
<PAGE> 137
provided in the Agreement and notwithstanding the foregoing, the final
distribution on this Class B Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class B Certificate at the Corporate Trust Office of the
Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Trustee and the
Holder of this Certificate by acceptance of this Certificate agree to treat the
Investor Certificates, for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness and to report the transactions contemplated by the Agreement on
all applicable tax returns in a manner consistent with such treatment.
By accepting this Certificate, the Holder hereof waives any claim to any
proceeds or assets of the Origination Trustee and to all assets of the
Origination Trust other than those from time to time included within the 1997-A
SUBI Portfolio as 1997-A SUBI Assets and those proceeds or assets derived from
or earned by such 1997-A SUBI Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class B Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then Holder hereof
agrees (i) to treat such Certificates, together with the Transferor
Certificate, as representing an interest in a partnership for all tax purposes,
(ii) to treat all payments in respect of such Certificates (to the extent not a
return of capital) as a "guaranteed payment" thereon made pursuant to Section
707(c) of the Code, and (iii) to allocate all other items of income, gain,
deduction, loss or credit with respect to the assets and operations of the
Trust to the Transferor.
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1997-A SUBI Interest and 99.8%
1997-A SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and
B-5
<PAGE> 138
at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Trustee. In certain limited circumstances,
the Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Trustee in its
capacity as Certificate Registrar, who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, the City of New York, or at the appropriate
office of any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class B Certificates of
authorized denominations and of a like aggregate fractional undivided interest
will be issued to the designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $250,000 and integral multiples of $1,000
in excess thereof, (except for one Class B Certificate in a smaller minimum
denomination representing any remaining portion of the Initial Class B
Certificate Balance). As provided in the Agreement, and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class, of authorized denominations of a like aggregate
principal amount, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
B-6
<PAGE> 139
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name this Class B Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Transferor may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate and other property of the Trust will effect
early retirement of the Certificates; provided, however, such right of purchase
is exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof covenants and agrees
that prior to the date which is one year and one day after the last date upon
which (a) each Class of Investor Certificates has been paid in full, and (b)
all obligations due under any other Securitized Financing have been paid in
full, the Holder will not institute against, or join any other Person in
instituting against the Transferor, World Omni Lease Securitization, Inc.,
ALFI, ALFI LP, the Origination Trustee or the Origination Trust any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law. The
foregoing shall not limit the Holder's right to file any claim in or otherwise
take actions with respect to any such proceeding instituted by any Person not
under such a constraint. This non-petition covenant shall survive the
termination of the Agreement.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class B
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
B-7
<PAGE> 140
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
Dated: _________ __, 199__ WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as Trustee
(SEAL) By:
----------------------------
Authorized Officer
ATTEST:
- --------------------------
Authorized Officer
B-8
<PAGE> 141
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:
--------------------------
B-9
<PAGE> 142
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
--------------------------------
Signature Guaranteed:
*
--------------------------------
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a
commercial bank or trust company.
B-10
<PAGE> 143
EXHIBIT C
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED.
WORLD OMNI 1997-A AUTOMOBILE LEASE SECURITIZATION TRUST
AUTOMOBILE LEASE ASSET BACKED TRANSFEROR CERTIFICATE
evidencing the entire interest in the distributions allocable to the
Transferor Certificate evidencing an undivided interest in the Trust, as
defined below, the property of which includes, among other things, a
99.8% interest in a special unit of beneficial interest (the "99.8%
1997-A SUBI Interest") in World Omni LT, an Alabama business trust,
which 99.8% 1997-A SUBI Interest represents a beneficial interest in a
pool of retail lease contracts for new and used automobiles and light
duty trucks (and the related automobiles and light-duty trucks) entered
into by various automobile and light duty truck dealers pursuant to
contractual arrangements with World Omni Financial Corp. and thereafter
assigned to World Omni LT, and which 99.8% 1997-A SUBI Interest was
originally issued to Auto Lease Finance L.P., and then sold to World
Omni Lease Securitization L.P., and then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., World Omni Lease Securitization, Inc.,
World Omni LT, World Omni Financial Corp., or any of their respective
affiliates.)
THIS CERTIFIES THAT WORLD OMNI LEASE SECURITIZATION L.P. (the
"Transferor") is the registered owner of the entire interest not allocated to
the Investor Certificates in the World Omni 1997-A Automobile Lease
Securitization Trust (the "Trust") formed by the Transferor. The Trust was
created pursuant to a Securitization Trust Agreement dated as of April 1, 1997
(the "Agreement"), between the Transferor and First Bank National Association,
a national banking association (successor trustee to Bank of America Illinois,
an Illinois banking corporation), as trustee (the "Trustee"). A summary of
certain of the pertinent provisions of the Agreement is set forth below. To
the extent not otherwise defined herein the capitalized terms used herein have
the meanings assigned to them in the Agreement.
C-1
<PAGE> 144
This Certificate is the duly authorized Transferor Certificate issued
under the Agreement and designated as the "World Omni 1997-A Automobile Lease
Securitization Trust Automobile Lease Asset Backed Transferor Certificate" (the
"Transferor Certificate"). Also issued under the Agreement are Certificates
designated as "World Omni 1997-A Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1
Certificates"), Certificates designated as "World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-2" (the "Class A-2 Certificates"), Certificates designated as "World Omni
1997-A Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class A-3" (the "Class A-3 Certificates"), Certificates
designated as "World Omni 1997-A Automobile Lease Securitization Trust ___%
automobile Lease Asset Backed Certificates, Class A-4 (the "Class A-4
Certificates" and, together with the Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates, the "Class A Certificates") and
Certificates designated as "World Omni 1997-A Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates" and, together with the Transferor Certificate, the
"Certificates"). This Transferor Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Transferor Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1997-A SUBI Interest") in
World Omni LT, an Alabama business trust (the "Origination Trust"), which 99.8%
1997-A SUBI Interest represents a beneficial interest in a pool of retail
automobile and light duty truck lease contracts ("Leases") and the new and used
automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool
of Leases and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by
various automobile and light duty truck dealers pursuant to contractual
arrangements with World Omni Financial Corp., which also acts as servicer (in
that capacity, the "Servicer") of the 1997-A SUBI Portfolio. During the
Revolving Period, Principal Collections allocable to the 99.8% 1997-A SUBI
Interest generally will be applied towards the allocation to the 1997-A SUBI
Portfolio of additional qualifying Leases and Leased Vehicles from among all
other unallocated Leases and Leased Vehicles owned by the Origination Trust.
Payments in respect of the 99.8% 1997-A SUBI Interest will be allocated
between the Investor Certificates and this
C-2
<PAGE> 145
Transferor Certificate and paid to the registered Holder of this Transferor
Certificate as provided in the Agreement.
It is the intention of the Transferor, as the Holder of this
Certificate, and the Holders of Investor Certificates that the Investor
Certificates will be indebtedness for federal, state and local income and
franchise tax purposes and for purposes of any other tax imposed on or measured
by income. The Trustee and Transferor, as the Holder of this Certificate, by
acceptance of this Certificate, agree to treat the Investor Certificates, for
purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness and to report the
transactions contemplated by the Agreement on all applicable tax returns in a
manner consistent with such treatment.
By accepting this Certificate, the Holder hereof waives any claim to any
proceeds or assets of the Origination Trustee and to all assets of the
Origination Trust other than those from time to time included within the 1997-A
SUBI Portfolio as 1997-A SUBI Assets and those proceeds or assets derived from
or earned by such 1997-A SUBI Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Investor Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Trust, then the Transferor,
as Holder hereof, agrees (i) to treat the Investor Certificates, together with
this Certificate, as representing an interest in a partnership for all tax
purposes, (ii) to treat all payments in respect of such Certificates (to the
extent not a return of capital) as a "guaranteed payment" thereon made pursuant
to Section 707(c) of the Code, and (iii) to allocate all other items of income,
gain, deduction, loss or credit with respect to the assets and operations of
the Trust to the Transferor.
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1997-A SUBI Interest and 1997-A
SUBI Certificate and certain monies on deposit in the Reserve Fund and the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
C-3
<PAGE> 146
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor, the Servicer and the Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the
Holders of Certificates evidencing not less than 51% of the aggregate
Percentage Interest of all Investor Certificates, voting together as a single
class.
As provided in the Agreement, this Certificate shall be owned by the
Transferor and may not be transferred.
As provided in the Agreement and subject to certain limitations therein
set forth, Certificates are exchangeable for new Certificates of the same
Class, of authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Transferor may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the 99.8% 1997-A SUBI Interest
and 99.8% 1997-A SUBI Certificate and other property of the Trust will effect
early retirement of the Certificates; provided, however, such right of purchase
is exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Transferor
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
C-4
<PAGE> 147
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Transferor Certificate to be duly executed.
Dated: _______ __, 199_ WORLD OMNI 1997-A AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as Trustee
(SEAL) By:
---------------------------
Authorized Officer
ATTEST:
- ------------------------------
C-5
<PAGE> 148
This is the Transferor Certificate referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:
---------------------------
C-6
<PAGE> 149
EXHIBIT D-1
NON-RULE 144A REPRESENTATION LETTER
World Omni Lease Securitization L.P.,
c/o World Omni Lease Securitization, Inc.,
its general partner
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
First Bank National Association
400 North Michigan Avenue
Chicago, Illinois 60611
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281-1201
Re: World Omni 1997-A Automobile Lease Securitization Trust
____% Automobile Lease Asset Backed Certificates,
Class B
Ladies and Gentlemen:
The undersigned purchaser (the "Purchaser") understands that the
purchase of the above-referenced certificates (the "Certificates") may be made
only by institutions which are "Accredited Investors" under Regulation D, as
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), which includes banks, savings and loan associations, registered brokers
and dealers, insurance companies, investment companies and organizations
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), corporations, business trusts and partnerships, not formed for
the specific purpose of acquiring the Certificates offered, with total assets
in excess of $5,000,000. The undersigned represents on behalf of the Purchaser
that the Purchaser is an "Accredited Investor" within the meaning of such
definition. The Purchaser is urged to review carefully the responses,
representations and warranties it is making herein.
Representations and Warranties
The Purchaser makes the following representations and warranties
in order to permit First Bank National Association (successor to Bank of
America Illinois), as trustee (the "Trustee") of the World Omni 1997-A
Automobile Lease Securitization Trust (the "Trust"), World Omni Lease
Securitization L.P. (the "Transferor") and Merrill Lynch, Pierce, Fenner, Smith
Incorporated to determine its suitability as a purchaser of
D-1-1
<PAGE> 150
Certificates and to determine that the exemption from registration relied upon
by the Transferor under Section 4(2) of the Securities Act is available to it.
1. The Purchaser understands that the Certificates have
not been, and throughout their term will not be, registered or qualified under
the Securities Act or the securities law of any state and may be resold (which
resale is not currently contemplated) only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration under the
Securities Act and other applicable state securities laws are available, that
neither the Transferor nor the Trustee is required to register the Certificates
under the Securities Act or any applicable state securities laws and that any
transfer must comply with Section 4.03 of the Securitization Trust Agreement,
dated as of April 1, 1997 (the "Agreement"), among the Transferor, World Omni
Financial Corp. and the Trustee.
2. The Purchaser will comply with all applicable federal
and state securities laws in connection with any subsequent resale of the
Certificates.
3. The Purchaser is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act and a sophisticated
institutional investor and has knowledge and experience in financial and
business matters (and, in particular, in such matters related to securities
similar to the Certificates) and is capable of evaluating the merits and risks
of its investment in the Certificates and is able to bear the economic risk of
such investment. The Purchaser has been given such information concerning the
Certificates, World Omni Financial Corp. and the Transferor as it has
requested.
4. The Purchaser is acquiring the Certificates as
principal for its own account (or for the account of one or more other
sophisticated institutional investors for which it is acting as duly authorized
fiduciary or agent) for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof, subject nevertheless to any
requirement of law that the disposition of the Purchaser's property shall at
all times be and remain within its control.
5. Neither the Purchaser nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of any
Certificate, any interest in any Certificate or any other similar security of
the Transferor to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of any Certificate, any interest in any Certificate or any
other similar security of the Transferor with, any person in any manner,
D-1-2
<PAGE> 151
or made any general solicitation by means of general advertising or in any
other manner, or taken any other action, which would constitute a distribution
of the Certificates under the Securities Act or which would render the
disposition of any Certificate a violation of Section 5 of the Securities Act
or any state securities law, require registration or qualification pursuant
thereto, or require registration of the Trust or the Transferor as an
"investment company" under the Investment Company Act of 1940, as amended, nor
will it act, nor has it authorized or will it authorize any person to act in
such manner with respect to the Certificates.
6. The Purchaser has reviewed the Private Placement
Memorandum with respect to the Certificates dated April __, 1997, including the
Prospectus attached thereto as Exhibit A (the "Private Placement Memorandum"),
and the agreements and other materials referred to therein, and has had the
opportunity to ask questions and receive answers concerning the terms and
conditions of the transaction contemplated by the Private Placement Memorandum
and to obtain additional information necessary to verify the accuracy and
completeness of any information furnished to the Purchaser or to which the
Purchaser had access.
7. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").] [No
"prohibited transaction" under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Code will occur in connection with our
acquisition of the Certificates.] [The acquisition of the Certificates is
subject to a statutory or administrative exemption from the "prohibited
transaction" provisions of the Employee Retirement Income Security act of 1974,
as amended ("ERISA"), and the Code [specifying exemption].]*
8. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" or any other benefit plan investor.]
[The Purchaser represents that it is an insurance company and is holding and
will be holding all funds used to purchase the Certificates in its general
account, the assets of which such Purchaser reasonably believes do not
constitute "plan assets" as defined in the plan asset regulations under ERISA.]
[The Purchaser will acquire the Certificates with the assets of an "employee
benefit plan" or other benefit plan investor.]*
__________________________________
* Purchaser required to select applicable sentence.
D-1-3
<PAGE> 152
9. The Purchaser understands that the Certificates will
bear a legend substantially as set forth in the form of Certificate included as
Exhibit B to the Agreement.
10. The Purchaser understands that there is no market, nor
is there any assurance that a market will develop, for the Certificates and
that the Transferor does not have any obligation to make or facilitate any such
market (or to otherwise repurchase the Certificates from the Purchaser) under
any circumstances.
11. The Purchaser has consulted with its own legal counsel,
independent accountants and financial advisors to the extent it deems necessary
regarding the tax consequences to it of ownership of the Certificates, is aware
that its taxable income with respect to the Certificates in any accounting
period may not correspond to the cash flow (if any) from the Certificates for
such period, and is not purchasing the Certificates in reliance on any
representations of the Transferor or its counsel with respect to tax matters.
12. The Purchaser represents, on behalf of itself (or, if
it is acquiring the Certificates on behalf of one or more other sophisticated
institutional investors, on behalf of each of such investors) that if the
Purchaser or any such other investor is a partnership, grantor trust or S
corporation for federal income tax purposes (a "Flow-Through Entity"), any
Certificates owned by such Flow-Through Entity will represent less than 50% of
the value of all the assets owned by such Flow-Through Entity and no special
allocation of income, gain, loss, deduction or credit from such Certificates
will be made among the beneficial owners of such Flow-Through Entity.
13. The Purchaser agrees that it will obtain from any
subsequent purchaser of the Certificates substantially the same
representations, warranties and agreements contained in the foregoing
paragraphs 1 through 12 and in this paragraph 13.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Agreement or the Private
Placement Memorandum, as the case may be.
The representations and warranties contained herein shall be
binding upon the successors of the undersigned.
D-1-4
<PAGE> 153
Executed at ___________________, this ____ day of ___________ 199__
--------------------------------------
Purchaser's Name (Print)
By
-----------------------------------
Signature
Its
-----------------------------------
--------------------------------------
Address of Purchaser
--------------------------------------
Purchaser's Taxpayer
Identification Number
D-1-5
<PAGE> 154
EXHIBIT D-2
RULE 144A REPRESENTATION LETTER
World Omni Lease Securitization L.P.,
c/o World Omni Lease Securitization, Inc.,
its general partner
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
First Bank National Association
400 North Michigan Avenue
Chicago, Illinois 60611
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner, & Smith Incorporated
World Financial Center
North Tower
New York, New York 10281-1201
Re: World Omni 1997-A Automobile Lease Securitization Trust
____% Automobile Lease Asset Backed Certificates,
Class B
Ladies and Gentlemen:
__________________ (the "Purchaser") is today purchasing in a
private resale from ______________________ (the "Transferor") $_________
aggregate principal amount of the above-captioned certificates (the
"Certificates"), issued pursuant to the securitization trust agreement, dated
as of April 1, 1997 (the "Agreement"), among World Omni Lease Securitization
L.P. ("the Transferor"), World Omni Financial Corp. ("World Omni") and First
Bank National Association (successor to Bank of America Illinois), as trustee
(the "Trustee").
In connection with the purchase of the Certificates, the
Purchaser hereby represents and warrants to each of you as follows:
1. The Purchaser understands that the Certificates have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state.
2. The Purchaser is acquiring the Certificates for its own
account only for investment and not for any other person, and not with a view
to, or for resale in connection with, a distribution that would constitute a
violation of the Securities Act or any state securities laws (subject to the
understanding that disposition of the Purchaser's property will remain at all
times within its control). The Purchaser is not an affiliate of
D-2-1
<PAGE> 155
the Transferor, World Omni, the Trustee, any custodian of the Certificates or
any of their respective affiliates.
3. The Purchaser agrees that the Certificates must be held
indefinitely by it unless (i) the Certificates are subsequently registered
under the Securities Act or (ii) an exemption from the registration
requirements of the Securities Act is available.
4. The Purchaser agrees that if at some time it wishes to
dispose of or exchange any of the Certificates, it will not transfer or
exchange any of the Certificates unless such transfer or exchange is in
accordance with the provisions of Section 4.03 of the Agreement.
5. The Purchaser is a qualified institutional buyer as
defined in Rule 144A of the Securities Act and has completed and is delivering
herewith either of the forms of certification to that effect attached as
Annexes hereto, it is aware that the sale to it is being made in reliance on
Rule 144A, it is acquiring the Certificates for its own account or for the
account of a qualified institutional buyer and it understands that such
Certificates may be resold, pledged or transferred only (i) to a person who the
Transferor reasonably believes is a qualified institutional buyer that
purchases for its own account or for the account of a qualified institutional
buyer to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A or (ii) pursuant to another exemption from
registration under the Securities Act and applicable state securities laws.
6. Neither the Purchaser nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of any
Certificate, any interest in any Certificate or any other similar security of
the Transferor to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of any Certificate any interest in any Certificate or any
other similar security of the Transferor with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, which would constitute a distribution of the
Certificates under the Securities Act or which would render the disposition of
any Certificate a violation of Section 5 of the Securities Act or any state
securities law, require registration or qualification pursuant thereto, or
require registration of the World Omni 1997-A Automobile Lease Securitization
Trust (the "Trust") or the Transferor as an "investment company" under the
Investment Company Act of 1940, as amended, nor will it act, nor has it
authorized or will it authorize any person to act in such manner with respect
to the Certificates.
D-2-2
<PAGE> 156
7. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").] [No
"prohibited transaction" under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended
(the "Code"), will occur in connection with our acquisition of the
Certificates.] [The acquisition of the Certificates is subject to a statutory
or administrative exemption from the "prohibited transaction" provisions of the
Employee Retirement Income Security act of 1974, as amended ("ERISA"), and the
Internal Revenue Code of 1986, as amended (the "Code"), [specifying
exemption].]*
8. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" or any other benefit plan investor.]
[The Purchaser represents that it is an insurance company and is holding and
will be holding all funds used to purchase the Certificates in its general
account, the assets of which such Purchaser reasonably believes do not
constitute "plan assets" as defined in the plan asset regulations under ERISA.]
[The Purchaser will acquire the Certificates with the assets of an "employee
benefit plan" or other benefit plan investor.]*
9. The Purchaser understands that there is no market, nor
is there any assurance that a market will develop, for the Certificates and
that the Transferor does not have any obligation to make or facilitate any such
market (or to otherwise repurchase the Certificates from the Purchaser) under
any circumstances.
10. The Purchaser has consulted with its own legal counsel,
independent accountants and financial advisors to the extent it deems necessary
regarding the tax consequences to it of ownership of the Certificates, is aware
that its taxable income with respect to the Certificates in any accounting
period may not correspond to the cash flow (if any) from the Certificates for
such period, and is not purchasing the Certificates in reliance on any
representations of the Transferor or its counsel with respect to tax matters.
11. The Purchaser has reviewed the Private Placement
Memorandum with respect to the Certificates dated March __, 1997, including the
Prospectus attached as Exhibit A thereto (the "Private Placement Memorandum"),
and the agreements and other materials referred to therein, and has had the
opportunity to ask questions and receive answers concerning the terms and
conditions of the transaction contemplated by the Private Placement Memorandum
and to obtain additional information necessary to
__________________________________
* Purchaser required to select applicable sentence.
D-2-3
<PAGE> 157
verify the accuracy and completeness of any information furnished to the
Purchaser or to which the Purchaser had access.
12. The Purchaser understands that the Certificates will
bear a legend substantially as set forth in the form of Certificate included as
Exhibit B to the Agreement.
13. The Purchaser hereby further agrees to be bound by all
the terms and conditions of the Certificates as provided in the Agreement.
14. The Purchaser represents that if the Purchaser is a
partnership, grantor trust or S corporation for federal income tax purposes (a
"Flow-Through Entity"), any Certificates owned by such Flow-Through Entity will
represent less than 50% of the value of all the assets owned by such
Flow-Through Entity and no special allocation of income, gain, loss deduction
or credit from such Certificates will be made among the beneficial owners of
such Flow-Through Entity.
15. If the Purchaser sells any of the Certificates, the
Purchaser will obtain from any subsequent purchaser substantially the same
representations contained in this Representation Letter.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Agreement or the Private
Placement Memorandum, as the case may be.
The representations and warranties contained herein shall be
binding upon the successors of the undersigned.
Executed at ___________________, this ____ day of ___________ 199__
--------------------------------------------------
Purchaser's Name (Print)
By
-----------------------------------------------
Signature
Its
-----------------------------------------------
--------------------------------------------------
Address of Purchaser
--------------------------------------------------
Purchaser's Taxpayer
Identification Number
D-2-4
<PAGE> 158
ANNEX 1 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to
the addressees of the Rule 144A Representation Letter to which this
certification is attached with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Purchaser.
2. In connection with purchases by the Purchaser, the
Purchaser is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A") because (i) the
Purchaser owned and/or invested on a discretionary basis $_________** in
securities (except for the excluded securities referred to below) as of the end
of the Purchaser's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Purchaser satisfies the criteria in the
category marked below.
___ Corporation. etc. The Purchaser is a corporation
(other than a bank, savings and loan association or
similar institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended.
___ Bank. The Purchaser (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
__________________________________
** Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
D-2-5
<PAGE> 159
___ Savings and Loan. The Purchaser (a) is a savings and
loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over any
such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements,
a copy of which is attached hereto.
___ Broker-dealer. The Purchaser is a dealer registered
pursuant to Section 15 of the Securities Exchange Act
of 1934.
___ Insurance Company. The Purchaser is an insurance
company whose primary and predominant business activity
is the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or
a similar official or agency of a State, territory or
the District of Columbia.
___ State or Local Plan. The Purchaser is a plan
established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit of
its employees.
___ ERISA Plan. The Purchaser is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Purchaser is an investment
advisor registered under the Investment Advisors Act of
1940.
___ Small Business Investment Company. The Purchaser is a
small business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
___ Business Development Company. The Purchaser is a
business development company as defined in Section
202(a) (22) of the Investment Advisors Act of 1940.
___ Trust Fund. The Purchaser is a trust fund whose
trustee is a bank or trust company and whose
D-2-6
<PAGE> 160
participants are exclusively State or Local Plans or
ERISA Plans as defined above, and no participant of the
Purchaser is an individual retirement account or an
H.R. 10 (Keogh) plan.
3. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Purchaser, (ii)
securities that are part of an unsold allotment to or subscription by the
Purchaser, if the Purchaser is a dealer, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Purchaser, the
Purchaser used the cost of such securities to the Purchaser and did not include
any of the securities referred to in the preceding paragraph, except (i) where
the Purchaser reports its securities holdings in its financial statements on
the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market. Further,
in determining such aggregate amount, the Purchaser may have included
securities owned by subsidiaries of the Purchaser, but only if such
subsidiaries are consolidated with the Purchaser in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Purchaser's direction.
However, such securities were not included if the Purchaser is a majority
owned, consolidated subsidiary of another enterprise and the Purchaser is not
itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Purchaser acknowledges that it is familiar with
Rule 144A and understands that the seller to it and other parties related to
the Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Purchaser may be in reliance on Rule
144A.
6. Until the date of purchase of the Certificates, the
Purchaser will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Purchaser's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Purchaser is a bank or savings and loan is provided above,
D-2-7
<PAGE> 161
the Purchaser agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
---------------------------------------
Name of Purchaser or Adviser
By:
-----------------------------------
Name:
Title:
Date:
----------------------------------
D-2-8
<PAGE> 162
ANNEX 2 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to
the addressees of the Rule 144A Representation Letter which this certification
is attached with respect to the Transferor Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Purchaser or, if the
Purchaser is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A") because the
Purchaser is part of a Family of Investment Companies (as defined below), is
such an officer of the Adviser.
2. In connection with purchases by the Purchaser, the
Purchaser is a "qualified institutional buyer" as defined in SEC Rule 144A
because (i) the Purchaser is an investment company registered under the
Investment Company Act of 1940, as amended and (ii) as marked below, the
Purchaser alone, or the Purchaser's Family of Investment Companies, owned at
least $100,000,000 in securities (other than the excluded securities referred
to below) as of the end of the Purchaser's most recent fiscal year. For
purposes of determining the amount of securities owned by the Purchaser or the
Purchaser's Family of Investment Companies, the cost of such securities was
used, except (i) where the Purchaser or the Purchaser's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to
the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
___ The Purchaser owned $____________ in securities
(other than the excluded securities referred to below)
as of the end of the Purchaser's most recent fiscal
year (such amount being calculated in accordance with
Rule 144A).
___ The Purchaser is part of a Family of Investment
Companies which owned in the aggregate $__________ in
securities (other than the excluded securities referred
to below) as of the end of the Purchaser's most recent
fiscal year (such amount being calculated in accordance
with Rule 144A).
D-2-9
<PAGE> 163
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the same parent
or because one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Purchaser or are part of
the Purchaser's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
5. The Purchaser is familiar with Rule 144A and
understands that the parties listed in the Rule 144A Representation Letter to
which this certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Purchaser will be in
reliance on Rule 144A. In addition, the Purchaser will only purchase for the
Purchaser's own account.
6. Until the date of purchase of the Transferor
Certificates, the undersigned will notify the parties listed in the Rule 144A
Transferee Certificate to which this certification relates of any changes in
the information and conclusions herein. Until such notice is given, the
Purchaser's purchase of the Certificates will constitute a reaffirmation of
this certification by the undersigned as of the date of such purchase.
-------------------------------------------
Name of Purchaser or Adviser
By:
---------------------------------------
Name:
Title:
IF AN ADVISER:
-------------------------------------------
Name of Purchaser
Date:
--------------------------------------
D-2-10
<PAGE> 1
EXHIBIT 5.1
[MCDERMOTT, WILL & EMERY LETTERHEAD]
April 21, 1997
World Omni Lease Securitization L.P.
World Omni LT
Auto Lease Finance L.P.
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
Re: World Omni 1997-A Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-1 (the
"CLASS A-1 CERTIFICATES"), World Omni 1997-A Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed
Certificates, Class A-2 (the "CLASS A-2 CERTIFICATES"), World
Omni 1997-A Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-3 (the
"CLASS A-3 CERTIFICATES") and World Omni 1997-A Automobile
Lease Securitization Trust ___% Automobile Lease Agreement
Backed Certificates, Class A-4 (the "CLASS A-4 CERTIFICATES"
and, together with the Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates, the "CLASS A
CERTIFICATES")
Ladies and Gentlemen:
We have acted as special Illinois and New York counsel for World Omni
Financial Corp., a Florida corporation ("WOFCO"), and World Omni Lease
Securitization L.P., a Delaware limited partnership (the "TRANSFEROR"), in
connection with the proposed offering by the Transferor of $___________ initial
principal amount of Class A-1 Certificates, $___________ initial principal
amount of Class A-2 Certificates, $___________ initial principal amount of
Class A-3 Certificates and $____________ initial principal amount of Class A-4
Certificates, to be issued pursuant to a Securitization Trust Agreement (the
"SECURITIZATION TRUST AGREEMENT"), dated as of April 1, 1997, between the
Transferor and First Bank National Association, as trustee (the "TRUSTEE").
The Class A Certificates are to be acquired by [Merrill Lynch & Co.] [Merrill
Lynch, Pierce, Fenner & Smith Incorporated], as representative of the several
underwriters (collectively, the "Underwriters") named in the Underwriting
Agreement (the "UNDERWRITING AGREEMENT"), dated April __, 1997, among the
Transferor, Auto Lease Finance L.P., WOFCO and the Underwriters and offered by
the Underwriters as provided in the Registration Statement on Form S-1 (File
No. 333-21917), filed with the Securities and Exchange Commission ("SEC") on
February 18, 1997, as amended by Amendment No. 1, dated
<PAGE> 2
April 1, 1997, Amendment No. 2, dated April __, 1997, and Amendment No. 3,
dated April __, 1997 (the "REGISTRATION STATEMENT").
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon (a) certificates of public officials and others and
(b) the representations and warranties contained in the Securitization Trust
Agreement and the Underwriting Agreement. We have also examined originals or
copies, certified or otherwise identified to our satisfaction, of the
Registration Statement, the form of Securitization Trust Agreement filed as
Exhibit 4.1 to the Registration Statement, including the form of each Class A
Certificate attached thereto, and the form of Underwriting Agreement filed as
Exhibit 1.1 to the Registration Statement.
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the
genuineness of all signatures, the authenticity of the documents submitted to
us as originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or reproduced copies.
We have also assumed that the Securitization Trust Agreement and the
Underwriting Agreement will be governed by the laws of either New York or
Illinois, without regard to any applicable principles of conflicts of laws, and
that each such agreement has been duly and validly executed and delivered and
constitutes the legal, valid and binding obligation of each party thereto in
accordance with its terms. In addition, we have assumed that each Class A
Certificate, when issued, will conform to the form thereof attached to the
Securitization Trust Agreement, each Class A Certificate has been duly and
validly executed and delivered in accordance with the terms of the
Securitization Trust Agreement and the Underwriting Agreement and each Class A
Certificate constitutes the legal, valid and binding obligation of the Trustee
that is a party thereto in accordance with its terms.
Based upon and subject to the foregoing, it is our opinion that when
each Class A Certificate is executed, issued and authenticated by the Trustee
in accordance with the Securitization Trust Agreement and sold and delivered to
the Underwriters in accordance with the provisions of the Underwriting
Agreement, it will be legally issued, fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the States of
Illinois and New York (excluding the state securities laws thereof), and we do
not express any opinion herein concerning any other law. Specifically and
without limiting the generality of the preceding sentence, we express no
opinion herein as to the applicability of or compliance with any state
securities laws, federal securities laws or other federal laws, including
without limitation the Securities Act of 1933, as amended, and the Trust
Indenture Act of 1939, as amended. This opinion letter is given as of the date
hereof and we assume no obligation to advise you of changes that may hereafter
be brought to our attention. This opinion letter is solely for the information
of the addressees hereof and is not to be quoted in whole or in part or
otherwise referred to, nor is it to be filed with any governmental agency or
any other person, without our prior written consent. No one other than the
addressees hereof is entitled to rely on this opinion letter.
-2-
<PAGE> 3
We hereby consent to (a) the use of this opinion for filing as Exhibit
5.1 to the Registration Statement and (b) to the use of our name under the
heading "Legal Matters" in the Prospectus included in the Registration
Statement, as the same may be further amended and declared effective by the
SEC.
Very truly yours,
/s/ McDermott, Will & Emery
---------------------------
-3-
<PAGE> 1
Exhibit 8.1
April 21, 1997
World Omni Lease Securitization L.P.
6150 Omni Park Drive
Mobile, Alabama 36609
Re: World Omni 1997-A Automobile Lease Securitization Trust
-------------------------------------------------------
Dear Sirs:
We have acted as special federal income tax counsel to World Omni Lease
Securitization, L.P. (the "Transferor") in connection with the filing of a
Registration Statement on Form S-1 (File No. 333-21917) with the Securities and
Exchange Commission (the "Commission") on February 18, 1997, as amended by
Amendments No. 1, No. 2 and No. 3 thereto filed with the Commission (such
registration statement, together with the exhibits and any amendments thereto,
the "Registration Statement"), including a form of prospectus contained therein
(the "Prospectus"), relating to the offering of approximately $250,000,000
aggregate principal amount of World Omni 1997-A Automobile Lease Securitization
Trust __% Automobile Lease Asset Backed Certificates, Class A-1 (the "Class A-1
Certificates"), approximately $290,000,000 aggregate principal amount of World
Omni 1997-A Automobile Lease Securitization Trust __% Automobile Lease Asset
Backed Certificates, Class A-2 (the "Class A-2 Certificates"), approximately
$290,000,000 aggregated principal amount of World Omni 1997-A Automobile Lease
Securitization Trust __% Automobile Lease Asset Backed Certificates, Class A-3
(the "Class A-3 Certificates") and approximately $277,297,857 aggregated
principal amount of World Omni 1997-A Automobile Lease Securitization Trust __%
Automobile Lease Asset Backed Certificates, Class A-4 (the "Class A-4
Certificates" and, together with the Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates, the "Certificates") to be issued
pursuant to a Securitization Trust Agreement dated as of April 1, 1997 (the
"Securitization Trust Agreement"), between the Transferor and First Bank
National Association, as trustee (the "Trustee").
As such counsel, we have reviewed the Registration Statement, the
Prospectus, the form of the Securitization Trust Agreement filed as an exhibit
to the Registration Statement, the forms of the Certificates included in the
Securitization Trust Agreement and such agreements, instruments, certificates
and other documents as we have deemed necessary for the purposes of this
opinion. In addition, we have examined such questions of law as we have deemed
necessary for purposes of this opinion.
<PAGE> 2
We have advised the Registrant with respect to material federal income
tax consequences of the proposed issuance of the Certificates. This advice is
summarized under the headings "Summary -- Tax Status" and "Material Income Tax
Considerations -- Federal Taxation" in the Prospectus. Such description does
not purport to discuss all possible federal income tax ramifications of the
proposed issuance, but with respect to those material federal income tax
consequences that are discussed, in our opinion the description is accurate in
all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the use of our name under the headings "Material
Income Tax Considerations -- Federal Taxation" and "Legal Matters" in the
Prospectus, without implying or admitting that we are "experts" within the
meaning of the Securities Act of 1933, as amended, or the rules and regulations
of the Commission promulgated thereunder, with respect to any part of the
Registration Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE> 1
[ENGLISH, MCCAUGHAN & O'BRYAN, P.A. LETTERHEAD]
EXHIBIT 8.2
LEE W. HARVATH, JR.
April 18, 1997
World Omni Lease Securitization, L.P. Auto Lease Finance, L.P.
6150 Omni Park Drive 6150 Omni Park Drive
Mobile, Alabama 36609 Mobile, Alabama 36609
VT, Inc., as Trustee for
World Omni LT, an Alabama Trust
6150 Omni Park Drive
Mobile, Alabama 36609
Re: WORLD OMNI 1997-A
AUTOMOBILE LEASE SECURITIZATION TRUST
Ladies and Gentlemen:
We are acting as special Florida tax counsel for World Omni Financial
Corp., a Florida corporation ("WOFCO"), World Omni Lease Securitization L.P., a
Delaware limited partnership ("WOLS LP" or the "TRANSFEROR"), World Omni Lease
Securitization, Inc., a Delaware corporation ("WOLSI"), Auto Lease Finance,
Inc., a Delaware corporation ("ALFI"), Auto Lease Finance L.P., a Delaware
limited partnership ("ALFI LP"), World Omni LT, an Alabama trust (the
"ORIGINATION TRUST"), and World Omni 1997-A Automobile Lease Securitization
Trust (the "SECURITIZATION TRUST" or the "TRUST") (WOFCO, the Transferor,
WOLSI, ALFI, ALFI LP, the Origination Trust and the Securitization Trust are
referred to collectively as the "CLIENTS") in connection with certain matters
of Florida law arising in connection with the proposed offering by the
Transferor of: (a) $__________ principal amount of _____% Automobile Lease
Asset Backed Certificates, Class A-1; $__________ principal amount of _____%
Automobile Lease Asset Backed Certificates, Class A-2; $___________ principal
amount of ____% Automobile Lease Asset Backed Certificates, Class A-3; and
$__________ principal amount of ____% Automobile Lease Asset Backed
Certificates, Class A-4 (collectively, the "CLASS A CERTIFICATES"), and (b)
$_________ principal amount of _____% Automobile Lease Asset Backed
Certificates, Class B (the "CLASS B CERTIFICATES", and together with the Class
A Certificates, the "INVESTOR CERTIFICATES"), to be issued pursuant to a
Securitization Trust Agreement, dated as of April 1, 1997, (the "SECURITIZATION
TRUST AGREEMENT") between the Transferor and First Bank National Association, a
national banking association (successor to Bank of
<PAGE> 2
World Omni Lease Securitization, L.P.
April 18, 1997
Page 2
America Illinois ("BA ILLINOIS"), an Illinois banking corporation) ("FIRST
BANK"), as trustee (the "TRUSTEE"). Simultaneously with the issuance of the
Investor Certificates, pursuant to the Securitization Trust Agreement, the
Securitization Trust will issue a certificate representing the interest in the
Securitization Trust not evidenced by the Investor Certificates (the
"TRANSFEROR CERTIFICATE" and, together with the Investor Certificates, the
"CERTIFICATES"). This opinion (the "OPINION") is being delivered, with the
consent of the Clients, to you; Merrill Lynch, Pierce, Fenner & Smith,
Incorporated ("MERRILL LYNCH"), in its capacity as representative of the
Underwriters(1) pursuant to Sections 6(d)(1)(c) and 6(d)(4) of the Underwriting
Agreement dated April __, 1997 (the "UNDERWRITING AGREEMENT"), among the
Transferor, WOFCO, and the Underwriters; Merrill Lynch, in its capacity as
Placement Agent (in such capacity, the "PLACEMENT AGENT") pursuant to Section
7(c) of the Private Placement Agency Agreement dated April ___, 1997 (the
"PLACEMENT AGENCY AGREEMENT") among the Transferor, WOFCO, and Merrill Lynch
(in such capacity, the "PLACEMENT AGENT"); and Merrill Lynch, as Purchaser (in
such capacity, the "PURCHASER") pursuant to Section 6(c) of the Purchase
Agreement dated April ___, 1997 (the "PURCHASE AGREEMENT") among the
Transferor, the Placement Agent and the Purchaser.
This Opinion is solely for the benefit of and may be relied upon only
by:
(a) you,
(b) Merrill Lynch, as Placement Agent, as Underwriter and as
Purchaser and Brown & Wood LLP, as counsel to the Placement
Agent, Underwriter and Purchaser, in connection with the
transactions contemplated by the Placement Agency Agreement,
the Underwriting Agreement, and the Purchase Agreement,
(c) Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services, in connection with the rating of the Investor
Certificates,
(d) First Bank as Trustee, and as trust agent for the Origination
Trust (in such capacity, the "TRUST AGENT"), and
(e) the parties set forth on Annex A hereto as lenders to ALFI LP
(the Persons listed in (a), (b), (c), (d) and (e),
collectively, the "RELIANCE PARTIES").
This Opinion may not be relied upon by, nor may copies be delivered
to, any other Person or used for any other purpose without our prior written
consent except as required by any bank regulatory agency.
Capitalized terms for which meanings are provided in the
Securitization Trust Agreement, the Underwriting Agreement, the Placement
Agency Agreement, or the
- -------------------
(1) As used in this Opinion, Underwriters refers to Merrill Lynch and those
entities listed on Schedule I to the Underwriting Agreement (as hereinafter
defined).
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 3
World Omni Lease Securitization, L.P.
April 18, 1997
Page 3
Purchase Agreement, unless otherwise defined herein, are used herein with such
meanings. Captions used in this Opinion are for convenience only, and should
not be regarded as having any independent meaning.
We are members of the Bar of the State of Florida and do not express
any opinion with respect to the applicability of the laws of any jurisdiction
other than the State of Florida. We do not express any opinion with respect to
the application or applicability of: (a) any other state or federal tax laws
or regulations; or (b) pension and employee benefit laws and regulations, to
the transactions contemplated by the Reviewed Documents (as hereinafter
defined) (the "TRANSACTIONS").
DOCUMENTS REVIEWED; INVESTIGATIONS; ASSUMPTIONS
In connection with this Opinion, we have examined copies of the
following documents (the "REVIEWED DOCUMENTS"):
a. the Securitization Trust Agreement;
b. the Second Amended and Restated Servicing Agreement dated as
of July 1, 1994 between VT Inc., as trustee of World Omni LT,
WOFCO, and, for certain limited purposes, ALFI LP (the "SECOND
AMENDED AND RESTATED SERVICING AGREEMENT");
c. the Supplement 1997-A to Servicing Agreement dated as of April
1, 1997 among VT Inc., as trustee of World Omni LT, WOFCO and,
for certain limited purposes only, First Bank and WOLSI as
general partner of WOLS LP (the "SERVICING SUPPLEMENT A");
d. the Second Amended and Restated Trust Agreement dated as of
July 1, 1994, as amended by Amendment No. 1 to Second Amended
and Restated Trust Agreement, dated as of November 1, 1994,
each among World Omni LT, ALFI LP, VT Inc., and, for certain
limited purposes only, BA Illinois(2) (as so amended, the
"SECOND AMENDED AND RESTATED TRUST AGREEMENT");
e. the Supplement 1997-A to Trust Agreement dated as of April 1,
1997 between ALFI LP, VT Inc., as Trustee of World Omni LT,
and, for certain
- ----------------------------------
(2) Please note that First Bank, although not a signatory to the Second
Amended and Restated Trust Agreement, is the successor in interest to BA
Illinois by virtue of its appointment as successor Trust Agent for the
Origination Trust.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 4
World Omni Lease Securitization, L.P.
April 18, 1997
Page 4
limited purposes only, First Bank and the Transferor (the
"TRUST SUPPLEMENT A");
f. the World Omni Lease Securitization L.P. Amended and Restated
Limited Partnership Agreement dated as of July 1, 1994 between
WOLSI, as general partner, and WOFCO, as limited partner (the
"WOLS LP AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT");
g. the Auto Lease Finance L.P. Amended and Restated Limited
Partnership Agreement dated as of July 1, 1994 between ALFI,
as general partner, and WOFCO, as limited partner (the "ALFI
LP AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT");
h. the SUBI Certificate Purchase and Sale Agreement dated as of
April 1, 1997 between ALFI LP and the Transferor (the "SUBI
CERTIFICATE PURCHASE AND SALE AGREEMENT");
i. the Backup Security Agreement dated as of April 1, 1997 among
WOFCO, ALFI LP, VT Inc., as trustee of World Omni LT, WOLS LP
and First Bank, as Trustee (the "BACKUP SECURITY AGREEMENT");
j. the Second Amended and Restated Assignment Agreement dated as
of July 1, 1994 between WOFCO and ALFI LP, as amended by
Amendment No. 1 dated as of October 1, 1995 (the "SECOND
AMENDED AND RESTATED ASSIGNMENT AGREEMENT");
k. the Intercreditor Agreement dated as of November 1, 1994 among
WOFCO, ALFI LP, the Transferor, VT Inc., BA Illinois as
Trustee, BA Illinois as trustee for the World Omni 1994-A
Automobile Lease Securitization Trust (the "1994-A
SECURITIZATION TRUST"), and BA Illinois as Trust Agent for the
Origination Trust and the parties listed on Appendix A
attached thereto, together with all Accession Agreements
supplementary thereto (together, the "INTERCREDITOR
AGREEMENT");(3)
l. the Accession Agreement to Intercreditor Agreement dated as of
October 1, 1995 (the "1995-A ACCESSION AGREEMENT") executed by
the Transferor and First Bank as Trustee (the "1995-A
SECURITIZATION TRUSTEE") of the World
- ----------------------------------
(3) Please note that First Bank, although not a signatory to the
Intercreditor Agreement, is the successor in interest to BA Illinois by virtue
of its appointment as: (a) successor Trustee for the Securitization Trust; (b)
successor trustee for the 1994-A Securitization Trust; and (c) successor Trust
Agent for the Origination Trust.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 5
World Omni Lease Securitization, L.P.
April 18, 1997
Page 5
Omni 1995-A Automobile Lease Securitization Trust (the "1995-A
SECURITIZATION TRUST");
m. the Accession Agreement to Intercreditor Agreement dated as of
May 1, 1996 (the "1996-A ACCESSION AGREEMENT") executed by the
Transferor and First Bank as Trustee (the "1996-A
SECURITIZATION TRUSTEE") of the World Omni 1996-A Automobile
Lease Securitization Trust (the "1996-A SECURITIZATION
TRUST");
n. the Accession Agreement to Intercreditor Agreement dated as of
October 1, 1996 (the "1996-B ACCESSION AGREEMENT") executed by
the Transferor and First Bank as Trustee (the "1996-B
SECURITIZATION TRUSTEE") of the World Omni 1996-B Automobile
Lease Securitization Trust (the "1996-B SECURITIZATION
TRUST");
o. the Accession Agreement to Intercreditor Agreement dated as of
April 1, 1997 (the "1997-A ACCESSION AGREEMENT") executed by
the Transferor and First Bank as Trustee (the "1997-A
SECURITIZATION TRUSTEE") of the World Omni 1997-A Automobile
Lease Securitization Trust (the "1997-A SECURITIZATION
TRUST");
p. the Support Agreement dated as of October 1, 1995 by WOFCO and
WOLS LP (the "SUPPORT AGREEMENT"), as amended by Amendment No.
1 dated as of May 1, 1996, Amendment No. 2 dated as of October
1, 1996, and Amendment No. 3 dated April 1, 1997;
q. the Underwriting Agreement;
r. the registration statement on Form S-1 (No. 333-21917) filed
by the Transferor, ALFI LP and the Origination Trust with the
Securities and Exchange Commission (the "COMMISSION") on
February 18, 1997 pursuant to the Securities Act of 1933, as
amended (the "ACT"), as amended by Amendment No. 1 thereto
filed with the Commission on April 1, 1997, as amended by
Amendment No. 2 thereto filed with the Commission on April __,
1997, and as amended by Amendment No. 3 thereto filed with the
Commission on April ___, 1997 (the registration statement in
the amended form in which it became effective on April __,
1997 and the related prospectus contained therein, the
"REGISTRATION STATEMENT" and the "PROSPECTUS");
s. the Placement Agency Agreement;
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 6
World Omni Lease Securitization, L.P.
April 18, 1997
Page 6
t. the Preliminary Private Placement Memorandum and Private
Placement Memorandum, each for the Class B Certificates, dated
April ___, 1997 and April ___, 1997, respectively (together,
the "PPM");
u. the Purchase Agreement;
v. Residual Value Insurance Policy dated April ___, 1997 by
American International Specialty Lines Insurance Company
("AISLIC") in favor of WOFCO, as Servicer, WOLS LP, ALFI
L.P., VT Inc., as Trustee of World Omni LT, and the Trustee;
w. Indemnity Agreement dated April ___, 1997 by and between
AISLIC and WOFCO; and
x. Promissory Note dated April ___, 1997 by WOFCO in favor of
AISLIC.
In addition to the Reviewed Documents, we have reviewed originals or
copies certified or authenticated to our satisfaction of all such corporate
records, agreements, instruments and documents of the Clients, certificates of
public officials, any certificates provided to us by the officers of any of the
Clients and other certificates and opinions, and have made such other
investigations, as we have deemed necessary in connection with the opinions set
forth herein. In our examination, we have assumed the capacity of natural
persons, the genuineness of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies, and the
authenticity of the originals from which any such copies were made, none of
which assumptions have we independently confirmed. We have also relied,
without further independent investigation, as to certain matters of fact, on
information obtained from public officials, from officers of the Clients and
from other sources believed by us to be responsible.
We have assumed without further investigation that all officer's
certificates (which expressly permit our reliance on such certificates) and
other information and documentation provided to us by any of the Clients are
true, complete and not misleading and that all statements and assumptions of
fact set forth therein and herein are and will remain true and valid. Each
assumption specifically described in this Opinion is made with the express
consent and approval of the Reliance Parties. However, with respect to the
assumptions we have made and as to our reliance upon such matters of fact and
information, to our knowledge, there is no information that conflicts with such
assumptions or that would make such reliance unwarranted.
This Opinion is given as of the date hereof, and we expressly disclaim
any obligation to update this Opinion or to give notice to any Reliance Party
or any third party of any future changes in facts or law, including changes
that might affect the opinions set forth herein.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 7
World Omni Lease Securitization, L.P.
April 18, 1997
Page 7
OPINIONS
Based on the foregoing, it is our opinion(4) that:
1. THE INVESTOR CERTIFICATES AS DEBT; CLASSIFICATION AS A
PARTNERSHIP
(a) Based upon the assumptions, authorities and reasoning
set forth below, upon their issuance in accordance with the Reviewed Documents
the Class A Certificates will represent debt (i.e., will be treated as
indebtedness) and the Class B Certificates should represent debt (i.e., should
be treated as indebtedness) under Florida law.
Florida law references standard, accepted definitions
and sources in defining the term "debt." For example, in Holman et al. v.
Hollis, 94 Fla. 614 (1927), the court stated that the accepted definition of
"debt" is: "That which is due from one person to another, whether money, goods,
or services; that which one person is bound to pay to another; a thing owed."
Similarly, in Turner v. Gruver, 168 So.2d 192 (Fla. 3rd DCA 1964), after citing
Holman with approval, the court cited Black's Law Dictionary for the
proposition that a debt is: "... an obligation to pay a sum certain; or a sum
which may be ascertained by simple mathematical calculation from known facts;
regardless of whether the liability arises by contract or by operation of law."
See, also, Waters' Dictionary of Florida Law. The Investor Certificates will
represent debt under all such definitions and, accordingly, the Investor
Certificates will represent debt under Florida law generally.
Brown & Wood LLP, special tax counsel to the Clients,
has opined and, with the consent of the Reliance Parties, we have assumed, that
the Class A Certificates will represent debt, rather than equity, and that the
Class B Certificates should represent debt, rather than equity, for federal
income tax purposes, and we know of no reason why we should not so assume.
Accordingly, because Florida income tax law utilizes federal definitions and
concepts, the Class A Certificates will represent debt, rather than equity, and
the Class B Certificates should represent debt, rather than equity, for Florida
income tax purposes. Moreover, because the factors utilized in distinguishing
debt from equity for federal income tax purposes are well developed and based
upon standard, accepted criteria, the Class A Certificates will represent debt,
rather than equity, and the Class B Certificates should represent debt, rather
than equity, for purposes of Florida law generally.
- ----------------------------------
(4) In rendering this opinion as of the date hereof, we are assuming
that the Transactions will occur as set forth in the versions of the Reviewed
Documents which have been delivered to us as of the date hereof and the facts
and circumstances known to us concerning the Transactions and the parties
thereto will be the same as of the date the Transactions occur as known by us
to exist as of the date hereof.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 8
World Omni Lease Securitization, L.P.
April 18, 1997
Page 8
In addition to generally defining the term "debt",
Florida law also uses it in several specific contexts, none of which is
inconsistent with finding that the Investor Certificates represent debt for
purposes of Florida law. For example, it is clear that the Investor
Certificates will represent debt for purposes of the Florida Statutes governing
attachment and garnishment. Similarly, it is clear that the Investor
Certificates will represent debt for purposes of the Florida Statutes governing
fraudulent conveyances.
A debt is distinguished from an advancement, in that
a debt is founded on a valuable consideration, entails the obligation of
repayment, and confers on the creditor the right to enforce it in the courts.
See 17 Fla. Jur. 2d, Decedents' Property, Section 92, citing 3 Am. Jur. 2d,
Advancements, Section 2. It is clear that the Investor Certificates will be
based upon valuable consideration, compel repayment and permit enforcement in a
Florida court.
In distinguishing a debt from a trust, it has been
held that the matter depends upon the manifested intention of the parties, and
that, if it is intended that the person receiving money shall have unrestricted
use thereof, being liable to pay a similar amount with or without interest, a
debt is created. Bankers Life & Casualty Co. v. Gaines Constr. Co., 199 So.2d
482 (Fla. 3rd DCA 1967). It is manifestly clear on the face of the Reviewed
Documents that the Transactions contemplate the creation of a debtor-creditor
relationship between the Issuer and the holders of the Investor Certificates.
In light of the foregoing, and because the Investor
Certificates will represent unconditional promises to pay sums certain plus
interest on definitely ascertainable dates, it is our opinion that the Class A
Certificates will represent debt (i.e., will be treated as indebtedness) and
the Class B Certificates should represent debt (i.e., should be treated as
indebtedness), for purposes of Florida law.
(b) Notwithstanding the opinions expressed above in this
numbered paragraph 1, in the event that the Class B Certificates are not
treated as debt for Florida tax purposes, then it is our opinion that (i) the
Trust will not be classified as an association taxable as a corporation for
Florida income tax purposes, (ii) the Trust will instead either be disregarded
as an entity or classified as a partnership between the Transferor and the
holder or holders of Class B Certificates, and (iii) if the Trust is
characterized as a partnership formed between the Transferor and the holder or
holders of the Class B Certificates, the portion of the amounts paid to each
such Class B Certificate holder corresponding to interest paid on the Class B
Certificates will be classified as a "guaranteed payment" for the use of
capital within the meaning of Code Section 707(c), and all remaining taxable
income or loss of such partnership and any separately allocated items thereof
will be allocated solely to the Transferor. As partners of a partnership,
corporate holders of Class B Certificates may be subject to Florida income tax,
currently at a 5.5% rate, on their share of all or a portion of the Trust's
taxable income to the extent that such income is apportioned to Florida under
Florida law.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 9
World Omni Lease Securitization, L.P.
April 18, 1997
Page 9
2. FLORIDA LOAN RULE
Although the matter is not free from doubt, and assuming that the
Investor Certificates are deemed to be debt pursuant to numbered paragraph 1
herein, if the matter were properly presented to a Florida court having
jurisdiction, and assuming interpretation of relevant law on a basis consistent
with existing authority, such Florida court would hold that Florida
Administrative Code Section 12C-1.011(1)(s) (the "LOAN RULE") will not be
applied so as to subject the holder of an Investor Certificate with absolutely
no other Florida contacts(5) to Florida income or franchise taxation solely as a
result of an investment in an Investor Certificate.
The Loan Rule provides that a financial organization is subject to
Florida income or franchise taxation if it earns or receives interest from
loans secured by real or tangible property located in Florida, even if it has
no other Florida contacts. Section 220.15(6), F.S., defines the term
"financial organization" to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company and investment company.
A threshold issue is the meaning of the term "loans" under the Loan
Rule. In this regard, some guidance is provided in TAA 90(M)-005 (December 12,
1990).(6) At issue there was a Massachusetts investment company, which was to
invest in a portfolio of tax-exempt municipal securities of Florida issuers,
including the State, counties, municipalities and political subdivisions,
agencies and instrumentalities of the State of Florida. It was found that,
under the scenario described, the company would not be subject to Florida
income taxation. It also was noted that, should the company obtain any loans
secured by real or tangible property located in Florida, it would become
subject to Florida income tax.
The class of securities described in the TAA includes some which might
be secured by real or tangible property located in Florida, such as industrial
development bonds. Thus, the TAA suggests a distinction between bonds or other
debt securities, particularly those which are publicly offered, which might not
be subject to the Loan Rule, and loans arising out of more traditional
commercial settings, which might be subject to the Loan Rule.
- ----------------------------------
(5) Other Florida contacts, which might require a different opinion
than the one given herein, might include the purchase of any other asset backed
security from a Florida issuer, or the making of any secured loan in Florida,
or other minimal contacts, such as sending into Florida any employee, agent or
contractor, or having any affiliate in Florida. No opinion is given herein as
to such circumstances.
(6) A Technical Assistance Advisement or TAA is a particular response
by the Florida Department of Revenue to an inquiry made by a particular
taxpayer, and generally may not be relied upon by any other taxpayer. However,
the reasoning of a particular TAA may be instructive.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 10
World Omni Lease Securitization, L.P.
April 18, 1997
Page 10
Such a distinction was further suggested by TAA 93(M)-003 (April 2,
1993). At issue there was a Massachusetts Business Trust, which included a
fund invested in tax-exempt municipal securities of Florida issuers. The TAA
noted that the Fund would become subject to Florida income taxation if the Fund
held loans secured by mortgages, deeds of trust, or other liens upon real or
tangible personal property located in Florida. However, the TAA then noted
that: "Investment in Florida Bonds, including general obligation bonds ('GOs'),
revenue bonds ('RBs'), and industrial revenue bonds ('IRBs') will not in itself
subject the Fund to Florida income tax. While these bonds may be secured, the
investment in these publicly traded bonds is to be distinguished from a private
loan secured by a mortgage, deed of trust, or other lien upon real or tangible
personal property located within Florida."
A similar distinction, one between bonds and notes, has been made
under Rev. Rul. 79-251. 1979-2 Cum. Bull. 271. The Ruling considered a
taxpayer, which purchased mortgage-backed, pass-through trust certificates, and
would have been subject to tax if it were deemed to be receiving interest from
mortgage notes. However, the Ruling determined that, in part because the
certificates were freely transferrable, the certificates were bonds rather than
notes, and the taxpayer was not subject to federal income tax, because it was
receiving interest on a bond rather than interest on the underlying mortgage
notes.(7)
A similar distinction has been made under the federal and Florida
securities laws. Although the applicable statutes treat notes as securities,
applicable case law has created a distinction between securities and certain
notes arising in traditional commercial settings. See Reves v. Ernst & Young,
110 S.Ct. 945 (1990); Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930 at
939 (CA2 1984); Hunssinger v. Rockford Business Credits, Inc., 745 F.2d 484,
488 (CA7 1984); Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d
1126, 1137 (CA2 1976); Juanita McClure v. First National Bank of Lubbock,
Texas, 497 F.2d 490, 492-494 (1974); and State v. Fried, 357 So.2d 211 (1978).
In our opinion the Investor Certificates would be treated as securities rather
than mere notes under the federal and Florida securities laws.
Although the TAA and the Loan Rule might be interpreted differently,
the most rational and compelling interpretation is that which differentiates
between bonds or other debt securities, particularly those which are publicly
offered, which might not be subject to
- ----------------------------------
(7) Also of note is the fact that the Ruling dealt with a pass-through,
"grantor" trust. Although each beneficiary of a grantor trust generally is
"treated as the owner" of a portion of the trust, the Ruling did not extend the
legal "fiction" so as to treat the taxpayer as the owner of and the recipient
of interest on any of the underlying mortgages (the trust assets). Similarly,
although the Securitization Trust generally is being disregarded and treated as
a mere security device, it might not have to be entirely disregarded, and the
Certificate Holders might not have to be treated as secured by tangible
property. Rather, they might be treated as secured by intangible property,
that is, by a pledge of the beneficial interest owned by the Securitization
Trust. See 1959 Op. Atty. Gen. 059-229 (Nov. 16, 1959). The Loan Rule does
not apply to loans secured by intangible property.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 11
World Omni Lease Securitization, L.P.
April 18, 1997
Page 11
the Loan Rule, and loans arising in more traditional commercial settings, which
might be subject to the Loan Rule. Moreover, such a distinction might provide
a basis for preserving the Loan Rule from invalidation on constitutional
grounds.
The Loan Rule is subject to constitutional attack both under the Due
Process Clause of the Fourteenth Amendment to the U.S. Constitution and under
the Commerce Clause (Article I, sec. 8, cl. 3 of the U.S. Constitution). Both
the Due Process and the Commerce Clauses require that there be some connection
or "nexus" between a state and a person sought to be taxed by the state, and
both of those nexus requirements were recently reviewed by the U.S. Supreme
Court in Quill Corporation v. North Dakota, 112 S.Ct. 1904 (1992).
The nexus requirement under the Due Process Clause is the more easily
met of the two nexus requirements. Generally, it will be met if a person
purposefully directs its activities towards the residents of a state, so as to
establish some definite link or minimum connection with the state, such that
the person has fair warning that it may be subject to the jurisdiction of the
state and such that requiring the person to defend a suit in the state would be
reasonable and would not offend traditional notions of fair play and
substantial justice. See Quill, at pages 1909 through 1911, and the cases
therein cited.
It seems questionable to suggest that a single purchase of a single
security in a nationally marketed public offering (or in a private offering
derivative to such nationally distributed public offering) constitutes
purposeful direction of one's activities toward Florida residents, or otherwise
establishes a definite link or minimal connection with the State of Florida, so
as to give one fair warning and cause it to be reasonable and inoffensive to
require one to defend a suit in the State of Florida.
While the Due Process Clause focuses on concerns over fundamental
fairness, the Commerce Clause is concerned with the effects of state regulation
on the national economy. Accordingly, the nexus requirement under the Commerce
Clause is different from and more stringent than the nexus requirement under
the Due Process Clause. Under the Commerce Clause, there must, among other
things, be a "substantial nexus" between the person and the state and a tax
must be "fairly related" to services provided by the state. See Quill, at
pages 1911 et seq., and the cases there cited, including Complete Auto Transit,
Inc. v. Brady, 430 U.S. 274 (1977).
At issue in Quill was a North Dakota law which on its face imposed a
use tax collection duty on every vendor who advertised in North Dakota three
times in a single year. The Supreme Court stated that the North Dakota law
illustrated well how a state tax might unduly burden interstate commerce. See
Quill, at footnote 6, and accompanying test.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 12
World Omni Lease Securitization, L.P.
April 18, 1997
Page 12
The Loan Rule is subject to the same objections as the North Dakota
law found to be unconstitutional in Quill. The Supreme Court found it
unreasonably burdensome that the North Dakota law required only three contacts
per year. On its face, the Loan Rule requires only one contact with Florida at
any time. The Supreme Court found it unreasonably burdensome that the North
Dakota law might subject a person to similar laws in multiple jurisdictions,
thus leading to a plethora of filing requirements. The same is true of the
Loan Rule. Moreover, it is also true that the Loan Rule presents the very real
possibility of a person being subjected to multiple taxation. In addition,
without diminishing the significance of the interests which the Supreme Court
protected in Quill, we note that the free flow of credit and free access to
sources of credit are of particular and vital importance to interstate commerce
and the national economy. The Loan Rule might strangle that flow by making it
more difficult, more expensive or, in some cases, perhaps even impossible to
access national or regional credit markets through public offerings of
securities.(8)
The dubious constitutional status of the Loan Rule is exacerbated by
its uncertain scope and its uncertain statutory underpinning.(9) For example,
although it may be argued that the concept of "doing business" in Florida, for
purposes of the Florida income and franchise tax, need not be entirely the same
as the concept of "transacting business" in Florida, for purposes of the
Florida intangible tax, it is nevertheless of note that Section 199.175(b)3,
F.S., an intangible tax statute, provides that the "ownership of any interest
in a participation or syndication loan or pool of loans, notes, or receivables
shall not be sufficient to support a finding that the owner of such interest is
transacting business" in Florida.
Under the circumstances, a Florida court should determine that it is
entitled to the benefit of a clear and reasonable statute, rather than a vague
and questionable administrative pronouncement, and should refuse to enforce the
Loan Rule pending some specific action on the part of the Florida legislature.
Further, even if the Investor Certificates were deemed to be loans for
purposes of the Loan Rule, and even if the Loan Rule were upheld on
constitutional grounds, the Investor Certificates should not be taxable under
the Loan Rule since they are not secured directly by real or tangible personal
property located in Florida. The holders of the Investor
- ----------------------------------
(8)The Loan Rule also might fail under the Commerce Clause by causing
the tax to be "discriminatory" against interstate commerce because it is not
"fairly apportioned." For example, on its face, the Loan Rule might cause all
of the income from a loan to be apportioned to Florida, even if only a very
small part of the security for the loan consists of Florida real or tangible
property.
(9)It is true that Section 220.15, F.S., includes somewhat similar
provisions relating to financial organizations. However, it is an
apportionment statute, which presupposes that the financial organizations are
subject to tax. It does not address the nexus issue. It is interesting to
note, however, that its provisions include some which are at least partially
consistent with those of the intangible tax statute discussed in the text
following this footnote.
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 13
World Omni Lease Securitization, L.P.
April 18, 1997
Page 13
Certificates merely have a beneficial interest in the assets of the
Securitization Trust which in turn has a beneficial interest in the assets of
the Origination Trust. Although the corpus of the Origination Trust does
contain vehicles, some of which are located in Florida, the Investor
Certificates are not directly secured by those vehicles.
Our opinions in this numbered paragraph 2 are limited to the possible
subjugation of holders of Investor Certificates, which holders are financial
organizations with no other Florida contacts, to Florida income or franchise
taxation solely as a result of their investment in an Investor Certificate.
The opinions in this numbered paragraph 2 do not purport to deal with any other
aspect of the Florida tax laws, do not address the tax consequences that would
arise if the Class B Certificates were deemed not to be debt and the Trust were
characterized as a Partnership formed between the Transferor and the holder or
holders of the Class B Certificates as is further described in numbered
paragraph 1, do not address any tax consequences to any other natural or other
person or persons, and do not address any federal tax consequences, any other
state tax consequences or any local tax consequences.
The opinions expressed herein are limited to the matters expressly set
forth herein, and no opinion is to be inferred or implied beyond the matters so
stated. Captions used in this Opinion are for convenience only, and should not
be regarded as having any independent meaning. The foregoing Opinion is
expressly subject to there being no material change in the law after the date
hereof.
We hereby consent to the filing of this Opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under the
headings "Legal Matters" and "Certain Income Tax Considerations - Florida
Income Taxation" in the Prospectus constituting part of the Registration
Statement.
Very truly yours,
ENGLISH, McCAUGHAN & O'BRYAN, P.A.
By: /s/ Lee W. Harvath
------------------------------
Lee W. Harvath, Jr., President
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 14
ANNEX A
LIST OF LENDERS
RECEIVABLES CAPITAL CORPORATION, a Delaware corporation ("RCC");
CORPORATE ASSET FUNDING COMPANY, INC., a Delaware corporation ("CAFCO");
CIESCO L.P., a Delaware limited partnership ("CIESCO");
CITIBANK, N.A. ("CITIBANK");
CORPORATE RECEIVABLES CORP., a California corporation ("CRC")
DRESDNER BANK AG, NEW YORK BRANCH;
ENTERPRISE FUNDING CORPORATION, a Delaware corporation ("EFC");
CREDIT SUISSE NEW YORK BRANCH, a branch of Credit Suisse, a Swiss banking
corporation duly licensed under the laws of the State of New York, individually
("CREDIT SUISSE");
ALPINE SECURITIZATION CORP., a Delaware corporation ("ALPINE");
CREDIT SUISSE, as agent for Credit Suisse and Alpine;
BANK OF AMERICA ILLINOIS (f/k/a Continental Bank and Continental Bank N.A.)
("BANK OF AMERICA ILLINOIS"), as agent and administrative agent for RCC;
CITICORP NORTH AMERICA, INC., a Delaware corporation, as agent for CAFCO,
CIESCO, Citibank and CRC;
NATIONSBANK N.A., a national banking association, as agent for EFC;
BANK OF AMERICA ILLINOIS, as Collateral Agent;
MARKET STREET FUNDING CORPORATION;
PNC BANK, NATIONAL ASSOCIATION;
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION;
WCP FUNDING, INC., a Delaware corporation;
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH; and
BAYERISCHE VEREINSBANK AG
ENGLISH, MCCAUGHAN & O'BRYAN, P.A.
<PAGE> 1
EXHIBIT 10.2
This instrument prepared by:
Charles A. Sweet
Williams & Connolly
725 Twelfth St., N.W.
Washington, DC 20005
- --------------------------------------------------------------------------------
AUTO LEASE FINANCE L.P.,
VT INC.,
AS TRUSTEE OF WORLD OMNI LT,
AND
FOR CERTAIN LIMITED PURPOSES ONLY
FIRST BANK NATIONAL ASSOCIATION
(SUCCESSOR TRUSTEE TO BANK OF AMERICA ILLINOIS)
SUPPLEMENT 1997-A TO
TRUST AGREEMENT
DATED AS OF APRIL 1, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 10.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Loss Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Administrative Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ALFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ALFI LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Amortization Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Backup Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankrupt Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capped Contingent and Excess Liability Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capped Origination Trust Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Charged-off Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contingent and Excess Liability Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Contract Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Credit and Collection Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defaulted Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Delinquent Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Discounted Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Discounted Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Early Termination Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Extension Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
First Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Initial Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Insurance Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Interest Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lease Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Liquidation Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Matured Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Matured Leased Vehicle Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Matured Leased Vehicle Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Matured Leased Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Matured Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Monthly Lease Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Matured Leased Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Repossessed Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A Leased Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A SUBI Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A SUBI Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A SUBI Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1997-A SUBI Lease Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1997-A SUBI Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
99.8% 1997-A SUBI Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
0.2% 1997-A SUBI Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Obligee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Outstanding Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Payment Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Repossessed Vehicle Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Repossessed Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Residual Value Surplus Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Revolving Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securitization Trust Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securitization Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Servicer Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Servicing Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SUBI Certificate Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Subsequent Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Unallocated Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Undistributed Transferor Excess Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
WOFCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.02. Rights in Respect of 1997-A SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CREATION OF 1997-A SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.01. Initial Creation of 1997-A SUBI
Portfolio and 1997-A SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.02. Subsequent Additions to 1997-A SUBI Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11.03. Issuance and Form of 1997-A SUBI Certificates . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 11.04. Actions and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.05. Termination of 1997-A SUBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.06. Merger or Consolidation of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.07. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.08. Other SUBIs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 11.09. Retained SUBI Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11.10. Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PART XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SUBI ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 12.01. 1997-A SUBI Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 12.02. SUBI Lease Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.03. Residual Value Surplus Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 12.04. Servicer Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
PART XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 13.01. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 13.02. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13.04. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13.05. Effect of Supplement on Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBITS:
EXHIBIT A - Schedule of 1997-A Leases and 1997-A Leased
Vehicles as of the Initial Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Form of 1997-A SUBI Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - Forms of 1997-A Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D - Current Credit and Collection Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
iii
<PAGE> 5
SUPPLEMENT 1997-A TO
TRUST AGREEMENT
SUPPLEMENT 1997-A TO TRUST AGREEMENT (the "Supplement"), dated and
effective as of April 1, 1997, among AUTO LEASE FINANCE L.P., a Delaware
limited partnership ("ALFI LP" or, in its capacity as grantor, the "Grantor"
and in its capacity as beneficiary, the "Beneficiary"), VT INC., an Alabama
corporation, as trustee (in such capacity, together with any successor or
permitted assign, the "Trustee"), and for certain limited purposes only, FIRST
BANK NATIONAL ASSOCIATION, a national banking association (successor trustee to
Bank of America Illinois, an Illinois banking corporation) (together with any
successor, "First Bank").
RECITALS
A. The Grantor, the Trustee and First Bank have entered
into that certain Second Amended and Restated Trust Agreement dated as of July
1, 1994 (amending and restating that certain original Trust Agreement among
Auto Lease Finance, Inc., a Delaware corporation ("ALFI" or, in its capacity as
initial grantor, the "Initial Grantor"), the Trustee and First Bank dated as of
November 1, 1993, and that certain Amended and Restated Trust Agreement dated
as of June 1, 1994 among the Initial Grantor, the Grantor, the Trustee and
First Bank), as amended by that certain Amendment No. 1 to Second Amended and
Restated Trust Agreement dated as of November 1, 1994 among the same parties
(as so amended and restated, and as it may be further amended, supplemented or
modified, the "Trust Agreement"), pursuant to which the Initial Grantor and the
Trustee formed World Omni LT, an Alabama trust (the "Trust"), for the purpose
of taking assignments and conveyances of, holding in trust and dealing in,
various Trust Assets (as defined in the Trust Agreement) in accordance with the
Trust Agreement. The Initial Grantor and World Omni Financial Corp. ("WOFCO"),
the sole parent of ALFI, have entered into that certain Limited Partnership
Agreement dated as of June 1, 1994, as amended and restated by that certain
Amended and Restated Limited Partnership Agreement dated as of July 1, 1994,
pursuant to which the Grantor was created and ALFI contributed to the Grantor
all of its right, title and interest in and to the Trust both as Initial
Grantor and as the Initial Beneficiary thereof.
B. The Trustee, on behalf of the Trust, and WOFCO (in
its capacity as servicer, the "Servicer") also have entered into that certain
Second Amended and Restated Servicing Agreement dated as of July 1, 1994 (the
"Servicing Agreement"), amending and restating that certain original Servicing
Agreement dated as of November 1, 1993, and that certain Amended and Restated
Servicing Agreement dated as of June 1, 1994, which provides,
<PAGE> 6
among other things, for the servicing of the Trust Assets by the Servicer.
C. The Trust Agreement contemplates that, from time to
time the Trustee, on behalf of the Trust and at the direction of the
Beneficiary, will identify and allocate on the Trust's books and records
certain Trust Assets within a separate SUBI Portfolio (as defined in the Trust
Agreement) and create and issue to the Beneficiary a separate special unit of
beneficial interest in the Trust or "SUBI" (as defined in the Trust Agreement),
whose beneficiaries generally will be entitled to the net cash flow arising
from, but only from, the related SUBI Portfolio (as defined in the Trust
Agreement), all as set forth in the Trust Agreement.
D. The parties hereto desire to supplement the terms of
the Trust Agreement to cause the Trustee to identify and allocate such a SUBI
Portfolio (the "1997-A SUBI Portfolio") and to create and issue to the
Beneficiary two (2) SUBI Certificates (as defined in the Trust Agreement) (such
SUBI Certificates, together with any replacements thereof, the "1997-A SUBI
Certificates") that, collectively, evidence the entire beneficial interest in
the related SUBI (the "1997-A SUBI"), and to set forth the terms and conditions
thereof.
E. Concurrently herewith, the Beneficiary and World Omni
Lease Securitization L.P. (the "Transferor") are entering into that certain
SUBI Certificate Purchase and Sale Agreement dated as of April 1, 1997 (the
"SUBI Certificate Agreement"), pursuant to which the Beneficiary will sell to
the Transferor, without recourse, all of the Beneficiary's right, title and
interest in and to the 1997-A SUBI and the 1997-A SUBI Certificates, all moneys
due thereon and paid thereon or in respect thereof and the right to realize on
any property that may be deemed to secure the 1997-A SUBI, and all proceeds
thereof, all in consideration of the cash payment to the Beneficiary of an
amount equal to the Aggregate Net Investment Value (as defined in the
Securitization Trust Agreement, as defined below) of the 1997-A SUBI Portfolio
as of the Initial Cutoff Date (as defined below).
F. Also concurrently herewith, and as contemplated by
the Servicing Agreement and the Trust Agreement, the Transferor and First Bank,
as trustee (the "Securitization Trustee"), are entering into that certain
Securitization Trust Agreement dated as of April 1, 1997 (the "Securitization
Trust Agreement"), pursuant to which a SUBI Certificate (as defined in the
Trust Agreement) representing a 99.8% beneficial interest in the 1997-A SUBI
(the "99.8% 1997-A SUBI Certificate") will be transferred to the Securitization
Trustee, in that capacity, in connection with a Securitized Financing (as
defined in the
2
<PAGE> 7
Trust Agreement) by the Transferor, but the SUBI Certificate representing a
0.2% beneficial interest in the 1997-A SUBI (the "0.2% 1997-A SUBI
Certificate") will be retained by the Transferor and not used in connection
with a Securitized Financing.
G. Also concurrently herewith, the Trustee, on behalf of
the Trust, and the Servicer also are entering into that certain Supplement
1997-A to Servicing Agreement dated as of April 1, 1997 (the "Servicing
Supplement") pursuant to which, among other things, the terms of the Servicing
Agreement will be supplemented insofar as they apply to the 1997-A SUBI
Portfolio, providing for further specific servicing obligations that will
benefit the holders of the 1997-A SUBI Certificates and the parties to the
Securitized Financing (as defined in the Trust Agreement) contemplated by the
Securitization Trust Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and in the Trust Agreement, the parties hereto agree
to the following supplemental obligations and provisions with regard to the
1997-A SUBI Portfolio:
PART X
DEFINITIONS
SECTION 10.01. DEFINITIONS.
For all purposes of this Supplement, except as otherwise
expressly provided or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Trust Agreement, (b) the capitalized terms
expressly defined in this Supplement have the meanings assigned to them in this
Supplement and include (i) all genders and (ii) the plural as well as the
singular, (c) all references to words such as "herein", "hereof" and the like
shall refer to this Supplement as a whole and not to any particular article or
section within this Supplement, (d) the term "include" and all variations
thereon shall mean "include without limitation", and (e) the term "or" shall
include "and/or".
"Accountant" means a Person qualified to pass upon accounting
questions, whether or not (unless herein required to be Independent) such
person shall be an officer or employee of the Grantor, the Trust or the
Transferor or of an Affiliate thereof.
"Additional Loss Amount" means, with respect to any Collection
Period, all payments (including any indemnification or reimbursement of the
Trustee or any Trust Agent) with respect
3
<PAGE> 8
to Claims by Persons other than the Trustee, the Trust Agent, the Servicer, the
Securitization Trustee, the Certificateholders, and any other beneficiary of
the Trust against or with respect to the 1997-A SUBI Assets paid during that
Collection Period, including reasonable fees and expenses of attorneys incurred
in defending or settling such Claims, all as allocated by the Trustee pursuant
to Section 7.01(c) of the Trust Agreement, and the amount of reserves for
future possible such payments that the Servicer, on behalf of the Trustee,
deems advisable (after consultation with Independent Accountants) to retain in
the 1997-A SUBI Collection Account out of moneys that otherwise would
constitute Collections for that Collection Period.
"Administrative Expense" means any reasonable administrative
cost or expense associated with the Trust, including reasonable fees and
expenses of attorneys and accountants (other than such fees and expenses as
constitute an Additional Loss Amount).
"Advance" means those advances required or permitted to be
made by the Servicer pursuant to Section 9.04 of the Servicing Supplement.
"ALFI" has the meaning set forth in Recital A.
"ALFI LP" has the meaning set forth in the Preamble.
"Amortization Period" has the meaning set forth in the
Securitization Trust Agreement.
"Backup Security Agreement" means that certain Backup Security
Agreement dated as of April 1, 1997, among WOFCO, the Grantor, the Trustee on
behalf of the Trust, the Transferor, and the Securitization Trustee on behalf
of the Securitization Trust.
"Bankrupt Lease" means a Lease as to which a voluntary or
involuntary case has commenced against the related Obligor under the federal
bankruptcy laws, as now or hereafter in effect, or under another present or
future federal or State bankruptcy, insolvency or similar laws, after the date
of origination of the related Lease.
"Beneficiary" has the meaning set forth in the Preamble.
"Capped Contingent and Excess Liability Premiums" means, as of
any Deposit Date, an amount sufficient to pay the premiums then due on the
portion of any Contingent and Excess Liability Insurance Policies allocable to
the 1997-A SUBI Portfolio, provided, however, that to the extent that the
portion of such amount allocable to the 99.8% 1997-A SUBI Certificate,
4
<PAGE> 9
together with all such portions since the beginning of the calendar year,
exceeds $__________, such portion shall not constitute a Capped Contingent and
Excess Liability Premium but instead shall constitute an "Uncapped
Administrative Expense" (as defined in the Securitization Trust Agreement).
"Capped Origination Trust Administrative Expenses" means, as
of any Deposit Date, Administrative Expenses with respect to the Trust due on
or before such Deposit Date as are allocable to the 1997-A SUBI Portfolio, but
specifically not including any premiums on any portion of the Contingent and
Excess Liability Insurance Policies allocable to the 1997-A SUBI Portfolio;
provided, however, that to the extent the portion of such Administrative
Expenses allocable to the 99.8% 1997-A SUBI Certificate, together with all such
portions since the beginning of the calendar year, exceeds $__________, such
portion shall not constitute a Capped Origination Trust Administrative Expense
but instead shall constitute an "Uncapped Administrative Expense" (as defined
in the Securitization Trust Agreement).
"Charged-off Lease" means a Lease (a) with respect to which
the related Leased Vehicle has been repossessed and sold or otherwise disposed
of, or (b) the Lease has been written off by the Servicer in accordance with
its normal policies for writing off lease contracts other than with respect to
repossessions and Early Termination Leases.
"Collection Period" means, with respect to any Distribution
Date, the period from and including the first day of the calendar month
immediately preceding the calendar month in which such Distribution Date occurs
(or, with respect to the first Distribution Date, from and including the
Initial Cutoff Date) to and including the last day of the calendar month
immediately preceding the calendar month in which the Distribution Date occurs.
"Collections" means, with respect to any Collection Period,
all collections received on or in respect of the 1997-A Leases and 1997-A
Leased Vehicles in respect of that Collection Period, including the following,
but subject to any limitations set forth therein: (i) Monthly Lease Payments
(including amounts that previously were Payments Ahead but which became due
during that Collection Period, Prepayments, Extension Fees, and any other
payment by an Obligor under a 1997-A Lease); (ii) Net Matured Leased Vehicle
Proceeds, Net Repossessed Vehicle Proceeds, and all other Net Liquidation
Proceeds; (iii) any Net Insurance Proceeds not included in Net Liquidation
Proceeds; (iv) Advances; and (v) any Undistributed Transferor Excess
Collections with respect to the Distribution Date occurring during that
Collection Period; provided, however, that Collections (A) shall in no event
include proceeds of claims made under the Residual
5
<PAGE> 10
Value Insurance Policy, and (B) shall in no event include, and shall be net of,
the following, which shall be retained in the 1997-A SUBI Collection Account or
paid to the appropriate party: (1) any portion of any of the foregoing that
represents late payment charges, or collections allocable to payments to be
made by Obligors for payment of insurance premiums, excise taxes or similar
items; (2) Payments Ahead; (3) the amount of all Advances, Matured Leased
Vehicle Expenses, Repossessed Vehicle Expenses and other Liquidation Expenses,
and Insurance Expenses reimbursed pursuant to Section 9.02(g) of the Servicing
Supplement; (4) Additional Loss Amounts; and (5) any amounts required to be
retained in the 1997-A SUBI Collection Account in order to maintain that
account in good standing.
"Contingent and Excess Liability Insurance Policy" means that
certain policy numbered 5539875 issued to the Servicer and the Trustee, on
behalf of the Trust, by Lexington Insurance Company and that certain policy
numbered BE 9324116 issued to the Servicer and the Trustee on behalf of the
Trust by National Union Fire Insurance Company of Pittsburgh, Pennsylvania and
that certain policy numbered XLUMB-00260 issued to J.M. Family Enterprises,
Inc. by X.L. Insurance Company, Ltd. with the Origination Trustee named as an
additional insured or loss payee, plus all excess or umbrella policies from
time to time issued with the Origination Trustee named as an additional insured
or loss payee, in each case to the extent applicable to any 1997-A Lease or
1997-A Leased Vehicle.
"Contract Rights" means all of the Trustee's right, title, and
interest in, to, and under any 1997-A Leases and the proceeds therefrom, which
right, title, and interest include without limitation: the Lease Documents;
all Monthly Lease Payments received on or due on or after the related Cutoff
Date; Security Deposits paid by any Obligor to secure the obligations of such
Obligor to the Obligee in the amount and to the extent provided in the related
1997-A Lease; partial prepayments and Prepayments (regardless of whether made
by the related Obligor or by any other Person) received on or after the related
Cutoff Date and Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds
and other Liquidation Proceeds and Insurance Proceeds received on or after the
related Cutoff Date; subject, however, to the limitations set forth in Section
11.01(a).
"Credit and Collection Policy" means those lease origination
and credit and collection policies and practices of the Servicer as applied by
the Servicer with respect to Leases and Leased Vehicles, a summary of the
current form of which is attached as Exhibit D.
"Cutoff Date" means the Initial Cutoff Date or a Subsequent
Cutoff Date, as the context may require.
6
<PAGE> 11
"Defaulted Lease" means a Lease (a) as to which any Monthly
Lease Payment or part thereof in excess of $40.00, remains unpaid for more than
90 days from the original due date for such payment, or (b) that is a
Charged-off Lease.
"Delinquent Lease" means, with respect to any Lease as of any
Due Date, a Lease as to which all or any part of a Monthly Lease Payment in
excess of $40 is unpaid (including without limitation because of a check being
returned for insufficient funds) 61 days or more after its Due Date (other than
a Defaulted Lease or a Lease as to which an extension has been granted with
respect to such Due Date by the Servicer pursuant to clause (ii) of Section
2.02(b) of the Servicing Agreement) (and, if applicable, Section 9.02(a) of the
Servicing Supplement).
"Deposit Date" means, with respect to a Collection Period, the
Business Day preceding the related Distribution Date.
"Discount Rate" means 9.25% per annum.
"Discounted Lease" means a 1997-A Lease with a Lease Rate of
less than 9.25%.
"Discounted Principal Balance" means (i) with respect to any
1997-A Lease that is a Discounted Lease, an amount equal to the present value
of the sum of all remaining Monthly Lease Payments on such Lease paid on a
timely basis, plus the Booked Residual Value of the related 1997-A Leased
Vehicle, calculated by discounting such Monthly Lease Payments and Booked
Residual Value by the Discount Rate, and (ii) with respect to any other 1997-A
Lease, its Outstanding Principal Balance at such time.
"Distribution Date" has the meaning set forth in the
Securitization Trust Agreement.
"Due Date" means, as to any Monthly Lease Payment, the date
during each month upon which such payment is due, which date is specified in
the related 1997-A Lease.
"Early Termination Lease" means a 1997-A Lease which is
terminated prior to its scheduled Maturity Date by agreement between the
Servicer and the Obligor other than in connection with the payment (excluding
payments in the form of non-cash items) of less than 100% of the Outstanding
principal Balance of a 1997-A Lease; provided, however, that such a 1997-A
Lease will not constitute an Early Termination Lease if such deficit is less
than $200.00.
"Eligible Account" means either (a) an account that is
maintained with a depository institution or trust company
7
<PAGE> 12
organized under the laws of the United States or of any State, the commercial
paper or other short-term unsecured debt obligations of which have credit
ratings from Moody's at least equal to "P-1" (so long as Moody's is a Rating
Agency) and from Standard & Poor's at least equal to "A-1+" (so long as
Standard & Poor's is a Rating Agency); or (b) a segregated trust account
bearing a designation clearly indicating that funds deposited therein are held
in trust for the benefit of the holders of the 1997-A SUBI Certificates or the
Certificateholders, as the case may be, maintained in the corporate trust
department of a depositary institution or trust company organized under the
laws of the United States or of any State and having corporate trust powers,
which institution or trust company has a rating from Moody's for its long term
deposits of at least Baa3 (so long as Moody's is a Rating Agency).
"Eligible Lease" means a Lease as to which the following are
true as of the Closing Date or Transfer Date, as applicable (unless otherwise
specified below):
(a) that was originated by a Dealer (i) in the ordinary
course of its business, (ii) on the form of Lease attached as Exhibit
C, (iii) pursuant to a form of Dealer Agreement which provides for
recourse to the Dealer in the event of certain defects in the Lease
but not for default by the Obligor, and (iv) in compliance with the
Credit and Collection Policy;
(b) which Lease and the related Leased Vehicle are owned
by the Trustee, on behalf of the Trust, free of all Liens (including
tax liens, mechanics' liens and liens that arise by operation of law,
but other than any lien on the title of such Vehicle noted solely to
provide for delivery of title documentation to the Trustee or its
designee);
(c) that was originated in compliance with, and complies
with, all material applicable legal requirements, including, to the
extent applicable, the Federal Consumer Credit Protection Act, as
amended, Regulations M and Z of the Board of Governors of the Federal
Reserve System, as amended, all state leasing and consumer protection
laws and all state and federal usury laws;
(d) as to which all material consents, licenses,
approvals or authorizations of, or registrations or declarations with,
any governmental authority required to be obtained, effected or given
by the originator of such Lease in connection with (i) the origination
of such Lease, (ii) the execution, delivery and performance by such
originator of such Lease, and (iii) the acquisition
8
<PAGE> 13
by the Trustee, on behalf of the Trust, of such Lease and the related
Leased Vehicle, have been duly obtained, effected or given and are in
full force and effect as of such date of creation or acquisition;
(e) that is the legal, valid and binding full-recourse
payment obligation of the Obligor thereunder, enforceable against such
Obligor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights in general and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(f) that, to the knowledge of the Servicer, is not
subject to any right of rescission, setoff, counterclaim or any other
defense (including defenses arising out of violations of usury laws)
of the Obligor thereof to payment of the amounts due thereunder, and
no such right of rescission, setoff, counterclaim or other defense has
been asserted or threatened;
(g) as to which each of the originator of such Lease, the
Servicer and the Trustee, on behalf of the Trust, have each satisfied
all obligations required to be fulfilled on its part with respect to
such Lease and the related Leased Vehicle;
(h) that is payable solely in United States dollars in
the United States;
(i) the Obligor of which is a Person located in one or
more of the 50 states of the United States, the District of Columbia
or a territory of the United States and is not (i) the Initial
Grantor, the Grantor, World Omni Lease Securitization, Inc. or the
Transferor, or an Affiliate thereof or (ii) the United States of
America or any state or local government or any agency or political
subdivision thereof;
(j) that requires the Obligor thereunder to maintain
insurance against loss or damage to the related Leased Vehicle under
an insurance policy that names the Trustee, on behalf of the Trust, as
loss payee, and the related Leased Vehicle is covered by the Residual
Value Insurance Policy;
(k) the related Leased Vehicle of which is titled in the
name of the Trustee on behalf of the Trust (or properly completed
applications for such title have been submitted to
9
<PAGE> 14
the appropriate titling authority) and all transfer and similar taxes
imposed in connection therewith have been paid;
(l) that arises under a closed-end Lease that (i)
requires equal monthly payments to be made within 60 months of the
date of origination of such Lease, and (ii) requires such payments to
be made by the Obligor thereof within 30 days after the billing date
for such payment;
(m) that is fully assignable and that does not require
the consent of the Obligor thereunder as a condition to any transfer,
sale or assignment of the rights of the originator under such Lease;
(n) as to which the Booked Residual Value of the related
Vehicle does not exceed the lesser of (i) $60,000, and (ii) the amount
reasonably established by the Servicer consistent with its policies
and practices regarding the setting of residual values as applied with
respect to closed-end retail automobile and light duty truck leases;
(o) that, as of the related Cutoff Date, has not been
extended by more than five months in the aggregate or been otherwise
compromised, adjusted or modified except in accordance with the Credit
and Collection Policy;
(p) as to which the Obligor thereof has not made a claim
under the Soldiers' and Sailors' Relief Act of 1940;
(q) that satisfies all applicable requirements of the
Credit and Collection Policy;
(r) that is not allocated to any other SUBI Portfolio
other than the 1997-A SUBI Portfolio;
(s) that, as of the related Cutoff Date, is not a
Delinquent Lease, a Defaulted Lease or a Bankrupt Lease;
(t) that is a finance lease for purposes of generally
accepted accounting principles, consistently applied;
(u) that is a "true lease", as opposed to a lease
intended as security, under the laws of the State in which it was
originated;
(v) as to which the Servicer has not exercised any right
of set off against the originating Dealer as contemplated by Section
2.01(b)(ii)(A) of the Servicing Agreement;
10
<PAGE> 15
(w) the related Leased Vehicle of which was produced by
the original manufacturer to U.S. specifications and standards, as
evidenced by the vehicle identification number which is within the
approved series for the make and model at the time of origination of
the Lease; and
(x) which Lease, as of the related Cutoff Date, (i) is
written with respect to a Leased Vehicle that was, at the time of
origination of the Lease, a new vehicle, a dealer demonstrator vehicle
driven fewer than 6,000 miles, or a manufacturer's program vehicle;
(ii) was originated in the United States after November 1, 1993 (in
the case of Leases allocated to the 1997-A SUBI Portfolio as of the
Initial Cutoff Date) or on or before April 30, 1998 (in the case of
Leased Vehicles allocated to the 1997-A SUBI Portfolio as of a
Subsequent Cutoff Date); (iii) has a Maturity Date on or after
February 5, 1999 and no later than February 24, 2002 (in the case of
Leases allocated to the 1997-A SUBI Portfolio as of the Initial Cutoff
Date) or no later than March 31, 2003 (in the case of Leases allocated
to the 1997-A SUBI Portfolio as of a Subsequent Cutoff Date); and (iv)
fully amortizes to an amount equal to the Booked Residual Value of the
related Leased Vehicle based on a fixed Lease Rate calculated on a
constant yield basis and provides for level payments over its term
(except for payment of such Booked Residual Value).
"Extension Fee" means, with respect to any 1997-A Lease that
has had its Maturity Date extended pursuant to the Servicing Agreement and the
Servicing Supplement, any payment required to be made with respect to such
1997-A Lease by the Obligor in exchange for the extension.
"First Bank" has the meaning set forth in the Preamble.
"Grantor" has the meaning set forth in the Preamble.
"Independent" means, when used with respect to any specified
Person, such a Person who (a) is in fact independent of the Grantor, the
Trustee, the Transferor and any of their respective Affiliates; (b) does not
have any direct financial interest or any material indirect financial interest
in the Grantor, the Trust, the Transferor or any of their respective
Affiliates; and (c) is not connected with the Grantor, the Trust, the
Transferor or any of their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions. "Independent" when used with respect to any Accountant means such
an Accountant, who may also be the Accountant who audits the books of the
Grantor, the Trust, the Transferor or any of their respective Affiliates, who
is Independent with respect to the
11
<PAGE> 16
Grantor, the Trustee, the Transferor, and their respective Affiliates as
contemplated by Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants. Whenever it is herein provided that
any Independent Person's opinion or certificate shall be furnished to the
Trustee, such Person shall be acceptable to the Trustee if such opinion or
certificate shall state that the signer has read this direction and that the
signer is independent within the meaning thereof.
"Initial Beneficiary" and "Initial Grantor" shall have the
meanings set forth in the Preamble.
"Initial Cutoff Date" means March 1, 1997.
"Insurance Expenses" means any amount of Insurance Proceeds
(a) applied to the repair of the related 1997-A Leased Vehicle, (b) released to
an Obligor in accordance with the normal servicing procedures of the Servicer,
or (c) representing other related expenses incurred by the Servicer not
otherwise included in Liquidation Expenses and recoverable under the Servicing
Agreement or the Servicing Supplement.
"Insurance Policy" means, with respect to a 1997-A Lease,
1997-A Leased Vehicle or Obligor, any policy of comprehensive, collision,
public liability, physical damage, personal liability, credit health or
accident, credit life or employment insurance, or any other form of insurance.
"Insurance Proceeds" means, with respect to any 1997-A Lease,
1997-A Leased Vehicle or Obligor, proceeds paid to the Servicer or the Trustee,
on behalf of the Trust, pursuant to an Insurance Policy and amounts paid to the
Trustee, on behalf of the Trust, or the Servicer under any other insurance
policy related to such 1997-A Lease, 1997-A Leased Vehicle or Obligor
(including but not limited to any contingent and excess liability insurance
policy maintained by or on behalf of the Trustee, on behalf of the Trust, but
not including the Residual Value Insurance Policy).
"Interest Collections" means, with respect to any Collection
Period, all Collections received during or allocable to such Collection Period
other than Principal Collections, less the following, which shall be paid to
the appropriate parties or retained in the 1997-A SUBI Collection Account, as
appropriate, in the following order and priority for so long as WOFCO is the
Servicer: (a) Capped Contingent and Excess Liability Premiums, but with regard
to the Investor Percentage of Interest Collections allocable to the 99.8%
1997-A SUBI Certificate, only to the extent such deduction and payment would
have the same effect as if it followed item (iii) of Section 3.03(b)
12
<PAGE> 17
of the Securitization Trust Agreement; (b) Capped Origination Trust
Administrative Expenses, but with regard to the Investor Percentage of Interest
Collections allocable to the 99.8% 1997-A SUBI Certificate, only to the extent
that such deduction and payment would have the same effect as if it followed
item (iii) of Section 3.03(b) of the Securitization Trust Agreement and then
followed the deduction and payment set forth in clause (a) above; and (c) the
Servicing Fee and any unpaid Servicing Fee with respect to one or more prior
Collection Periods, but with regard to the Investor Percentage of Interest
Collections allocable to the 99.8% 1997-A SUBI Certificate, only to the extent
that such deduction and payment would be made with the same effect as if it
followed item (xi) of Section 3.03(b) of the Securitization Trust Agreement and
the deductions and payments in clauses (a) and (b) have been made as indicated.
If WOFCO is not the Servicer, the deduction and payment in clause (c) shall
instead be made only to the extent that it would have with the same effect as
if it followed item (iv) of Section 3.03(b) of the Securitization Trust
Agreement and the deductions and payments in clauses (a) and (b) of the
preceding sentence have been made as indicated.
"Lease Documents" means, with respect to each 1997-A Lease,
the fully executed 1997-A Lease and any agreement(s) modifying such 1997-A
Lease (including, without limitation, any extension agreement(s) relating to
extended 1997-A Lease(s)).
"Lease Rate" means, with respect to each Lease, the implicit
rate, calculated on the basis of an annual percentage rate, included in the
calculation of the Monthly Lease Payment due with respect to such Lease.
"Lien" means any security interest, lien, charge, pledge,
equity or encumbrance of any kind other than tax liens, mechanics' liens and
any liens that attach to the 99.8% 1997-A SUBI Interest or any other property,
as the context may require, by operation of law.
"Liquidation Expenses" means Matured Leased Vehicle Expenses,
Repossessed Vehicle Expenses, and all other reasonable out-of-pocket expenses
incurred by the Servicer in connection with the attempted realization of the
full amounts due or to become due under any 1997-A Lease, including expenses
incurred in connection with any collection effort (whether or not resulting in
a lawsuit against the Obligor under such 1997-A Lease) or an application or
request for Insurance Proceeds.
"Liquidation Proceeds" means Matured Leased Vehicle Proceeds,
Repossessed Vehicle Proceeds, and all other gross amounts received by the
Servicer or the Trustee, on behalf of the Trust (before reimbursement for
Liquidation Expenses) in
13
<PAGE> 18
connection with the realization of the full amounts due or to become due under
any 1997-A Lease, whether from the proceeds of any collection effort (whether
or not resulting in a lawsuit against the Obligor under such Lease), receipt of
Insurance Proceeds, or collection of amounts due under the Servicing Agreement
(including but not limited to the application of Security Deposits pursuant to
Section 2.04 thereof), the Servicing Supplement (including but not limited to
any amount required to be deposited by the Servicer into the 1997-A SUBI
Collection Account pursuant to Section 8.03 thereof) or otherwise.
"Matured Lease" means any 1997-A Lease that has reached its
scheduled Maturity Date and as to which all scheduled Monthly Lease Payments
and other payments due thereunder have been made.
"Matured Leased Vehicle Expenses" means reasonable
out-of-pocket expenses incurred by the Servicer in connection with the sale or
other disposition of a 1997-A Leased Vehicle included in Matured Leased Vehicle
Inventory.
"Matured Leased Vehicle Inventory" as of any date means all
Matured Vehicles that first became Matured Vehicles within the three
immediately preceding Collection Periods (or during the March 1997 Collection
Period in respect of any date during the April 1997 Collection Period, and the
March and April 1997 Collection Periods in respect of any date during the May
1997 Collection Period), and that, as of the last day of the most recent
Collection Period have remained unsold and not otherwise disposed of by the
Servicer for no more than two full Collection Periods.
"Matured Leased Vehicle Proceeds" means gross amounts received
by the Servicer or the Trustee, on behalf of the Trust (before reimbursement
for Matured Leased Vehicle Expenses) in connection with the sale or other
disposition of a 1997-A Leased Vehicle included in Matured Leased Vehicle
Inventory (including any charges for excess mileage and excess wear and use).
"Matured Vehicle" as of any date means any 1997-A Leased
Vehicle the related 1997-A Lease of which has reached its Maturity Date and as
to which all scheduled Monthly Lease Payments and other payments due thereunder
have been made, and which Leased Vehicle has been returned to the Servicer on
behalf of the Origination Trustee, on behalf of the Origination Trust,
regardless of the status of the disposition of such 1997-A Leased Vehicle as of
such date.
"Maturity Date" means, with respect to any 1997-A Lease, the
date on which the last scheduled Monthly Lease Payment shall be due and
payable, as such date may be extended pursuant
14
<PAGE> 19
to Section 2.02(b) of the Servicing Agreement and Section 9.02(a) of the
Servicing Supplement.
"Monthly Lease Payment" means, with respect to any Lease, the
amount of each fixed monthly payment payable to the Obligee of such Lease in
accordance with the terms thereof, net of any portion of such monthly payment
that represents late payment charges, Extension Fees or collections allocable
to payments to be made by Obligors for payment of insurance premiums, excise
taxes or similar items.
"Net Insurance Proceeds" means Insurance Proceeds less
Insurance Expenses.
"Net Liquidation Proceeds" means Liquidation Proceeds less
Liquidation Expenses.
"Net Matured Leased Vehicle Proceeds" means Matured Leased
Vehicle Proceeds plus (unless the context otherwise requires) any sums
transferred from the Residual Value Surplus Account pursuant to Section
12.03(b), less Matured Leased Vehicle Expenses (unless the context otherwise
requires, other than those Matured Leased Vehicle Expenses as are reimbursed
from the Residual Value Surplus Account pursuant to Section 9.02(g) of the
Servicing Supplement), and less (unless the context otherwise requires) any
amounts transferred to the Residual Value Surplus Account pursuant to Section
12.01(b).
"Net Repossessed Vehicle Proceeds" means Repossessed Vehicle
Proceeds less Repossessed Vehicle Expenses.
"1997-A Lease" has the meaning set forth in Section 11.01(a).
"1997-A Leased Vehicle" has the meaning set forth in Section
11.01(a).
"1997-A SUBI" has the meaning set forth in Recital D.
"1997-A SUBI Asset" has the meaning set forth in Section
11.01(a).
"1997-A SUBI Certificate" has the meaning set forth in
Recital D.
"1997-A SUBI Collection Account" means the separate account
established and maintained by the Trustee as the initial repository of all
proceeds received with respect to all 1997-A SUBI Assets, pursuant to Section
12.01(a).
15
<PAGE> 20
"1997-A SUBI Lease Account" has the meaning set forth in
Section 12.02(a).
"1997-A SUBI Portfolio" has the meaning set forth in Recital D.
"99.8% 1997-A SUBI Certificate" has the meaning set forth in
Recital F.
"0.2% 1997-A SUBI Certificate" has the meaning set forth in
Recital F.
"Obligee" means each Person who is the lessor under a 1997-A
Lease or the assignee thereof, including the Trustee on behalf of the Trust.
"Obligor" means each Person who is the lessee under a Lease.
"Outstanding Principal Balance" means, with respect to any
1997-A Lease as of any date, an amount equal to (a) the sum of all Monthly
Lease Payments remaining to be made (provided, however, that Payments Ahead
received but not yet applied are deemed to be Monthly Lease Payments remaining
to be made), less any unearned finance or other charges relating to the period
beginning after the next succeeding Due Date on such 1997-A Lease (determined
in accordance with the actuarial method as applied to the Lease Rate for such
1997-A Lease in accordance with the Servicer's usual practices), plus (b) the
Booked Residual Value of the related Leased Vehicle.
"Payment Ahead" means any payment of one or more Monthly Lease
Payments (other than in connection with a Prepayment) remitted by an Obligor
with respect to a 1997-A Lease in excess of the Monthly Lease Payment due
during such Collection Period with respect to such 1997-A Lease, which sums the
Obligor has instructed the Servicer to apply to Monthly Lease Payments due in
one or more immediately subsequent Collection Periods.
"Permitted Investments" has the meaning set forth in the
Securitization Trust Agreement.
"Person" means any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, bank, trust company, estate (including any beneficiaries thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Prepayment" means: (a) payment to the Servicer of 100% of the
Outstanding Principal Balance of a 1997-A Lease
16
<PAGE> 21
(exclusive of any 1997-A Lease referred to in the definition of the term
"Charged-off Lease") or such lesser amount as may be provided for in such
1997-A Lease, including any related payment of interest, or (b) payment by the
Servicer to the Trustee, on behalf of the Trust, of any amount required to be
deposited by the Servicer into the 1997-A SUBI Collection Account pursuant to
Section 8.03 of the Servicing Supplement.
"Principal Collections" means, with respect to any Collection
Period, all Collections received during or allocable to such Collection Period
allocable to the principal component of any 1997-A Lease (including any payment
in respect of the Booked Residual Value of the related 1997-A Leased Vehicle,
but expressly not including Collections with regard to which a Loss Amount (as
defined in the Securitization Trust Agreement) has already accrued); provided,
however, that, solely for purposes of calculating Principal Collections, the
principal portion of Monthly Lease Payments included in such Collections
arising from a Discounted Lease will be discounted on a present value basis at
the Discount Rate.
"Repossessed Vehicle Expenses" means reasonable out-of-pocket
expenses incurred by the Servicer in connection with the sale or other
disposition of a 1997-A Leased Vehicle that has been repossessed by the
Servicer or has been returned to the Servicer for sale or other disposition,
other than for inclusion in Matured Leased Vehicle Inventory.
"Repossessed Vehicle Proceeds" means gross amounts received by
the Servicer or the Trustee, on behalf of the Trust (before reimbursement for
Repossessed Vehicle Expenses) in connection with the sale or other disposition
of a 1997-A Leased Vehicle that has been repossessed by the Servicer or has
been returned to the Servicer for sale or other disposition in connection with
a Prepayment of the related 1997-A Lease.
"Residual Value Surplus Account" means the separate account
established and maintained by the Trustee pursuant to Section 12.03(a).
"Revolving Period" means the period from the Initial Cutoff
Date to but not including the earlier of May 1, 1998 and the day on which an
Early Amortization Event (as defined in the Securitization Trust Agreement)
occurs.
"Securitization Trust Agreement" has the meaning set forth in
Recital F.
"Securitization Trust Documents" means and includes the Trust
Agreement, the Servicing Agreement, this Supplement, the Servicing Supplement,
the SUBI Certificate Agreement, the
17
<PAGE> 22
Securitization Trust Agreement, the Backup Security Agreement, the 1997-A SUBI
Certificates, and the Certificates (as defined in the Securitization Trust
Agreement), as the same may be amended, supplemented or modified from time to
time, and each to the extent that it relates to the 1997-A SUBI (but
specifically not including any such amendment, supplement or modification that
relates only to the UTI or to one or more SUBIs other than the 1997-A SUBI).
"Securitization Trustee" has the meaning set forth in Recital
F.
"Security Deposit" means, with respect to any 1997-A Lease,
the refundable security deposit specified in such 1997-A Lease.
"Servicer" has the meaning set forth in Recital B.
"Servicer Reimbursement" has the meaning set forth in the
Servicing Supplement.
"Servicing Agreement" has the meaning set forth in Recital B.
"Servicing Fee" has the meaning set forth in the Servicing
Agreement, as modified or waived pursuant to Section 9.06 of the Servicing
Supplement.
"Servicing Supplement" has the meaning set forth in Recital G.
"SUBI Certificate Agreement" has the meaning set forth in
Recital E.
"Subsequent Cutoff Date" means, with respect to any Lease and
Leased Vehicle allocated to the 1997-A SUBI Portfolio on a Transfer Date, the
last day of the preceding calendar month.
"Transfer Date" means any Business Day in any calendar month
following a Collection Period in the Revolving Period, on or prior to the
twenty-fifth calendar day of that calendar month (beginning May 1997) specified
as such by the Servicer in its notice and certificate pursuant to Section
8.02(b) of the Servicing Supplement.
"Transferor" has the meaning set forth in Recital E.
"Trust" has the meaning set forth in Recital A.
"Trust Agreement" has the meaning set forth in Recital A.
18
<PAGE> 23
"Trustee" has the meaning set forth in the Preamble.
"Unallocated Principal Collections" has the meaning set forth
in Section 11.02(d).
"Undistributed Transferor Excess Collections" has the meaning
set forth in the Securitization Trust Agreement.
"WOFCO" has the meaning set forth in Recital A.
SECTION 10.02. RIGHTS IN RESPECT OF 1997-A SUBI.
Each holder of a 1997-A SUBI Certificate (including the
Securitization Trustee, on behalf of the Certificateholders) is a third-party
beneficiary of the Trust Agreement and this Supplement, insofar as they apply
to the 1997-A SUBI and the holders of 1997-A SUBI Certificates. Therefore, to
that extent, references in the Trust Agreement to the ability of any "holder of
a SUBI Certificate", "assignee of a SUBI Certificate" or the like to take any
action shall be deemed to refer to the Securitization Trustee acting at its own
instigation or upon the instruction of Investor Certificateholders (as defined
in the Securitization Trust Agreement) representing at least 51% of the
aggregate Percentage Interest (as defined in the Securitization Trust
Agreement).
PART XI
CREATION OF 1997-A SUBI
SECTION 11.01. INITIAL CREATION OF 1997-A SUBI
PORTFOLIO AND 1997-A SUBI.
(a) Pursuant to Section 4.02(a) of the Trust Agreement,
the Beneficiary hereby directs the Trustee to identify and allocate or cause to
be identified and allocated on the books and records of the Trust an initial
separate portfolio of SUBI Assets consisting of Leases, related Leased Vehicles
and other associated Trust Assets to be accounted for and held in trust
independently from all other Trust Assets within the Trust, all of which Trust
Assets shall consist of: (i) Leases that are Eligible Leases as of the Initial
Cutoff Date, including the related Contract Rights and the related Leased
Vehicles, with an Aggregate Net Investment Value (as defined in the
Securitization Trust Agreement) as of the Initial Cutoff Date of $___________;
(ii) all other Trust Assets related to the foregoing, including (A) the 1997-A
SUBI Collection Account and the Residual Value Surplus Account, including all
cash and Permitted Investments therein and all income from the investment of
funds therein; (B) the Residual Value Insurance Policy and all Contingent and
Excess Liability Insurance Policies to the extent applicable to such Leases and
Leased Vehicles; (C) the right to proceeds from
19
<PAGE> 24
physical damage, credit life and disability insurance policies, if any,
covering such Leases, Leased Vehicles or Obligors with respect thereto, as the
case may be; (D) the right to receive the proceeds of all Dealer repurchase
obligations, if any, relating to any such Lease or Leased Vehicle; and (E) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other property. Based upon their identification and allocation by
the Servicer pursuant to the Servicing Supplement, the Trustee hereby
identifies and allocates as SUBI Assets the portfolio of Leases and Leased
Vehicles more particularly described on Exhibit A hereto, and the related Trust
Assets described above, each such SUBI Asset to be identified on the books and
accounts of the Trust as belonging to the 1997-A SUBI Portfolio (such Leases
and Leased Vehicles, together with those additional Leases and Leased Vehicles
allocated to the 1997-A SUBI Portfolio during the Revolving Period, the "1997-A
Leases" and the "1997-A Leased Vehicles", respectively, and, together with
those other Trust Assets so allocated either initially or during the Revolving
Period pursuant to Section 2.02 hereof, the "1997-A SUBI Assets"). In addition
to the conveyance of such 1997-A SUBI Assets to the Trust pursuant to Section
2.01 of the Trust Agreement, the Grantor does hereby grant to the Trustee a
security interest therein, and the Trustee shall have all of the rights, powers
and privileges of a secured party under the UCC.
(b) Also pursuant to Section 4.02(a) of the Trust
Agreement, the Trustee hereby creates a SUBI which shall be known as the
"1997-A SUBI". The 1997-A SUBI shall represent a specific divided beneficial
interest solely in the 1997-A SUBI Portfolio and the 1997-A SUBI Assets.
(c) As required by Section 4.02(d) of the Trust
Agreement, the Beneficiary will certify to the Trustee as of the date of
execution and delivery hereof that (i) the sole pledgee of the Undivided Trust
Interest has received prior notice of the creation of the 1997-A SUBI Portfolio
and of the terms and provisions of (x) this Supplement and (y) the Securitized
Financing contemplated by the 1997-A Securitization Trust Agreement and (ii)
after giving effect to the creation of the 1997-A SUBI, the transfer to the
Beneficiary of both 1997-A SUBI Certificates and the application by the
Beneficiary of the proceeds of that Securitized Financing, no event of default
(matured or unmatured) shall exist under any Securitized Financing involving a
UTI Pledge.
SECTION 11.02. SUBSEQUENT ADDITIONS TO 1997-A SUBI
PORTFOLIO.
(a) The Beneficiary hereby directs the Trustee, as of
each Transfer Date, to cause to be (i) identified on the books and records of
the Trust from among all those Leases,
20
<PAGE> 25
Leased Vehicles and other associated Trust Assets then owned by the Trustee on
behalf of the Trust and not allocated to, or reserved for allocation to, any
SUBI (or, in the circumstances contemplated in Section 7.03 of the Trust
Agreement or Section 11.02(e) below, acquired by the Trustee on behalf of the
Trust but not yet allocated to, or reserved for allocation to, any specific
Portfolio) and (ii) allocated to the 1997-A SUBI Portfolio effective as of the
relevant Subsequent Cutoff Date as additional 1997-A Leases, 1997-A Leased
Vehicles and 1997-A SUBI Assets, such further Eligible Leases, related Leased
Vehicles and other associated Trust Assets (as described in clauses (i) and
(ii) of the first sentence of Section 11.01(a)) as shall have an aggregate
Discounted Principal Balance of not more than the aggregate amount of all
Principal Collections received from the Initial Cutoff Date through the end of
the most recent Collection Period that have not yet been so reinvested in
additional 1997-A Leases, 1997-A Leased Vehicles and related 1997-A SUBI
Assets, all on a "first-in, first-out" basis based on the date of origination
(other than as provided in Section 11.08 herein); provided, however, that (y)
after giving effect to such reallocation, no event of default (matured or
unmatured) shall exist under any Securitized Financing involving a UTI Pledge,
and (z) prior to such reallocation, the Servicer shall have provided the
Officer's Certificate required by Section 8.02(b) of the Servicing Supplement.
(b) Pursuant to subsection (a) above, the Trustee agrees,
as of each Transfer Date, to cause the Servicer to identify such further
Eligible Leases, related Leased Vehicles and other associated Trust Assets as
described in Section 11.02(a) and thereafter to allocate them to the 1997-A SUBI
Portfolio.
(c) Except in the circumstances set forth in Section 7.03
of the Trust Agreement or Section 12.02 below, the Trustee shall direct the
Servicer, pursuant to Section 8.02(c) of the Servicing Supplement, effective as
of each Transfer Date, to transfer or cause to be transferred from the 1997-A
SUBI Collection Account to the Lease Funding Account an amount equal to the
aggregate Discounted Principal Balance as of the Subsequent Cutoff Date of the
1997-A Leases then being added to the 1997-A SUBI Portfolio pursuant to Section
11.02(a) hereof.
(d) To the extent that, for any reason, the additional
1997-A Leases allocated to the 1997-A SUBI Portfolio on any Transfer Date shall
have an aggregate Discounted Principal Balance, measured as of the Subsequent
Cutoff Date, that is less than the aggregate amount of all Principal
Collections received since the Initial Cutoff Date and prior to the termination
of the Revolving Period which have not yet been reinvested in additional 1997-A
Leases, 1997-A Leased Vehicles and related 1997-A SUBI
21
<PAGE> 26
Assets, the balance of such Principal Collections ("Unallocated Principal
Collections") shall continue to be invested and reinvested in Permitted
Investments as part of the 1997-A SUBI Portfolio until the earliest of (i) the
reinvestment of such unallocated Principal Collections on a subsequent Transfer
Date, (ii) the date on which an Early Amortization Event occurs or (iii) the
October 1997 Distribution Date (in the cases of clauses (ii) and (iii), at
which time such funds shall be treated as Principal Collections collected
during the Amortization Period).
(e) In the circumstances set forth in Section 7.03 of the
Trust Agreement or Section 12.02 of this Supplement, the Trustee shall direct
the Servicer, pursuant to Section 8.02(d) of the Servicing Supplement,
effective as of each Transfer Date, to transfer from the 1997-A SUBI Collection
Account to the 1997-A SUBI Lease Account those Principal Collections received
since the Initial Cutoff Date that have not yet been reinvested in additional
1997-A Leases, 1997-A Leased Vehicles and related 1997-A SUBI Assets, to be
applied in accordance with Section 7.03 of the Trust Agreement.
(f) Neither any interest in the 1997-A SUBI nor any
1997-A SUBI Certificate may be transferred or assigned by the Beneficiary, and
any such purported transfer or assignment shall be deemed null, void and of no
effect herewith, provided, however, that (i) the 1997-A SUBI and the 1997-A
SUBI Certificates may be sold to the Transferor pursuant to the SUBI
Certificate Agreement, and (ii) the 99.8% 1997-A SUBI Certificate and the
interest in the 1997-A SUBI represented thereby may be assigned by the
Transferor absolutely or a security interest therein granted in connection with
a Securitized Financing, in each case in the circumstances contemplated in
Section 4.02(c) of the Trust Agreement. Such a transfer is registrable upon
surrender of the relevant 1997-A SUBI Certificate for registration of transfer
at the corporate trust office of the Trustee (or the Trust Agent, if
applicable) or by any successor Trustee, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder
thereof or such holder's attorney duly authorized in writing, and thereupon one
or more new 1997-A SUBI Certificates of a like aggregate fractional undivided
interest will be issued to the designated permitted transferee.
SECTION 11.03. ISSUANCE AND FORM OF 1997-A SUBI
CERTIFICATES.
(a) The 1997-A SUBI shall be represented by two 1997-A
SUBI Certificates: the 99.8% 1997-A SUBI Certificate, and the 0.2% 1997-A SUBI
Certificate, each of which shall represent a beneficial interest in the 1997-A
SUBI and the 1997-A SUBI Portfolio, as further set forth herein. The 1997-A
SUBI
22
<PAGE> 27
Certificates shall be substantially in the form of Exhibit B attached hereto,
with such appropriate insertions, omissions, substitutions and other variations
as are required by this Supplement and may have such letters, numbers or other
marks of identification and such legends and endorsements placed thereon as
may, consistently herewith and with the Trust Agreement, be directed by the
Beneficiary. Any portion of the 1997-A SUBI Certificates may be set forth on
the reverse thereof, in which case the following reference to the portion of
the text on the reverse shall be inserted on the face thereof, in relative
proximity to and prior to the signature of the Trustee executing such
certificate:
"Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which provisions
shall for all purposes have the same effect as if set forth at
this place."
The 1997-A SUBI Certificates shall be printed, lithographed, typewritten,
mimeographed, photocopied or otherwise produced or may be produced in any other
manner as may, consistently herewith and with the Trust Agreement, be
determined by the Beneficiary.
(b) As required by Section 4.02(b) of the Trust
Agreement, each 1997-A SUBI Certificate shall contain an express written waiver
of any claim by any holder thereof or owner of a beneficial interest therein to
any proceeds or assets of the Trustee and to all of the Trust Assets other than
those from time to time included within the 1997-A SUBI Portfolio as 1997-A
SUBI Assets and those proceeds or assets derived from or earned by such 1997-A
SUBI Assets.
SECTION 11.04. ACTIONS AND FILINGS.
The Beneficiary hereby directs the Trustee to enter into the
Backup Security Agreement as a protective device. The Grantor and the Trustee
will undertake all other and future actions and activities as may be deemed
reasonably necessary by the Servicer (pursuant to Section 8.04 of the Servicing
Supplement) to perfect (or evidence) and confirm the foregoing allocations of
Trust Assets to the 1997-A SUBI Portfolio, including without limitation filing
or causing to be filed UCC financing statements and executing and delivering
all related filings, documents or writings as may be deemed reasonably
necessary by the Servicer hereunder or under any other Securitization Trust
Documents (including the Backup Security Agreement); provided, however, that in
no event will the Grantor or the Trustee be required to take any action to
perfect any security interest that may be held by the Securitization Trustee in
any 1997-A Leased Vehicle. The Grantor hereby irrevocably
23
<PAGE> 28
makes and appoints each of the Trustee and the Servicer, and any of their
respective officers, employees or agents, as the true and lawful
attorney-in-fact of the Grantor (which appointment is coupled with an interest
and is irrevocable) with power to sign on behalf of the Grantor any financing
statements, continuation statements, security agreements, mortgages,
assignments, affidavits, letters of authority, notices or similar documents
necessary or appropriate to be executed or filed pursuant to this Section.
SECTION 11.05. TERMINATION OF 1997-A SUBI.
In connection with any purchase by the Transferor of the
Investor Certificateholders' interest in the corpus of the Securitization Trust
pursuant to Section 7.02 of the Securitization Trust Agreement, and the
succession of the Transferor to all of the interest in the 1997-A SUBI
represented by the 1997-A SUBI Certificates, should all of the interest in the
1997-A SUBI thereafter be transferred to the UTI Holder, whether by sale or
otherwise, then upon the direction of the UTI Holder the 1997-A SUBI shall be
terminated, the 1997-A SUBI Certificates shall be returned to the Trustee and
canceled thereby, and (pursuant to Section 12.01(a) of the Servicing
Supplement) the Servicer shall reallocate all 1997-A Leases, 1997-A Leased
Vehicles and related 1997-A SUBI Assets to the UTI Portfolio.
SECTION 11.06. MERGER OR CONSOLIDATION OF TRUSTEE.
The Trustee shall give notice to each Rating Agency (as
defined in the Securitization Trust Agreement) prior to effecting any merger,
consolidation, or other transaction set forth in Section 6.05 of the Trust
Agreement.
SECTION 11.07. REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee hereby makes the following representations and
warranties on which the Grantor and Beneficiary, each of their permitted
assignees and pledgees, and each pledgee or holder of a 1997-A SUBI Certificate
(and beneficial owner of any portion thereof in connection with a Securitized
Financing, including the Securitization Trustee and the Investor
Certificateholders) may rely:
(a) Organization and Good Standing. The Trustee is a
corporation, duly organized, validly existing and in good standing under the
law of the State of Alabama and is qualified to do business as a foreign
corporation and is in good standing in each of Florida, Georgia, North Carolina
and South Carolina;
24
<PAGE> 29
(b) Power and Authority. The Trustee has full power,
authority and right to execute, deliver and (assuming that the filings set
forth on Schedule A to the Trust Agreement are sufficient to allow the Trustee
to act as a trustee with respect to the Trust Assets and otherwise perform this
Supplement in each of Alabama, Florida, Georgia, North Carolina, South
Carolina, California, Illinois, New Jersey, and Pennsylvania, and in all
material respects in any other jurisdiction) perform this Supplement (in all
material respects outside of the nine states set forth above) and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Supplement;
(c) Due Execution. This Supplement has been duly
executed and delivered by the Trustee, and is a legal, valid and binding
instrument enforceable against the Trustee in accordance with its terms;
(d) No Conflict. Neither the execution and delivery of
this Supplement nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default (with notice or passage of time or both)
under any provision of any law, governmental rule, regulation, judgment, decree
or order binding on the Trustee or the articles of incorporation or bylaws of
the Trustee or any provision of any mortgage, indenture, contract, agreement or
other instrument to which the Trustee is a party or by which it is bound; and
(e) Single Purpose. The Trustee has not engaged, is not
currently engaged, and will not engage during the term of this Agreement in any
other activity other than serving as Trustee and in such ancillary activities
as are necessary and proper in order to act as Trustee in accordance with the
Trust Agreement and this Supplement.
SECTION 11.08. OTHER SUBIS.
The Trustee will not create any SUBI other than the 1997-A
SUBI during the Revolving Period unless the Trustee has received from the
Servicer an Officer's Certificate certifying that the creation of such other
SUBI would not cause an Early Amortization Event (as defined in the
Securitization Trust Agreement). The Trustee will not allocate to any SUBI
other than the 1997-A SUBI any Leases, Leased Vehicles or associated Trust
Assets booked on the Servicer's records from February 28, 1997 through April 7,
1997 that would be eligible to be allocated as 1997-A SUBI Assets until the
Revolving Period has terminated and all Principal Collections collected during
the Revolving Period have been reinvested in additional Leases, Leased Vehicles
and associated Trust Assets pursuant to Section 11.02. In the event that the
Trustee at any time during the Revolving Period also is
25
<PAGE> 30
allocating Trust Assets to one or more other SUBIs pursuant to similar
revolving periods (from the Trust Assets generally, not from blocks of Trust
Assets reserved for allocation to particular SUBIs), the Trustee first shall
allocate available Trust Assets to SUBIs created prior to the 1997-A SUBI
before allocating Trust Assets to the 1997-A SUBI.
SECTION 11.09. RETAINED SUBI INTEREST.
The Beneficiary or a Special Purpose Affiliate, as applicable,
shall at all times maintain with respect to the 1997-A SUBI at a minimum a
two-tenths of one percent (0.2%) interest in the 1997-A SUBI and the related
1997-A SUBI Portfolio, including (a) a two-tenths of one percent (0.2%)
interest in each material item of income, gain, loss, deduction or credit with
respect to the 1997-A SUBI and 1997-A SUBI Portfolio, and (b) a capital account
balance (or capital investment) in the 1997-A SUBI and 1997-A SUBI Portfolio at
least equal to two-tenths of one percent (0.2%) of the aggregate capital
account balances (or capital investments) therein.
SECTION 11.10. MINIMUM NET WORTH.
Nothwithstanding anything to the contrary in Section 4.03 of
the Trust Agreement, the Grantor (or if Grantor is a partnership, the general
partner of Grantor) shall at all times maintain a minimum net worth of $10
million.
PART XII
SUBI ACCOUNTS
SECTION 12.01. 1997-A SUBI COLLECTION ACCOUNT.
(a) The Trustee shall establish and maintain with respect to
the 1997-A SUBI a "1997-A SUBI Collection Account" in the name of the Trustee,
for the benefit of the holders of 1997-A SUBI Certificates, which account shall
constitute a SUBI Collection Account. The 1997-A SUBI Collection Account
initially shall be established with First Bank, as Trust Agent, and at all
times shall be an Eligible Account. In the event that the Trust Agent no
longer meets the requirements stated in the definition of "Eligible Account",
then the Servicer shall, with the Trustee's assistance as necessary, cause the
1997-A SUBI Collection Account to be moved to a bank or trust company that
satisfies those requirements. The 1997-A SUBI Collection Account shall relate
solely to the 1997-A SUBI and the 1997-A SUBI Portfolio, and funds therein
shall not be commingled with any other moneys, except as otherwise provided for
or contemplated in the Trust Agreement as supplemented by this Supplement or in
the Servicing Agreement as supplemented by the Servicing Supplement.
26
<PAGE> 31
All amounts held in the 1997-A SUBI Collection Account shall be invested in
Permitted Investments in accordance with Section 7.01(d) of the Trust Agreement
and Section 11.02(d) hereof until distributed or otherwise applied in
accordance with the Trust Agreement or this Supplement.
(b) On each Deposit Date, the Trustee shall transfer or
cause the transfer from the 1997-A SUBI Collection Account to the Residual
Value Surplus Account of any excess of Net Matured Leased Vehicle Proceeds (for
these purposes, calculated without subtracting any amounts transferred pursuant
to this subsection (b)) for the related Collection Period over the sum of the
Booked Residual Values of all Matured Vehicles sold or otherwise disposed of
from Matured Leased Vehicle Inventory during the related Collection Period.
(c) On each Deposit Date the Trustee shall transfer or
cause the transfer of all Principal Collections and Interest Collections in the
1997-A SUBI Collection Account with respect to the related Collection Period to
the holders of the 1997-A SUBI Certificates (and more particularly, with regard
to the 99.8% 1997-A SUBI Certificate, to the Distribution Account), pro rata in
proportion to the relative percentage of the 1997-A SUBI represented by each;
provided, however, that on each Deposit Date related to a Collection Period in
the Revolving Period, the Trustee shall withhold from any such transfers all
Principal Collections, all of which shall be applied solely as provided for in
Section 11.02 hereof. After the last Deposit Date related to a Collection
Period in the Revolving Period, Principal Collections shall be included in
calculating and making any such transfers.
(d) The Trustee shall provide in the Servicing Supplement
that the Servicer shall prepare all such calculations and provide for all such
transfers as are provided for in this Section 12.01.
(e) Any transfer to the holder of the 99.8% 1997-A SUBI
Certificate shall be made as directed pursuant to the Securitization Trust
Documents. Any transfer to the holder of the 0.2% 1997-A SUBI Certificate
shall be made at the direction of such holder.
(f) Notwithstanding Section 7.01(b) of the Trust
Agreement and Section 2.02 of the Servicing Agreement, the Trustee may provide
in the Servicing Supplement that, in the event the Servicer provides to the
Beneficiary, the Transferor, the Trustee and the Securitization Trustee a
letter from each Rating Agency to the effect that the utilization by the
Servicer of an alternative remittance schedule with respect to collections
arising out of the 1997-A SUBI Portfolio to be deposited in the
27
<PAGE> 32
1997-A SUBI Collection Account pursuant to Section 2.02(c) or (d) of the
Servicing Agreement (including but not limited to the use of an alternative
remittance schedule pursuant to which the obligations of the Servicer to make
such remittances are secured by a Servicer Letter of Credit (as defined in such
Servicing Supplement) satisfactory to each such Rating Agency (as defined in
the Securitization Trust Agreement)) will not result in a qualification,
downgrading or withdrawal of the then-current rating assigned to the Rated
Certificates by such Rating Agency, (i) the Servicing Supplement may be so
modified without the consent of any Certificateholders pursuant to Section
12.02 thereof and (ii) the Servicer may remit such collections to the 1997-A
SUBI Collection Account in accordance with that alternative remittance
schedule.
(g) Notwithstanding Section 5.05 or 7.01(c) or any other
provision of the Trust Agreement, the rights of the Trustee to be indemnified
or reimbursed for Administrative Expenses of the Trust incurred in connection
with or allocated to the 1997-A SUBI shall be limited to those Capped
Origination Trust Administrative Expenses as may be deducted from Collections
in accordance with the definition of "Interest Collections", any reimbursement
of Uncapped Administrative Expenses (as defined in the Securitization Trust
Agreement) as may be available pursuant to Section 3.03(b) of the
Securitization Trust Agreement, any advance of Administrative Expenses as may
be available pursuant to Section 9.05(a) of the Servicing Supplement, and any
indemnity as may be available pursuant to Section 2.07(g) of the Servicing
Agreement.
SECTION 12.02. SUBI LEASE ACCOUNT.
(a) In the circumstances set forth in Section 7.03 of the
Trust Agreement, the Trustee shall establish and maintain with respect to the
1997-A SUBI a "1997-A SUBI Lease Account" in the name of the Trustee, for the
benefit of the holders of the 1997-A SUBI Certificates, which account shall
constitute a SUBI Lease Account. Any 1997-A SUBI Lease Account initially shall
be established with the Trust Agent and at all times shall be an Eligible
Account. In the event that the Trust Agent no longer meets the requirements
stated in the definition of "Eligible Account", then the Servicer shall, with
the Trustee's assistance as necessary, cause the 1997-A SUBI Lease Account to
be moved to a bank or trust company that satisfies those requirements. The
1997-A SUBI Lease Account shall relate solely to the 1997-A SUBI and the 1997-A
SUBI Portfolio, and funds therein shall not be commingled with any other
moneys, except as otherwise provided for or contemplated in the Trust Agreement
as supplemented by this Supplement or in the Servicing Agreement as
supplemented by the Servicing Supplement. All amounts held in the 1997-A SUBI
Lease Account shall be invested in Permitted Investments in
28
<PAGE> 33
accordance with Section 7.01(d) of the Trust Agreement and Section 11.02(d)
hereof until distributed or otherwise applied in accordance with the Trust
Agreement or this Supplement.
(b) All transfers of funds into and out of the 1997-A SUBI
Lease Account shall be made in accordance with Section 7.03 of the Trust
Agreement.
SECTION 12.03. RESIDUAL VALUE SURPLUS ACCOUNT.
(a) The Trustee shall establish and maintain with respect to
the 1997-A SUBI a "Residual Value Surplus Account" in the name of the Trustee,
for the benefit of the holders of 1997-A SUBI Certificates of the Trust. The
Residual Value Surplus Account initially shall be established with First Bank,
as Trust Agent, and at all times shall be an Eligible Account. In the event
that the Trust Agent no longer meets the requirements stated in the definition
of "Eligible Account", then the Servicer shall, with the Trustee's assistance
as necessary, cause the Residual Value Surplus Account to be moved to a bank or
trust company that satisfies those requirements. The Residual Value Surplus
Account shall relate solely to the 1997-A SUBI and the 1997-A SUBI Portfolio,
and funds therein shall not be commingled with any other moneys, except as
otherwise provided for or contemplated in the Trust Agreement as supplemented
by this Supplement or in the Servicing Agreement as supplemented by the
Servicing Supplement. All amounts held in the Residual Value Surplus Account
shall be invested in Permitted Investments in accordance with Section 7.01(d)
of the Trust Agreement and Section 11.02(d) hereof until distributed or
otherwise applied in accordance with the Trust Agreement or this Supplement.
(b) If, for any Collection Period, (i) any Matured
Vehicle included in Matured Leased Vehicle Inventory as of the last day of that
Collection Period has not been sold or otherwise disposed of by the Servicer
for at least two full Collection Periods, (ii) the sum of the Booked Residual
Values of all Matured Vehicles sold or otherwise disposed of from Matured
Leased Vehicle Inventory during that Collection Period exceeds Net Matured
Leased Vehicle Proceeds (for purposes hereof, calculated without including
transfers made pursuant to this subsection (b)), or (iii) any 1997-A Leases
became Early Termination Leases during such Collection Period, then on the
related Deposit Date, the Trustee shall transfer or cause the transfer from the
Residual Value Surplus Account to the 1997-A SUBI Collection Account of an
amount equal to the sum of (x) the Booked Residual Values of the Matured
Vehicles described in clause (i), (y) the excess described in clause (ii) and
(z) the sum of the Discounted Principal Balances, as of the end of such
Collection Period, of any Early Termination Leases described in clause (iii),
such Discounted Principal Balances calculated
29
<PAGE> 34
without reference to paymentd received in the form of non-cash items.
(c) The Trustee shall provide in the Servicing Supplement
that the Servicer shall prepare all such calculations and provide for all such
transfers as are provided for in this Section 12.03.
SECTION 12.04. SERVICER CALCULATIONS.
The Trustee shall be under no obligation to recalculate or
reverify any calculations made by the Servicer with respect to any amounts to
be transferred by the Trustee pursuant to this Part XII.
PART XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT, ETC.
(a) Notwithstanding Section 9.01 of the Trust Agreement,
the Trust Agreement, as supplemented by this Supplement, to the extent that it
deals solely with the 1997-A SUBI and the 1997-A SUBI Portfolio, may be amended
from time to time only in a writing signed by the Trustee and the Beneficiary
(and by First Bank to the extent that any such amendment affects it as Trust
Agent), with the prior written consent of the Securitization Trustee, which
shall be given only in the circumstances contemplated by Section 9.01 of the
Securitization Trust Agreement.
(b) ALFI LP shall provide each Rating Agency (as defined
in the Securitization Trust Agreement) prior notice of the content of any
proposed amendment to the Trust Agreement, whether or not such amendment
relates to the 1997-A SUBI or requires approval by any Rating Agency.
(c) No resignation or removal of the Trustee pursuant to
Section 6.03 of the Trust Agreement shall be effective unless and until each
Rating Agency has confirmed, in writing, that such resignation or removal would
not cause it to downgrade, withdraw, or otherwise adversely modify its
then-current rating of the Rated Certificates.
(d) The holder from time to time of the Trustee Stock
pursuant to Section 6.10 of the Trust Agreement shall at all times be a
corporation organized and doing business under the laws of such State or the
United States; authorized under such laws to exercise corporate trust powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and
30
<PAGE> 35
having a long-term deposit rating no lower than Baa3 by Moody's, so long as
Moody's is a Rating Agency or be otherwise acceptable to each Rating Agency, as
evidenced by a letter to such effect from each of them. If such holder shall
publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time such holder shall
cease to be eligible in accordance with the provisions of this subsection (d),
it will immediately so notify the Beneficiary in the manner and with the effect
specified in Section 6.10(b) of the Trust Agreement.
SECTION 13.02. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE CREATED UNDER AND GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF ALABAMA, WITHOUT REGARD TO
ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 13.03. NOTICES.
The notice provisions of Section 9.03 of the Trust Agreement
shall apply equally to this Supplement, provided, that any notice to the
Securitization Trustee shall be addressed as follows:
First Bank National Association
One Illinois Center
111 East Wacker, Suite 3000
Chicago, Illinois 60601
Attention: Corporate Trust Office
A copy of each notice or other writing required to be delivered to the Trustee
pursuant to the Trust Agreement or this Supplement also shall be delivered to
the Securitization Trustee.
SECTION 13.04. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Supplement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Supplement and
shall in no way affect the validity or enforceability of the other provisions
of this Supplement or of any 1997-A SUBI Certificates or the rights of the
holders thereof. To the extent permitted by law, the parties hereto waive any
provision
31
<PAGE> 36
of law that renders any provision of this Supplement invalid or unenforceable
in any respect.
SECTION 13.05. EFFECT OF SUPPLEMENT ON TRUST AGREEMENT.
(a) Except as otherwise specifically provided herein: (i)
the parties shall continue to be bound by all provisions of the Trust
Agreement; and (ii) the provisions set forth herein shall operate either as
additions to or modifications of the already-extant obligations of the parties
under the Trust Agreement, as the context may require. In the event of any
conflict between the provisions of this Supplement and the Trust Agreement with
respect to the 1997-A SUBI, the provisions of this Supplement shall prevail.
(b) For purposes of determining the parties' obligations
under this Supplement with respect to the 1997-A SUBI, general references in
the Trust Agreement to: (i) a SUBI Account shall be deemed to refer more
specifically to the 1997-A SUBI Account; (ii) a SUBI Asset shall be deemed to
refer more specifically to a 1997-A SUBI Asset; (iii) an appropriate or
applicable SUBI Collection Account shall be deemed to refer more specifically
to the 1997-A SUBI Collection Account; (iv) an appropriate or applicable SUBI
Lease Account shall be deemed to refer more specifically to a 1997-A SUBI Lease
Account; (v) a SUBI Portfolio shall be deemed to refer more specifically to the
1997-A SUBI Portfolio; (vi) a SUBI Supplement shall be deemed to refer more
specifically to this Supplement; and (vii) a SUBI Servicing Agreement
Supplement shall be deemed to refer more specifically to the Servicing
Supplement.
[SIGNATURES ON NEXT PAGE]
32
<PAGE> 37
IN WITNESS WHEREOF, the Grantor, the Trustee, and (solely for
the limited purposes set forth in Sections 5.03(e), 6.10 and 9.03 of the Trust
Agreement) First Bank, have caused this Supplement to be duly executed by their
respective officers as of the day and year first above written.
AUTO LEASE FINANCE, L.P., Grantor
and Beneficiary
By: AUTO LEASE FINANCE, INC., its
general partner
By:
-----------------------------------
A. Tucker Allen
Treasurer
VT INC., as Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
FIRST BANK NATIONAL ASSOCIATION, as
Trust Agent
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
WORLD OMNI LEASE SECURITIZATION L.P.,
assignee of Beneficiary (solely to
acknowledge the provisions hereof)
By: WORLD OMNI LEASE SECURITIZATION,
INC., its general partner
By:
-----------------------------------
A. Tucker Allen
Treasurer
33
<PAGE> 38
STATE OF )
----------
)
COUNTY OF )
----------
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that A. Tucker Allen, whose name as Treasurer of Auto
Lease Finance, Inc., a Delaware corporation, in its capacity as the general
partner of Auto Lease Finance, L.P., a Delaware limited partnership, is signed
to the foregoing instrument, and who is known to me, acknowledged before me on
this day, that, being informed of the contents thereof, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation, acting in its capacity as general partner as aforesaid.
Given under my hand and official seal, this the ___ day of __________,
1997.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires:
- ----------
34
<PAGE> 39
STATE OF )
--------
)
COUNTY OF )
--------
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of VT Inc., an Alabama corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this
day, that, being informed of the contents thereof, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal, this the ___ day of
___________, 1997.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires:
- -----------
35
<PAGE> 40
STATE OF )
---------
)
COUNTY OF )
--------
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of First Bank National Association, a national
banking association, is signed to the foregoing instrument, and who is known to
me, acknowledged before me on this day, that, being informed of the contents
thereof, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said national banking association.
Given under my hand and official seal, this the ___ day of _________,
1997.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires:
- ----------
36
<PAGE> 41
STATE OF )
---------
)
COUNTY OF )
--------
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that A. Tucker Allen, whose name as Treasurer of World
Omni Lease Securitization, Inc., a Delaware corporation, in its capacity as the
general partner of World Omni Lease Securitization, L.P., a Delaware limited
partnership, is signed to the foregoing instrument, and who is known to me,
acknowledged before me on this day, that, being informed of the contents
thereof, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation, acting in its capacity as
general partner as aforesaid.
Given under my hand and official seal, this the ___ day of _________,
1997.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires:
- ----------
37
<PAGE> 42
EXHIBIT A
SCHEDULE OF 1997-A LEASES AND
1997-A LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Trustee and
the Securitization Trustee.]
A-1
<PAGE> 43
EXHIBIT B
FORM OF 1997-A SUBI CERTIFICATES
WORLD OMNI LT
SPECIAL UNIT OF BENEFICIAL INTEREST 1997-A CERTIFICATE
evidencing a fractional undivided __% interest in all 1997-A SUBI
Assets (as defined below).
(This Certificate does not represent an obligation of, or an interest
in, World Omni Financial Corp., Auto Lease Finance, Inc., Auto Lease
Finance L.P. or any of their respective affiliates.)
Number 1997-A SUBI-__
THIS CERTIFIES THAT __________________________________ is the
registered owner of a nonassessable, fully-paid, fractional undivided interest
in the 1997-A SUBI Assets (such interest, a "1997-A SUBI Interest"), of World
Omni LT, an Alabama business trust (the "Trust") formed by Auto Lease Finance
L.P., a Delaware limited partnership, as grantor ("ALFI LP" or, in its capacity
as grantor thereunder, and, together with any successor or assign, the
"Grantor"), and VT Inc., an Alabama corporation, as trustee (the "Trustee").
The Trust was created pursuant to a Trust Agreement dated and effective as of
November 1, 1993, as amended and restated pursuant to an Amended and Restated
Trust Agreement dated and effective as of June 1, 1994, as further amended and
restated pursuant to a Second Amended and Restated Trust Agreement dated and
effective as of July 1, 1994, and as further amended by that certain Amendment
No. 1 to Second Amended and Restated Trust Agreement dated as of November 1,
1994 (as so amended and restated, the "Trust Agreement"), among the Grantor,
ALFI LP as the sole initial beneficiary (in such capacity, and, together with
any successor or permitted assign, the "Beneficiary"), the Trustee, and, for
certain limited purposes set forth therein, First Bank National Association, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation) ("First Bank"), as supplemented by that certain
1997-A Supplement to Trust Agreement dated and effective as of April 1, 1997
among the Grantor, the Beneficiary, the Trustee, First Bank and World Omni
Lease Securitization L.P (the "Transferor") (the Trust Agreement, as so
supplemented, the "Agreement"). A summary of certain of the pertinent portions
of the Agreement is set forth below. To the extent not otherwise defined
herein, the capitalized terms herein have the meanings set forth in the
Agreement.
B-1
<PAGE> 44
This Certificate is one of the duly authorized certificates issued
under the Agreement and designated as "World Omni LT Special Unit of Beneficial
Interest 1997-A Certificates" (the "1997-A SUBI Certificates"). This 1997-A
SUBI Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this 1997-A SUBI
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. Also to be issued under the Agreement are various other series of
Certificates, the first designated as "World Omni LT Undivided Trust Interest
Certificates" (the "Undivided Trust Interest Certificates"), and the others
each designated as "World Omni LT Special Unit of Beneficial Interest __
Certificates" (together with the 1997-A SUBI Certificates, the "SUBI
Certificates" and, together with the Undivided Trust Interest Certificates, the
"Certificates"). The Undivided Trust Interest Certificates, taken together,
evidence an exclusive, undivided interest in the Trust Assets, other than SUBI
Assets (each as defined below); each other series of SUBI Certificates, taken
together, will evidence an exclusive undivided interest in a separate SUBI
Portfolio (as defined below) other than the 1997-A SUBI Portfolio.
The property of the Trust includes, or will include, among other
things: cash capital; certain fixed rate retail closed-end lease contracts (the
"Leases") of automobile and light-duty trucks (the "Leased Vehicles")
originated on or after November 1, 1993 by vehicle dealers ("Dealers") located
within the United States (to the extent permitted by law applicable to the
Trustee or otherwise) pursuant to dealer agreements entered into with the
initial Grantor's parent company, World Omni Financial Corp. ("WOFCO") (or, in
certain circumstances, by dealers or other Persons unaffiliated with WOFCO),
and the proceeds thereof; the Leased Vehicles and the proceeds thereof,
including the residual values thereof and the titles thereto; the right to
proceeds of any Dealer repurchase obligations relating to any Lease or Leased
Vehicle; and certain insurance policies or proceeds therefrom covering any
Lease, Leased Vehicles or a lessee under a Lease (such assets, together with
any other assets of the Trust, the "Trust Assets"). The Agreement provides
that, from time to time, certain of the Trust Assets will be identified and
allocated on the records of the Trust into one or more separate portfolios of
Trust Assets (such assets, "SUBI Assets" and each such portfolio, a "SUBI
Portfolio"). The beneficial interest in each such SUBI Portfolio will
constitute a separate "special unit of beneficial interest" ("SUBI") in the
Trust. Pursuant to the 1997-A SUBI Supplement, various SUBI Assets (the
"1997-A SUBI Assets") were identified and allocated on the records of the Trust
into a separate SUBI Portfolio (the "1997-A SUBI Portfolio"), and the
beneficial interest in the 1997-A SUBI Portfolio was designated as a separate
SUBI known as the "1997-A SUBI". The rights of the holder of this Certificate
to certain of the proceeds of the
B-2
<PAGE> 45
1997-A SUBI Assets are and will be further set forth in the Agreement.
The Certificates do not represent an obligation of, or an interest in,
the Grantor, WOFCO or any of their respective Affiliates. The Certificates are
limited in right of payment to certain collections and recoveries respecting
the Leases (and the related Obligors) and the Leased Vehicles allocated to the
1997-A SUBI Portfolio, all to the extent and as more specifically set forth in
the Agreement. A copy of the Agreement may be examined during normal business
hours at the principal office of the Trustee, and at such other places, if any,
designated by the Trustee, by the holder hereof upon request.
By accepting this Certificate, the holder hereof and all owners of
beneficial interests herein waives any claim to any proceeds or assets of the
Trustee and to all of the Trust Assets other than those from time to time
included within the 1997-A SUBI Portfolio as 1997-A SUBI Assets and those
proceeds or assets derived from or earned by such 1997- A SUBI Assets.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto with respect to the 1997-A SUBI Assets, the 1997-A SUBI
Portfolio and the 1997-A SUBI and the rights of holders of 1997-A SUBI
Certificates at any time by the Beneficiary and the Trustee, only with the
consent of First Bank, as Trustee (the "Securitization Trustee") under that
certain Securitization Trust Agreement dated as of March 1, 1997 (the
"Securitization Trust Agreement"), between the Transferor and the
Securitization Trustee. The Securitization Trust Agreement further provides
that, in certain limited circumstances, such consent may be given only with the
consent of the Holders of Investor Certificates evidencing not less than 51% of
the aggregate Percentage Interest (as all such terms are defined in the
Securitization Trust Agreement), voting together as a single class. If
approval of any holder of this Certificate is required, any such consent shall
be conclusive and binding on such holder and on all future holders hereof and
of any Certificate issued upon the permitted transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent is made upon
this Certificate.
As provided in the Agreement, this Certificate and the underlying
interests represented hereby may not be transferred or assigned, and any such
purported transfer or assignment shall be null, void, and of no effect, except
in connection with an absolute assignment or the grant of a security interest
pledge by the Transferor in connection with [(I)] a sale by the Beneficiary to
the Transferor[, OR (II) A SECURITIZED FINANCING]. [NOTE: BRACKETED LANGUAGE
ONLY IN 99.8% 1997-A SUBI
B-3
<PAGE> 46
CERTIFICATE.] Such a transfer of this Certificate is registrable upon
surrender of this Certificate for registration of transfer at the corporate
trust office of the Trustee (or the Trust Agent, if applicable) or by any
successor Trustee, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new 1997-A SUBI
Certificates of a like aggregate fractional undivided interest will be issued
to the designated permitted transferee.
Prior to due presentation of this Certificate for registration of a
permitted transfer, the Trustee, the certificate registrar and any of their
respective agents may treat the person or entity in whose name this Certificate
is registered as the owner hereof for the purpose of receiving distributions
and for all other purposes, and, except as provided for in the Agreement,
neither the Trustee, the certificate registrar nor any such agent shall be
affected by any notice to the contrary.
Unless this Certificate shall have been executed by an authorized
officer of the Trustee, by manual signature, this Certificate shall not entitle
the holder hereof to any benefit under the Agreement or be valid for any
purpose.
B-4
<PAGE> 47
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this 1997-A SUBI Certificate to be duly
executed.
Dated: WORLD OMNI LT
VT INC., as Trustee
(SEAL) By:
----------------------------------
Authorized Officer
ATTEST:
- -------------------------
B-5
<PAGE> 48
EXHIBIT C
FORMS OF 1997-A LEASE
C-1
<PAGE> 49
EXHIBIT D
CREDIT AND COLLECTION POLICY
D-1
<PAGE> 1
EXHIBIT 10.4
------------------------------------------------------------------
VT INC.,
AS TRUSTEE OF
WORLD OMNI LT
AND
WORLD OMNI FINANCIAL CORP.
SUPPLEMENT 1997-A TO
SERVICING AGREEMENT
DATED AS OF APRIL 1, 1997
------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE SIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 6.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ALFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ALFI LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Current Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Eligible Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
First Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1997-A SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1997-A SUBI Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1997-A Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1997-A SUBI Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1997-A SUBI Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trust Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Securitization Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Securitization Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Securitization Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Servicer Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Servicer Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trust Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Unfunded Current Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE SEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
REPRESENTATIONS AND WARRANTIES OF SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.01. Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.02. Authorization, Execution and Delivery; No Conflicts . . . . . . . . . . . . . . . . . . . . 7
Section 7.03. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7.04. Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 7.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7.06. Representations to AISLIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE EIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
CREATION OF 1997-A SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 8.01. Initial Creation of 1997-A SUBI Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 8.02. Subsequent Additions to 1997-A SUBI Portfolio . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8.03. Servicer Payment in Respect of Certain
Leases and Leased Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.04. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF LEASES
IN 1997-A SUBI PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.01. Servicer Bound by Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.02. Collection of Monthly Lease Payments and Remittances; Application of Proceeds;
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 9.03. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9.04. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.05. Payment of Certain Fees and Expenses;
No Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.06. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.07. Repossession and Sale of Leased Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.08. Indemnification by Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.09. Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.10. Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.11. Servicer Not to Resign; Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.12. Obligor Insurance Coverage in Respect of Leased Vehicles . . . . . . . . . . . . . . . . . 23
Section 9.13. Corporate Existence; Status; Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.14. Mobile Leased Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE TEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
STATEMENTS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.01. Reporting by the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.02. Annual Accountants' Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.03. Other Certificates and Notices from Servicer. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.04. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE ELEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11.01. Events of Default; Termination of Servicer as to 1997-A SUBI Portfolio. . . . . . . . . . . . 26
Section 11.02. No Effect on Other Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE TWELVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.01. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.03. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.06. Inspection and Audit Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.07. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.08. Article and Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 12.09. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 12.10. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 12.11. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 12.12. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
EXHIBITS
EXHIBIT A - Schedule of 1997-A Leases and 1997-A
Leased Vehicles as of the Initial Cutoff
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Form of Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
iii
<PAGE> 5
SUPPLEMENT 1997-A TO
SERVICING AGREEMENT
SUPPLEMENT 1997-A TO SERVICING AGREEMENT (the "Supplement"),
dated as April 1, 1997, between VT INC., an Alabama corporation, as trustee
(hereinafter, together with its successors and assigns, the "Origination
Trustee") of WORLD OMNI LT, an Alabama business trust (the "Origination
Trust"), and WORLD OMNI FINANCIAL CORP., a Florida corporation (the
"Servicer").
RECITALS
A. Auto Lease Finance L.P. ("ALFI LP"), the Origination
Trustee and, for certain limited purposes set forth therein, First Bank
National Association (successor trustee to Bank of America Illinois, an
Illinois banking corporation) (together with its successors, "First Bank") have
entered into that certain Second Amended and Restated Trust Agreement dated as
of July 1, 1994 (amending and restating that certain original Trust Agreement
dated as of November 1, 1993, among Auto Lease Finance, Inc. ("ALFI"), the
Origination Trustee and First Bank, and that certain Amended and Restated Trust
Agreement dated as of June 1, 1994 among ALFI, ALFI LP, the Origination Trustee
and First Bank) as amended by that certain Amendment No. 1 to Second Amended
and Restated Trust Agreement dated as of November 1, 1994, among the same
parties (as so amended and restated, and as it may be further amended,
supplemented or modified, the "Origination Trust Agreement"), pursuant to which
ALFI and the Origination Trustee formed the Origination Trust for the purpose
of taking assignments and conveyances of, holding in trust and dealing in,
various Trust Assets (as defined in the Origination Trust Agreement) in
accordance with the Origination Trust Agreement. ALFI and the Servicer have
entered into that certain Limited Partnership Agreement dated as of June 1,
1994, as amended and restated by that certain First Amended and Restated
Limited Partnership Agreement dated as of July 1, 1994, pursuant to which ALFI
LP was formed and ALFI contributed to ALFI LP all of its right, title and
interest in and to the Origination Trust.
B. The parties hereto also have entered into that
certain Second Amended and Restated Servicing Agreement dated as of July 1,
1994 (as the same has been supplemented, is supplemented hereby and may be
further amended, supplemented or modified, the "Servicing Agreement"), amending
and restating that certain original Servicing Agreement dated as of November 1,
1993, and that certain Amended and Restated Servicing Agreement dated as of
June 1, 1994, which provides for, among other things, the servicing of the
Trust Assets by the Servicer.
<PAGE> 6
C. Concurrently herewith, and as contemplated by the
Servicing Agreement and the Origination Trust Agreement, ALFI LP, the
Origination Trustee, First Bank and World Omni Lease Securitization L.P. (the
"Transferor") are entering into that certain Supplement 1997-A to Trust
Agreement dated as of April 1, 1997 (the "1997-A SUBI Supplement"), pursuant to
which the Origination Trustee, on behalf of the Origination Trust and at the
direction of ALFI LP, which also will be at that time a beneficiary of the
Origination Trust, will create and issue to ALFI LP a special unit of
beneficial interest in the Origination Trust, or SUBI (as defined in the
Origination Trust Agreement) (such SUBI, the "1997-A SUBI"), whose
beneficiaries generally will be entitled to the net cash flow arising from, but
only from, the related SUBI Portfolio (as defined in the Origination Trust
Agreement) (such SUBI Portfolio, the "1997-A SUBI Portfolio"), a SUBI
Certificate (as defined in the Origination Trust Agreement) representing a
99.8% beneficial interest in the 1997-A SUBI (such SUBI Certificate, the "99.8%
1997-A SUBI Certificate") and a SUBI Certificate representing the remaining
0.2% beneficial interest in the 1997-A SUBI (such SUBI Certificate, the "0.2%
1997-A SUBI Certificate" and, together with the 99.8% 1997-A SUBI Certificate
and any replacements of either of them, the "1997-A SUBI Certificates"), all as
set forth in the Origination Trust Agreement and the 1997-A SUBI Supplement.
D. Also concurrently herewith, ALFI LP and the
Transferor are entering into that certain SUBI Certificate Purchase and Sale
Agreement dated as of April 1, 1997, pursuant to which ALFI LP is selling to
the Transferor, without recourse, all of ALFI LP's right, title and interest in
and to the 1997-A SUBI and the 1997-A SUBI Certificates, all moneys due thereon
and paid thereon or in respect thereof and the right to realize on any property
that may be deemed to secure the 1997-A SUBI, and all proceeds thereof, all in
consideration of the cash payment to ALFI LP of an amount equal to the
Aggregate Net Investment Value (as defined in the Securitization Trust
Agreement) of the 1997-A SUBI Portfolio as of the Initial Cutoff Date (as
defined in the 1997-A SUBI Supplement).
E. Also concurrently herewith, and as contemplated by
the Servicing Agreement and the Origination Trust Agreement, the Transferor and
First Bank, as Trustee (the "Securitization Trustee"), are entering into that
certain Securitization Trust Agreement dated as of April 1, 1997 (the
"Securitization Trust Agreement") pursuant to which the 99.8% 1997-A SUBI
Certificate will be transferred to the Securitization Trustee, in that
capacity, in connection with a Securitized Financing (as defined in the
Origination Trust Agreement) by the Transferor, but the 0.2% 1997-A SUBI
Certificate will be retained by the
2
<PAGE> 7
Transferor and not used in connection with such Securitized Financing.
F. The parties desire to supplement the terms of the
Servicing Agreement insofar as they apply to the 1997-A SUBI, the 1997-A SUBI
Portfolio, and the 1997-A SUBI Certificates to provide for further specific
servicing obligations that will benefit the holders of the 1997-A SUBI
Certificates and the parties to and the beneficiaries of the Securitized
Financing contemplated by the Securitization Trust Agreement, all as generally
contemplated by the Servicing Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and in the Servicing Agreement, the parties hereto
agree to the following supplemental obligations with regard to the 1997-A SUBI
Portfolio:
ARTICLE SIX
DEFINITIONS
SECTION 6.01. DEFINITIONS.
For all purposes of this Supplement, except as otherwise
expressly provided or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by Section 1.01 of the Servicing Agreement, by
Section 0.01 of the Origination Trust Agreement, by Section 13.01 of the 1997-A
SUBI Supplement, or by Section 1.01 of the Securitization Trust Agreement, as
applicable, (b) the capitalized terms defined in this Supplement have the
meanings assigned to them in this Supplement and include (i) all genders and
(ii) the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Supplement as a whole and
not to any particular article or section within this Supplement, (d) the term
"include" and all variations thereon shall mean "include without limitation",
(e) the term "or" shall include "and/or", and (f) any reference herein to the
"Origination Trustee, acting on behalf of the Origination Trust," or words of
similar import, shall be deemed to mean the Origination Trustee, acting on
behalf of the Origination Trust and all beneficiaries thereof.
"Advance" means, (i) with respect to all Delinquent Leases
included in the 1997-A SUBI Portfolio during a Collection Period, an aggregate
advance required to be made with respect to such Delinquent Leases, the amount
of which shall equal the sum of all Monthly Lease Payments due but not received
during such Collection Period; provided, however, that for purposes of this
definition, the term "Delinquent Lease" shall have the meaning set forth in the
1997-A SUBI Supplement, except that it shall
3
<PAGE> 8
refer to 1997-A Leases that are 31 days or more past due, not 61 days or more
past due; and (ii) with respect to Leases that are included in the 1997-A SUBI
Portfolio during a Collection Period but which are not Delinquent Leases, an
aggregate advance permitted (but not required) to be made with respect to any
Monthly Lease Payments under such Leases that are one or more days, but less
than 31 days, past due.
"ALFI" and "ALFI LP" have the respective meanings set forth
in Recital A.
"Code" means the Internal Revenue Code of 1986, as amended.
"Current Liability" means, with respect to any Plan, the
present value of the accrued benefits under the Plan, as set forth in the most
recent audited consolidated financial statements of JM Family Enterprises, Inc.
and its subsidiaries.
"Eligible Servicer" means the Trust Agent or an entity that is
currently servicing a portfolio of automobile and/or light truck retail
installment lease contracts, that is legally qualified and has the capacity to
service the 1997-A Leases and that has demonstrated the ability to service a
portfolio of similar lease contracts professionally and competently in
accordance with high standards of skill and care.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of similar
import, together with the regulations thereunder, in each case as in effect
from time to time. References to sections of ERISA shall be construed to refer
also to any successor sections.
"ERISA Affiliate" means each person (as defined in Section
3(9) of ERISA) which, together with the identified person, would be deemed to
be a member of the same "controlled group" within the meaning of Section
414(b), (c), (m) and (o) of the Code or Section 4001 of ERISA.
"First Bank" has the meaning set forth in Recital A.
"1997-A SUBI" has the meaning set forth in Recital C.
"1997-A SUBI Account" means any SUBI Account related to the
1997-A SUBI.
"1997-A Event of Default" means any of the acts, events or
occurrences set forth in Section 11.01.
4
<PAGE> 9
"1997-A SUBI Portfolio" has the meaning set forth in Recital C.
"1997-A SUBI Supplement" has the meaning set forth in Recital
C.
"Nonrecoverable Advance" means any Advance that, in the
Servicer's reasonable judgment, may not be ultimately recoverable by the
Servicer from Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds or
other Liquidation Proceeds or Insurance Proceeds, any Residual Value Insurance
Policy or otherwise.
"Origination Trust" has the meaning set forth in the Preamble.
"Origination Trust Agreement" has the meaning set forth in
Recital A.
"Origination Trust Expenses" has the meaning set forth in
Section 9.02(e).
"Origination Trustee" has the meaning set forth in the
Preamble.
"Plan" means an "employee benefit plan," as such term is
defined in Section 3(3) of ERISA.
"Prospectus" means that certain prospectus dated April __,
1997 relating to the public offering of the Class A Certificates issued by the
Securitization Trust.
"Residual Value Loss Determination Date" means, with respect
to a Collection Period, the fifteenth day of the following month, or if that
day is not a Business Day, the next Business Day, beginning with April 15,
1997.
"Securitization Trust" means the trust created by the
Securitization Trust Agreement.
"Securitization Trust Agreement" has the meaning set forth in
Recital E.
"Securitization Trustee" has the meaning set forth in Recital
E.
"Servicer Letter of Credit" means a letter of credit, surety
bond or insurance policy under which demands for payment may be made to secure
timely remittance by the Servicer of monthly collections received in respect of
the 1997-A SUBI Assets to the 1997-A SUBI Collection Account.
5
<PAGE> 10
"Servicer Reimbursement" has the meaning set forth in Section
9.02(g).
"Servicer's Certificate" has the meaning set forth in Section
10.01(b).
"Servicing Agreement" has the meaning set forth in Recital B.
"Supplement" has the meaning set forth in the Preamble.
"Transferor" has the meaning set forth in Recital C.
"Trust Agent" has the meaning set forth in the Preamble.
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the present value of the accrued benefits under the Plan as of
the close of its most recent Plan year exceeds the value of the Plan's assets,
which value shall be determined as set forth in the most recent audited
consolidated financial statements of JM Family Enterprises, Inc. and its
subsidiaries.
ARTICLE SEVEN
REPRESENTATIONS AND WARRANTIES OF SERVICER
The Servicer represents and warrants to the Securitization
Trustee as follows:
SECTION 7.01. ORGANIZATION AND STANDING.
The Servicer: (i) is a corporation validly organized and
existing and in good standing under the laws of the State of Florida; (ii) has
qualified to do business as a foreign corporation and is in good standing in
the State of Alabama and any other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have a
material adverse effect on the ability of the Servicer to carry out its
obligations as Servicer under the Servicing Agreement or this Supplement; (iii)
has full power, authority and legal right to own its property, to carry on its
business as presently conducted, and to enter into and perform its obligations
under the Servicing Agreement and this Supplement; and (iv) holds all requisite
licenses and permits, the absence of which would have a material adverse effect
on its ability to carry on its business as presently conducted.
6
<PAGE> 11
SECTION 7.02. AUTHORIZATION, EXECUTION AND DELIVERY; NO
CONFLICTS.
The execution and delivery by the Servicer of this Supplement
are within the corporate power of the Servicer and have been duly authorized by
all necessary corporate action on the part of the Servicer. Neither the
execution and delivery of this Supplement, nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof,
will conflict with or result in a breach of, or constitute a default (with
notice or passage of time or both) under any provision of any law, governmental
rule, regulation, judgment, decree or order binding on the Servicer or its
properties or the articles of incorporation or bylaws of the Servicer, or any
provision of any indenture, mortgage, contract or other instrument to which the
Servicer is a party or by which it is bound, or result in the acceleration of
any obligation under, or the creation or imposition of any Lien upon, any of
its property pursuant to the terms of any such indenture, mortgage, contract or
other instrument.
SECTION 7.03. APPROVALS.
The Servicer has obtained or made all necessary licenses,
consents, approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case in connection with the execution and
delivery of this Supplement and the consummation of all the transactions herein
contemplated, and the Servicer is not required to obtain the consent of any
other party or the consent, license, approval, waiver or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Supplement.
SECTION 7.04. ENFORCEABILITY.
This Supplement constitutes a legal, valid and binding
instrument enforceable against the Servicer in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, and other similar
laws relating to the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
SECTION 7.05. LITIGATION.
There are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened against or affecting the Servicer or any
Affiliate thereof, before or by any court, administrative agency, arbitrator or
governmental body with
7
<PAGE> 12
respect to any of the transactions contemplated by this Supplement, or which
will, if determined adversely to the Servicer or any such Affiliate, materially
and adversely affect the Servicer's ability to perform its obligations
hereunder. The Servicer is not in default with respect to any order of any
court, administrative agency, arbitrator or governmental body so as materially
and adversely to affect the transactions contemplated by this Supplement.
SECTION 7.06. REPRESENTATIONS TO AISLIC.
The Servicer has made no material misrepresentations to AISLIC
regarding any matter in the process of arranging for and negotiating the terms
of the Residual Value Insurance Policy.
ARTICLE EIGHT
CREATION OF 1997-A SUBI
SECTION 8.01. INITIAL CREATION OF 1997-A SUBI PORTFOLIO.
(a) Pursuant to Section 4.02 of the Origination Trust
Agreement and Section 11.01 of the 1997-A SUBI Supplement, the Origination
Trustee has been directed to cause to be identified and allocated on the books
and records of the Origination Trust an initial separate portfolio of SUBI
Assets consisting of Leases, related Leased Vehicles and other associated Trust
Assets, which Trust Assets shall meet the criteria specified therein. Pursuant
to Section 2.02(f) of the Servicing Agreement, the Origination Trustee, on
behalf of the Origination Trust, hereby directs that the Servicer so identify
and allocate such a separate portfolio of SUBI Assets consisting of Leases,
related Leased Vehicles and other associated Trust Assets from among all those
Leases, related Leased Vehicles and other associated Trust Assets owned by the
Origination Trustee, on behalf of the Origination Trust, and currently
accounted for as part of the Undivided Trust Interest.
(b) Pursuant to subsection (a) above and Section 2.02(f)
of the Servicing Agreement, the Servicer hereby identifies and allocates the
portfolio of Leases, related Leased Vehicles and other associated Trust Assets
(as described in clauses (i) through (ii) of the first sentence of Section
11.01(a) of the 1997-A SUBI Supplement) more particularly described on Exhibit
A hereto (which is in substantially the form of a Schedule of Leases and Leased
Vehicles), in order to create the initial 1997-A SUBI Portfolio.
(c) The Servicer hereby represents and warrants to the
Origination Trustee, on behalf of the Origination Trust, and to the
Securitization Trustee, on behalf of the Certificateholders,
8
<PAGE> 13
that (i) all 1997-A Leases as of the Initial Cutoff Date were Eligible Leases
as of the Initial Cutoff Date, (ii) no adverse selection procedures were
employed in selecting such 1997-A Leases, and (iii) it is not aware of any bias
in the selection of such 1997-A Leases that would cause the delinquencies or
losses therein to be worse than those of other Leases.
SECTION 8.02. SUBSEQUENT ADDITIONS TO 1997-A SUBI
PORTFOLIO.
(a) Pursuant to Section 11.02 of the 1997-A SUBI
Supplement, the Origination Trustee has been directed to cause to be identified
and allocated on the books and records of the Origination Trust on or before
each Transfer Date certain additional Eligible Leases, related Leased Vehicles
and other associated Trust Assets not then allocated, or reserved for
allocation to, any SUBI Portfolio, with an aggregate Discounted Principal
Balance determined as provided for in such Section. Pursuant to Section
2.02(f) of the Servicing Agreement, the Origination Trustee, on behalf of the
Origination Trust, hereby directs that the Servicer identify such additional
Eligible Leases, related Leased Vehicles and other associated Trust Assets (as
described in clauses (i) and (ii) of the first sentence of Section 11.01(a) of
the 1997-A SUBI Supplement and as meet the other requirements set forth in
Section 11.02 thereof) on or before each Transfer Date, and cause such Leases
and Leased Vehicles to be specifically identified on the revised Schedule of
Leases and Leased Vehicles to be delivered pursuant to Section 10.01(b) hereof.
On each such Transfer Date, but effective as of the related Subsequent Cutoff
Date, such additional Eligible Leases, Leased Vehicles and other associated
Trust Assets shall be added to the 1997-A SUBI Portfolio as additional 1997-A
SUBI Assets.
(b) The Servicer shall give one Business Day's prior
notice to the Trustee of each Transfer Date. On each Transfer Date, prior to
the reallocation described in the last sentence of subparagraph (a), the
Servicer also shall provide to the Origination Trustee, on behalf of the
Origination Trust, an Officer's Certificate certifying that (i) all 1997-A
Leases added to the 1997-A SUBI Portfolio on that date were Eligible Leases as
of the relevant Subsequent Cutoff Date, (ii) no adverse selection procedures
were employed in selecting such 1997-A Leases, (iii) it is not aware of any
bias in the selection of such 1997-A Leases that would cause the delinquencies
or losses thereof to be worse than other Leases, other than the fact that such
1997-A Leases were selected from all Eligible Leases not then allocated to any
SUBI Portfolio or reserved for allocation to another SUBI Portfolio on a
"first-in, first-out" basis, based on the date of origination (other than as
provided in Section 11.08 of the 1997-A SUBI Supplement) and (iv) unless the
9
<PAGE> 14
Origination Trustee receives confirmation (written or oral) from each Rating
Agency to the effect that the use of different criteria would not result in the
qualification, reduction or withdrawal of its then current rating on any Rated
Certificates, after giving effect to such reallocation (A) each such 1997-A
Lease will be allocated to the 1997-A SUBI Portfolio based upon its Discounted
Principal Balance as of the relevant Subsequent Cutoff Date, (B) the weighted
average remaining term of all 1997-A Leases will be not greater than 38 months,
and (C) the weighted average Booked Residual Value of all 1997-A Leases, as a
percentage of the aggregate Outstanding Principal Balance of the 1997-A Leases,
will be not greater than 65%, based on the characteristics of each 1997-A Lease
as of its date of origination.
(c) Except in the circumstances set forth in Section
11.02(e) of the 1997-A SUBI Supplement, on each Transfer Date, the Servicer
shall transfer from the 1997-A SUBI Collection Account to the Lease Funding
Account an amount equal to the aggregate Discounted Principal Balance as of the
relevant Subsequent Cutoff Date of the 1997-A Leases then being added to the
1997-A SUBI Portfolio pursuant to Section 11.02(a) of the 1997-A SUBI
Supplement.
(d) In the circumstances set forth in Section 11.02(e) of
the 1997-A SUBI Supplement, the Servicer shall transfer from the 1997-A SUBI
Collection Account to the 1997-A SUBI Lease Account the amounts specified in
such Section.
SECTION 8.03. SERVICER PAYMENT IN RESPECT OF CERTAIN
LEASES AND LEASED VEHICLES.
(a) The representation and warranty of the Servicer set
forth in Section 8.01(c), and the certifications of the Servicer pursuant to
Section 8.02(b)(i), with respect to each 1997-A Lease shall survive delivery of
the related Lease Documents to the Servicer and shall continue so long as such
1997-A Lease remains outstanding, or until the termination of the
Securitization Trust Agreement pursuant to Section 7.01 thereof, whichever
occurs earlier. Upon discovery by the Origination Trustee, the Securitization
Trustee or the Servicer that any such representation or warranty was incorrect
as of the time effective and materially and adversely affects such 1997-A
Lease, the party discovering such incorrectness shall give prompt written
notice to the others. Within 60 days of its discovery of such incorrectness or
notice to such effect to the Servicer, the Servicer shall cure in all material
respects the circumstances or condition in respect of which the representation
or warranty was incorrect as of the time effective. If the Servicer is unable
or unwilling to do so timely, it shall, as the sole remedy for such breach,
promptly (i) deposit (or cause to be deposited) into
10
<PAGE> 15
the 1997-A SUBI Collection Account an amount equal to the then Discounted
Principal Balance of such Lease as of the Deposit Date related to the
Collection Period in which the 60-day cure period ended, plus an amount equal
to the imputed interest, or lease charge, portion of any Monthly Lease Payments
with respect thereto at the related Lease Rate that was delinquent as of that
Collection Period, (ii) reallocate such Lease and the related Leased Vehicle
from the 1997-A SUBI Portfolio to the UTI Portfolio, and (iii) indemnify,
defend and hold harmless the holders of any 1997-A SUBI Certificate (including
without limitation the Securitization Trustee on behalf of the Securitization
Trust and the Certificateholders) and any subsequent servicer (if other than
the current Servicer) from and against, any and all loss or liability with
respect to or resulting from any such Lease or Leased Vehicle (including
without limitation the reasonable fees and expenses of counsel).
Notwithstanding the foregoing, if any reallocation described in clause (ii)
would cause the Transferor Interest to be equal to or less than zero, the
Servicer also shall deposit promptly into the 1997-A SUBI Collection Account an
amount so that the Transferor Interest will not be reduced to less than zero,
and the reallocation will not be made until such deposit has been made.
(b) In the event that the Servicer receives funds from a
Dealer required pursuant to such Dealer's obligation under a Dealer Agreement
with the Servicer to repurchase a misrepresented Lease or Leased Vehicle
included in the 1997-A SUBI Portfolio, the Servicer shall, within two Business
Days of receipt thereof, deposit such funds into the 1997-A SUBI Collection
Account, which deposit shall satisfy the Servicer's obligations pursuant to
Section 8.03(a)(i), and return to the repurchasing Dealer the Certificate of
Title and Lease with respect to such Leased Vehicle.
(c) The obligations of the Servicer pursuant to this
Section 8.03 shall survive any termination of the Servicer with respect to the
1997-A SUBI Portfolio under this Supplement or the Servicing Agreement.
SECTION 8.04. FILINGS.
The Servicer will undertake all other and future actions and
activities as may be reasonably necessary to perfect (or evidence) and confirm
the foregoing allocations of Trust Assets to the 1997-A SUBI Portfolio,
including without limitation filing or causing to be filed UCC financing
statements and executing and delivering all related filings, documents or
writings as may be reasonably necessary hereunder or under any other
Securitization Trust Documents (including the Backup Security Agreement),
whether on its own behalf or pursuant to the power of attorney granted by the
Grantor pursuant to Section
11
<PAGE> 16
11.04 of the 1997-A SUBI Supplement; provided, however, that in no event shall
the Servicer be required to take any action to perfect a security interest that
may be held by the Securitization Trustee in any 1997-A Leased Vehicle.
ARTICLE NINE
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF LEASES
IN 1997-A SUBI PORTFOLIO
SECTION 9.01. SERVICER BOUND BY SERVICING AGREEMENT.
(a) Except as otherwise specifically provided herein: (i)
the Servicer shall continue to be bound by all provisions of the Servicing
Agreement with respect to the Leases, Leased Vehicles and other associated
Trust Assets in the 1997-A SUBI Portfolio, including without limitation the
provisions of Article Two thereof relating to the administration and servicing
of Leases; and (ii) the provisions set forth herein shall operate either as
additions to or modifications of the already-extant obligations of the Servicer
under the Servicing Agreement, as the context may require. In the event of any
conflict between the provisions of this Supplement and the Servicing Agreement
with respect to the 1997-A SUBI, the provisions of this Supplement shall
prevail.
(b) For purposes of determining the Servicer's
obligations with respect to the servicing of the 1997-A SUBI Portfolio under
this Supplement (including without limitation pursuant to Article Two thereof),
general references in the Servicing Agreement to: (i) a SUBI Account shall be
deemed to refer more specifically to the 1997-A SUBI Account; (ii) a SUBI Asset
shall be deemed to refer more specifically to a 1997-A SUBI Asset; (iii) an
appropriate or applicable SUBI Collection Account shall be deemed to refer more
specifically to the 1997-A SUBI Collection Account; (iv) an appropriate or
applicable SUBI Lease Account shall be deemed to refer more specifically to a
1997-A SUBI Lease Account; (v) a SUBI Portfolio shall be deemed to refer more
specifically to the 1997-A SUBI Portfolio; (vi) a SUBI Servicing Agreement
Supplement shall be deemed to refer more specifically to this Supplement; and
(vii) a SUBI Supplement shall be deemed to refer more specifically to the
1997-A SUBI Supplement.
(c) Coincident with the execution and delivery of this
Supplement, the Servicer shall furnish the Securitization Trustee, on behalf of
the 1997-A Securitization Trust, with an Officer's Certificate listing the
officers of the Servicer currently involved in, or responsible for, the
administration and servicing of the Leases in the 1997-A SUBI Portfolio, which
list shall from time to time be updated by the Servicer.
12
<PAGE> 17
SECTION 9.02. COLLECTION OF MONTHLY LEASE PAYMENTS AND
REMITTANCES; APPLICATION OF PROCEEDS;
ACCOUNTS
(a) With reference to Section 2.02(b) of the Servicing
Agreement:
(i) the Servicer shall transfer into the 1997-A
SUBI Collection Account any Extension Fee that it may receive in connection
with the extension of a 1997-A Lease;
(ii) except as provided in clause (iii) below, the
extended Maturity Date of any 1997-A Lease may not occur later than the last
day of the Collection Period related to the Final Scheduled Distribution Date;
and
(iii) if the Servicer does extend the Maturity Date
of a Lease included in the 1997-A SUBI Portfolio by more than a total of five
times or by more than five months in the aggregate as described in Section
2.02(b) of the Servicing Agreement, or extends the Maturity Date so that the
extended Maturity Date will occur later than the last day of the Collection
Period relating to the Final Scheduled Maturity Date, then, as the sole remedy
therefor, the Servicer shall, on the Deposit Date related to the Collection
Period in which such extension was granted or on the Deposit Date relating to
the Collection Period in which the Servicer discovers or is notified that an
improper extension was granted, (y) deposit into the 1997-A SUBI Collection
Account an amount equal to the then Discounted Principal Balance of such Lease
plus an amount equal to the interest, or lease charge, portion of any Monthly
Lease Payments with respect thereto at the related Lease Rate that were
delinquent as of the end of that Collection Period, and (z) reallocate such
Lease and the related Leased Vehicle from the 1997-A SUBI Portfolio to the UTI
Portfolio. The obligations of the Servicer pursuant to this Section 9.02(a)
shall survive any termination of the Servicer's obligations with respect to the
1997-A SUBI Portfolio under this Supplement or the Servicing Agreement.
(b) With reference to Section 2.02(c) of the Servicing
Agreement, the Servicer shall, within one (1) Business Day after receipt,
deposit all proceeds of claims made under the Residual Value Insurance Policy
(as described in Section 9.10(b)) (i) for Insured Residual Value Loss Amounts
with respect to the Revolving Period, into the 1997-A SUBI Collection Account
for reinvestment in additional Eligible Leases, related Leased Vehicles and
other associated Trust Assets as provided in Section 8.02, and (ii) for Insured
Residual Value Loss Amounts with respect to the Amortization Period, into the
Distribution Account for
13
<PAGE> 18
distribution as provided in clause (ii) of Section 3.03(e) of the
Securitization Trust Agreement.
(c) With reference to Section 2.02(d) of the Servicing
Agreement, the Servicer shall treat all Repossessed Vehicle Proceeds and
Matured Leased Vehicle Proceeds in the manner provided for other Liquidation
Proceeds; provided, however, as set forth in Section 9.07, that the Servicer
may be reimbursed for related unreimbursed Repossessed Vehicle Expenses,
Matured Leased Vehicle Expenses, other Liquidation Expenses and Insurance
Expenses as provided in subsection (g).
(d) With reference to Section 2.04 of the Servicing
Agreement, the Servicer shall deposit into the 1997-A SUBI Collection Account
on or before each Deposit Date each Security Deposit that became Liquidation
Proceeds during the related Collection Period.
(e) The Servicer, on behalf of the Origination Trustee,
shall establish and maintain the 1997-A SUBI Collection Account in the
circumstances set forth in Section 12.01(a) of the 1997-A SUBI Supplement. The
Servicer, on behalf of the Origination Trustee, shall establish and maintain
the Residual Value Surplus Account in the circumstances set forth in Section
12.03(a) of the 1997-A SUBI Supplement. The Servicer shall establish and
maintain the Distribution Account in the circumstances set forth in Section
3.01 of the Securitization Trust Agreement. The Servicer shall establish and
maintain the Reserve Fund in the circumstances set forth in Section 3.04(a) of
the Securitization Trust Agreement.
(f) On each Determination Date the Servicer shall make
the calculations necessary to allow the distribution by the Origination Trustee
to holders of the 1997-A SUBI Certificates on the related Distribution Date in
accordance with Section 12.01(c) of the 1997-A SUBI Supplement. In connection
therewith, the Servicer shall determine the amount of Origination Trust
expenses and liabilities ("Origination Trust Expenses") incurred or suffered
during the preceding Collection Period and shall calculate the allocations of
such Origination Trust Expenses among the various Portfolios, including the
1997-A SUBI Portfolio, in good faith and so as not to disproportionately affect
any Portfolio, generally as provided for in Section 7.01(c) of the Trust
Agreement. On each Determination Date, the Servicer also shall make the
calculations necessary to allow the distributions to Certificateholders and
others on the related Distribution Date in accordance with Section 3.03 of the
Securitization Trust Agreement.
(g) On each Deposit Date, the Servicer shall (i) cause
the transfer from the 1997-A SUBI Collection Account to the
14
<PAGE> 19
Residual Value Surplus Account as provided in Section 12.01(b) of the 1997-A
SUBI Supplement or make the transfer from the Residual Value Surplus Account to
the 1997-A SUBI Collection Account as provided in Section 12.03(b) of the
1997-A SUBI Supplement, as appropriate, and (ii) cause the transfers from the
1997-A SUBI Collection Account in respect of the 1997-A SUBI Certificates to
the Distribution Account at the direction of the Transferor, as provided in
Section 3.02(a) of the Securitization Trust Agreement and Section 12.01(c) of
the 1997-A SUBI Supplement. On each Distribution Date, the Servicer shall make
the distributions from the Distribution Account and the Reserve Fund in respect
of the Certificates, as provided in Section 3.03 of the Securitization Trust
Agreement, including without limitation any redeposit of Undistributed
Transferor Excess Collections into the 1997-A SUBI Collection Account upon
receipt of appropriate instructions from the Transferor pursuant to Section
3.03(e) of the Securitization Trust Agreement.
(h) To the extent that during any Collection Period the
Servicer has incurred Matured Leased Vehicle Expenses as would result in Net
Matured Leased Vehicle Proceeds (for purposes hereof, calculated without
netting any Matured Leased Vehicle Expenses as are reimbursed pursuant to
subsection (b)), being less than the sum of the Booked Residual Values of all
Matured Vehicles sold or otherwise disposed of from Matured Leased Vehicle
Inventory during the related Collection period, then on the related Deposit
Date, (w) the Servicer shall provide to the Origination Trustee and the
Securitization Trustee an Officer's Certificate setting forth the basis for its
determination of any such amount, and (x) the Origination Trustee shall
promptly transfer the amount of such Matured Leased Vehicle Expenses for the
related Collection Period from the Residual Value Surplus Account to the Lease
Funding Account (but only to the extent as would result in the Net Matured
Leased Vehicle Proceeds (but instead calculated fully in accordance with the
definition thereof) being no more than the sum of the Booked Residual Values of
all Matured Vehicles sold or otherwise disposed of from Matured Leased Vehicle
Inventory during that Collection Period). To the extent that during any
Collection Period: (i) the Servicer has incurred Matured Leased Vehicle
Expenses that may not be reimbursed from the Residual Value Surplus Account as
described above, whether because Net Matured Leased Vehicle Proceeds (again
calculated fully in accordance with the definition thereof) would be more than
the sum of the Booked Residual Values of all Matured Vehicles sold or otherwise
disposed of from Matured Leased Vehicle Inventory during that Collection Period
or because there are insufficient amounts available on deposit in the Residual
Value Surplus Account to reimburse the Servicer for any Matured Leased Vehicle
Expenses as would otherwise be reimbursable from the Residual Value Surplus
Account as provided above; (ii) the Servicer has incurred any Repossessed
Vehicle Expenses or other
15
<PAGE> 20
Liquidation Expenses or Insurance Expenses; (iii) any Monthly Lease Payments
arising from a Lease allocated to the 1997-A SUBI Portfolio are received by
the Origination Trustee or the Servicer with respect to any prior Collection
Period as to which the Servicer has outstanding an unreimbursed Advance; or
(iv) any amount of unreimbursed Advances are reasonably determined by the
Servicer to be Nonrecoverable Advances, then, on the related Deposit Date, (1)
the Servicer shall provide to the Origination Trustee and the Securitization
Trustee an Officer's Certificate setting forth the basis for its determination
of any such amount and (2) the Origination Trustee shall promptly transfer an
amount equal to the aggregate of such amounts from the 1997-A SUBI Collection
Account to the Lease Funding Account. Thereafter, the Origination Trustee
shall remit to the Servicer from the Lease Funding Account the total of such
amounts set forth in the first sentence above and clauses (i) through (v) of
the second sentence above, without interest (the "Servicer Reimbursement"). In
lieu of causing the Origination Trustee to transfer to the Lease Funding
Account and then remit to the Servicer all or part of any such Servicer
Reimbursement, upon providing an Officer's Certificate, the Servicer may deduct
from deposits otherwise to be made into the 1997-A SUBI Collection Account or
Residual Value Surplus Account, as applicable, an amount up to but not
exceeding the total of such amounts as are due and owing to the Servicer.
(i) The Servicer shall account to the Origination Trustee
and the Securitization Trustee with respect to the 1997-A SUBI Portfolio
separately from any other Portfolio.
(j) The Servicer shall direct the Origination Trustee's
or the Securitization Trustee's, as applicable, investments from time to time
of funds in the 1997-A SUBI Accounts, the Distribution Account and the Reserve
Fund, all as provided for in (and subject to the limitations of) Section
7.01(d) of the Trust Agreement, Sections 11.02(d), 12.01, 12.02 and 12.03 of
the 1997-A SUBI Supplement, and Sections 3.01(b) and 3.04(a) of the
Securitization Trust Agreement. The maximum permissible maturities of any such
investments pursuant to this clause on any date shall be not later than the
Business Day immediately preceding the Deposit Date (with regard to investment
of funds in 1997-A SUBI Accounts) or the Business Day immediately preceding the
Distribution Date (with regard to investment of funds in the Distribution
Account and the Reserve Fund) next succeeding the date of such investment,
except for (i) investments on which the Origination Trustee or Securitization
Trustee, respectively, is the obligor (including repurchase agreements on which
it, in its commercial capacity, is liable as principal), which may mature on
the Deposit Date or Distribution Date, respectively, and (ii) investments
during the Revolving Period of Principal Collections on deposit in the 1997-A
SUBI Collection Account, which may mature on such dates as
16
<PAGE> 21
specified by the Origination Trustee at the Servicer's direction so as to
maintain the availability of sufficient cash to make the payments described in
Sections 8.02(c) and (d) hereof.
(k) In the event the Servicer obtains confirmation
(written or oral) from each Rating Agency, and provides evidence of such
confirmation to the UTI Holder, the Origination Trustee and the Securitization
Trustee, to the effect that the utilization by the Servicer of an alternative
remittance schedule with respect to collections arising out of the 1997-A SUBI
Portfolio to be deposited in the 1997-A SUBI Collection Account pursuant to
Section 2.02(c) or (d) of the Servicing Agreement (including but not limited to
the use of an alternative remittance schedule pursuant to which the obligations
of the Servicer to make such remittances are secured by a Servicer Letter of
Credit satisfactory to each such Rating Agency) will not result in a
qualification, downgrading or withdrawal of the then-current rating assigned to
the Rated Certificates by such Rating Agency, (i) this Supplement may be so
modified without the consent of any Certificateholders pursuant to Section
12.02 of this Agreement and 9.01 of the Securitization Trust Agreement and (ii)
the Servicer may remit such collections to the 1997-A SUBI Collection Account
in accordance with that alternative remittance schedule.
(l) The Servicer may make remittances to the Distribution
Account net of certain other amounts, as and to the extent set forth in Section
3.05 of the Securitization Trust Agreement.
(m) The parties hereto acknowledge that the Origination
Trustee, on behalf of the Origination Trust, has made a complete transfer to
the Securitization Trustee of the initial proceeds of the 99.8% 1997-A SUBI
Certificate contained in the Distribution Account and the Reserve Fund and,
except as provided in this Supplement, the 1997-A SUBI Supplement and the
Securitization Trust Agreement, neither the Origination Trustee nor the
Servicer has any right to direct such funds to a third party or to receive such
funds.
(n) In the event of a sale, disposition or other
liquidation of the 99.8% 1997-A SUBI Certificate and the other property of the
Securitization Trust pursuant to Section 8.02 of the Securitization Trust
Agreement, the Servicer shall allocate the net proceeds thereof between
Principal Collections and Interest Collections as set forth in Section 8.01(b)
of the Securitization Trust Agreement.
17
<PAGE> 22
SECTION 9.03. RECORDS.
Upon the occurrence and during the continuance of a 1997-A
Event of Default hereunder, the Servicer shall, on demand of the Origination
Trustee, on behalf of the Origination Trust (either at the request of the
Securitization Trustee or, as provided in Section 11.01(b) hereof, upon demand
of Investor Certificateholders representing not less than 51% of the aggregate
Percentage Interest), deliver to the Origination Trustee all such data,
operating software and appropriate documentation necessary for the servicing of
the 1997-A Leases, including but not limited to the related Lease Documents and
Title Documents, all moneys collected by it and required to be deposited in any
1997-A SUBI Account on behalf of the Origination Trust, or in the Distribution
Account or the Reserve Fund on behalf of the Securitization Trust, all Security
Deposits with respect to 1997-A Leases, and any 1997-A Leased Vehicle in the
possession of the Servicer that has been repossessed or is part of Matured
Leased Vehicle Inventory and in either case has not yet been sold or otherwise
disposed of pursuant to Section 2.06 of the Servicing Agreement. Without
limitation of the foregoing, if the rights of the Servicer with respect to the
1997-A SUBI Portfolio shall have been terminated in accordance with Section
4.01(b) of the Servicing Agreement and Section 11.01(b) hereof or if this
Supplement shall have been terminated pursuant to Section 12.01 hereof, the
Servicer shall, upon demand of the Origination Trustee, on behalf of the
Origination Trust (either at the request of the Securitization Trustee, the
Investor Certificateholders representing not less than 51% of the aggregate
Percentage Interest, or otherwise), deliver to the Origination Trustee all such
data, operating software and appropriate documentation necessary for the
servicing of the 1997-A Leases and all moneys collected by it and required to
be deposited, as appropriate, in any 1997-A SUBI Account or the Distribution
Account or the Reserve Fund. In addition to delivering such data, operating
software and appropriate documentation and moneys, the Servicer shall use its
commercially reasonable efforts to effect the orderly and efficient transfer of
the servicing of the 1997-A Leases to the party that will be assuming
responsibility for such servicing, including, without limitation, directing
Obligors to remit payments in respect of those Leases to an account or address
designated by the Origination Trustee or such new servicer.
SECTION 9.04. ADVANCES.
(a) On or prior to each Deposit Date, the Servicer shall
make any Advance required by clause (i) of the definition thereof, and may make
any Advance permitted by clause (ii) of the definition thereof which the
Servicer chooses to make, into the 1997-A SUBI Collection Account.
18
<PAGE> 23
(b) Notwithstanding any other provision of this
Supplement, the Servicer shall not be obligated to make any Advance if and to
the extent that the Servicer shall have reasonably determined that any such
Advance, if made, would constitute a Nonrecoverable Advance. Any such
determination shall be evidenced by an Officer's Certificate of the Servicer
furnished to the UTI Holder, the Origination Trustee and the Securitization
Trustee setting out the basis for such determination, which determination shall
be conclusive and binding absent manifest error.
SECTION 9.05. PAYMENT OF CERTAIN FEES AND EXPENSES;
NO OFFSET.
(a) As part of its obligations hereunder, to the extent that
cash flows arising from the 1997-A SUBI Portfolio, as set forth in Section
3.03(b) of the Securitization Trust Agreement, are insufficient to provide for
the payment of all fees and expenses due to the Origination Trustee or the
Securitization Trustee as Capped Origination Trust Administrative Expenses,
Capped Securitization Trust Administrative Expenses or Uncapped Administrative
Expenses, the Servicer shall advance an amount equal to such excess fees and
expenses as they become payable from time to time and agrees to indemnify the
Origination Trustee and the Securitization Trustee and their respective agents
for such amounts. The Servicer shall be entitled to reimbursement of such
advances as set forth in Section 3.03(b) of the Securitization Trust Agreement.
The obligations of the Servicer pursuant to this Section 9.05(a) shall survive
any termination of the Servicer's rights and obligations with respect to the
1997-A SUBI Portfolio under this Supplement or the Servicing Agreement.
(b) Prior to the termination of the Servicer's rights and
obligations with respect to the 1997-A SUBI Portfolio and thereafter if such
termination results from a 1997-A Event of Default, the obligations of the
Servicer with respect to the 1997-A SUBI Portfolio shall not be subject to any
defense, counterclaim or right of offset that the Servicer has or may have
against any UTI Holder, the Origination Trustee on behalf of the Origination
Trust, any Special Purpose Affiliate or the Securitization Trustee, whether in
respect of this Supplement, the 1997-A SUBI Supplement, the Servicing
Agreement, any Securitization Trust Document, any 1997-A Lease, any related
Lease Document, any 1997-A Leased Vehicle or otherwise.
SECTION 9.06. SERVICING COMPENSATION.
(a) Notwithstanding anything to the contrary in Section 2.05
of the Servicing Agreement, (a) the Servicing Rate Portion with regard to the
1997-A SUBI Portfolio shall be
19
<PAGE> 24
calculated and (unless waived in accordance with Section 9.06(b) hereof) paid
on each Distribution Date based upon the Aggregate Net Investment Value as of
the first day of the related Collection Period, rather than based upon the
allocable portion of the Pool Balance, (b) the portion of the Servicing Fee
allocable to the 1997-A SUBI Portfolio shall be paid out of cash flows arising
from the 1997-A SUBI Portfolio as and to the extent set forth in Section
12.01(c) of the 1997-A SUBI Supplement and the definition of the term
"Collections" set forth in Section 10.01 thereof, (c) no Extension Fee with
respect to a Lease included in the 1997-A SUBI Portfolio shall constitute part
of the Servicing Fee, and (d) the Servicer may be reimbursed for advancing
certain Administrative Expenses as provided in Section 9.05(a). Further, as
additional servicing compensation with regard to the 1997-A SUBI Portfolio, the
Servicer also shall receive income on investment of funds in the Reserve Fund
if and to the extent that the balance therein is greater than the Reserve Fund
Cash Requirement (and so long as the ERISA Compliance Test is satisfied) as and
to the extent provided in Section 3.04(b) of the Securitization Trust
Agreement.
(b) So long as World Omni Financial Corp. is the Servicer,
the Servicer may, by notice to the Origination Trustee and the Securitization
Trustee on or prior to any Determination Date, waive its Servicing Fee with
respect to the related Collection Period, so long as the Servicer believes that
sufficient collections will be available from Interest Collections on one or
more future Distribution Dates (other than from amounts on deposit in the
Reserve Fund) to pay such waived Servicing Fee, without interest. If the
Servicer so waives such Servicing Fee, the Servicing Fee with respect to such
Collection Period shall be deemed to be zero for all purposes, provided,
however, that for purposes of clause (c) of the definition of "Interest
Collections" in the 1997-A SUBI Supplement and Section 3.03 of the
Securitization Trust Agreement, any such waived Servicing Fee thereafter shall
be treated as an unpaid Servicing Fee with respect to a prior Collection Period
(unless the Servicer continues to waive such Servicing Fee).
SECTION 9.07. REPOSSESSION AND SALE OF LEASED VEHICLES.
Notwithstanding Section 2.06 of the Servicing Agreement, the
Servicer need not deduct from Repossessed Vehicle Proceeds, Matured Leased
Vehicle Proceeds or other Liquidation Proceeds or Insurance Proceeds with
respect to any particular 1997-A Leased Vehicle all related unreimbursed
Repossessed Vehicle Expenses, Matured Leased Vehicle Expenses or other
Liquidation Expenses or Insurance Expenses prior to transferring such funds out
of its operating account. Such expenses may instead be reimbursed as provided
in Section 9.02(g).
20
<PAGE> 25
SECTION 9.08. INDEMNIFICATION BY SERVICER.
The Servicer agrees to indemnify, defend and hold harmless the
Securitization Trustee and its agents for any and all liabilities, losses,
damages and expenses (including without limitation reasonable fees and expenses
of counsel) that may be incurred by the Securitization Trustee or its agents as
a result of any act or omission by the Servicer in connection with its
maintenance and custody of the Lease Documents, Title Documents, and Lease
Records with respect to 1997-A Leases and 1997-A Leased Vehicles, the servicing
of the 1997-A Leases, the Servicer's undertakings in clause (e) of Section 2.07
of the Servicing Agreement or any other activity undertaken or omitted by the
Servicer with respect to any Trust Asset included in the 1997-A SUBI Portfolio.
The obligations set forth in this Section 9.08 shall survive the termination of
this Supplement or the resignation or removal of the Servicer (generally or
with respect to the 1997-A SUBI Portfolio) or the Securitization Trustee.
SECTION 9.09. THIRD PARTY CLAIMS.
The Servicer shall immediately notify the Securitization
Trustee and any other holder of any 1997-A SUBI Certificate upon its learning
that a claim of whatever kind that would have a material adverse impact on any
UTI Holder, the Transferor, the Origination Trustee, the Origination Trust, the
Securitization Trust, the Securitization Trustee, any 1997-A SUBI Asset or the
Servicer is being made by a third party with respect to any Lease or Leased
Vehicle (whether or not included in the 1997-A SUBI Portfolio) or the servicing
thereof or with respect to any other Trust Asset (whether or not constituting a
1997-A SUBI Asset).
SECTION 9.10. INSURANCE POLICIES.
(a) So long as any 1997-A SUBI Certificates are outstanding,
the Servicer will maintain and pay when due all premiums with respect to, and
the Servicer may not terminate or cause the termination of, or permit any other
insured party to terminate or cause the termination of the following: (i) each
Contingent and Excess Liability Insurance Policy, all premiums with respect to
which shall constitute Administrative Expenses, unless (A) a replacement
insurance policy or policies is obtained providing coverage against third party
claims that may be raised against the Origination Trustee, on behalf of the
Origination Trust, with respect to any Leased Vehicle included in the 1997-A
SUBI Portfolio in an amount at least equal to $10 million per claim, not
subject, to this extent, to any annual or aggregate cap (which policy or
policies may be a blanket insurance policy or policies covering the Servicer
and one or more of its
21
<PAGE> 26
Affiliates), and (B) either each Rating Agency has confirmed (orally or in
writing) to the Securitization Trustee to the effect that the obtaining of any
such replacement insurance policy or policies, in and of itself, will not cause
its then-current rating of any of the Rated Certificates to be qualified,
reduced or withdrawn, or alternatively (with respect to Moody's only, so long
as Moody's is a Rating Agency) such replacement policy is issued by a carrier
with a claims paying ability rating of A-2 or better; or (ii) the Residual
Value Insurance Policy, all premiums with respect to which shall be an expense
of the Servicer, unless the Servicer complies with clause (ii) or (iii) of
Section 8.01(l) of the Securitization Trust Agreement. Further, the Servicer
shall provide each Rating Agency prior notice of the content of any proposed
amendment, modification or waiver of the terms of the Residual Value Insurance
Policy, whether or not such action requires the approval of any Rating Agency.
On or before December 31 of each year, the Servicer shall provide to the
Origination Trustee one or more insurance certificates certifying that each of
the particular policies it is required to maintain pursuant to this Section
9.10 remains in full force and effect. The obligations of the Servicer
pursuant to this Section 9.10 shall survive any termination of the Servicer's
obligations with respect to the 1997-A SUBI Portfolio under this Supplement or
the Servicing Agreement.
(b) On or prior to each Residual Value Loss Determination
Date, the Servicer shall determine the Insured Residual Value Loss Amount for
the related Collection Period, if any, and shall make a claim under the
Residual Value Insurance Policy for any such Insured Residual Value Loss
Amount. The proceeds of such claim shall be deposited as set forth in Section
2.02(c) hereof for application as set forth in clause (ii) of Section 3.03(e)
of the Securitization Trust Agreement.
(c) Once established, the Servicer shall not change the
insured residual value of any 1997-A Leased Vehicle under the Residual Value
Insurance Policy except in accordance with its customary and usual procedures.
SECTION 9.11. SERVICER NOT TO RESIGN; ASSIGNMENT.
(a) If the Servicer resigns in the circumstances contemplated
by Section 2.10(a) of the Servicing Agreement, in addition to the requirements
set forth therein, the Opinion of Counsel required thereby also shall be
reasonably satisfactory to the Securitization Trustee. Any servicing agreement
entered into by a new servicer pursuant to that Section 2.10(a) also must
contain substantially the same provisions as this Supplement. The
Securitization Trustee shall not unreasonably fail to consent to a servicing
agreement with a new servicer that proposes to enter into a servicing agreement
that meets the standards
22
<PAGE> 27
required by Section 2.10 of the Servicing Agreement and this Supplement. No
such resignation shall affect the obligation of the Servicer to remit moneys to
the 1997-A SUBI Collection Account (in lieu of unrecoverable insurance
proceeds) as set forth in Section 2.11 of the Servicing Agreement and Section
9.11 hereof, or the obligations of the Servicer pursuant to Section 8.03(c)
hereof, Section 2.07(g) of the Servicing Agreement or Section 9.07 hereof,
Section 9.02(a) hereof (as to any 1997-A Lease the Maturity Date of which has
been extended beyond the specified limit by the Servicer), Section 9.05(a)
hereof, or Section 9.09 hereof; no successor Servicer shall be required to
undertake any of the foregoing, other than the obligation set forth in Section
9.05(a) (which shall remain a joint and several obligation of the initial
Servicer and any successor Servicer). The Origination Trustee shall give
prompt notice to each Rating Agency of any such resignation of the Servicer,
and the Origination Trustee and Securitization Trustee must obtain from each
Rating Agency a letter approving each substitute servicer.
(b) The Servicer may not assign this Supplement or any of its
rights, powers, duties or obligations hereunder except in connection with an
assignment of the Servicing Agreement as permitted thereby.
(c) Except as provided in paragraphs (a) and (b) above, the
duties and obligations of the Servicer under this Supplement shall continue
until they shall have been terminated as provided in Section 12.01 hereof or in
the Servicing Agreement and shall survive the exercise by the Origination
Trustee, on behalf of the Origination Trust, of any right or remedy under this
Supplement or the Servicing Agreement or the enforcement by the Origination
Trustee, on behalf of the Origination Trust, of any provision of the
Origination Trust Documents.
SECTION 9.12. OBLIGOR INSURANCE COVERAGE IN RESPECT OF
LEASED VEHICLES.
With reference to Section 2.11 of the Servicing Agreement,
except as provided in Section 9.02 hereof, the required deposits of insurance
proceeds with respect to 1997-A Leased Vehicles into the 1997-A SUBI Collection
Account shall be made within two Business Days after receipt thereof.
SECTION 9.13. CORPORATE EXISTENCE; STATUS; MERGER.
(a) With reference to Section 2.13(a) of the Servicing
Agreement, the Servicer also will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of, or to permit the
23
<PAGE> 28
Servicer to perform its obligations under, this Supplement, the Servicing
Agreement and the Securitization Trust Agreement.
(b) With reference to Section 2.13(b) of the Servicing
Agreement, whenever the consent of the Origination Trustee is required, so also
shall the consent of the Securitization Trustee be required, and whenever a
successor to the Servicer by merger or consolidation is required to execute and
deliver to the Origination Trustee an agreement in form and substance
reasonably satisfactory to the Origination Trustee as to the assumption by the
successor of the Servicer's obligations under the Servicing Agreement and the
other Origination Trust Documents, such agreement also must be reasonably
satisfactory to the Securitization Trustee and must contain a similar
assumption of the Servicer's obligations under this Supplement.
SECTION 9.14. MOBILE LEASED PREMISES.
The Servicer as "Lessor," hereby leases to the Transferor and
its general partner, World Omni Lease Securitization, Inc., each as "Lessee,"
and Lessee hereby hires and takes as tenant, for a rental of $100 per year for
Lessee, certain premises located at 6150 Omni Park Drive, Mobile, Alabama of
the minimum dimensions of five (5) feet by eleven (11) feet and surrounded on
at least three (3) sides by walls or moveable partitions (the "Mobile Leased
Premises"), to be used as the Alabama office of Lessee. The lease of the
Mobile Leased Premises to the Lessee pursuant to this Section 9.14 shall
continue throughout the term of this Supplement, except in the case of a change
in the Servicer's principal Alabama offices, in which case the lease of
functionally equivalent premises in the new location from time to time shall
continue throughout such term.
ARTICLE TEN
STATEMENTS AND REPORTS
SECTION 10.01. REPORTING BY THE SERVICER.
(a) The Servicer shall deliver to the Securitization Trustee
all reports and other documents required to be delivered to the Origination
Trustee pursuant to the Servicing Agreement (including Section 3.01 thereof)
concurrently with their delivery to the Origination Trustee.
(b) On or prior to each Determination Date and each Transfer
Date, the Servicer shall cause to be delivered to the Origination Trustee and
the Securitization Trustee a revised Schedule of Leases and Leased Vehicles,
containing data as of the last day of the prior Collection Period (in the case
of
24
<PAGE> 29
each Determination Date) or as of the related Subsequent Cutoff Date (in the
case of each Transfer Date), and which shall contain in addition to the data
required by the definition of the term "Schedule of Leases and Leased Vehicles"
an identification of all Leases and Leased Vehicles that are 1997-A Leases and
1997-A Leased Vehicles, the Discounted Principal Balance of each 1997-A Lease
and the related Cutoff Date for each 1997-A Lease, and on or prior to each
Determination Date, shall cause to be delivered to the Origination Trustee, the
Securitization Trustee and each Rating Agency a certificate in respect of such
Collection Period (the "Servicer's Certificate") substantially in the form
attached as Exhibit B (and setting forth such additional information as
requested by each Rating Agency from time to time which information the
Servicer is able to reasonably provide), containing all information necessary
to make the distributions required by Sections 9.02(f) hereof, 12.01(c) of the
1997-A SUBI Supplement and 3.03 of the Securitization Trust Agreement in
respect of the Collection Period immediately preceding such Determination Date.
On or prior to each Deposit Date, the Servicer shall cause to be delivered to
the Securitization Trustee the statement required by Section 3.06(a) of the
Securitization Trust Agreement. Within the time required by Section 3.06(b) of
the Securitization Trust Agreement, the Servicer shall cause to be delivered to
the Securitization Trustee the statements required by that Section. Any
Certificate Owner may obtain a copy of a Servicer's Certificate upon written
request.
SECTION 10.02. ANNUAL ACCOUNTANTS' REPORTS.
The annual report of the Independent Accountants of the
Servicer required by Section 3.02 of the Servicing Agreement, to the extent
that it refers to the Servicing Agreement, shall also specifically refer to the
Servicing Agreement as supplemented by this Supplement, and shall additionally
be delivered to the Securitization Trustee and each Rating Agency.
SECTION 10.03. OTHER CERTIFICATES AND NOTICES FROM SERVICER.
(a) The annual Officer's Certificate of the Servicer
required by Section 3.03 of the Servicing Agreement, to the extent that it
refers to the Servicing Agreement, shall also specifically refer to the
Servicing Agreement as supplemented by this Supplement, and shall additionally
be delivered to the Securitization Trustee and each Rating Agency.
(b) The Servicer shall deliver to the Securitization
Trustee, the Origination Trustee and each Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, an Officer's Certificate
25
<PAGE> 30
specifying the nature and status of any event which with the giving of notice
or lapse of time, or both, would become a 1997-A Event of Default.
(c) On or prior to each Determination Date, the Servicer
shall cause to be delivered to the Securitization Trustee and each Rating
Agency an Officer's Certificate stating that neither the Trust nor any of its
ERISA Affiliates: (i) maintains a Plan, which, as of its last valuation date,
has Unfunded Current Liability; (ii) anticipates that the value of the assets
of any Plan it maintains would not be sufficient to cover any Current
Liability; or (iii) is contemplating benefit improvements with respect to any
Plan then maintained by any such entity or the establishment of any new Plan,
either of which would cause any such entity to maintain a Plan with Unfunded
Current Liability.
SECTION 10.04. TAX RETURNS.
As contemplated by Section 6.12 of the Securitization Trust Agreement,
the Servicer shall direct the Securitization Trustee to prepare or cause to be
prepared, on behalf of the Transferor, any required federal tax information
returns (in a manner consistent with the treatment of the Investor Certificates
as indebtedness). Also as contemplated by Section 6.12 of the Securitization
Trust Agreement, the Servicer shall prepare or cause to be prepared any federal
and state tax returns that may be required with respect to the Securitization
Trust or the assets thereof and shall deliver any such returns to the
Securitization Trustee for signature at least five days prior to the date such
returns are required by law to be filed.
ARTICLE ELEVEN
DEFAULT
SECTION 11.01. EVENTS OF DEFAULT; TERMINATION OF SERVICER AS
TO 1997-A SUBI PORTFOLIO.
(a) Any of the following acts or occurrences shall constitute
a 1997-A Event of Default under the Servicing Agreement, as supplemented by
this Supplement:
(i) The Servicer shall have failed to deliver to the
Origination Trustee for distribution to or for the account of the
holders of 1997-A SUBI Certificates or to the Securitization Trustee
for distribution to the Investor Certificateholders any amounts
required to be so distributed pursuant to the Servicing Agreement or
this Supplement, which failure continues for five Business Days after
discovery of such failure by an officer of the Servicer or receipt by
the Servicer of written notice thereof from the
26
<PAGE> 31
Origination Trustee, the Securitization Trustee or Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests;
(ii) The Origination Trustee or the Securitization
Trustee shall not have received any report relating to the 1997-A SUBI
Portfolio and required to be delivered to it pursuant to the Servicing
Agreement or this Supplement within ten Business Days after the date
any such report is due;
(iii) The Servicer shall default in the due
performance and observance of any other provision of the Servicing
Agreement or this Supplement with regard to the 1997-A SUBI Portfolio,
which default materially and adversely affects the rights of holders
of 1997-A SUBI Certificates or the Investor Certificateholders, and
such default shall have continued for a period of 60 days after
written notice thereof shall have been given to the Servicer by the
Origination Trustee, the Securitization Trustee or by Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests;
(iv) The Event of Default set forth in Section
4.01(a)(iv) of the Servicing Agreement;
(v) The Event of Default set forth in Section
4.01(a)(v) of the Servicing Agreement;
(vi) Any representation, warranty or statement of
the Servicer made in the Servicing Agreement or this Supplement
relating to the 1997-A SUBI Portfolio or any certificate, report or
other writing delivered pursuant hereto or thereto relating to the
1997-A SUBI Portfolio shall prove to be incorrect in any material
respect as of the time when the same shall have been made and, within
30 days after written notice thereof shall have been given to the
Servicer by the Origination Trustee, the Securitization Trustee or
Investor Certificateholders representing not less than 25% of the
aggregate Percentage Interests, the circumstance or condition in
respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured;
(vii) The Servicer shall have failed to make an
Advance (other than any Nonrecoverable Advance) at the time and in the
amount required by Section 9.04(a) hereof, which failure continues for
five Business Days after discovery of such failure by an officer of
the Servicer or receipt by the Servicer of written notice thereof from
the Origination
27
<PAGE> 32
Trustee, the Securitization Trustee or Investor Certificateholders
representing not less than 25% of the aggregate Percentage Interests;
(viii) The Servicer shall have failed to pay promptly
any Insurance Proceeds pursuant to Section 9.12 hereof and Section
2.11 of the Servicing Agreement at the time such moneys would
otherwise be recoverable under the comprehensive, collision, public
liability and property damage policy required to be maintained by an
Obligor under the related Lease, which failure continues for five
Business Days after discovery of such failure by an officer of the
Servicer or receipt by the Servicer of written notice thereof from the
Origination Trustee, the Securitization Trustee or Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests;
(ix) The Servicer shall have failed to perform its
obligations under Section 9.10(a) hereof with respect to the
Contingent and Excess Liability Insurance Policies or the Residual
Value Insurance Policy; or
(x) The Transferor shall have failed to timely
perform its obligations under Section 3.04(b) of the Securitization
Trust Agreement with regard to the deposit into the Reserve Fund of
an amount equal to the AISLIC Reserve Fund Supplemental Requirement in
the event of an AISLIC Trigger Event.
Notwithstanding the foregoing, a delay or failure in the performance
referred to under clause (i), (vii) or (viii) above for a period of ten
Business Days, or referred to in clause (ii) above for a period of 20 Business
Days, or referred to in clause (iii) for a period of 90 days, or referred to in
clause (vi) for a period of 60 days, shall not constitute a 1997-A Event of
Default if arising from a Force Majeure. Upon the occurrence of a Force
Majeure, the Servicer shall not be relieved from using all commercially
reasonable efforts to perform its obligations in a timely manner, and the
Servicer shall provide to the Trustee, the Origination Trustee, the Transferor
and the Investor Certificateholders prompt notice of such failure or delay,
together with a description of its efforts to perform its obligations.
(b) Notwithstanding anything to the contrary in the Servicing
Agreement, the rights and powers of the Servicer may not be terminated with
regard to the 1997-A SUBI Portfolio absent a 1997-A Event of Default, as
further set forth below. The consequences of a 1997-A Event of Default shall
be as set forth in Section 4.01(b) of the Servicing Agreement with respect to
an Event of Default, as modified by this Section 11.01(b). For
28
<PAGE> 33
those purposes, references in Section 4.01(b) of the Servicing Agreement, to an
Event of Default shall mean a 1997-A Event of Default. Further, in the case of
the 1997-A SUBI, references to "the holder of the requisite percentage of any
SUBI" shall refer either to the Securitization Trustee, or to Investor
Certificateholders representing not less than 51% of the aggregate Percentage
Interests. If a 1997-A Event of Default shall have occurred and be continuing,
the Origination Trustee, on behalf of the Origination Trust, upon the direction
of the Securitization Trustee or Investor Certificateholders representing not
less than 51% of the aggregate Percentage Interests, shall, by notice given to
the Servicer, terminate the portion of the rights and powers of the Servicer
under the Servicing Agreement, as supplemented by this Supplement, with respect
to the 1997-A SUBI Portfolio. Upon the giving of any such notice described in
the preceding sentence or in Section 4.01(b) of the Servicing Agreement, all
rights, powers, duties and responsibilities of the Servicer under the Servicing
Agreement, as supplemented by this Supplement with respect to the 1997-A SUBI
Portfolio, whether with respect to the related Lease Documents, the related
Title Documents or Lease Records, the 1997-A SUBI Collection Account, the
Distribution Account, any 1997-A Lease Funding Account, the Reserve Fund, the
Residual Value Surplus Account, the Servicing Fee or otherwise, but excluding
the obligations set forth below as being retained by the Servicer, shall vest
in and be assumed by the Trust Agent or, if the Trust Agent declines to act as
successor servicer as permitted below, a new servicer as provided in Section
4.01(b) of the Servicing Agreement, and each of the Trust Agent and the
Origination Trustee is each hereby irrevocably authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other instruments (including any notices to
Obligors deemed necessary or advisable by the Trust Agent or Origination
Trustee), and to do or accomplish all other acts or things necessary or
appropriate to effect such vesting and assumption, including, without
limitation, directing the Obligors to remit Monthly Contract Payments,
Prepayments and all other payments on or in respect of the 1997-A Leases and
the 1997-A Leased Vehicles to an account or address designated by the Trust
Agent or such new servicer. Further, in such event, the Servicer shall use
commercially reasonable efforts to effect the orderly and efficient transfer of
the servicing of the 1997-A Leases to the Trust Agent or new servicer, and as
promptly as practicable, the Servicer shall provide to the Trust Agent or new
servicer, as the case may be, a current computer tape containing all
information from the Lease Records required for the proper servicing of the
1997-A Leases, together with documentation containing any and all information
necessary for use of the tape. The Trust Agent may resign or decline to serve
as the Servicer of the 1997-A SUBI Portfolio by giving written notice of such
resignation or
29
<PAGE> 34
declination to the Origination Trustee and the Securitization Trustee and in
such event will be released from such duties and obligations, such resignation
or declination and such release not to be effective until the date a new
servicer enters into a servicing agreement with the Origination Trustee as
provided in Section 4.01(b) of the Servicing Agreement and the Origination
Trustee and Securitization Trustee receive from each Rating Agency a letter
approving such substitute servicer. Upon delivery of any such notice to the
Origination Trustee, the Origination Trustee shall use its commercially
reasonable efforts, upon not less than 30 days' prior written notice to the
Securitization Trustee and the Investor Certificateholders, to obtain a new
servicer for the 1997-A SUBI Portfolio, which shall be an Eligible Servicer,
and which shall enter into a servicing agreement with the Origination Trustee
as provided in Section 4.01(b) of the Servicing Agreement. If, within 30 days
after the delivery of the notice to the Origination Trustee and the
Securitization Trustee referred to above, the Origination Trustee shall not
have obtained such a new servicer for the 1997-A SUBI Portfolio, the
Securitization Trustee may appoint, or may petition a court of competent
jurisdiction to appoint, a successor servicer to service the 1997-A Leases.
No termination of the Servicer as to the 1997-A SUBI Portfolio
shall affect the obligations of the Servicer pursuant to Section 2.01(b)(i) of
the Servicing Agreement, Section 2.11 of the Servicing Agreement or Section
9.10 hereof, Section 2.07(g) of the Servicing Agreement or Section 9.08 hereof,
Section 8.03 hereof, Section 9.02(a) hereof (as to any 1997-A Lease the
Maturity Date of which has been extended beyond the specified limit by the
Servicer), or Section 9.01(a) hereof.
The Origination Trustee shall give prompt notice to each
Rating Agency of any termination of the Servicer affecting the 1997-A SUBI
Portfolio pursuant to this Section 11.01(b) or pursuant to Section 4.01(b) of
the Servicing Agreement.
SECTION 11.02. NO EFFECT ON OTHER PARTIES.
Upon any termination of the rights and powers of the Servicer
with respect to the 1997-A SUBI Portfolio from time to time pursuant to Section
11.01 hereof or Section 4.01 of the Servicing Agreement, or upon any
appointment of a successor to the Servicer with respect to the 1997-A SUBI
Portfolio, all the rights, powers, duties and obligations of the Origination
Trustee, the UTI Holder and the Transferor under this Agreement, the
Securitization Trust Agreement, the 1997-A SUBI Supplement, or any other
Origination Trust Document shall remain unaffected by such termination or
appointment and shall remain in full force and effect thereafter, except as
otherwise expressly provided herein or therein.
30
<PAGE> 35
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TERMINATION OF AGREEMENT.
(a) In connection with any purchase by the Transferor of
the Investor Certificateholders' interest in the corpus of the Securitization
Trust pursuant to Section 7.02 of the Securitization Trust Agreement, and the
Transferor's then succeeding to all of the interest in the 1997-A SUBI
represented by the 1997-A SUBI Certificates, and if the UTI Holder shall
thereafter succeed to such interest in the 1997-A SUBI, the Servicer, upon the
direction of the UTI Holder as provided in Section 11.05 of the 1997-A SUBI
Supplement, shall reallocate all 1997-A Leases, 1997-A Leased Vehicles and
related 1997-A SUBI Assets to the UTI Portfolio.
(b) Except as provided in this Section 12.01, the
respective duties and obligations of the Servicer and the Origination Trustee
with respect to the 1997-A SUBI Portfolio created by the Servicing Agreement
and this Supplement shall terminate upon the termination of the Securitization
Trust Agreement pursuant to Section 7.01 thereof or upon the earlier
termination of the Servicing Agreement pursuant to Section 5.01 thereof. Upon
such a termination, the Servicer shall pay over to the Origination Trustee or
any other Person entitled thereto all moneys held by the Servicer with respect
to the 1997-A SUBI Portfolio pursuant to the Servicing Agreement and this
Supplement.
SECTION 12.02. AMENDMENT.
(a) Notwithstanding Section 5.02(a) of the Servicing
Agreement, the Servicing Agreement, as supplemented by this Supplement, to the
extent that it deals with the 1997-A SUBI Portfolio, may be amended from time
to time in a writing signed by the Origination Trustee, on behalf of the
Origination Trust, the Trust Agent (but only to the extent that such amendment
deals with Section 11.01(b)) and the Servicer, with the prior written consent
of the Securitization Trustee, which shall be given only in the circumstances
contemplated by Section 9.01 of the Securitization Trust Agreement.
(b) The Servicer shall provide each Rating Agency prior
notice of the content of any proposed amendment to the Servicing Agreement,
whether or not such amendment relates to the 1997-A SUBI or requires approval
of any Rating Agency.
31
<PAGE> 36
SECTION 12.03. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 12.04. NOTICES.
The notice provisions of Section 5.04 of the Servicing
Agreement shall apply equally to this Supplement, provided that any notice to
the Securitization Trustee shall be addressed as follows:
First Bank National Association
One Illinois Center
111 East Wacker, Suite 3000
Chicago, Illinois 60601
Attention: Corporate Trust Office
SECTION 12.05. SEVERABILITY.
If one or more of the provisions of this Supplement shall be
for any reason whatever held invalid or unenforceable, such provisions shall be
deemed severable from the remaining covenants, agreements and provisions of
this Supplement, and such invalidity or unenforceability shall in no way affect
the validity or enforceability of such remaining covenants, agreements and
provisions, or the rights of any parties hereto. To the extent permitted by
law, the parties hereto waive any provision of law that renders any provision
of this Supplement invalid or unenforceable in any respect.
SECTION 12.06. INSPECTION AND AUDIT RIGHTS.
The Servicer agrees to afford the same inspection and audit
rights to any representative or designee of the Securitization Trustee as
granted to any representative or designee of the Origination Trustee pursuant
to Section 5.06 of the Servicing Agreement, but only with respect to the books
of account, records, reports and other papers of the Servicer relating to the
1997-A SUBI Portfolio.
SECTION 12.07. BINDING EFFECT.
The provisions of the Servicing Agreement and this Supplement,
insofar as they relate to the 1997-A SUBI Portfolio, shall be binding upon and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto, and shall inure to the benefit of the Origination Trustee, on
behalf of the Origination Trust, and the Securitization Trustee.
32
<PAGE> 37
SECTION 12.08. ARTICLE AND SECTION HEADINGS.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
SECTION 12.09. EXECUTION IN COUNTERPARTS.
This Supplement may be executed in any number of counterparts,
each of which so executed and delivered shall be deemed to be an original, but
all of which counterparts shall together constitute but one and the same
instrument.
SECTION 12.10. RIGHTS CUMULATIVE.
All rights and remedies from time to time conferred upon or
reserved to the Origination Trustee, on behalf of the Origination Trust, the
Servicer or the Securitization Trustee or to any or all of the foregoing are
cumulative, and none is intended to be exclusive of another. No delay or
omission in insisting upon the strict observance or performance of any
provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy may be exercised from time to
time and as often as deemed expedient.
SECTION 12.11. FURTHER ASSURANCES.
Each party will do such acts, and execute and deliver to any
other party such additional documents or instruments as may be reasonably
requested in order to effect the purposes of this Supplement and to better
assure and confirm unto the requesting party its rights, powers and remedies
hereunder.
SECTION 12.12. THIRD-PARTY BENEFICIARIES.
The Servicing Agreement and this Supplement, insofar as they
relate to the 1997-A SUBI Portfolio, will inure to the benefit of and be
binding upon the parties hereto, and each of the holders of any legal or
beneficial interest in the 1997-A SUBI Certificates (including without
limitation the Securitization Trustee and the Certificateholders), who shall be
considered to be third-party beneficiaries hereof. Except as otherwise
provided in this Agreement, no other Person will have any right or obligation
hereunder.
[SIGNATURES ON NEXT PAGE]
33
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers duly authorized as
of the day and year first above written.
WORLD OMNI FINANCIAL CORP.
By:
---------------------------------
A. Tucker Allen
Treasurer
VT INC., as
trustee of World Omni LT
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
WORLD OMNI LEASE SECURITIZATION L.P.
(solely for purposes of Section 9.14)
By: WORLD OMNI LEASE SECURITIZATION,
INC., its general partner
By:
---------------------------------
A. Tucker Allen
Treasurer
FIRST BANK NATIONAL ASSOCIATION, as
Trust Agent (solely for purposes of
Section 11.01(b))
By:
---------------------------------
Name
---------------------------------
Title:
------------------------------
34
<PAGE> 39
Acknowledged and Agreed:
FIRST BANK NATIONAL ASSOCIATION, as
Securitization Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
-------------------------------
35
<PAGE> 40
EXHIBIT A
SCHEDULE OF 1997-A LEASES AND
1997-A LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Trustee and
the Securitization Trustee.]
A-1
<PAGE> 41
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
B-1
<PAGE> 1
EXHIBIT 10.10
AMENDMENT NO. 2
TO
SUPPORT AGREEMENT
AMENDMENT NO. 2 TO SUPPORT AGREEMENT dated as of October 1,
1996 (the "Amendment") made by World Omni Financial Corp., a Florida corporation
("World Omni") having its principal place of business at 120 N.W. 12th Avenue,
Deerfield Beach, FL 33442, and World Omni Lease Securitization L.P., a
Delaware limited partnership ("WOLS LP").
World Omni is the sole limited partner of WOLS LP. The sole
general partner of WOLS LP is World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI") and a wholly owned subsidiary of World Omni. In order to
better assure WOLS LP that it will be able to meet its financial obligations as
and when they become due and payable, and therefore to assist WOLS LP in
inducing third parties to enter into financial arrangements with it as it deems
desirable, the undersigned have entered into a Support Agreement dated as of
October 1, 1995, as amended by Amendment No. 1 to Support Agreement dated as of
May 1, 1996 (the "Support Agreement") to provide support to WOLS LP in
maintaining a favorable financial condition, and desires to amend the Support
Agreement to provide additional support to WOLS LP.
For the foregoing reasons, and for other good and valuable
consideration, receipt of which is hereby acknowledged, World Omni, having a
financial interest in WOLS LP, and WOLS LP, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Amendment, except as otherwise
expressly provided for or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Second Amended and Restated Assignment
Agreement, (b) all terms used in this Amendment include (i) all genders and
(ii) the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Amendment as a whole and
not to any particular article or sections within this Amendment, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
SECTION 2. AMENDMENT OF SECTION 3
Section 3 of the Support Agreement is hereby amended by
deleting the proviso contained at the end of the second full
-1-
<PAGE> 2
sentence thereof that reads "provided that such obligations of World Omni under
this Support Agreement shall not exceed $20 million in the aggregate" and
inserting in its place "provided that such obligations of World Omni under this
Support Agreement shall not exceed $30 million in the aggregate."
SECTION 3. EFFECT OF AMENDMENT.
Other than as specifically amended in this Amendment, the
Support Agreement remains in full force and effect and is hereby reaffirmed in
all respects, and all references therein to the "Agreement" shall be deemed to
refer to the Support Agreement, as amended by this Amendment.
SECTION 4. GOVERNING LAW.
THIS AMENDMENT SHALL BE CREATED UNDER THE LAWS AND GOVERNED BY
AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 5. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Amendment shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provision or terms of this Amendment and
shall in no way affect the validity or enforceability of the other provisions
of this Amendment. To the extent permitted by law, the parties hereto waive
any provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By: /s/ Patrick C. Ossenbeck
------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
Inc., its general partner
By: /s/ Patrick C. Ossenbeck
--------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
-2-
<PAGE> 1
EXHIBIT 10.11
AMENDMENT NO. 3
TO
SUPPORT AGREEMENT
AMENDMENT NO. 3 TO SUPPORT AGREEMENT dated as of April 1, 1997
(the "Amendment") made by World Omni Financial Corp., a Florida corporation
("World Omni") having its principal place of business at 120 N.W. 12th Avenue,
Deerfield Beach, FL 33442, and World Omni Lease Securitization L.P., a
Delaware limited partnership ("WOLS LP").
World Omni is the sole limited partner of WOLS LP. The sole
general partner of WOLS LP is World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI") and a wholly owned subsidiary of World Omni. In order to
better assure WOLS LP that it will be able to meet its financial obligations as
and when they become due and payable, and therefore to assist WOLS LP in
inducing third parties to enter into financial arrangements with it as it deems
desirable, the undersigned have entered into a Support Agreement dated as of
October 1, 1995, as amended by Amendment No. 1 to Support Agreement dated as of
May 1, 1996 and Amendment No. 2 to Support Agreement dated as of October 1,
1996 (as so amended, the "Support Agreement") to provide support to WOLS LP in
maintaining a favorable financial condition, and desires to amend the Support
Agreement to provide additional support to WOLS LP.
For the foregoing reasons, and for other good and valuable
consideration, receipt of which is hereby acknowledged, World Omni, having a
financial interest in WOLS LP, and WOLS LP, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Amendment, except as otherwise
expressly provided for or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Second Amended and Restated Assignment
Agreement, (b) all terms used in this Amendment include (i) all genders and
(ii) the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Amendment as a whole and
not to any particular article or sections within this Amendment, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
<PAGE> 2
SECTION 2. AMENDMENT OF SECTION 3
Section 3 of the Support Agreement is hereby amended by
deleting the proviso contained at the end of the second full sentence thereof
that reads "provided that such obligations of World Omni under this Support
Agreement shall not exceed $30 million in the aggregate" and inserting in its
place "provided that such obligations of World Omni under this Support
Agreement shall not exceed $60 million in the aggregate."
SECTION 3. EFFECT OF AMENDMENT.
Other than as specifically amended in this Amendment, the
Support Agreement remains in full force and effect and is hereby reaffirmed in
all respects, and all references therein to the "Agreement" shall be deemed to
refer to the Support Agreement, as amended by this Amendment.
SECTION 4. GOVERNING LAW.
THIS AMENDMENT SHALL BE CREATED UNDER THE LAWS AND GOVERNED BY
AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 5. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Amendment shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provision or terms of this Amendment and
shall in no way affect the validity or enforceability of the other provisions
of this Amendment. To the extent permitted by law, the parties hereto waive
any provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By:
----------------------------------
A. Tucker Allen
Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
2
<PAGE> 3
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
Inc., its general partner
By:
--------------------------------
A. Tucker Allen
Treasurer
3
<PAGE> 1
EXHIBIT 23.4
[WILLIAMS & CONNOLLY LETTERHEAD]
725 TWELFTH ST., NW
WASHINGTON, DC 20005-5901
CONSENT OF WILLIAMS & CONNOLLY
We hereby consent to the use of our name under the headings
"Legal Matters" and "Risk Factors -- Insolvency of World Omni; Substantive
Consolidation with World Omni" in the Prospectus included in the Registration
Statement on Form S-1 (No. 333-21917) filed by World Omni Lease Securitization
L.P., World Omni LT and Auto Lease Finance L.P. with the Securities and
Exchange Commission (the "SEC") on February 18, 1997, as it may be further
amended and declared effective by the SEC.
Date: April 21, 1997
/s/ Charles A. Sweet
---------------------
Williams & Connolly
By: Charles A. Sweet
for the firm
<PAGE> 1
EXHIBIT 23.5
[HAND ARENDALL, L.L.C. LETTERHEAD]
900 PARK PLACE TOWER
2001 PARK PLACE NORTH
BIRMINGHAM, ALABAMA 35203
April 21, 1997
CONSENT OF HAND ARENDALL, L.L.C.
We hereby consent to the use of our name under the heading "Legal
Matters" in the prospectus included in the Registration Statement on Form S-1
(No. 333-21917) filed by World Omni Lease Securitization L.P., World Omni LT
and Auto Lease Finance L.P. with the Securities and Exchange Commission (the
"SEC") on February 18, 1997 and as may be further amended and declared
effective by the SEC.
HAND ARENDALL, L.L.C.
By: /s/ W. Clark Watson
-------------------------
W. Clark Watson, Member
for the firm
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Amendment No. 2 to Form S-1 of World Omni
1997-A Automobile Lease Securitization Trust of our report dated May 17, 1996
(which report expresses an adverse opinion under generally accepted accounting
principles and an unqualified opinion as to the statutory-basis of accounting)
on our audits of the statutory-basis financial statements of American
International Specialty Lines Insurance Company as of December 31, 1995 and
1994 and for each of the two years in the period ended December 31, 1995. We
also consent to the inclusion of our report dated May 22, 1995 (which report
expresses an adverse opinion under generally accepted accounting principles and
an unqualified opinion as to the statutory-basis of accounting) on our audits
of the statutory-basis financial statements of American International Specialty
Lines Insurance Company as of December 31, 1994 and 1993 and for each of the
two years in the period ended December 31, 1994. Furthermore, we consent to
the reference to our firm under the caption "Experts".
COOPERS & LYBRAND, L.L.P.
New York, New York
April 21, 1997
