<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1997
REGISTRATION NO. 333-35523
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
(ISSUER WITH RESPECT TO THE NOTES)
---------------------
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>
<C> <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. STUART M. LITWIN, ESQ.
WILLIAMS & CONNOLLY MAYER, BROWN & PLATT
725 TWELFTH STREET, N.W. 190 SOUTH LASALLE STREET
WASHINGTON, D.C. 20005 CHICAGO, ILLINOIS 60603
</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. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective 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 MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Automobile Lease Asset Backed Notes, Class
A-1........................................ $260,000,000 100% $260,000,000 $ 78,787.88(4)
Automobile Lease Asset Backed Notes, Class
A-2........................................ $220,000,000 100% $220,000,000 $ 66,666.67(4)
Automobile Lease Asset Backed Notes, Class
A-3........................................ $390,000,000 100% $390,000,000 $118,181.82(4)
Automobile Lease Asset Backed Notes, Class
A-4........................................ $239,128,644 100% $239,128,644 $ 72,463.22(4)
99.8% 1997-B Special Unit of Beneficial
Interest Certificate(2).................... (3) (3) (3) (3)
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The 1997-B Special Unit of Beneficial Interest (the "SUBI") issued by World
Omni LT will constitute a beneficial interest in specified assets 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 first by
Auto Lease Finance L.P. to World Omni Lease Securitization L.P. A 99.8%
1997-B Special Unit of Beneficial Interest Certificate (the "SUBI
Certificate") issued by World Omni LT and representing a 99.8% undivided
interest in the SUBI will then be transferred to the Owner Trustee for the
World Omni 1997-B Automobile Lease Securitization Trust issuing, and pledged
to the Indenture Trustee as recruiting for, the Automobile Lease Asset
Backed Notes, Class A-1, Class A-2, Class A-3 and Class A-4. The SUBI
Certificate is not being offered to investors hereunder.
(3) Not applicable.
(4) $303.03 of which, in the aggregate, 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-B 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 Notes; Security for the Notes
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, DATED OCTOBER 23, 1997
$1,109,128,644 (Approximate)
WORLD OMNI 1997-B
AUTOMOBILE LEASE SECURITIZATION TRUST
$260,000,000 (Approximate)
% Automobile Lease Asset Backed Notes, Class A-1
$220,000,000 (Approximate)
% Automobile Lease Asset Backed Notes, Class A-2
$390,000,000 (Approximate)
% Automobile Lease Asset Backed Notes, Class A-3
$239,128,644 (Approximate)
% Automobile Lease Asset Backed Notes, Class A-4
WORLD OMNI LEASE SECURITIZATION L.P.
(Transferor)
WORLD OMNI FINANCIAL CORP.
(Servicer)
The Automobile Lease Asset Backed Notes (the "Class A Notes") will be issued by
the World Omni 1997-B Automobile Lease Securitization Trust (the "Trust"), a
Delaware business trust created pursuant to a Securitization Trust Agreement
between World Omni Lease Securitization L.P. (the "Transferor"), PNC Bank,
Delaware, as owner trustee (the "Owner Trustee") and U.S. Bank National
Association, as indenture trustee (the "Indenture Trustee"). The Class A Notes
will be issued pursuant to an Indenture between the Trust and the Indenture
Trustee. The Class A Notes will be secured by the property of the Trust, which
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 certain accounts and 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 NOTES, SEE "RISK FACTORS" ON PAGE 17 HEREIN.
------------------
THE CLASS A NOTES WILL REPRESENT OBLIGATIONS OF 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 ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO THE
PRICE TO PUBLIC(1) COMMISSIONS(2) TRANSFEROR(1)(3)
------------------ -------------- ----------------
<S> <C> <C> <C>
Per Class A-1 Note................................... % % %
Per Class A-2 Note................................... % % %
Per Class A-3 Note................................... % % %
Per Class A-4 Note................................... % % %
Total................................................ $ $ $
</TABLE>
(1) Plus accrued interest, if any, calculated at the related Note 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
$1,050,000.
------------------
The Class A Notes are offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters, subject to approval
of certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Class A Notes 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 , 1997, against payment in immediately
available funds.
CREDIT SUISSE FIRST BOSTON
BANCAMERICA ROBERTSON STEPHENS
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY SECURITIES, INC.
The date of this Prospectus is , 1997.
<PAGE> 4
(Cover continued from previous page)
The SUBI initially will evidence a beneficial interest in specified
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
October 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 Noteholders, 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 Notes. For further information regarding the Trust, the
SUBI and the Origination Trust, see "The Trust and the SUBI" and "The
Origination Trust".
The Notes will consist of four classes of senior notes (respectively, the
"Class A-1 Notes", the "Class A-2 Notes", the "Class A-3 Notes" and the "Class
A-4 Notes", and collectively, the "Notes") and one class of subordinated Notes
(the "Class B Notes"). The Class A Notes will be the only Notes offered hereby.
The initial principal amount of the Class B Notes will be approximately
$62,950,545, and the Class B Notes will be subordinated to the Class A Notes to
the extent described herein. The Transferor will own the undivided equity
interest in the Trust (the "Transferor Interest"). The Transferor Interest will
be subordinated to the Notes as described herein. For further information
regarding the Notes, see "Description of the Notes".
In general, no principal payments will be made on the Class A-2 Notes until
the Class A-1 Notes have been paid in full, no principal payments will be made
on the Class A-3 Notes until the Class A-1 Notes and the Class A-2 Notes have
been paid in full, and no principal payments will be made on the Class A-4 Notes
until the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been
paid in full.
Interest on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes will accrue at the respective fixed per annum interest
rates specified herein and will be distributed to holders of the Class A Notes
on the twenty-fifth day of each month (or, if such day is not a Business Day, on
the next succeeding Business Day), beginning November 25, 1997 (each, a
"Distribution Date"). Principal will be distributed to holders of the Notes to
the extent described herein on each Distribution Date beginning in December
1998, or, in certain limited circumstances, earlier, as more fully described
herein. The final maturity date for each Class of Class A Notes will be the
November 2003 Distribution Date.
There currently is no secondary market for the Class A Notes 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 Notes. 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 Notes", it is a
condition of issuance that each of Moody's Investors Service, Inc., Standard &
Poor's and Fitch Investors Service, L.P. rates each Class of Class A Notes 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 NOTES.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
ii
<PAGE> 5
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 Notes 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.
iii
<PAGE> 6
[OVERVIEW OF TRANSACTION CHART]
iv
<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 97 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-B Automobile Lease Securitization
Trust (the "Trust"). In return, the Trust will
issue certain securities, including the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes being offered hereby. The undivided
equity interest in the Trust 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
Noteholders 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 created pursuant to a
securitization trust agreement dated as of
October 1, 1997 (the "Agreement"), among the
Transferor, PNC Bank, Delaware ("PNC Bank"), as
owner trustee (in such capacity, the "Owner
Trustee") and U.S. Bank National Association
("U.S. Bank"), as indenture trustee (in such
capacity, the "Indenture 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 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
1
<PAGE> 8
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 Omni. VT Inc. is an Alabama
corporation and a wholly owned, special purpose
subsidiary of U.S. 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 October 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 Noteholders 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
2
<PAGE> 9
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 Notes.
The 0.2% interest in the SUBI not transferred to
the Trust 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 Notes. For further
information regarding the SUBI, see
"Summary -- Security for the Notes -- 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 October 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 Owner Trustee and
the Indenture Trustee will be third party
beneficiaries of the Servicing Agreement, as
described under "Additional Document
Provisions -- The Servicing
Agreement -- Indenture Trustee and Owner Trustee
as Third-Party Beneficiaries".
SECURITIES OFFERED......... The Automobile Lease Asset Backed Notes (the
"Notes") will consist of four classes of senior
Notes (the "Class A-1 Notes", the "Class A-2
Notes", the "Class A-3 Notes" and the "Class A-4
Notes", respectively, and collectively, the
"Class A Notes") and one class of subordinated
notes (the "Class B Notes"). Generally, no
principal payments will be made on the Class A-2
Notes until the Class A-1 Notes have been paid in
full, no principal payments will be made on the
Class A-3 Notes until the Class A-1 Notes and the
Class A-2 Notes have been paid in full, and no
principal payments will be made
3
<PAGE> 10
on the Class A-4 Notes until the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes have been
paid in full, in each case as more fully
described under "Description of the
Notes -- Distributions on the
Notes -- Application and Distributions of
Principal -- Amortization Period". The Class B
Notes will be subordinated to the Class A Notes
so that (i) interest payments generally will not
be made in respect of the Class B Notes until
interest in respect of the Class A Notes has been
paid, (ii) principal payments generally will not
be made in respect of the Class B Notes until the
Class A-1, Class A-2 and Class A-3 Notes have
been paid in full and (iii) if other sources
available to make payments of principal and
interest on the Class A-4 Notes are insufficient,
amounts that otherwise would be paid in respect
of the Class B Notes generally will be available
for that purpose, as more fully described under
"Description of the Notes -- Distributions on the
Notes". The undivided equity interest in the
Trust will be permanently retained by the
Transferor (the "Transferor Interest"). The
Transferor Interest will be subordinated to the
Notes as described under "Summary -- Security for
the Notes -- Subordination of the Transferor
Interest". Only the Class A Notes are being
offered hereby. The Class A Notes will be issued
in book-entry form in minimum denominations of
$1,000 and integral multiples thereof, as set
forth under "Description of the
Notes -- Book-Entry Registration" and
"-- Definitive Notes". The Class B Notes will be
sold in one or more private placements.
Each Note will represent the right to receive
monthly payments of interest at the related Note
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, 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.
On the date of initial issuance of the Notes (the
"Closing Date"), the Trust will issue
approximately $260,000,000 aggregate principal
amount of Class A-1 Notes (the "Initial Class A-1
Note Balance"), approximately $220,000,000
aggregate principal amount of Class A-2 Notes
(the "Initial Class A-2 Note Balance"),
approximately $390,000,000 aggregate principal
amount of Class A-3 Notes (the "Initial Class A-3
Note Balance"), approximately $239,128,644
aggregate principal amount of Class A-4 Notes
(the "Initial Class A-4 Note Balance" and,
together with the Initial Class A-1 Note Balance,
the Initial Class A-2 Note Balance and the
Initial Class A-3 Note Balance, the "Initial
Class A Note Balance") and approximately
$62,950,545 aggregate principal amount of Class B
Notes (the "Initial Class B Note Balance" and,
together with the Initial Class A Note Balance,
the "Initial Note Balance"). The aggregate
principal amounts of the Class A-1, Class A-2,
Class A-3 and Class A-4 Notes and the Class B
Notes will, except in certain circumstances
described
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<PAGE> 11
under "Summary -- The Revolving Period;
Subsequent Contracts and Subsequent Leased
Vehicles", remain fixed at their respective
Initial Class Note Balances during the Revolving
Period and, to the extent described herein, will
decline thereafter during the Amortization Period
as principal is paid on the Notes. The "Class
Note Balance" of any Class of Notes on any day
will equal the Initial Class Note Balance,
reduced by the sum of all distributions made in
respect of principal (including any
reimbursements of Loss Amounts allocable to such
Class and Note Principal Loss Amounts in respect
of such Class) on or prior to such day on the
related Class of Notes and those Note Principal
Loss Amounts in respect of such Class, if any,
which have not been reimbursed as described
herein. The "Class A Note Balance" will mean the
sum of the Class A-1, Class A-2, Class A-3 and
Class A-4 Note Balances. The "Note Balance" with
respect to the Notes will mean the sum of the
Class A Note Balance and the Class B Note
Balance.
The amount of the Transferor Interest will
initially equal approximately $26,978,805 (which
amount will equal 2.25% 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 Notes -- The SUBI"
and "Summary -- The Contracts", and the Note
Balance. As more fully described under
"Description of the Notes -- General", the
Aggregate Net Investment Value can change daily.
REGISTRATION OF THE
NOTES.................... Each Class of Class A Notes initially will be
represented by one or more notes 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 Notes (each,
a "Note Owner") will 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 each a
participating member of DTC. No Note Owner will
be able to receive a definitive Note representing
such person's interest, except in the limited
circumstances described under "Description of the
Notes -- Definitive Notes". Unless and until
definitive Notes are issued, Note Owners will not
be recognized as holders of record of Class A
Notes 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 Notes, see
"Description of the Notes -- 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 November 25, 1997 (each,
a "Distribution Date"), distributions in respect
of the
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<PAGE> 12
Class A Notes will be made to the holders of
record of the Class A-1, Class A-2, Class A-3 and
Class A-4 Notes (respectively, the "Class A-1
Noteholders", the "Class A-2 Noteholders", the
"Class A-3 Noteholders" and the "Class A-4
Noteholders", and collectively, the "Class A
Noteholders") as of the day immediately preceding
such Distribution Date or, if Definitive Notes
are issued, the last day of the immediately
preceding calendar month (each such date, a
"Record Date"). On each Distribution Date, the
Indenture Trustee will distribute interest for
the related Interest Period to the Class A
Noteholders, based on the related Class Note
Balance as of the immediately preceding
Distribution Date (after giving effect to
reductions in such Class Note Balance as of such
immediately preceding Distribution Date) or, in
the case of the first Distribution Date, on the
Initial Class Note Balance, in the case of (i)
the Class A-1 Notes, at an annual percentage rate
equal to % (the "Class A-1 Note Rate"), (ii)
the Class A-2 Notes, at an annual percentage rate
equal to % (the "Class A-2 Note Rate"), (iii)
the Class A-3 Notes, at an annual percentage rate
equal to % (the "Class A-3 Note Rate") and (iv)
the Class A-4 Notes, at an annual percentage rate
equal to % (the "Class A-4 Note Rate"). All
such payments will be calculated on the basis of
a 360-day year consisting of twelve 30-day
months.
The final maturity date for each Class of Class A
Notes (the "Stated Maturity Date") will be the
November 2003 Distribution Date. A "Business Day"
will be a day other than a Saturday or Sunday or
a day on which banking institutions in New York,
New York, Chicago, Illinois, Wilmington,
Delaware, Deerfield Beach, Florida, or Mobile,
Alabama, are authorized or obligated by law,
executive order or government decree to be
closed. As described under "Description of the
Notes -- Distributions on the
Notes -- Distributions of Interest",
distributions in respect of interest on the Class
B Notes will be subordinated to distributions in
respect of interest on the Class A Notes under
certain circumstances.
THE REVOLVING PERIOD;
SUBSEQUENT CONTRACTS AND
SUBSEQUENT LEASED
VEHICLES................. No principal will be payable on the Notes until the
December 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 November 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 Note
Balances at constant levels during the Revolving
Period, except to the extent there are
unreimbursed Note Principal Loss Amounts in
respect of any such Class, in which case the Note
Balance of the related Class of Notes will
decrease until such time, if any, as such Note
Principal Loss Amounts are reimbursed as
described under "Description of the
Notes -- Distributions on the Notes -- Distribu-
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<PAGE> 13
tions 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 Notes -- Early
Amortization Events".
Prior to the twenty-fifth calendar day (i) in each
month (beginning November 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 Noteholders
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 November
1997) during the Revolving Period the amount of
Principal Collections and such otherwise
reimbursable 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 as of such day
and all unreinvested Principal Collections and
all such Loss Amounts will be distributed as
principal to Noteholders 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 -- Risk of Absence of
Funds for Reimbursement of Loss Amounts", "The
Trust and the SUBI -- The SUBI" and "Description
of the Notes -- Distributions on the
Notes -- 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 Contracts -- Representations, Warranties and
Covenants". If allocations are being made in
respect of any one or more previous Other SUBI(s)
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.
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 8.0% (each, a "Discounted
Contract") will be discounted to
7
<PAGE> 14
present value at a rate of approximately 8.0%,
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 Noteholders.
"Collections" with respect to any Collection
Period will include all net collections received
on or 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, 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,
Matured Leased Vehicle Expenses, Repossessed
Vehicle Expenses, other Liquidation Expenses and
Insurance Expenses, (iii) late payment charges,
payments of insurance premiums, excise taxes or
similar items and (iv) 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 Noteholders on the related Distribution Date
as reimbursement of Loss Amounts allocable to the
Notes (as described under "Description of the
Notes -- Distributions on the
Notes -- 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
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. "Net Matured Leased Vehicle
Proceeds" will be Matured Leased Vehicle Proceeds
received during a Collection Period net of
Matured Leased Vehicle Expenses incurred during
such Collection Period.
AMORTIZATION PERIOD;
PRINCIPAL PAYMENTS....... The "Amortization Period" will commence on the
earlier of November 1, 1998 (the "Amortization
Date") or the day on which an Early Amortization
Event occurs, and will end when each Class of
Notes has been paid in full and all Note
Principal Loss Amounts and Class B Note 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 reimbursed 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 Notes have been paid in full, all
Principal Collections for the related Collection
Period that are allocable to the Notes will be
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<PAGE> 15
distributed as principal payments first to the
Class A-1 Noteholders until the Class A-1 Notes
have been paid in full, second, to the Class A-2
Noteholders until the Class A-2 Notes have been
paid in full, third, to the Class A-3 Noteholders
until the Class A-3 Notes 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 Noteholders
and to the holders of record of the Class B Notes
(the "Class B Noteholders" and, together with the
Class A Noteholders, the "Noteholders"),
respectively. On each Distribution Date after the
Class A-3 Notes 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 Notes will be distributed
to the Class A-4 Noteholders and the Class B
Noteholders, respectively, until the related
Class of Notes has been paid in full. Certain
Loss Amounts incurred during the Amortization
Period will be reimbursed to the Noteholders as
described below. The "Class A Percentage" will
mean the Class A Note Balance immediately after
the Class A-3 Notes have been paid in full, as a
percentage of the Note Balance at such time, and
the "Class B Percentage" will mean the Class B
Note Balance immediately after the Class A-3
Notes have been paid in full, as a percentage of
the Note 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 Notes exceed its Note
Balance. In addition, under certain
circumstances, (i) Class A Noteholders 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 Notes may instead be distributed in
respect of Loss Amounts allocable to the Class
A-4 Notes, Class A-4 Note Principal Loss Amounts
and accrued and unpaid interest thereon, as
described under "Description of the
Notes -- Distributions on the
Notes -- Distributions of Interest", "Description
of the Notes -- Distributions on the
Notes -- Application and Distributions of
Principal" and "Risk Factors -- Risk of Absence
of Funds for Reimbursement of Loss Amounts".
See "Description of the Notes -- 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 Notes 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 Note
Balance and the denominator of which is 99.8% of
the Aggregate Net Investment Value, calculated as
described under "Summary -- 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
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<PAGE> 16
Event occurs. See "Description of the
Notes -- 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 Noteholders in amounts
that are greater relative to the declining
balance of the Note 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 Notes.
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
Noteholders in the same manner and priority as
principal is distributed in respect of the Notes
as described in the preceding paragraphs. See
"Description of the Notes -- Distributions on the
Notes -- Distributions of Interest" and
"Description of the Notes -- The Accounts -- The
SUBI Collection Account -- Withdrawals from the
SUBI Collection Account" for further information
regarding the foregoing matters.
OPTIONAL REDEMPTION........ The Notes will be subject to redemption if the
Transferor exercises its option to purchase all
of the assets of the Trust, which option may be
exercised 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 Note Balance has been
reduced to an amount less than or equal to 10% of
the Initial Note Balance, at a purchase price
determined as described under "Description of the
Notes -- Termination of the Trust; Redemption of
the Notes".
SECURITY FOR THE NOTES..... The security for the Notes 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 U.S. 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
October 1, 1997 (the "SUBI Supplement" and,
together with the Origination Trust Agreement,
the "SUBI Trust Agreement"). The Indenture
Trustee and the Owner Trustee will be third party
beneficiaries of the SUBI Trust Agreement. The
Transferor will permanently hold the Retained
SUBI Interest, representing
10
<PAGE> 17
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
Notes. For more information regarding the SUBI,
see "The Trust and the SUBI" and "The Origination
Trust".
B. 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
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" or
the "RV Insurer") an indirect subsidiary of
American International Group, Inc. ("AIG"), will
issue an insurance policy (the "Residual Value
Insurance Policy") to the Transferor (with the
Origination Trustee, the Owner Trustee, the
Indenture Trustee and ALFI L.P. also named as
insureds), which 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
Notes -- 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 Notes -- Distributions on the
Notes -- Distributions of Interest". For a fuller
description of these mechanics, see "Security for
the Notes -- 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 Notes -- Distributions on the
Notes -- 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 Notes -- Subordination of the Transferor
Interest".
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<PAGE> 18
C. THE RESERVE FUND........ The Trust will have the benefit of the Reserve Fund
maintained with the Indenture Trustee for the
benefit of the Noteholders and the Transferor (as
holder of the Transferor Interest). The Reserve
Fund is designed to provide additional funds for
the benefit of the Noteholders in the event that
on any Distribution Date Interest Collections
allocable to the Notes 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 for the related Collection Period, are
insufficient to pay, among other things, the sum
of (i) accrued interest and any overdue interest
(with interest thereon) at the applicable Note
Rate on the Notes on such Distribution Date, (ii)
any Loss Amount for such Collection Period
allocable to the Notes, calculated as described
under "Description of the Notes -- Calculation of
Investor Percentage and Transferor Percentage",
and (iii) any unreimbursed Note Principal Loss
Amounts, together with interest thereon at the
applicable Note Rate. Monies on deposit in the
Reserve Fund also will be available to
Noteholders should Collections ultimately be
insufficient to pay in full any Class of Notes.
For further information regarding the Reserve
Fund, see "Security for the Notes -- The Reserve
Fund".
The Reserve Fund will be created with an initial
deposit by the Transferor of approximately
$11,990,580 (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 Notes -- Distributions
on the Notes -- 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 Notes -- 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 Notes -- The Reserve Fund". For further
information regarding deposits into the Reserve
Fund, see "Description of the
Notes -- Distributions on the
Notes -- 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 generally will be paid to
the Transferor, free and clear of any lien of the
Trust.
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<PAGE> 19
D. SUBORDINATION OF THE
TRANSFEROR INTEREST..... The Transferor Interest will initially equal
approximately $26,978,805, and will represent the
entire equity interest in the Trust. However, to
provide additional credit enhancement for the
Notes, 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
Notes -- Distributions on the
Notes -- 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 Notes --
Certain Payments to the Transferor".
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 49,166 lease
contracts. As of the Initial Cutoff Date, the
Lease Rate of the Initial Contracts ranged from
3.08% to 12.94%, with a weighted average Lease
Rate of approximately 8.80%. The aggregate of the
original principal balances of the Initial
Contracts as of their respective dates of
origination was approximately $1,266,000,709. As
of the Initial Cutoff Date, the aggregate
Outstanding Principal Balance of the Initial
Contracts was approximately $1,205,609,324, the
aggregate Residual Value of the Initial Leased
Vehicles was approximately $833,211,953 and the
Initial Contracts had a weighted average original
term of approximately 40.96 months and a weighted
average remaining term to scheduled maturity of
approximately 34.47 months. See "The Contracts"
for further information regarding the Initial
Contracts.
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
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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 Noteholders,
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 the present
value of all remaining Monthly Payments on such
Contract and the Residual Value of the related
Leased Vehicle, calculated using a discount rate
of approximately 8%, 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 approximately
$1,201,460,915.
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 Owner Trustee in the Leased Vehicles by
virtue of its beneficial interest in the SUBI or
any security interest of the Indenture Trustee.
Therefore, the Indenture Trustee will not have a
perfected lien in the Leased Vehicles, although
it will be deemed to have a perfected security
interest in the SUBI Certificate and certain
other assets. For further information regarding
the titling of the Leased Vehicles and the
interest of the Indenture 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".
THE ACCOUNTS............... The Indenture Trustee will maintain the SUBI
Collection Account for the benefit of the
Noteholders. Within two Business Days of receipt,
payments 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 Vehi-
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<PAGE> 21
cle 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 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
"Description of the Notes -- The Accounts -- The
SUBI Collection 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. 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
Indenture Trustee for the benefit of the
Noteholders 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
Distribution Account on each Distribution Date.
All payments to Noteholders 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
Notes. 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 "Description of the Notes -- The
Accounts -- The Distribution Account" and "-- The
SUBI Collection Account".
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
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
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<PAGE> 22
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................. Cadwalader, Wickersham & Taft, special federal
income tax counsel to the Transferor, is of the
opinion that the Class A Notes will be
characterized as indebtedness for federal income
tax purposes, as described under "Material Income
Tax Considerations -- Federal Taxation". Each
Class A Noteholder, by its acceptance of a Class
A Note, and each Note Owner, by its acquisition
of an interest in the Class A Notes, will agree
to treat the Class A Notes 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 the Class A Notes,
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 Notes, 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
Notes should consult its counsel before making a
purchase, and the fiduciary of such plan and such
legal advisors should consider the matters
discussed herein.
RATINGS.................... It is a condition of issuance of the Class A Notes
that each of Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's ("Standard &
Poor's") and Fitch Investors Service, L.P.
("Fitch" and, together with Moody's and Standard
& Poor's, the "Rating Agencies") rates each Class
of Class A Notes in its highest rating category.
The ratings of the Class A Notes 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 Notes, inasmuch as such rating does not
comment as to market price or suitability for a
particular investor. The ratings of the Class A
Notes address the likelihood of the payment of
principal of and interest on the Class A Notes
pursuant to their terms. For further information
concerning the ratings assigned to the Class A
Notes, including the limitations of such ratings,
see "Ratings of the Class A Notes".
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<PAGE> 23
RISK FACTORS
RISK OF LIMITED LIQUIDITY; ABSENCE OF SECONDARY MARKET
There is currently no market for the Class A Notes. The Underwriters
expect, but will not be obligated, to make a market in each Class of Class A
Notes. There can be no assurance that a secondary market for the Class A Notes
will develop or, if one does develop, that it will provide the related
Noteholders with liquidity of investment or will continue for the life of the
related Class A Notes.
RISK OF ABSENCE OF FUNDS FOR 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 Noteholders 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 Noteholders will be entitled to receive the Class A-1
Allocation Percentage of the Investor Percentage of such Loss Amounts, the Class
A-2 Noteholders will be entitled to receive the Class A-2 Allocation Percentage
of the Investor Percentage of such Loss Amounts, the Class A-3 Noteholders will
be entitled to receive the Class A-3 Allocation Percentage of the Investor
Percentage of such Loss Amounts and the Class A-4 Noteholders 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) the Servicing Fee (so long as World Omni is the Servicer); (iii) Transferor
Amounts otherwise payable to the Transferor in respect of the Transferor
Interest; (iv) Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy; (v) amounts on deposit in the Reserve Fund; (vi) amounts
otherwise payable as interest to the Class B Noteholders; and (vii) in the case
of the Class A-4 Notes, amounts otherwise payable as principal to the Class B
Noteholders. With respect to any Distribution Date, the "Class A-1 Allocation
Percentage" will mean the Class A-1 Note Balance as a percentage of the Note
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 Notes, 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 Notes. To the extent that Principal Collections and Loss
Amounts that otherwise would be reimbursed to the Noteholders 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 Notes 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 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 (up to the respective
Discounted Principal Balance)
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<PAGE> 24
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.
As more fully described under "Security for the Notes -- 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 Notes -- Distributions on the
Notes -- 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 Notes.
MATURITY AND PREPAYMENT RISKS
No principal will be paid to any Class A Noteholders until the December
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 Noteholders 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
Notes. See "Description of the Notes -- 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 Notes 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 Noteholders during the Amortization Period
according to the timing of their receipt, the rate of principal payments on the
Notes and the yield to maturity of the Class A Notes 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 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 Noteholders as more fully described under
"Description of the Notes -- Distributions on the Notes -- Distributions of
Interest". The rate of payment of principal of the
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<PAGE> 25
Class A Notes 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 all of the assets of the Trust at its option under certain
circumstances pursuant to the Agreement, thereby triggering a redemption of the
Notes. 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 Notes. See
"Description of the Notes -- Termination of the Trust; Redemption of the Notes",
"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, 1996 and the six months ended June 30, 1997, an average of
approximately 83% 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".
RISKS ASSOCIATED WITH SEQUENTIAL PAYMENT OF PRINCIPAL ON THE NOTES
In general, no principal payments will be made on the Class A-2, Class A-3,
Class A-4 or Class B Notes until the Class A-1 Notes have been paid in full, on
the Class A-3, Class A-4 or Class B Notes until the Class A-1 and Class A-2
Notes have been paid in full, or on the Class A-4 or Class B Notes until the
Class A-1, Class A-2 and Class A-3 Notes 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 Notes will be
distributed first to the Class A-1 Noteholders until the Class A-1 Notes have
been paid in full, second to the Class A-2 Noteholders until the Class A-2 Notes
have been paid in full, third to the Class A-3 Noteholders until the Class A-3
Notes 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 Noteholders and the Class B
Noteholders, respectively.
Principal payments in respect of the Class A-4 and Class B Notes 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 Notes have been paid in
full. The Investor Percentage of Loss Amounts will be allocated among the
Noteholders 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, and then
reimbursed out of available funds in the amounts and order of priority described
in "Description of the Notes -- Distributions on the Notes -- Distributions of
Interest". As a result, Class A-2 Notes may be allocated more Loss Amounts than
the Class A-1 Notes as a relative percentage of their respective Initial Note
Balances, Class A-3 Notes may be allocated more Loss Amounts than the Class A-1
or Class A-2 Notes as a relative percentage of their respective Initial Note
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<PAGE> 26
Balances, and Class A-4 Notes may be allocated more Loss Amounts than the Class
A-1, Class A-2 or Class A-3 Notes as a relative percentage of their respective
Initial Note 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 Note Balance of each Class of
Class A Notes 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 Notes -- 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 Noteholders based on their respective Class Note Balances
until the Class A Notes have been paid in full, and second, to the Class B
Noteholders.
RISKS ASSOCIATED WITH 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 Notes -- The Residual Value Insurance Policy".
RISKS ASSOCIATED WITH 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 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 Notes -- 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".
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<PAGE> 27
RISKS ASSOCIATED WITH 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. Such a PBGC lien would have priority over the interest of
Noteholders in any SUBI Assets that are not subject to a prior perfected
security interest in favor of the Indenture Trustee (i.e., the Leased Vehicles).
The ratings of the Class A Notes 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 Notes address the likelihood of the payment
of principal of and interest on the Class A Notes pursuant to their terms, as
described under "Ratings of the Class A Notes". 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. 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 these conditions will continue in the
future.
RISKS ASSOCIATED WITH VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Leased Vehicles and the Trust
will have an interest therein evidenced by the SUBI, the Leased Vehicles 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 Notes could incur a
loss on their investment. See "Security for the Notes -- 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. 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 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 Notes -- 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
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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 Notes 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".
RISKS IN THE EVENT OF AN 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 Notes 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.
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
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
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Retained SUBI Interest and the rights of the Indenture Trustee as pledgee of the
SUBI Certificate, or (ii) if such transfer does not constitute a sale, then the
Agreement creates a valid perfected security interest of the Owner Trustee 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 Indenture Trustee,
as more fully described under "Security for the Notes -- 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 Noteholders 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 Notes. For
further information regarding the Origination Trust, see "The Origination
Trust".
THE TRUST
Pursuant to the Agreement, the Transferor will create the Trust by
transferring and assigning the 99.8% SUBI Interest, represented by the SUBI
Certificate, to the Owner Trustee in exchange for the Notes and a certificate
evidencing the Transferor Interest. (Agreement, Section 2.02). The property of
the Trust will primarily include (i) the 99.8% SUBI Interest which evidences a
99.8% 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 Owner 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 investments of such amounts.
If the protection provided to the Class A Noteholders by (i) the Investor
Percentage of certain excess Interest Collections; (ii) amounts otherwise
payable to the Transferor in respect of the Transferor Interest; (iii) so long
as World Omni is the Servicer, amounts otherwise payable in respect of the
Servicing Fee; (iv) Insured Residual Value Loss Amounts paid under the Residual
Value Insurance Policy; (v) available monies on deposit in the Reserve Fund;
(vi) the subordination of interest payments otherwise payable to the Class B
Noteholders; and (vii) in the case of the Class A-4 Notes, the subordination of
principal payments otherwise payable to the Class B Noteholders is insufficient,
the Class A Noteholders 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 Indenture Trustee which in turn will be
distributed to the Noteholders. 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 Notes may thus be
subject to delays in payment and may incur losses on their investment in the
Class A Notes 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
Notes -- The Reserve Fund", "Additional Document Provisions -- The
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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
(which account, and the funds therein, will be pledged to the Indenture Trustee
for the benefit of the Noteholders), (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 Notes -- Distributions
on the Notes -- 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 Notes 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, the Transferor will transfer and assign the SUBI Certificate to the
Owner Trustee pursuant to the Agreement, and the Owner Trustee will pledge the
SUBI Certificate to the Indenture Trustee pursuant to the Indenture. 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 Notes.
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")
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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 Owner Trustee) and their pledgees (including
the Indenture Trustee) 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 Notes or a beneficial interest in the Notes,
Noteholders and Note 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 "Additional Document
Provisions -- The SUBI Trust Agreement -- The SUBI, 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 partner
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.
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THE ORIGINATION TRUSTEE
The Origination Trustee is a wholly owned, special purpose subsidiary of
U.S. Bank that was organized in 1993 solely for the purpose of acting as
Origination Trustee. U.S. 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
U.S. 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, U.S. 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 Owner Trustee, as holder of the SUBI Certificate, or the
Indenture Trustee, as pledgee 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
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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 Notes (i.e., the proceeds of
the public offering of the Class A Notes 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
partner 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 asset-backed notes and
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 $90
million. The Support Agreement does not constitute a guarantee by World Omni of
the Notes 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 Indenture Trustee or the Noteholders would be able to enforce the Support
Agreement directly against World Omni.
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.
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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 for review and credit evaluation to one of World Omni's central
operations centers, which are located in St. Louis, Missouri (the "St. Louis
Center") and Deerfield Beach, Florida (the "Deerfield Office"), as applicable.
At the St. Louis 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 St. Louis
Center and a center located in Mobile, Alabama (the "Mobile Center"), which
handle collection activities, operational accounting, insurance verification and
dealer and customer inquiries for World Omni. In addition, the St. Louis 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 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, $228 million
and $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.
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<PAGE> 35
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 and annual income. Upon receipt by the applicable office, 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 various 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, World Omni
implemented an updated scorecard system, also developed by Fair, Isaac
specifically for World Omni, in February 1997. The updated scorecard system
includes three retail credit and two lease scorecards (which, for lease
scorecards, differ according to the geographic location of the dealer and, for
retail scorecards, whether the vehicle is new or used and the credit "depth" of
the applicant). The revised scorecards place a greater emphasis upon 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 and, under certain
circumstances, lessees having certain minimum credit bureau scores may be
automatically approved.
For the six months ended June 30, 1997 and the years ended December 31,
1996, December 31, 1995 and December 31, 1994, World Omni, either directly or
through the Origination Trust or certain special purpose finance subsidiaries of
World Omni, on average, booked approximately 66%, 70%, 71% and 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. A majority of all of the
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<PAGE> 36
Initial Contracts were, and substantially all Subsequent Contracts will be,
underwritten using the updated numerical scorecards. 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 any payments due from the
customer. 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 by World Omni (through its third-party contracted agents) upon
execution of the lease contract.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
Collection efforts are made by World Omni as Servicer, which are enhanced
by the use of an automated dialing system. Notwithstanding the centralization of
collection efforts, repossessions continue to be handled locally, as independent
contractors are employed in connection with repossessions. In general,
guidelines for collection of lease contracts and repossession of leased vehicles
include the following:
<TABLE>
<CAPTION>
NUMBER OF DAYS DELINQUENT ACTION
- ------------------------- ------
<S> <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
30
<PAGE> 37
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 and as of and for the six month period ended June 30, 1997.
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. During the six month period
ended June 1997, delinquencies remained steady.
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.
Net Repossession Losses as a percentage of Average Net Receivables
increased in both 1995 and 1996. The increase in 1995 was driven primarily by an
increase in the Average Net Repossession Loss per Liquidated Lease Contract
which was generally due to higher average amounts being financed and higher
residual values. These same factors continued to cause an increase in the
Average Net Repossession Loss per Liquidated Lease Contract during 1996. In
addition, loss severity during 1996 was negatively affected by a general
weakening in the used car market. 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. The
trends experienced during 1996 continued through the first six months of 1997.
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. There are no short term leases
included in the Initial Contracts nor will any be included in the Subsequent
Contracts. In addition, during 1996 there was some weakening in the used car
market relative to the prior three years. Generally, the 1996 trends continued
into 1997, resulting in higher vehicle returns and losses through June 1997.
Toward the end of 1996 and through the first six months of 1997, the used
car market has been relatively weak. If this trend were to continue, World
Omni's returns and losses in the future could be negatively affected. 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
its loss experience or those recent negative trends will materially adversely
affect Class A Noteholders or World Omni's business. However, no assurances can
be given in this regard.
31
<PAGE> 38
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,
AT JUNE 30, --------------------------------------------------------------
1997 1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1)............ $5,717,470 $4,641,992 $2,798,830 $1,823,823 $1,039,888 $ 624,017
Ending Number of Lease
Contracts............... 271,827 231,942 156,471 114,298 71,198 48,646
Percentage of Lease
Contracts
Delinquent(2)(3)(4)
31-60 Days................ 1.37% 1.42% 1.12% 0.97% 0.88% 1.55%
61-90 Days................ 0.16 0.13 0.08 0.03 0.04 0.03
91 Days or More........... 0.03 0.03 0.01 0.01 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
Total........... 1.56% 1.58% 1.21% 1.01% 0.92% 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 June 30, 1997 approximately 261
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.
32
<PAGE> 39
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, ------------------------------------------------------------
1997 1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1).............. $5,717,470 $4,641,992 $2,798,830 $1,823,823 $1,039,888 $624,017
Ending Number of Lease
Contracts................. 271,827 231,942 156,471 114,298 71,198 48,646
Average Lease Contracts
Outstanding............... 252,972 194,492 133,069 93,023 58,605 46,013
Repossessions:
Number of Repossessions... 2,863 4,297 2,519 1,776 1,287 1,916
Number of Repossessions as a
Percentage of:
Lease Contracts
Outstanding............. 2.11%(4) 1.85% 1.61% 1.55% 1.81% 3.94%
Average Lease Contracts
Outstanding............. 2.26%(4) 2.21% 1.89% 1.91% 2.20% 4.16%
Losses:
Average Net Receivables
Outstanding............. $5,206,731 $3,718,336 $2,243,790 $1,426,382 $ 817,452 $548,852
Net Repossession
Losses(2)............... $ 17,114 $ 23,196 $ 11,347 $ 6,283 $ 3,811 $ 5,759
Average Net Repossession
Loss per Liquidated
Lease Contract(1)(3).... $ 5,978 $ 5,398 $ 4,505 $ 3,538 $ 2,961 $ 3,006
Net Repossession Losses as
a Percentage of Average
Net Receivables......... 0.66%(4) 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.
(4) This number has been annualized.
RESIDUAL VALUE LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, --------------------------------------------------
1997 1996 1995 1994 1993 1992
----------- --------- --------- ------ ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Number of Leased Vehicles
Scheduled to Terminate............... 40,682 36,413 25,677 14,775 17,218 15,155
Number of Leased Vehicles Returned to
and Sold by World Omni............... 9,719 5,018 4,611 779 2,050 2,142
Full Termination Ratio(2).............. 23.9% 13.8% 18.0%(3) 5.3% 11.9% 14.1%
Total Losses/(Gains) on Vehicles that
Reached Scheduled Term(4)............ $10,228(5) $3,700(5) $ 1,893 $(168) $ 503 $ 894
Average Loss/(Gain)(4)(6).............. $ 1,052 $ 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 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.
(5) Does not include losses related to World Omni's incentive programs of
approximately $778,697 and $222,303 at June 30, 1997 and December 31, 1996,
respectively.
(6) Dollars not in thousands.
33
<PAGE> 40
THE CONTRACTS
GENERAL
The Initial Contracts will consist of a pool of 49,166 closed-end retail
lease contracts, having an aggregate Outstanding Principal Balance as of the
Initial Cutoff Date of $1,205,609,324, 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 Notes -- Distributions on the Notes -- 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 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 be reinvested in
eligible leases selected by World Omni in its discretion, except that (i)
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 (ii) 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.
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<PAGE> 41
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 Risks" 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 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.
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 Notes.
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, 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 Noteholders and, in the case of the Class A-4 Notes, the
35
<PAGE> 42
subordination of principal payments otherwise payable to the Class B
Noteholders, in each case to the extent described herein, investors in the Class
A Notes could suffer a loss on their investment.
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 October 31, 1998 in the case of the
Subsequent Contracts; (iii) has a Maturity Date on or after February 2, 1999 and
no later than August 19, 2002 in the case of the Initial Contracts and no later
than October 31, 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.................. $25,749.52 $8,955.47 $95,634.03
Outstanding Principal Balance(1)............ $24,521.20 $8,522.29 $87,834.16
Residual Value.............................. $16,946.91 $3,181.30 $59,950.00
Lease Rate(1)............................... 8.80%(2) 3.08% 12.94%
Seasoning (months)(1)....................... 6.49(2) 2 20
Remaining Term (months)(1).................. 34.47(2) 16 58
</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.................................................. 22,330 45.42%
United States manufacturers.............................. 23,962 48.74
Other Japanese manufacturers............................. 283 0.57
Other foreign manufacturers.............................. 2,591 5.27
--------- -------
Total.......................................... 49,166 100.00%
========= =======
</TABLE>
36
<PAGE> 43
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
INITIAL AGGREGATE
PERCENTAGE OF CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING OUTSTANDING PRINCIPAL
LEASE RATE RANGE INITIAL CONTRACTS INITIAL CONTRACTS PRINCIPAL BALANCE BALANCE
- ---------------- ----------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
3.00% to 3.99%............... 100 0.20% $ 1,460,037.95 0.12%
4.00% to 4.99%............... 668 1.36 10,014,879.19 0.83
5.00% to 5.99%............... 2,348 4.78 39,219,994.41 3.25
6.00% to 6.99%............... 2,202 4.48 38,995,666.87 3.24
7.00% to 7.99%............... 2,333 4.74 53,091,799.72 4.40
8.00% to 8.99%............... 19,764 40.20 540,415,038.57 44.83
9.00% to 9.99%............... 17,613 35.82 424,149,518.06 35.18
10.00% to 10.99%............... 2,645 5.38 63,288,739.00 5.25
11.00% to 11.99%............... 1,303 2.65 31,455,603.51 2.61
12.00% to 12.99%............... 190 0.39 3,518,046.56 0.29
------- ------- ----------------- -------
Total................ 49,166 100.00% $1,205,609,323.84 100.00%
======= ======= ================= =======
</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
INITIAL AGGREGATE
PERCENTAGE OF CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING OUTSTANDING PRINCIPAL
YEAR OF MATURITY INITIAL CONTRACTS INITIAL CONTRACTS PRINCIPAL BALANCE BALANCE
- ---------------- ----------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
1999........................... 3,897 7.93% $ 98,769,916.91 8.19%
2000........................... 33,976 69.10 805,087,520.43 66.78
2001........................... 9,209 18.73 240,966,302.86 19.99
2002........................... 2,084 4.24 60,785,583.64 5.04
------- ------- ----------------- -------
Total................ 49,166 100.00% $1,205,609,323.84 100.00%
======= ======= ================= =======
</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
INITIAL AGGREGATE
PERCENTAGE OF CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING OUTSTANDING PRINCIPAL
STATE INITIAL CONTRACTS INITIAL CONTRACTS PRINCIPAL BALANCE BALANCE
- ----- ----------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Alabama........................ 3,401 6.92% $ 78,400,628.98 6.50%
Florida........................ 15,961 32.46 363,380,607.48 30.14
Georgia........................ 6,869 13.97 159,289,986.51 13.21
North Carolina................. 8,805 17.91 200,080,496.04 16.60
South Carolina................. 2,295 4.67 53,324,895.42 4.42
All other states............... 11,835 24.07 351,132,709.41 29.13
------- ------- ----------------- -------
Total................ 49,166 100.00% $1,205,609,323.84 100.00%
======= ======= ================= =======
</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
37
<PAGE> 44
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
Noteholders) 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 Indenture 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 Notes
or the Class B Notes, after
38
<PAGE> 45
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; (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 67%. (Servicing Agreement, Section 8.02).
The Servicing Agreement will provide that upon the discovery by the
Origination Trustee, World Omni, the Owner Trustee, the Indenture 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 Noteholders 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 Notes.
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 over calendar
years 1994, 1995, 1996 and the six months ended June 30, 1997 an average of
approximately 83% 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 for the year 1996 and the six months ended June 30, 1997 the
losses relating to these incentives were $223,303 and $778,697, respectively.
World Omni anticipates expanding its use of these incentive programs 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 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
39
<PAGE> 46
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 Notes
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 Noteholders. 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 Noteholders who receive such amounts may
not be able to reinvest the related payments of principal received on the Class
A Notes at yields as high as the related Note 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 Notes. 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 Notes.
Additionally, although monies on deposit in the Accounts and Principal
Collections (and Loss Amounts that otherwise would be reimbursed to the
Noteholders) 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
Notes -- Distributions on the Notes -- 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
Noteholders will be borne entirely by the Class A Noteholders.
The yield to an investor who purchases Class A Notes 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 Notes 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 Notes, (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 Noteholders until the Class A-1 Notes have been paid in
full, by Class A-3 Noteholders until the Class A-1 and Class A-2 Notes have been
paid in full or by Class A-4 and Class B Noteholders until the Class A-1, Class
A-2 and Class A-3 Notes have been paid in full. In addition, the Class A
Percentage and the Class B Percentage of Principal Collections allocable to the
Notes will be calculated when the Class A-1, Class A-2 and Class A-3 Notes have
been paid in full, and then used to determine the distribution of principal
payments on the Class A-4 Notes and the Class B Notes, as described under "Risk
Factors -- Maturity and Prepayment Risks" and "-- Risks Associated with
Sequential Payment of Principal on the Notes", which may affect the maturity and
yield on the Class A-4 Notes. The Investor Percentage of Loss Amounts will be
allocated among the Noteholders 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, and then reimbursed out of available funds in the amounts and order of
priority described in "Description of the Notes -- Distributions on the
Notes -- Distributions of
40
<PAGE> 47
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
Indenture Event of Default (as described under "Additional Document
Provisions -- The Indenture -- Events of Default"), to the extent such net
proceeds constitute Principal Collections, will be distributed first, on a pro
rata basis, to the Class A Noteholders based on their respective Class Note
Balances until the Class A Notes have been paid in full, and second, to the
Class B Noteholders.
The following information is provided solely to illustrate the effect of
prepayments of the Contracts on the Class A-1 Note Balance, the Class A-2 Note
Balance, the Class A-3 Note Balance and the Class A-4 Note Balance and the
weighted average life of each Class of Class A Notes 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 property of the Trust as described herein; (v) all distributions
of principal (including any Accelerated Principal Distribution Amount) and
interest on the Class A Notes 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
October 31, 1998; (ix) the Initial Contracts have assumed Lease Rates of 8.0%
and were originated six 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 twenty-fifth day of the
following calendar month, in Subsequent Contracts that have stated terms of
three years, Lease Rates of 8.0% 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 Noteholders, 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 Noteholders, 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 Note Balance, the Class A-2
Note Balance, the Class A-3 Note Balance or the Class A-4 Note Balance, as the
case may be, and the weighted average lives of each Class of Class A Notes set
forth in the tables. In addition, since the Contracts will have characteristics
which differ from those
41
<PAGE> 48
assumed in preparing the tables, distributions of principal on the Class A Notes
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 Note Balance
of each Class of Class A Notes 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 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-----------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
November 1997...................................... 100% 100% 100% 100% 100%
May 1998........................................... 100 100 100 100 100
November 1998...................................... 100 100 100 100 100
May 1999........................................... 71 54 32 2 0
November 1999...................................... 23 0 0 0 0
May 2000........................................... 0 0 0 0 0
Weighted Average Life (Years)(1)................... 1.81 1.61 1.46 1.37 1.31
===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-1 Notes 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 Note Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-2 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-----------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
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 42
November 1999...................................... 100 84 24 0 0
May 2000........................................... 0 0 0 0 0
Weighted Average Life (Years)(1)................... 2.46 2.28 1.99 1.75 1.59
===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-2 Notes 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 Note Balance.
42
<PAGE> 49
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-3 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
November 1997........................................... 100% 100% 100% 100% 100%
May 1998................................................ 100 100 100 100 100
November 1998........................................... 100 100 100 100 100
May 1999................................................ 100 100 100 100 100
November 1999........................................... 100 100 100 58 0
May 2000................................................ 92 68 31 0 0
November 2000........................................... 0 0 0 0 0
Weighted Average Life (Years)(1)........................ 2.76 2.68 2.50 2.14 1.78
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-3 Notes 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 Note Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-4 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
November 1997.......................................... 100% 100% 100% 100% 100%
May 1998............................................... 100 100 100 100 100
November 1998.......................................... 100 100 100 100 100
May 1999............................................... 100 100 100 100 100
November 1999.......................................... 100 100 100 100 59
May 2000............................................... 100 100 100 53 0
November 2000.......................................... 65 47 0 0 0
May 2001............................................... 51 0 0 0 0
November 2001.......................................... 0 0 0 0 0
Weighted Average Life (Years)(1)....................... 3.44 3.22 2.98 2.57 2.11
==== ==== ==== ==== =====
</TABLE>
- ---------------
(1) The weighted average life of the Class A-4 Notes 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 Note Balance.
CLASS A NOTE FACTORS AND TRADING INFORMATION;
REPORTS TO CLASS A NOTEHOLDERS
The "Class A-1 Note Factor", the "Class A-2 Note Factor", the "Class A-3
Note Factor" and the "Class A-4 Note 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 Note 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
Note Balance of the related Class of Class A Notes. Each Note 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 Note Principal Loss Amounts. During the
Amortization Period, each Note Factor will decline to reflect reductions in the
related Note Balance resulting from distributions of principal and unreimbursed
Class A-1, Class A-2, Class A-3 or Class A-4 Note Principal Loss Amounts, if
any. The portion of the Class A Note Balance for a given month allocable to a
Class A Noteholder can be determined by multiplying the original denomination of
the holder's Class A Note by the related Note Factor for that month.
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<PAGE> 50
Pursuant to the Agreement, U.S. Bank, as Indenture Trustee, will provide to
all registered holders of the Class A Notes (which shall be Cede as the nominee
of DTC unless Definitive Notes 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 Note Factors and various other items of information. Note Owners
may obtain copies of such reports upon a request in writing to the Indenture
Trustee. In addition, Class A Noteholders 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
Noteholders and Note Owners, see "Description of the Notes -- Statements to
Noteholders" and "Description of the Notes -- Book-Entry Registration".
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture, a form of which,
together with forms of the Agreement, 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 " The Contracts -- Characteristics at the
Contracts -- Representations, Warranties and Covenants", "Security for the
Notes" 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
Indenture, 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 Notes will be issued in denominations of $1,000 and integral
multiples thereof in book-entry form. (Indenture, Section 2.02). The Class A
Notes will initially be represented by notes registered in the name of Cede, the
nominee of DTC. No Note Owner will be entitled to receive a note representing
such owner's Note, except as set forth below. Unless and until Class A Notes are
issued in fully registered certificated form ("Definitive Notes") under the
limited circumstances described below, all references herein to distributions,
notices, reports and statements to Class A Noteholders will refer to the same
actions made with respect to DTC or Cede, as the case may be, for the benefit of
Note Owners in accordance with DTC procedures. (Indenture, Section 2.10). See
"Description of the Notes -- Book-Entry Registration" and " -- Definitive
Notes".
The outstanding principal amount of each class of Notes (each, a "Class")
at any time will be equal to the initial principal amount of such Class of
Notes, less the sum of (i) all payments made on or prior to such date allocable
to principal, (ii) the amount of Note Principal Loss Amounts allocable to such
Class of Notes, if any, which have not been reimbursed as described herein and
(iii) in the case of the Class B Notes, any unreimbursed Class B Note Principal
Carryover Shortfall. (Agreement, Section 1.01). See "Description of the
Notes -- Distributions on the Notes". Each Note will represent the right to
receive payments of interest at the related Note 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 Notes of the related
Class, 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 Notes -- Distributions on the Notes", the right of the
Class B Notes to receive payments of interest and principal also will be
subordinated to the right of the Class A Notes to receive such payments.
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<PAGE> 51
The Transferor will permanently retain the certificate representing the
Transferor Interest (the "Transferor Certificate"), which will represent the
entire equity 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 Notes -- Calculation of
Investor Percentage and Transferor Percentage". The Transferor Certificate will
be subordinated to the Notes to the extent described under "Description of the
Notes -- Certain Payments to the Transferor".
During the Revolving Period, the Note Balance will remain constant except
in certain limited circumstances where there are unreimbursed Note Principal
Loss Amounts. During the Amortization Period, the Note Balance will decline as
the Investor Percentage of Principal Collections allocable to the SUBI Interest
and Accelerated Principal Distribution Amounts are distributed to the
Noteholders and as Note 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.
TRANSFER OF THE SUBI INTEREST
On the Closing Date, pursuant to the Agreement, the Transferor will deliver
the SUBI Certificate to the Owner Trustee and transfer and assign to the Owner
Trustee, without recourse, all of its right, title and interest in and to the
SUBI Interest represented by the SUBI Certificate. The Owner Trustee will,
concurrently with such delivery, transfer and assignment, deliver the Notes and
the Transferor Certificate 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
Owner 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 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 Notes and the Transferor
Certificate, based on the applicable Investor Percentage and the Transferor
Percentage for the related Collection Period, all Interest Collections and
(during the
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<PAGE> 52
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 Note Balance on the last day of the
immediately preceding Collection Period (or, in the case of the first Collection
Period, the Initial Note 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 Note 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 Noteholders based on the relationship of the Note 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 Note 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 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 Indenture 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
Noteholders.
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<PAGE> 53
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
Notes -- Distributions on the Notes -- 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 NOTES
General
On the second Business Day prior to each Distribution Date (each, a
"Determination Date"), the Servicer will inform the Indenture 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 Note 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 Noteholders and to the Transferor in respect of the
Transferor Interest and the Reserve Fund Supplemental Requirement (if any).
(Servicing Agreement, Sections 9.02 and 10.01).
Distributions of Interest
On each Distribution Date, the Indenture Trustee will make the following
payments in the amounts and order of priority described below. The Indenture
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 Noteholders during the
Amortization Period, amounts that would otherwise be distributable to the Class
B Noteholders 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 Indenture Event of Default as a result of the
Indenture Trustee having received written instructions from holders of
Notes evidencing Voting Interests of not less than a majority in interest
of the Class A Notes (voting together as a single class) or a majority in
interest of the Class A Notes and Class B Notes (voting together as a
single class) to sell or dispose of the SUBI Interest, to the Indenture
Trustee, the Investor Percentage of Capped Indenture Trustee Administrative
Expenses, and to the Owner Trustee, the Investor Percentage of Capped Owner
Trustee Administrative Expenses;
(ii) to each Class of Class A Noteholders, interest at the related
Note Rate on the Class A-1, Class A-2, Class A-3 or Class A-4 Note Balance,
as applicable, as of the immediately preceding Distribution Date (after
giving effect to any reduction in such Note 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 Note
Balance, as applicable, 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 Noteholders, interest at a specified rate per
annum not expected to exceed 8.0% (the "Class B Note Rate" and, together
with the Class A-1, Class A-2, Class A-3 and Class A-4 Note Rates, the
"Note Rates"), on the Class B Note Balance as of the immediately preceding
Distribution
47
<PAGE> 54
Date (after giving effect to any reduction in the Class B Note Balance on
such immediately preceding Distribution Date) or, in the case of the first
Distribution Date, on the Initial Class B Note Balance, 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 Indenture Trustee, the Investor Percentage of Capped Indenture Trustee
Administrative Expenses, and to the Owner Trustee, the Investor Percentage
of Capped Owner Trustee 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 Noteholders, 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 Noteholders, 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 Note Principal Loss Amount", "Class A-2 Note Principal
Loss Amount," "Class A-3 Note Principal Loss Amount" or "Class A-4 Note
Principal Loss Amount", respectively);
(xi) to each Class of Class A Noteholders, accrued and unpaid interest
at the related Note Rate, on any unreimbursed Class A-1, Class A-2, Class
A-3 and Class A-4 Note Principal Loss Amount, as applicable;
(xii) to the Class B Noteholders, 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;
(xiii) to the Class B Noteholders, 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 Note Principal Loss Amount"), together with any Class B Note
Principal Carryover Shortfall;
(xiv) to the Class B Noteholders, accrued and unpaid interest at the
Class B Note Rate on any unreimbursed Class B Note Principal Loss Amount
and any unreimbursed Class B Note 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 Indenture Trustee, the Owner Trustee and the Origination
Trustee, as applicable, the Investor Percentage of all specified expenses
incurred with respect to the Indenture, the Notes, 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"). (Agreement, Sections 1.01 and 3.03).
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<PAGE> 55
Notwithstanding the foregoing, as more fully described under "Description
of the Notes -- Distributions on the Notes -- 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
Noteholders 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 Notes 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 Noteholders 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 Indenture 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 Noteholders 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
Noteholders until the Class A-1 Notes have been paid in full, second, to the
Class A-2 Noteholders until the Class A-2 Notes have been paid in full, third,
to the Class A-3 Noteholders until the Class A-3 Notes 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 Noteholders and the Class
B Noteholders, 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, Sections 1.01 and 3.03).
In the event on any Distribution Date there remains any shortfall in
amounts required to be distributed to the Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders and Class A-4 Noteholders under clauses (ii),
(ix), (x) or (xi) above, then the amount available will be distributed pro rata
to such Noteholders 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. (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). (Agreement, Section 3.03).
"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).
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<PAGE> 56
"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 Indenture
Trustee Administrative Expenses" will equal the amounts sufficient to pay the
Indenture Trustee's compensation and certain other expenses up to but not
exceeding $50,000 in any calendar year (or $100,000 in a calendar year in which
an Indenture Event of Default occurs with respect to which the Indenture Trustee
sells or otherwise disposes of the SUBI Interest). "Capped Owner Trustee
Administrative Expenses" will equal amounts sufficient to pay the Owner
Trustee's compensation and certain other expenses up to but not exceeding $5,000
in any calendar year. (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 $550,000 in any calendar year.
A "Note 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 Note
Principal Loss Amount and will represent a loss of principal in respect of Loss
Amounts allocable to the Notes 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 Note Principal Loss Amount, amounts otherwise
payable in respect of principal to the Class B Noteholders are not sufficient to
cover such loss. As described under "Description of the Notes -- General", any
Note Principal Loss Amounts allocable to a Class of Class A Notes which are not
reimbursed as provided herein will reduce the Note Balance of such Class of
Class A Notes. (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 Notes 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 Note 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 Noteholders 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 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B
Notes, respectively. (Agreement, Section 1.01).
The "Class B Note 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 Notes 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
Noteholders, 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 Note Balance as a percentage of the Note Balance,
calculated as of the last day of the related Collection Period.
The "Voting Interests" of the (i) Class A Notes will be allocated among the
Class A-1, Class A-2, Class A-3 and Class A-4 Noteholders or Note Owners, as the
case may be, in accordance with their respective Class Note Balances, as the
context may require, and (ii) Class B Notes will be allocated among the Class B
Noteholders in accordance with the Class B Note Balance represented thereby.
Notwithstanding the foregoing, in certain circumstances, any Class A Notes or
Class B Notes, 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).
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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 Notes -- The Reserve Fund".
Application and Distributions of Principal
Revolving Period. No principal will be payable to the Class A Noteholders
until the December 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 Noteholders which for this purpose are treated as Principal
Collections, as described under "Description of the Notes -- Distributions on
the Notes -- 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 Indenture 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 Noteholders) 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 November 25, 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 distributed as principal
to the Trust and then to Noteholders 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
Notes have been paid in full, the Indenture 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 Notes as
principal first to the Class A-1 Noteholders until the Class A-1 Notes have
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been paid in full, second, to the Class A-2 Noteholders until the Class A-2
Notes have been paid in full, third, to the Class A-3 Noteholders until the
Class A-3 Notes 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 Noteholders and the Class B
Noteholders, respectively. The Indenture Trustee will also distribute to Class
A-1 Noteholders 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
Noteholders of each Class of Class A Notes will not exceed the Initial Note
Balances of such Class of Notes. (SUBI Trust Agreement, Section 11.02;
Indenture, Section 2.06; Agreement, Section 3.03).
In general, no principal payments will be made on the Class A-2 Notes until
the Class A-1 Notes have been paid in full, on the Class A-3 Notes until the
Class A-1 and Class A-2 Notes have been paid in full, or on the Class A-4 or
Class B Notes until the Class A-1, Class A-2 and Class A-3 Notes have been paid
in full. The Investor Percentage of Loss Amounts will be allocated among
Noteholders 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 Notes -- Distributions on the
Notes -- Distributions of Interest". Loss Amounts will not be allocated or
reimbursed to any Noteholder once the related Notes 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 Indenture Event
of Default (as described under "Additional Agreement Provisions -- The
Indenture -- Events of Default"), 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 Noteholders based on their
respective Class Note Balances until the Class A Notes have been paid in full,
and second, to the Class B Noteholders.
In addition, on any Distribution Date relating to the Amortization Period
from and after the Distribution Date on which the Class A-3 Notes 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
Noteholders 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 Noteholders 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 Note Principal Loss Amounts and (iii) accrued and
unpaid interest on any Class A-4 Note Principal Loss Amounts, as set forth under
"Description of the Notes -- Distributions on the Notes -- Distributions of
Interest."
Principal payments made during the Amortization Period in respect of the
Class A-1 Notes, the Class A-2 Notes or Class A-3 Notes, as applicable, will
consist primarily of the Investor Percentage 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 Notes and the Class B Notes (once the
Class A-1 Notes, Class A-2 Notes and Class A-3 Notes 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.
THE ACCOUNTS
The Distribution Account
On or prior to the Closing Date, the Servicer will establish a trust
account with and in the name of the Indenture Trustee for the benefit of the
Noteholders and the Transferor, as holder of the Transferor Certificate, from
which all payments with respect to the Notes will be made (the "Distribution
Account"). (Agreement, Section 3.01). Within one Business Day of receipt, the
Servicer will deposit all Insured Residual
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Value Loss Amounts paid under the Residual Value Insurance Policy (if they
relate to the Amortization Period) into the Distribution Account (Agreement,
Section 3.02). 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 Note Balance is less than or equal to 10% of the Initial Note Balance.
The SUBI Collection Account
On or prior to the Closing Date, the Origination Trustee will establish a
trust account with and in the name of the Indenture Trustee for the benefit of
the Noteholders and the Transferor, as holder of the Transferor Certificate,
into which collections on or in respect of the Contracts and the Leased Vehicles
generally will be deposited (the "SUBI Collection Account" and, together with
the Distribution Account and the Reserve Fund, the "Accounts"). (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 and (ix) Insured Residual Value Loss Amounts paid
under the Residual Value Insurance Policy with respect to the Revolving Period.
(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 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 Indenture Trustee is provided with confirmation (written or oral)
from each Rating Agency to the effect that the use of such alternative
remittance schedule will not result in the
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qualification, reduction or withdrawal of its then-current rating of any Class
of Notes. (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 Indenture Trustee, as pledgee of the SUBI Interest, and the
Transferor on the related Deposit Date. The Servicer, however, will account to
the Indenture Trustee, the Origination Trustee, the Noteholders 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 Notes --
Distributions on the Notes -- 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 Indenture Trustee with an officer's certificate setting forth the basis
for such withdrawal, the Indenture 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, 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".
Maintenance of the Accounts
The Accounts will be maintained with the Indenture Trustee so long as
either (i) the short-term unsecured debt obligations of the Indenture Trustee
are rated at least P-1 by Moody's and A-1 by Standard & Poor's (and, if such
obligations are rated by Fitch, at least F-1 by Fitch) (the "Required Deposit
Ratings") or (ii) the Indenture Trustee 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 Indenture Trustee. If the
Indenture Trustee at any time does not qualify under either of these criteria,
the Servicer shall, with the assistance of the Indenture Trustee, 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 Indenture Trustee 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 or the Reserve Fund 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
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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 12.01 and 12.03; Agreement, Sections 3.01 and
3.04; 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 Moody's and Standard & Poor's (and, if such investments are
rated by Fitch, of Fitch) from time to time as being consistent with its
then-current rating of each Class of Notes. (Agreement, Section 1.01).
EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the close of
business on the last day of October 1998 and the Amortization Period will begin
on November 1, 1998 and continue to the earlier of the payment in full of the
Notes 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 Notes 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 Noteholders
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 Indenture Trustee or the Origination Trustee or (b) to the
Transferor or the Servicer, as the case may be, and to the Indenture
Trustee by holders of Notes evidencing not less than 25% of the Voting
Interests of the Class A Notes and the Class B Notes, 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 Noteholders 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 Indenture,
the Agreement, the Backup Security Agreement, the SUBI Trust Agreement or
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
Indenture, the Agreement, the Backup Security Agreement, the SUBI Trust
Agreement or the Servicing Agreement on the SUBI Assets, which lien or
encumbrance is not released or bonded over 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
Indenture, the Agreement, the Backup Security Agreement, the SUBI Trust
Agreement or the Servicing Agreement, which, in the case of the imposition
of a lien or encumbrance, is not released or bonded over 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;
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(viii) if on the twenty-fifth day of any month (beginning November 25,
1997) the amount of Principal Collections and Loss Amounts that otherwise
would be available to be reimbursed to the Noteholders 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 or an Event of Default under
the Indenture (an "Indenture Event of Default") 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 approximately $2,997,645 (i.e., 0.25% multiplied by
99.8% of the Aggregate Net Investment Value as of the Initial Cutoff Date);
or
(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 Noteholders 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 Noteholders 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 Noteholders 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 Notes.
STATEMENTS TO NOTEHOLDERS
On each Distribution Date, the Indenture Trustee will include with each
distribution to each Noteholder as of the close of business on the related
Record Date (which, in the case of the Class A Notes, shall be Cede as the
nominee of DTC unless Definitive Notes 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 Noteholders (the "Note
Distribution Amount");
(iii) the amount of the Note Distribution Amount allocable to interest
and to principal on each Class of Notes;
(iv) the amount of the Note 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 Note Distribution Amount;
(vi) the Note Balance, the Class A-1 Note Balance, the Class A-2 Note
Balance, the Class A-3 Note Balance, the Class A-4 Note Balance, the Class
A-1 Note Factor, the Class A-2 Note Factor, the Class A-3 Note Factor, the
Class A-4 Note 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
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the Class B Allocation Percentage as of such Distribution Date, in each
case after giving effect to distribution of the Note Distribution Amount;
(vii) the aggregate amount, if any, of the reimbursement of Loss
Amounts included in distribution of the Note Distribution Amount and the
amount thereof allocated to each Class of Noteholders;
(viii) the amount of the Note Distribution Amount allocable to
reimbursement of previous Class A-1 Note Principal Loss Amounts, Class A-2
Note Principal Loss Amounts, Class A-3 Note Principal Loss Amounts, Class
A-4 Note Principal Loss Amounts and Class B Note 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 Note
Principal Loss Amounts, Class A-2 Note Principal Loss Amounts, Class A-3
Note Principal Loss Amounts, Class A-4 Note Principal Loss Amounts and
Class B Note Principal Loss Amounts, after giving effect to distribution of
the Note Distribution Amount;
(x) the amount of any unreimbursed Class B Note Principal Carryover
Shortfall;
(xi) the Investor Percentage of the Servicing Fee;
(xii) the amount of any Required Amount included in the Note
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 any Reserve Fund supplemental requirement;
(xiii) the amount of Transferor Amounts, if any, included in the Note
Distribution Amount;
(xiv) the Aggregate Net Investment Value as of the end of such
Collection Period;
(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) certain information used in determining compliance with the
Charge-off Test Rate and the Delinquency Test; and
(xviii) 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 Note or Class B
Note, as applicable. Copies of such statements may be obtained by Noteholders or
Note Owners by a request in writing addressed to the Indenture 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 Indenture
Trustee will mail to each person who at any time during such calendar year shall
have been a Class A or Class B Noteholder or a Note 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; REDEMPTION OF THE NOTES
The respective obligations and responsibilities of the Transferor and the
Indenture Trustee created by the Agreement will terminate upon the earliest to
occur of (i) the disposition of the SUBI Interest, or its expiration or
termination by virtue of 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 Notes
have been paid in full and after which there is no unreimbursed Note Principal
Loss Amount or Class B Note Principal Carryover
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Shortfall (together with accrued interest thereon) and (iii) the purchase of the
corpus of the Trust and the resulting redemption of the Notes as described
below. In order to avoid excessive administrative expenses, the Transferor will
be permitted at its option to purchase all of the assets of 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 Note Balance is
less than or equal to 10% of the Initial Note Balance. The purchase price will
be equal to the greater of (i) the sum of the Class A Note Balance and the Class
B Note Balance, in each case plus accrued and unpaid interest thereon at the
related Note Rate, plus certain other accrued and unpaid amounts, if any, due to
the Investor Noteholders or the Servicer, and (ii) 99.8% of the Aggregate Net
Investment Value as of the last day of the preceding Collection Period. If the
Transferor purchases the assets of the Trust, the Indenture Trustee will furnish
a redemption notice to each Noteholder not more than 30 days and not less than
15 days prior to the applicable Redemption Date. Failure to give notice of
redemption, or any defect in the notice, to any Noteholder of any Note selected
for redemption will not impair or affect the validity of the redemption of any
Note. The Notes will, on the Redemption Date, become due and payable and no
interest will accrue on the Notes for any period after such Redemption Date.
(Agreement, Sections 7.01 and 7.02; Indenture, Section 2.06).
The final distribution to any Noteholder will be made only upon surrender
and cancellation of such Noteholder's Note at an office or agency of the
Indenture Trustee specified in the notice of termination. Any funds remaining
that are payable in such final distribution to a Noteholder, after the Indenture
Trustee has taken certain measures to locate such Noteholder and such measures
have failed, will be distributed to the Transferor. (Indenture, Section 2.06).
BOOK-ENTRY REGISTRATION
Note 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 Notes. 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 Notes are issued, it is anticipated that the
only Class A Noteholder will be Cede, as the nominee of DTC. Note 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 Notes by or through a Cedel
Participant or Euroclear Participant to a DTC Participant will be received with
value on the DTC settlement
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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.
Note 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 Notes 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 Notes in DTC's records. The ownership interest of each Note Owner in
turn will be recorded on the DTC Participants' and Indirect DTC Participants'
respective records. Note Owners will not receive written confirmation from DTC
of their purchase, but Note Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the DTC Participant or Indirect DTC Participant through which the
Note Owner entered into the transaction. Transfers of ownership interests in the
Class A Notes will be accomplished by entries made on the books of DTC
Participants acting on behalf of Note Owners.
To facilitate subsequent transfers, all Class A Notes deposited by DTC
Participants with DTC will be registered in the name of Cede, as nominee of DTC.
The deposit of Class A Notes 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 Note Owners and its records will reflect only the identity of the DTC
Participants to whose accounts such Class A Notes are credited, which may or may
not be the Note 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 Note 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 Notes 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 Note 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 Indenture Trustee, the Owner 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 Notes to DTC will be the responsibility of the Indenture Trustee,
disbursement of such payments to DTC Participants will be the responsibility of
DTC and disbursement of such payments to Note Owners will be the responsibility
of DTC Participants and Indirect DTC Participants. As a result, under the
book-entry format, Note 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 Note
Owner to pledge Class A Notes to persons or entities that
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do not participate in the DTC system, or otherwise take actions with respect to
such Class A Notes, may be limited due to the lack of a physical Note for such
Class A Notes.
Neither DTC nor Cede will consent or vote with respect to the Class A
Notes. Under its usual procedures, DTC mails an "Omnibus Proxy" to the Indenture
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 Notes are credited on that record
date (identified in a listing attached to the Omnibus Proxy).
None of the Transferor, the Servicer, the Origination Trustee, the Owner
Trustee nor the Indenture 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 Notes 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 34 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 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 34 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing, and
interfaces with domestic markets in more than 25 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 Board establishes policy for the
Euroclear System. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries. Indirect access to the Euroclear System is also available to
other firms that 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.
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Distributions with respect to Class A Notes 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 Noteholder 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 Notes 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 NOTES
Definitive Notes will be issued to Note 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 Notes, and neither the Indenture Trustee nor the
Transferor is able to locate a qualified successor, (ii) the Transferor, at its
option, elects to terminate the book-entry system through DTC or (iii) after an
Indenture Event of Default, Note Owners representing in the aggregate more than
50% of the Voting Interests of the Class A Notes (voting together as a single
class) advise the Indenture 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 Note Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee will be required to notify all Note
Owners, through Participants, of the availability through DTC of Definitive
Notes. Upon surrender by DTC of the certificates representing the related Class
A Notes and the receipt of instructions for re-registration, the Indenture
Trustee will issue Definitive Notes to Note Owners, who thereupon will become
Noteholders for all purposes of the Agreement. (Indenture, Section 2.12).
Payments on the related Class A Notes will thereafter be made by the
Indenture Trustee directly to holders of such Class A Notes in accordance with
the procedures set forth herein and to be set forth in the Indenture. Interest
payments and any principal payments on the Definitive Notes on each Distribution
Date will be made to holders in whose names the Definitive Notes 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 Note 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. (Indenture,
Section 2.06). The final payment on any Class A Notes (whether Definitive Notes
or global certificates registered in the name of Cede representing the Class A
Notes), however, will be made only upon presentation and surrender of such
Definitive Notes or global certificates at the office or agency specified in the
notice of final distribution to Class A Noteholders. (Indenture, Section 2.06).
Definitive Notes will be transferable and exchangeable at the offices of
the Indenture Trustee or the Note Registrar to be set forth in the Agreement. No
service charge will be imposed for any registration of transfer or exchange, but
the Indenture Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith. (Indenture,
Section 2.04).
THE INDENTURE TRUSTEE
U.S. Bank will be the Indenture Trustee under the Indenture. The Corporate
Trust Office of the Indenture Trustee is located at One Illinois Center, 111
East Wacker Drive, Suite 3000, Chicago, IL 60601. U.S. Bank is not affiliated
with World Omni, although it does act as a service provider to World Omni.
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The Indenture Trustee may resign at any time, in which event the Trust will
be obligated to appoint a successor Indenture Trustee. Noteholders representing
in the aggregate more than 50% of the Voting Interests of the outstanding Notes
(voting together as a single class) may remove the Indenture Trustee by
delivering notice thereof to the Indenture Trustee and the Trust. The Trust may
also remove the Indenture Trustee if the Indenture Trustee ceases to be eligible
to continue as such under the Indenture, becomes legally unable to act or
becomes insolvent. In such circumstances, the Trust will be obligated to appoint
a successor Indenture Trustee. Any resignation or removal of the Indenture
Trustee and appointment of a successor Indenture Trustee will not become
effective until acceptance of the appointment by such successor Indenture
Trustee. (Indenture, Section 6.10).
The Indenture 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. As co-trustee or separate trustee need not meet these eligibility
requirements. (Indenture, Sections 6.08 and 6.14).
Noteholders representing in the aggregate more than 50% of the Voting
Interests of the outstanding Notes (voting together as a single class) generally
will have the power to direct any proceeding for any remedy available to the
Indenture Trustee under the Agreement, and the exercise of any trust or power
conferred on the Indenture Trustee by the Agreement (including actions by the
Indenture Trustee in its capacity as a party to, or a third-party beneficiary
of, the SUBI Trust Agreement or the Servicing Agreement). However, the Indenture
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
Noteholders. (Indenture, Section 5.14).
A Noteholder may institute proceedings under the Indenture, but only if
such holder previously has given to the Indenture Trustee written notice of
default and unless the Noteholders representing in the aggregate not less than
25% of the Voting Interests of the outstanding Notes (voting together as a
single class) have made written request upon the Indenture Trustee to institute
such proceeding in its own name as Indenture Trustee and have offered to the
Indenture Trustee reasonable indemnity and the Trustee for 60 days has neglected
or refused to institute any such proceeding. (Indenture, Section 5.09). The
Indenture 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
Noteholders, unless such holders have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby. (Indenture, Section 6.03). Noteholders
will have no express right to institute a proceeding directly under the SUBI
Trust Agreement or the Servicing Agreement.
List of Noteholders
Upon a written request of the Servicer, the Indenture Trustee, as Note
Registrar, will provide to the Servicer within 15 days after receipt of such
request a list of the names and addresses of all Noteholders. In addition, three
or more Noteholders or Noteholders representing in the aggregate not less than
25% of the Voting Interests of any Class of outstanding Notes, upon compliance
by such Noteholders with certain provisions of the Agreement, may request that
the Indenture Trustee, as Note Registrar, afford such Noteholders access during
business hours to the current list of Noteholders for purposes of communicating
with other Noteholders with respect to their rights under the Indenture.
(Indenture, Section 7.02). For further information regarding communications with
Noteholders, see "Description of the Notes -- Book-Entry Registration" and
"-- Definitive Notes".
The Indenture will not provide for the holding of any annual or other
meetings of Noteholders.
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SECURITY FOR THE NOTES
GENERAL
The Notes will be secured by all of the property of the Trust, which will
primarily consist of the SUBI Interest evidenced by the SUBI Certificate, as
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. 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 Indenture Trustee also will have a security interest in the Contracts and
Contract Rights susceptible of perfection by the filing of a financing statement
under the Uniform Commercial Code (the "UCC"). The Indenture Trustee will also
have a security interest in the SUBI Collection Account, the Distribution
Account and the Reserve Fund, the Contingent and Excess Liability Insurance
Policies and the Residual Value Insurance Policy described below and will be a
third-party beneficiary of the SUBI Trust Agreement and the Servicing Agreement.
In no event will the Owner Trustee or the Indenture Trustee be deemed to have a
perfected security interest in the Leased Vehicles.
THE RESERVE FUND
On or prior to the Closing Date, the Owner Trustee will establish a trust
account with and in the name of the Indenture Trustee for the benefit of the
Noteholders and the Transferor, as holder of the Transferor Certificate (the
"Reserve Fund"). The monies on deposit in the Reserve Fund will, as described
below, be applied on each 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 Notes -- Distributions
on the Notes -- Distributions of Interest", monies on deposit in the Reserve
Fund will be available to make payments to the Noteholders should Collections
ultimately be insufficient to reduce the Class A-1 Note Balance, the Class A-2
Note Balance, the Class A-3 Note Balance, the Class A-4 Note Balance or the
Class B Note 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
$11,990,580 (i.e., 1.0% of 99.8% of the Aggregate Net Investment Value as of the
Initial Cutoff Date) and (ii) the Note Balance as of the related Distribution
Date (after giving effect to reductions in the Note Balance on such Distribution
Date).
So long as all of the Reserve Fund Tests (as described under "Security for
the Notes -- The Reserve Fund -- Reserve Fund Tests") are satisfied and there is
no RV Insurer Trigger Event or Downgrade Trigger Event, the Reserve Fund Cash
Requirement is expected to be approximately $11,990,580 for each Distribution
Date relating to the Revolving Period. (Agreement, Sections 3.03 and 3.04).
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 Noteholders or otherwise from the Reserve Fund, as described
under "Description of the Notes -- Distributions on the Notes -- Distributions
of Interest", to the extent that
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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) approximately $5,995,290
(i.e., 0.5% of 99.8% of the Aggregate Net Investment Value as of the Initial
Cutoff Date), less 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 the RV Insurer, or if certain other events relating to the bankruptcy or
insolvency of the RV Insurer 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 "RV Insurer 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)
approximately $41,967,030 (i.e., 3.5% of 99.8% of the Aggregate Net Investment
Value as of the Initial Cutoff Date) (the "RV Insurer Reserve Fund 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 approximately $41,967,030 (i.e., 3.5% of
99.8% of the Aggregate Net Investment Value as of the Initial Cutoff Date).
In the event that the RV Insurer's claims paying ability is downgraded to
"Aa3" or lower by Moody's, or below "AAA" by Standard & Poor's (or, if such
ability is rated by Fitch, below "AAA" by Fitch) (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 Notes (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 Notes and the Rating
Agencies may impose additional conditions to the maintenance of their
then-current ratings on each Class of Notes, 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, and the then-current ratings on each Class of Notes may be
downgraded. 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 Noteholders to the extent allocable to the Accelerated
Principal Distribution Amount). (Agreement, Sections 1.01 and 3.04).
Payment of the Reserve Fund Supplemental Requirement, the RV Insurer
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 RV
Insurer Trigger Event or a Downgrade Trigger Event, the Reserve Fund
Supplemental Requirement, the RV Insurer Reserve Fund Supplemental Requirement
or the Downgrade Reserve Fund Supplemental Require-
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ment, 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, RV Insurer 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, RV Insurer 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 and no RV Insurer 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 Note Balance as of such
Distribution Date (after giving effect to any reduction in the Note Balance on
such Distribution Date). The Alternate Reserve Fund Formula will be utilized to
determine the Reserve Fund Cash Requirement on all future 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 Notes -- Distributions on the Notes -- 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 month of October 1997 in the case of the
November 1997 Determination Date, or the months of October and November 1997 in
the case of the December 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 month of October 1997 in the case of the November 1997
Determination Date, or the months of October and November 1997 in the case of
the December 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. (Agreement, Section 1.01).
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 RV Insurer
Reserve Fund Supplemental Requirement and/or the Downgrade Reserve Fund
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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 RV Insurer 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 RV Insurer Reserve
Fund Supplemental Requirement and/or the Downgrade Reserve Fund Supplemental
Requirement. If each Rating Agency confirms (in writing or orally) to the
Indenture 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 Notes, and the Transferor's counsel delivers an opinion
as and to the extent required, as 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 Noteholder or Note Owner.
(Agreement, Section 9.01).
Withdrawals from the Reserve Fund. On each Deposit Date the Indenture
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 payments to Noteholders and the Transferor as described under "Security
for the Notes -- 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 Indenture Trustee or the Noteholders and
shall not be available to the Indenture Trustee or the Trust for the purpose of
making deposits to the Reserve Fund or making payments to the Noteholders, 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 the RV Insurer will issue the Residual
Value Insurance Policy to the Transferor (with the Origination Trustee, the
Indenture Trustee, the Owner Trustee and ALFI L.P. also named as insureds),
which 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 on or prior to their Maturity Dates by
agreement between the Servicer and the lessee in connection with the payment of
less than their respective Outstanding Principal Balances. The Residual Value
Insurance Policy may not be cancelled by the RV Insurer. 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, the RV Insurer 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
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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 Notes -- Distributions on the
Notes -- 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 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 and 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 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 Indenture Trustee. Audited financial statements of
AISLIC, prepared in accordance with Alaska insurance regulations, for the two
years ended December 31, 1996 and the two years ended December 31, 1995, 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 Indenture
Trustee on behalf of the Noteholders) 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 and 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 Indenture
Trustee on behalf of the Noteholders) may enforce the AIG Support Agreement only
if AIG fails to meet its obligations thereunder on demand.
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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
Notes 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
the RV Insurer for a specified percentage of claims paid under the Residual
Value Insurance Policy, although the failure to make such reimbursement will not
affect the RV Insurer's obligation to pay claims under the Residual Value
Insurance Policy.
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
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 Notes
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 -- Risks Associated with 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, under certain limited
circumstances where the lessee does not maintain required insurance, will be
required to make payments in respect of damaged Leased Vehicles. 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 Notes could incur a loss on their investment.
The Servicing Agreement will provide that so long as any Notes 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 Indenture Trustee to the effect that the obtaining of
any such replacement insurance will not cause its then-current rating of any
Class of Notes 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).
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ADDITIONAL DOCUMENT PROVISIONS
AMENDMENT OF TRANSACTION DOCUMENTS
The Indenture, the Agreement, the SUBI Supplement, the Servicing Agreement
and the other agreements and instruments relating to the transactions discussed
herein (collectively, the "Transaction Documents") may be amended by the
respective parties thereto, without the consent of the Noteholders, 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 Indenture which are not
inconsistent with provisions of the Indenture or to add or amend any provision
therein in connection with permitting transfers of the Class B Notes; provided
that any such action will not, in the good faith judgment of the parties,
materially and adversely affect the interests of any Noteholder, and the
Indenture Trustee shall have been furnished with an opinion of counsel to the
effect that such amendment will not adversely and materially affect the legal
interest of any Noteholder. (Indenture, Section 9.02; Agreement, Section 9.01).
See "Security for the Notes -- The Reserve Fund -- The Reserve Fund Cash
Requirement".
The Transaction Documents may also be amended from time to time by the
respective parties thereto, (including with respect to changing the formula for
determining the Reserve Fund Cash Requirement, the Reserve Fund Supplemental
Requirement, the RV Insurer Reserve Fund Supplement Requirement and/or the
Downgrade Reserve Fund Supplemental Requirement, 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 Indenture 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 Notes to be qualified, reduced or withdrawn or (b) the Indenture Trustee has
received the consent of the holders of Notes evidencing more than 50% of the
Voting Interests of the Class A Notes and the Class B Notes (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 Indenture or of modifying in
any manner the rights of each Class of Noteholders; provided, however, that: (i)
any amendment eliminating the Reserve Fund or the Residual Value Insurance
Policy, reducing the Reserve Fund Cash Requirement to less than the lesser of
(A) approximately $11,990,580 and (B) the Note Balance as of the related
Distribution Date (after giving effect to reductions in the Note Balance on such
Distribution Date), or eliminating or reducing the RV Insurer Reserve Fund
Supplement 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 Notes will, and the Class B Notes 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 Notes or the
applicable Note Rate and (B) no amendment of any type shall reduce the
percentage of the aggregate Voting Interests of the Notes of any Class required
to consent to any such amendment, in each case without the consent of all
Noteholders and Note Owners. (Indenture, Section 9.02; Agreement, Section 9.01.
THE INDENTURE
Events of Default
"Indenture Events of Default" will be any of the following events: (a) the
Trust defaults in the payment of any interest or principal on any Note for a
period of five Business Days after any such payment is due; (b) the Trust
defaults in the observance or performance in any material respect of any other
covenant or agreement made in the Indenture, or any representation or warranty
of the Trust made in the Indenture was incorrect in any material respect as of
the time made, which default materially and adversely affects the rights of the
Noteholders and which continues uncured for a period of 60 days after written
notice shall have been given to the Trust by the Indenture Trustee or to the
Trust and the Indenture Trustee by the Holders of at least 25% of the aggregate
outstanding principal amount of the Notes; or (c) certain insolvency events with
respect to the Trust. Investors should be aware that the amount of principal and
interest required to be paid to
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holders of any Class of the Notes prior to the maturity date for that Class of
Notes generally will be limited to amounts available in the Distribution Account
for payment to Noteholders. Therefore, the failure to pay principal or interest
on a Class of Notes generally will not result in the occurrence of an Indenture
Event of Default until the Stated Maturity Date for such Class of Notes.
(Indenture, Section 5.01).
If an Indenture Event of Default occurs and is continuing, then the
Indenture Trustee or Noteholders representing in the aggregate not less than 25%
of the Voting Interests of the outstanding Notes (voting together as a single
class) may declare all the Notes to be immediately due and payable, by a notice
in writing to the Trust (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration the Notes will become immediately due and payable,
except that upon an insolvency event with respect to the Trust, the Notes will
become immediately due and payable automatically without the giving of any
notice.
At any time after such a declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee, Noteholders representing in the aggregate
more than 50% of the Voting Interests of the outstanding Notes (voting together
as a single class) by written notice to the Trust and the Indenture Trustee, may
rescind and annul such declaration and its consequences under certain
circumstances. (Indenture, Section 5.02).
After acceleration of the Notes, the Indenture Trustee may institute a
proceeding to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the SUBI Interest (in accordance with the
procedures described below) or elect to have the Trust maintain possession of
the SUBI Interest and continue to apply collections as if there had been no
declaration of acceleration. (Indenture, Section 5.04 and 5.05).
The Indenture Trustee will be under no obligation to exercise any of the
rights or powers under the Indenture at the request or direction of any of the
holders of the Notes, if such Noteholders shall not have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in complying with such request or
direction. Subject to the provisions for indemnification and certain limitations
contained in the related Indenture, Noteholders representing in the aggregate
more than 50% of the Voting Interests of the outstanding Notes (voting together
as a single class) will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the Indenture Trustee, and
Noteholders representing in the aggregate more than 50% of the Voting Interests
of the outstanding Notes (voting together as a single class)may, in certain
cases, waive any default with respect thereto, except a default in the payment
of principal or interest or a default in respect of a covenant or provision of
the Indenture that cannot be modified without the waiver or consent of all the
holders of the outstanding Notes. (Indenture, Section 5.14 and 5.15).
No holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such holder previously has given to the
Indenture Trustee written notice of a continuing Indenture Event of Default,
(ii) Noteholders representing in the aggregate not less than 25% of the Voting
Interests of the outstanding Notes (voting together as a single class) have made
written request to the Indenture Trustee to institute such proceeding in its own
name as Indenture Trustee, (iii) such holder or holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding, and (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by more than 50% of the Voting Interests of the outstanding Notes (voting
together as a single class). (Indenture, Section 5.09).
If an Indenture Event of Default occurs, the Indenture Trustee may, and,
upon receipt of written instructions from Noteholders representing in the
aggregate Voting Interests of not less than a majority of interest of the
outstanding Class A Notes (voting together as a single class) or more than 50%
of the Voting Interests of the outstanding Notes (voting together as a single
class), shall (subject to its election to maintain possession of the SUBI
Interest as described above), publish a notice stating that the Indenture
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
Indenture 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
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shall not be made without the consent of all the Noteholders if proceeds
realized as a result of such sale would not be sufficient to discharge in full
the amounts then due and unpaid upon the Notes for principal and interest. The
net sale or disposition proceeds of the SUBI Interest, the SUBI Certificate and
such other property will be distributed to the Noteholders 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 Noteholders based on their respective Class
Note Balances until the Class A-1, Class A-2, Class A-3 and Class A-4 Notes have
been paid in full, and second, to the Class B Noteholders. If such proceeds,
together with all amounts on deposit in the Accounts, the Reserve Fund, 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 Notes, certain amounts otherwise distributable in respect of the
Class B Notes, are insufficient to pay the Note Balance of a Class of Class A
Notes, any unreimbursed Note Principal Loss Amount in respect of such Class of
Class A Notes and any accrued and unpaid interest thereon in full, the related
Class A Noteholders will suffer a corresponding loss. (Indenture, Section 5.08
and 5.17).
Annual Compliance Statement.
The Trust will be required to file annually with the Indenture Trustee a
written statement as to the fulfillment of its obligations under the Indenture.
(Indenture, Section 3.09).
Indenture Trustee's Annual Report.
The Indenture Trustee will be required to mail each year to all Noteholders
a brief report relating to its eligibility and qualification to continue as
Indenture Trustee, any amounts advanced by it under the Indenture, the amount,
interest rate and maturity date of certain indebtedness owing by the Trust to
the Indenture Trustee in its individual capacity, the property and funds
physically held by the Indenture Trustee as such and any action taken by it that
materially affects the Notes and that has not been previously reported.
(Indenture, Section 7.03).
Satisfaction and Discharge of Indenture.
The Indenture will be discharged with respect to the collateral securing
the Notes upon the delivery to the Indenture Trustee for cancellation of all
Notes or, with certain limitations, upon deposit with Indenture Trustee of funds
sufficient for the payment in full of all such Notes. (Indenture, Section 4.01).
No Petition
The Indenture Trustee (or any co-trustee or separate trustee appointed
pursuant to the Indenture) will agree not to institute, or join in, any
bankruptcy or similar proceeding against the Trust until one year and one day
after the payment of the Notes in full. (Indenture, Section 6.17)
ADDITIONAL AGREEMENT PROVISIONS
Certain provisions of the Agreement are described under "Description of the
Notes". The following summarizes certain additional provisions of the Agreement.
No Petition
Each of the Indenture Trustee and the Owner 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 Notes
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).
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The Owner Trustee
PNC Bank will be the Owner Trustee under the Agreement. The Corporate Trust
Office of the Owner Trustee is located at 222 Delaware Avenue, 17th Floor,
Wilmington, DE 19801. PNC Bank is not affiliated with World Omni, although it
does act as a service provider to World Omni.
The Owner Trustee may resign at any time, in which event the Transferor
will be obligated to appoint a successor Owner Trustee. The Transferor may also
remove the Owner Trustee if the Owner 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
Owner Trustee. Any resignation or removal of the Owner Trustee and appointment
of a successor Owner Trustee will not become effective until acceptance of the
appointment by such successor Owner Trustee. (Agreement, Section 6.10).
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 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 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
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SUBI" for a discussion of related risks. For purposes of making calculations
with respect to distributions on the Notes, "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 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
Indenture Trustee, as pledgee of the SUBI Certificate, on behalf of the
Noteholders may, or at the direction of Noteholders representing in the
aggregate more than 50% of the Voting Interests of the outstanding Notes (voting
together as a single class) will, exercise its powers under the SUBI Trust
Agreement to cause the Origination Trustee to remove or replace the Trust Agent
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 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).
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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
U.S. 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
subject to the provisions regarding Capped Origination Trust Administrative
Expenses described under "Description of the Notes -- Distributions on the
Notes -- Distributions of Interest".
Indemnity of Origination 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
Indenture 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).
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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).
Owner Trustee and Indenture Trustee as Third-Party Beneficiaries
As the holder of the SUBI Interest, the Owner Trustee, and as the pledgee
of the SUBI Interest, the Indenture Trustee, will be third-party beneficiaries
of the SUBI Trust Agreement. Therefore, the Owner Trustee or the Indenture
Trustee may, and, upon the direction of Noteholders representing in the
aggregate more than 50% of the Voting Interests of the outstanding Notes (voting
together as a single class), the Indenture Trustee will, exercise any right
conferred by the SUBI Trust Agreement upon a holder or pledgee 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 Indenture
Trustee and the Owner Trustee will be third-party beneficiaries 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 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).
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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 month immediately preceding the month in which the Class B Stated Maturity
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 "Description of the Notes -- 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 Indenture 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 certain 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
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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 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 and collision 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
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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
Indenture Trustee of an officer's certificate of the Servicer and Principal
Collections in respect of a Collection Period 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 upon presentation of an
officer's certificate by the Servicer. (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 Indenture Trustee, the Owner Trustee, the
Origination Trustee and the Noteholders, including the preparation and delivery
to the Indenture 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 Notes -- Statements to Noteholders", and an annual officer's
certificate specifying the occurrence and status of any Event of Servicing
Termination. (Servicing Agreement, Sections 3.03, 10.01 and 10.03).
Evidence as to Compliance
The Servicing Agreement will provide that a firm of nationally recognized
independent accountants will furnish to the Indenture 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).
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The Servicing Agreement will also provide for delivery to the Indenture
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).
Copies of such statements and certificates may be obtained by Note Owners
or Class A Noteholders by a request in writing addressed to the Indenture
Trustee at its Corporate Trust Office. (Agreement, Section 3.06).
Compliance with ERISA
On or before each Determination Date, the Servicer shall provide the
Indenture 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 Noteholders to the extent allocable to the Accelerated Principal
Distribution Amount). See "Security for the Notes -- 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
Indenture 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
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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 Origination
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 the SUBI Assets, administering the Contracts, including
making Advances, accounting for collections, furnishing monthly and annual
statements to the Indenture 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 Origination 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 Indenture Trustee for distribution to
Noteholders 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 Indenture Trustee, the
Origination Trustee or holders of Notes evidencing not less than 25% of the
Voting Interests of the Class A Notes and the Class B Notes, 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 Noteholders 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 Indenture Trustee any report required to be delivered to the Origination
Trustee or the Indenture 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
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amount equal to the RV Insurer Reserve Fund Supplemental Requirement after an RV
Insurer 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 Indenture Trustee, the
Origination Trustee, the Transferor and the Noteholders 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 Indenture Trustee or Noteholders
representing in the aggregate more than 50% of the Voting Interests of the
outstanding Notes (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 Indenture Trustee or
such Noteholders 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).
Noteholders representing in the aggregate more than 50% of the Voting
Interests of the outstanding Notes (voting together as a single class), with the
consent of the Origination Trustee and the Indenture 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
Noteholder (in which event the related waiver will require the approval of
holders of all of the Notes). No such waiver will impair the rights of the
Noteholders with respect to subsequent defaults. (Servicing Agreement, Section
4.01).
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).
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).
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Indenture Trustee and Owner Trustee as Third-Party Beneficiaries
As the holder of the SUBI Interest, the Owner Trustee, and as the pledgee
of the SUBI Interest, the Indenture Trustee, will be third-party beneficiaries
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 -- Risks in the Event of an Insolvency of World
Omni; Substantive Consolidation with World Omni".
QUALIFICATION OF VT INC. AS FIDUCIARY
State laws, including the laws in the Five State Area, differ as to whether
a corporate trustee that leases vehicles in that state, such as VT Inc., must
qualify as a fiduciary. The consequences of the failure to be qualified as a
fiduciary in a State where such qualification is required differ by State, and
could include penalties against VT Inc. and its directors and officers ranging
from fines to the inability of VT Inc. to maintain action in the courts of that
State.
World Omni believes that VT Inc. does not exercise sufficient discretion in
the performance of its duties under the SUBI Trust Agreement or take such other
discretionary actions that it should be considered to be exercising fiduciary
powers within the meaning of any applicable State law. However, no assurance can
be given that World Omni will prevail in this view. Because no State in which
(i) this issue is uncertain, (ii) VT Inc. has not taken the actions necessary to
qualify as a fiduciary and (iii) the consequences of such failure would be
material represents a significant percentage of the value of the SUBI Assets,
World Omni believes that the failure to be qualified as a fiduciary in any State
where such qualification may ultimately be required will not materially and
adversely affect the Noteholders. However, no assurance can be given in this
regard. World Omni, as Servicer, has agreed to indemnify VT Inc., as Origination
Trustee for, among other things, any and all liabilities, losses, damages and
expenses that may be incurred by the Origination Trustee as a result of any act
or omission by the Servicer in connection with its undertakings to identify from
time to time the periodic governmental filings, registrations and approvals
arising with respect to or required of the Origination Trustee or the
Origination Trust.
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 Notes 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
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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
Notes 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 Notes could
incur a loss on their investment.
Because the Owner Trustee and the Indenture Trustee will not own directly
or have a direct security interest in the Leased Vehicles and certain other SUBI
Assets, and since their respective interests therein generally will be an
indirect beneficial ownership interest and a security interest in such indirect
beneficial ownership interest, perfected liens of third-party creditors of the
Origination Trust in one or more of such SUBI Assets will take priority over the
interests of the Owner Trustee and the Indenture Trustee in such SUBI Assets.
Therefore, a general creditor of the Origination Trust may obtain a lien on one
or more such SUBI Assets regardless of whether its claim would be allocated to
such SUBI Assets under the terms of the Origination Trust Agreement. 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 -- Risks Associated with Consumer Protection Laws", "-- Risks Associated
with ERISA Liabilities" and "-- Risks Associated with 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 -- Risks in the Event
of an 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
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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 Notes 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
Absent prior perfection of a security interest by the Owner Trustee or the
Indenture Trustee in the SUBI Assets, the holder of a perfected lien in one or
more SUBI Assets would have priority over the respective interests of the
Indenture Trustee and Owner Trustee in such SUBI Assets. Therefore, certain
actions have been taken to ensure that the Indenture Trustee will 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 by the filing of a financing statement 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, 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
Indenture 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 any lien that the Indenture Trustee may be deemed to have in
the Leased Vehicles. 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 Indenture 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 Notes 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 Indenture 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 Indenture 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 Indenture 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 Indenture
Trustee's interest therein. Such liens could 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 -- Risks Associated with ERISA Liabilities", in
favor of the PBGC. Additionally, any perfected security interest of the
Indenture Trustee in all or part of the property of the Trust could also be
subordinate to claims of any trustee
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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 -- Risks in the Event of an 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 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 -- Risks Associated with
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 Indenture Trustee has
a prior perfected security interest therein (such as 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
Notes could incur a loss on their investment.
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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.
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
January 1998) 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
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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.
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 Owner Trustee and the Indenture 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 Servicing 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.
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MATERIAL INCOME TAX CONSIDERATIONS
FEDERAL TAXATION
General
Set forth below is a discussion representing the opinion of Cadwalader,
Wickersham & Taft, special federal income tax counsel to the Trust, as to
material federal income tax consequences to holders of the Class A Notes who are
original owners and who hold the Class A Notes 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
Noteholders or Note Owners in light of their particular circumstances, nor to
certain types of Class A Noteholders or Note 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 or disposition of the
Class A Notes, as well as the tax consequences arising under the laws of any
state, foreign country or other taxing jurisdiction.
Characterization of the Class A Notes as Indebtedness
The Transferor, the Owner Trustee, each Noteholder, and each Note Owner (by
acquiring a beneficial interest in a Class A Note) will express in the Agreement
and in the Indenture their intent that, for federal, state and local income and
franchise tax purposes, the Class A Notes will be indebtedness, secured by the
assets of the Trust. The Transferor and the Owner Trustee, by entering into the
Agreement and the Indenture, and each Noteholder and each Note Owner, by
acquiring a beneficial interest in a Class A Note, will agree to treat the Class
A Notes as indebtedness for federal, state and local income and franchise tax
purposes.
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 Notes are issued is consistent with the treatment of the
Class A Notes as debt 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, Cadwalader, Wickersham & Taft
is of the opinion that, for federal income tax purposes the characterization of
the Class A Notes 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 Notes will properly be characterized as
indebtedness that is secured by the Trust assets.
Taxation of Interest and Discount Income
Assuming that the Note 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 Note Owners utilizing the cash
method of accounting and when accrued by Note Owners utilizing the accrual
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method of accounting. Interest received on the Class A Notes 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 Notes 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 Notes, 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 Notes 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 Notes, 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 Noteholders have reasonable remedies to compel payment of interest
deficiencies (e.g., default and acceleration rights). Because Class A
Noteholders will not be entitled to penalty payments of interest on interest
deficiencies, and Class A Noteholders will have no default and acceleration
rights in the event of interest shortfalls, interest paid on the Class A Notes
may not be treated by the IRS as qualified stated interest, and, in such event,
would be treated as OID. A Class A Noteholder must include OID income over the
term of the related Class A Note 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 Noteholder's method of accounting.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Class A Note and its issue price. A holder of
a Class A Note 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 Note 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 Note is the first price at which a substantial
amount of Class A Notes 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 Notes 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 Note also includes
the amount paid by a Class A Noteholder for accrued interest that relates to a
period prior to the issue date of the Class A Note. The stated redemption price
at maturity of a Class A Note includes the original principal amount of the
Class A Note, 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 Note 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 Note multiplied by the weighted average maturity of the Class A
Note. Noteholders generally must report de minimis OID pro rata as principal
payments are received, and such income will be capital gain if the Class A Note
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 Note issued with OID must include in gross income,
for all days during its taxable year on which it holds such Class A Note, the
sum of the "daily portions" of such original issue discount. The amount of OID
includible in income by a Noteholder 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 Noteholder purchases a Class A Note issued with OID at an "acquisition
premium" (i.e., at a price in excess of the adjusted issue price of the Class A
Note, but less than or equal to the "stated redemption price at maturity"), the
amount includible by such Noteholder in income in each taxable year as OID will
be reduced by that portion of the premium properly allocable to such year.
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<PAGE> 96
Although the matter is not entirely clear, the Transferor currently intends
to report all stated interest on the Class A Notes as qualified stated interest
and not as OID.
Market Discount. Note Owners should be aware that the resale of a Class A
Note 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 Note 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 Note,
the lesser of such gain or the portion of the market discount that accrued while
the Class A Note 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 Note Owner who purchases a Class A Note for more than its
stated redemption price at maturity will be subject to the premium amortization
rules of the Code. Under those rules, the Note Owner may elect to amortize such
premium on a constant yield method. Amortizable premium reduces interest income
on the related Class A Note. If the Note Owner does not make such an election,
the premium paid for the Class A Note generally will be included in the tax
basis of the Class A Note in determining the gain or loss on its disposition.
Each Note 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 Notes
In general, a Note Owner will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of a Class A Note 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 Note Owner's tax basis in the Class A Note (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 Note). 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 Note 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 20% for capital assets held
for more than 18 months and 28% for capital assets held for more than 12 months
and not more than 18 months. 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 Notes 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 (other than a
partnership that is not treated as a United States person under any applicable
Treasury regulations), (iii) an estate where income is subject to United States
federal income tax purposes, regardless of its source or (iv) a trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States persons who have authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in regulations, certain trusts in existence on August 20,
1996 and treated as United States persons prior to such date that elect to
continue to be so treated also shall be considered U.S. Persons.
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
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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 Notes 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 Notes.
For the Class A Notes to constitute portfolio debt investments exempt from
United States withholding tax, the withholding agent must receive from the Note
Owner an executed IRS Form W-8 signed under penalty of perjury by the Note Owner
stating that the Note Owner is a Foreign Investor and providing such Note
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 Note 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 Note, provided that (i) such gain is not
effectively connected with a trade or business carried on by the Note Owner in
the United States, (ii) in the case of a Note Owner that is an individual, such
Note Owner is not present in the United States for 183 days or more during the
taxable year in which such sale, exchange or redemption occurs and (iii) in the
case of gain representing accrued interest, the conditions described in the
immediately preceding paragraph are satisfied.
Backup Withholding
A Note Owner may be subject to a backup withholding at the rate of 31% with
respect to interest paid on the Class A Notes if the Note Owner, upon issuance,
fails to supply the Trustee or his broker with such Note 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 Note Owner is not subject to backup withholding.
Information returns will be sent annually to the IRS and to each Note Owner
setting forth the amount of interest paid on the Class A Notes and the amount of
tax withheld thereon.
NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New Regulations
attempt to unify certification requirements and modify reliance standards. The
New Regulations will generally be effective for payments made after December 31,
1998, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
Possible Alternative Treatment of the Class A Notes
Although, as described above, it is the opinion of Cadwalader, Wickersham &
Taft that the Class A Notes 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 Notes did not represent debt for
federal income tax purposes, certain adverse tax consequences to the Class A
Noteholders could result. For example, the Trust generally would be required to
pay corporate income tax on its taxable income (thus reducing the cash available
to make payments on the Class A Notes). In addition, income to certain
tax-exempt entities (including pension funds) generally would be "unrelated
business taxable income", and income to foreign holders generally would 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 Notes.
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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 Notes, then a financial organization investing in the
Class A Notes 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 Notes 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 Notes and to their
ability to offset any such Florida tax against any other state tax liabilities
that such investors might have.
ERISA CONSIDERATIONS
Subject to the following discussion, the Class A Notes may be acquired by
pension, profit-sharing or other employee benefit plans, as well as an
individual retirement accounts and Keogh plan (each a "Benefit Plan"). Section
406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code prohibit a Benefit Plan 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 Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons or the
fiduciaries of the Benefit Plan. In addition, Title I of ERISA also requires
fiduciaries of a Benefit Plan subject to ERISA to make investments that are
prudent, diversified and in accordance with the governing plan documents.
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Class A Notes if assets of the Trust were deemed to be assets of
the Benefit Plan. Under a regulation issued by the United States Department of
Labor (the "Regulation"), the assets of the Trust would be treated as plan
assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquired an "equity interest" in the Trust and none of the
exceptions to plan assets contained in the Regulation was applicable. An equity
interest is defined under the Regulation as an interest other than an instrument
which is treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is little guidance on the subject,
the Transferor believes that, at the time of their issuance, the Class A Notes
should be treated as indebtedness of the Trust without substantial equity
features for purposes of the Regulation. This determination is based in part
upon the traditional debt features of the Class A Notes, including the
reasonable expectation of purchasers of Class A Notes that the Class A Notes
will be repaid when due, as well as the absence of conversion rights, warrants
and other typical equity features. The debt treatment of the Class A Notes for
ERISA purposes could change if the Trust incurred losses.
However, without regard to whether the Class A Notes are treated as an
equity interest for purposes of the Regulation, the acquisition or holding of
Class A Notes by or on behalf of a Benefit Plan could be considered to give rise
to a prohibited transaction if the Trust, the Indenture Trustee, the Owner
Trustee, the Origination Trustee, the Transferor or World Omni is or becomes a
party in interest or a disqualified person with respect to such Benefit Plan.
Certain exemptions from the prohibited transaction rules could be applicable to
the purchase and holding of Class A Notes by a Benefit Plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire such
Class A Notes. Included among these
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exemptions are: Prohibited Transaction Class Exemption ("PTCE") 96-23, regarding
transactions effected by "in-house asset managers"; PTCE 95-60, regarding
investments by insurance company general accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company pooled separate accounts; and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers." By
acquiring a Note, each purchaser will be deemed to represent that either (i) it
is not acquiring the Class A Notes with the assets of a Benefit Plan; or (ii)
the acquisition and holding of the Class A Notes will not give rise to a
nonexempt prohibited transaction under Section 406(a) of ERISA or Section 4975
of the Code.
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 Notes consult with its
counsel regarding whether the assets of the Trust would be considered plan
assets, and the applicability of 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 Notes 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 1997 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Credit Suisse First
Boston Corporation 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 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes:
<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 NOTES NOTES NOTES NOTES
- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston
Corporation................... $ $ $ $
BancAmerica Robertson
Stephens......................
Merrill Lynch, Pierce, Fenner &
Smith Incorporated............
NationsBanc Montgomery
Securities, Inc...............
------------ ------------ ------------ ------------
Total................. $260,000,000 $220,000,000 $390,000,000 $239,128,644
============ ============ ============ ============
</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 Notes 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 Underwriting Agreement may be
terminated. The Underwriters have agreed to reimburse the Transferor for certain
of its expenses incurred in connection with the offering of the Class A Notes.
The Transferor has been advised by the Representative that the Underwriters
propose to offer the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes 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 Note, Class A-2 Note, Class A-3 Note and Class A-4 Note, respectively,
and the Underwriters and such dealers may allow a discount of %, %, % and
% of such principal amount per Class A-1 Note, Class A-2 Note, Class A-3 Note
and Class A-4 Note, 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.
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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 Notes 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 fifth 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 Notes on the date hereof will be required,
by virtue of the fact that the Class A Notes initially will settle five 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 Notes
who wish to trade Class A Notes 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 Notes 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 Notes. As an exception to these
rules, the Underwriters are permitted to engage in certain transactions that
stabilize the price of the Class A Notes. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Class A Notes.
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 Notes. 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 Notes 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 Notes are effected. Accordingly, any resale
of the Class A Notes 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 Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Class A Notes 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 Notes
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".
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
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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 Notes 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 Notes 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 Notes acquired on the same date and
under the same prospectus exemption.
RATINGS OF THE CLASS A NOTES
It is a condition of issuance that each of Moody's, Standard & Poor's and
Fitch rates each Class of Class A Notes in its highest rating category. The
ratings of the Class A Notes will be based primarily upon the value of the
Initial Contracts, the Residual Value Insurance Policy (see "Security for the
Notes -- The Reserve Fund -- Other Reserve Fund Requirements" for information
regarding the effect of a downgrade by a Rating Agency of the credit rating of
the RV Insurer), the Reserve Fund and the terms of the Transferor Interest and
the Class B Notes. 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 Notes 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 Notes.
The ratings of the Class A Notes 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 Notes, 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 Notes addresses the likelihood of the payment of
principal of and interest on such Notes pursuant to their terms.
There can be no assurance as to whether any rating agency other than
Moody's, Standard & Poor's and Fitch will rate the Class A Notes, or, if one
does, what rating will be assigned by such other rating agency. A rating on any
Class of Class A Notes by another rating agency, if assigned at all, may be
lower than the ratings assigned to such Class A Notes by each of Moody's,
Standard & Poor's and Fitch.
LEGAL MATTERS
Certain legal matters with respect to the Class A Notes 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 respect to Florida law, by English, McCaughan & O'Bryan, P.A.,
Fort Lauderdale, Florida. Cadwalader, Wickersham & Taft, New York, New York will
act as special federal income tax counsel to the Transferor. Mayer, Brown &
Platt, Chicago, Illinois will act as counsel for the Underwriters.
95
<PAGE> 102
EXPERTS
The Statement of Admitted Assets, Liabilities, Capital and Surplus
(Statutory Basis) as of December 31, 1996 and 1995, the Statement of Income and
Capital and Surplus Account (Statutory Basis) for the Years Ended December 31,
1996 and 1995, the Statement of Cash Flows (Statutory Basis) for the Years Ended
December 31, 1996 and 1995, the Statement of Admitted Assets, Liabilities,
Capital and Surplus (Statutory Basis) as of December 31, 1995 and 1994, the
Statement of Income and Capital and 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, all of AISLIC, have been
included herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent 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.
96
<PAGE> 103
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>
Accelerated Principal Distribution Amount................... 10
Accounts.................................................... 53
Additional Loss Contract.................................... 65
Additional Loss Amount...................................... 72
Administrative Lien......................................... 26
Administrative Lienholders.................................. 26
Advance..................................................... 16
Agency Agreement............................................ 74
Aggregate Net Investment Value.............................. 13
Agreement................................................... 1
AIG......................................................... 11
AIG Support Agreement....................................... 67
AISLIC...................................................... 11
ALFI........................................................ 1
ALFI L.P.................................................... 1
Alternate Reserve Fund Formula.............................. 65
Amortization Date........................................... 8
Amortization Period......................................... 8
Benefit Plan................................................ 92
Business Day................................................ 6
Capped Contingent and Excess Liability Premiums............. 50
Capped Indenture Trustee Administrative Expenses............ 50
Capped Origination Trust Administrative Expenses............ 50
Capped Owner Trustee Administrative Expenses................ 50
Capped Trust Administrative Expenses........................ 51
Cede........................................................ 5
Cedel....................................................... 5
Cedel Participants.......................................... 58
Charge-off Rate............................................. 65
Charge-off-Rate Test........................................ 65
Charged-off Amount.......................................... 46
Charged-off Contract........................................ 46
Claims...................................................... 74
Class....................................................... 44
Class A Noteholders......................................... 6
Class A Note Balance........................................ 5
Class A Notes............................................... 3
Class A Percentage.......................................... 9
Class A-1 Allocation Percentage............................. 17
Class A-1 Interest Carryover Shortfall...................... 50
Class A-1 Note Balance...................................... 5
Class A-1 Note Principal Loss Amount........................ 48
Class A-1 Note Rate......................................... 6
Class A-1 Noteholders....................................... 6
Class A-1 Notes............................................. 3
Class A-2 Allocation Percentage............................. 17
</TABLE>
97
<PAGE> 104
<TABLE>
<CAPTION>
TERM PAGE
- ---- -------
<S> <C>
Class A-2 Interest Carryover Shortfall...................... 50
Class A-2 Note Balance...................................... 5
Class A-2 Note Principal Loss Amount........................ 48
Class A-2 Note Rate......................................... 6
Class A-2 Noteholders....................................... 6
Class A-2 Notes............................................. 3
Class A-3 Allocation Percentage............................. 17
Class A-3 Interest Carryover Shortfall...................... 50
Class A-3 Note Balance...................................... 5
Class A-3 Note Principal Loss Amount........................ 48
Class A-3 Note Rate......................................... 6
Class A-3 Noteholders....................................... 6
Class A-3 Notes............................................. 3
Class A-4 Allocation Percentage............................. 17
Class A-4 Interest Carryover Shortfall...................... 50
Class A-4 Note Balance...................................... 5
Class A-4 Note Principal Loss Amount........................ 48
Class A-4 Note Rate......................................... 6
Class A-4 Noteholders....................................... 6
Class A-4 Notes............................................. 3
Class B Allocation Percentage............................... 50
Class B Interest Carryover Shortfall........................ 50
Class B Note Balance........................................ 5
Class B Note Principal Carryover Shortfall.................. 50
Class B Note Principal Loss Amount.......................... 48
Class B Note Rate........................................... 47
Class B Noteholders......................................... 9
Class B Notes............................................... 3
Class B Percentage.......................................... 9
Closing Date................................................ 4
Code........................................................ 88
Collection Period........................................... 7
Collections................................................. 8
Commission.................................................. iii
Contingent and Excess Liability Insurance Policies.......... 68
Contracts................................................... 2
Cooperative................................................. 60
Current Contracts........................................... 65
Cutoff Dates................................................ 51
Dealers..................................................... 1
Deerfield Office............................................ 28
Definitive Notes............................................ 44
Delinquency Rate............................................ 65
Delinquency Test............................................ 65
Deposit Date................................................ 15
Depositaries................................................ 5
Determination Date.......................................... 47
Discounted Contract......................................... 7
Discounted Principal Balance................................ 14
Distribution Account........................................ 52
Distribution Date........................................... 5
</TABLE>
98
<PAGE> 105
<TABLE>
<CAPTION>
TERM PAGE
- ---- -------
<S> <C>
Downgrade Reserve Fund Supplemental Requirement............. 64
Downgrade Trigger Event..................................... 64
DTC......................................................... 5
DTC Participants............................................ 58
Early Amortization Event.................................... 56
Early Termination Charge.................................... 35
ERISA....................................................... 16
ERISA Compliance Test....................................... 79
Euroclear................................................... 5
Euroclear Operator.......................................... 60
Euroclear Participants...................................... 58
Events of Servicing Termination............................. 80
Excess Collections.......................................... 49
Exchange Act................................................ iii
Extension Fee............................................... 30
Fair, Isaac................................................. 29
Fitch....................................................... 16
Five State Area............................................. 3
Foreign Investors........................................... 90
Global Securities........................................... 102
Indenture Event of Default.................................. 56
Indenture Events of Default................................. 69
Indenture Trustee........................................... 1
Indirect DTC Participants................................... 58
Initial Class A Note Balance................................ 4
Initial Class A-1 Note Balance.............................. 4
Initial Class A-2 Note Balance.............................. 4
Initial Class A-3 Note Balance.............................. 4
Initial Class A-4 Note Balance.............................. 4
Initial Class B Note Balance................................ 4
Initial Contracts........................................... 2
Initial Cutoff Date......................................... 2
Initial Deposit............................................. 12
Initial Leased Vehicles..................................... 2
Initial Note Balance........................................ 4
Insolvency Event............................................ 22
Insolvency Laws............................................. 22
Insurance Proceeds.......................................... 53
Insured Residual Value Loss Amount.......................... 11
Interest Collections........................................ 8
Investor Percentage......................................... 9
IRS......................................................... 88
JMFE........................................................ 3
Lease Rate.................................................. 13
Leased Vehicles............................................. 2
Lemon Law................................................... 87
Liquidated Contract......................................... 65
Liquidation Expenses........................................ 15
Liquidation Proceeds........................................ 15
Loan Rule................................................... 92
Loss Amounts................................................ 17
</TABLE>
99
<PAGE> 106
<TABLE>
<CAPTION>
TERM PAGE
- ---- -------
<S> <C>
Matured Contract............................................ 14
Matured Leased Vehicle Expenses............................. 15
Matured Leased Vehicle Inventory............................ 14
Matured Leased Vehicle Proceeds............................. 14
Maturity Date............................................... 35
Mobile Center............................................... 28
Monthly Payments............................................ 13
Moody's..................................................... 16
National Union.............................................. 67
Net Liquidation Proceeds.................................... 8
Net Matured Leased Vehicle Proceeds......................... 8
Net Repossessed Vehicle Proceeds............................ 8
New Regulations............................................. 91
Nonrecoverable Advance...................................... 76
Note Balance................................................ 5
Note Distribution Amount.................................... 56
Note Owner.................................................. 5
Note Principal Loss Amount.................................. 50
Note Rates.................................................. 49
Noteholders................................................. 9
Notes....................................................... 3
OID......................................................... 89
Origination Trust........................................... 1
Origination Trust Agreement................................. 10
Origination Trust Assets.................................... 26
Origination Trustee......................................... 1
Other SUBI Assets........................................... 24
Other SUBI Certificates..................................... 24
Other SUBI Supplement....................................... 72
Other SUBIs................................................. 1
Outstanding Principal Balance............................... 13
Owner Trustee............................................... 1
Participants................................................ 58
Payment Ahead............................................... 14
PBGC........................................................ 83
Permitted Investments....................................... 55
PNC Bank.................................................... 1
Prepayment.................................................. 53
Prepayment Assumption....................................... 41
Principal Allocation........................................ 9
Principal Collections....................................... 7
PTC......................................................... 93
Rating Agencies............................................. 16
Realized Value.............................................. 35
Reallocation Deposit Amount................................. 45
Reallocation Payment........................................ 39
Record Date................................................. 6
Registration Statement...................................... iii
Regulation.................................................. 92
Repossessed Vehicle Expenses................................ 15
</TABLE>
100
<PAGE> 107
<TABLE>
<CAPTION>
TERM PAGE
- ---- -------
<S> <C>
Repossessed Vehicle Proceeds................................ 15
Representative.............................................. 93
Required Amount............................................. 51
Required Deposit Ratings.................................... 54
Reserve Fund................................................ 63
Reserve Fund Cash Requirement............................... 64
Reserve Fund Deficiency..................................... 64
Reserve Fund Supplemental Requirement....................... 64
Reserve Fund Tests.......................................... 65
Residual Value.............................................. 13
Residual Value Insurance Policy............................. 11
Residual Value Loss Amount.................................. 17
Retained SUBI Interest...................................... 3
Revolving Period............................................ 6
RV Insurer.................................................. 11
RV Insurer Reserve Fund Supplemental Requirement............ 64
RV Insurer Trigger Event.................................... 64
Schedule of Contracts and Leased Vehicles................... 38
Securities Act.............................................. iii
Security Deposits........................................... 77
Servicer.................................................... 3
Servicer Letter of Credit................................... 53
Servicer's Certificate...................................... 78
Servicing Agreement......................................... 3
Servicing Fee............................................... 16
SET......................................................... 3
St. Louis Center............................................ 28
Standard & Poor's........................................... 16
Stated Maturity Date........................................ 6
SUBI........................................................ 1
SUBI Assets................................................. 24
SUBI Certificate............................................ 2, 10
SUBI Collection Account..................................... 53
SUBI Interest............................................... 1
SUBI Supplement............................................. 10
SUBI Trust Agreement........................................ 10
Subsequent Contracts........................................ 2
Subsequent Cutoff Date...................................... 51
Subsequent Leased Vehicles.................................. 2
Support Agreement........................................... 27
Terms and Conditions........................................ 60
TMS......................................................... 28
Transfer Date............................................... 7
Transferor.................................................. 1
Transferor Amounts.......................................... 46
Transferor Certificate...................................... 45
Transaction Documents....................................... 69
Transferor Interest......................................... 4
Transferor Percentage....................................... 46
Trust....................................................... 1
Trust Agent................................................. 10
</TABLE>
101
<PAGE> 108
<TABLE>
<CAPTION>
TERM PAGE
- ---- -------
<S> <C>
UCC......................................................... 63
Unallocated Principal Collections........................... 46
Uncapped Administrative Expenses............................ 48
Underwriters................................................ 93
Underwriting Agreement...................................... 93
Undistributed Transferor Excess Collections................. 49
U.S. Bank................................................... 1
U.S. Persons................................................ 104
UTI......................................................... 1
UTI Assets.................................................. 24
UTI Certificates............................................ 24
Voting Interests............................................ 50
WOLSI....................................................... 3
World Omni.................................................. 1
</TABLE>
102
<PAGE> 109
ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A Notes
(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 Notes 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 U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their 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 U.S. corporate
debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear Purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
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<PAGE> 110
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's 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 the 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 Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
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.
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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 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 Note 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
105
<PAGE> 112
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 or trust,
the income of which is includible in gross income for United States tax
purposes, regardless of its source. 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.
106
<PAGE> 113
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, 1996
and 1995.................................................. F-2
Statement of Income and Capital and Surplus Account
(Statutory Basis) of American International Specialty
Lines Insurance Company for the Years Ended December 31,
1996 and 1995............................................. F-3
Statement of Cash Flows (Statutory Basis) of American
International Specialty Lines Insurance Company for the
Years Ended December 31, 1996 and 1995.................... F-4
Notes to Financial Statements of American International
Specialty Lines Insurance Company for the Two Years Ended
December 31, 1996......................................... F-5
Report of Coopers & Lybrand L.L.P........................... F-10
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-11
Statement of Income and Capital and Surplus Account
(Statutory Basis) of American International Specialty
Lines Insurance Company for the Years Ended December 31,
1995 and 1994............................................. F-12
Statement of Cash Flows (Statutory Basis) of American
International Specialty Lines Insurance Company for the
Years Ended December 31, 1995 and 1994.................... F-13
Notes to Financial Statements of American International
Specialty Lines Insurance Company for the Two Years Ended
December 31, 1995......................................... F-14
</TABLE>
107
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder
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, 1996 and
1995, and related statements of income and changes in capital and surplus, 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 audits 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, 1996 and 1995 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, 1996 and 1995, 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 20, 1997
F-1
<PAGE> 115
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF ADMITTED ASSETS, LIABILITIES, CAPITAL AND SURPLUS
(STATUTORY BASIS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
ADMITTED ASSETS
Bonds, principally at amortized cost (market value:
1996 -- $428,374,610; 1995 -- $364,071,111)............... $408,951,827 $342,660,008
Short-term investments, at amortized cost (approximates
market)................................................... 2,881,520 1,816,577
Other invested assets, at market............................ 774,090 13,536,699
Cash........................................................ 3,756,500 7,093,727
------------ ------------
Total invested assets and cash.................... 416,363,937 365,107,011
Agents' balances or uncollected premiums:
Premiums in course of collection (including ceded
reinsurance balances payable of, 1996 -- $122,822,137;
1995 -- $51,082,419)................................... 22,119,963 (7,984,299)
Premiums and installments booked but deferred and not yet
due (including ceded reinsurance balances payable of,
1996 -- $78,001,716; 1995 -- $15,045,483).............. 48,902,443 73,458,478
Reinsurance recoverable on loss payments.................... 10,731,446 11,231,396
Interest and dividends due and accrued...................... 7,514,358 7,031,860
Receivable from parent, subsidiaries and affiliates......... 57,000 --
Loss funds on deposit....................................... 3,403,226 1,258,000
------------ ------------
Total admitted assets............................. $509,092,373 $450,102,446
============ ============
LIABILITIES
Unpaid losses............................................... $157,261,155 $137,464,053
Reinsurance payable on paid loss and loss adjustment
expenses.................................................. 17,901,733 9,247,912
Unpaid loss adjustment expenses............................. 44,732,880 34,805,997
Unearned premiums........................................... 77,925,706 64,227,729
Funds held under reinsurance treaties....................... 1,271,081 7,315
Provision for reinsurance................................... 8,322,009 7,738,123
Drafts outstanding.......................................... 8,375,056 19,581,459
Federal income tax payable.................................. 46,412 1,981,087
Payable to affiliates....................................... -- 1,955,319
Other liabilities........................................... 907,006 2,655,650
------------ ------------
Total liabilities................................. 316,743,038 279,664,644
============ ============
CAPITAL AND SURPLUS
Common 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.......................................... 88,969,335 67,057,802
------------ ------------
Total capital and surplus......................... 192,349,335 170,437,802
------------ ------------
Total liabilities, capital and surplus............ $509,092,373 $450,102,446
============ ============
</TABLE>
See Notes to Financial Statements
F-2
<PAGE> 116
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF INCOME AND CAPITAL AND SURPLUS ACCOUNT
(STATUTORY BASIS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
Underwriting income:
Premiums earned........................................... $ 97,505,461 $ 81,810,517
------------ ------------
Deductions:
Losses incurred........................................ 60,951,620 48,588,886
Loss adjustment expenses incurred...................... 21,162,771 17,797,396
Other underwriting expenses incurred................... 11,741,435 8,604,097
------------ ------------
Total underwriting deductions..................... 93,855,826 74,990,379
------------ ------------
Net underwriting gain....................................... 3,649,635 6,820,138
------------ ------------
Investment income:
Net investment income earned.............................. 24,101,919 22,771,754
Net realized capital (losses) gains......................... (298,241) 301,028
------------ ------------
Net investment gain......................................... 23,803,678 23,072,782
------------ ------------
Income before federal income taxes.......................... 27,453,313 29,892,920
Federal income tax provision................................ 5,295,642 6,900,296
------------ ------------
Net income........................................ $ 22,157,671 $ 22,992,624
============ ============
CAPITAL and SURPLUS ACCOUNT
Total capital and surplus, December 31, previous year....... $170,437,802 $149,544,522
------------ ------------
Gains and (losses) in surplus:
Net income.................................................. 22,157,671 22,992,624
Change in non-admitted assets............................... 337,748 316,586
Change in provision for reinsurance......................... (583,886) (2,415,930)
------------ ------------
Change in surplus as regards policyholders for the year..... 21,911,533 20,893,280
------------ ------------
Total capital and surplus, December 31, current
year............................................ $192,349,335 $170,437,802
============ ============
</TABLE>
See Notes to Financial Statements
F-3
<PAGE> 117
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
STATEMENT OF CASH FLOWS
(STATUTORY BASIS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Premiums collected (net of reinsurance)..................... $105,998,970 $ 39,968,249
Loss and loss adjustment expenses paid (net of salvage,
subrogation and reinsurance).............................. 54,443,638 35,203,305
Underwriting expenses paid.................................. 12,154,628 8,866,433
------------ ------------
Net cash flows from underwriting............................ 39,401,304 (4,101,489)
------------ ------------
Investment income collected (net of investment expenses
paid)..................................................... 23,600,054 22,659,696
Other income (expenses)..................................... 1,263,766 --
Federal income taxes paid................................... (7,320,317) (5,182,995)
------------ ------------
Net cash flows from operations.................... 56,944,807 13,375,212
------------ ------------
Proceeds from investments sold, matured or repaid:
Bonds..................................................... 54,626,495 95,416,214
Other invested assets..................................... 172,166,000 89,750,000
------------ ------------
Total investment proceeds......................... 226,792,495 185,166,214
Cost on investments acquired (long-term only):
Bonds..................................................... 120,713,170 91,338,032
Other invested assets..................................... 160,118,547 103,364,787
------------ ------------
Total investments acquired........................ 280,831,717 194,702,819
------------ ------------
Net cash from investments................................... (54,039,222) (9,536,605)
Other cash provided:
Net transfers from affiliates............................. -- 3,662,933
------------ ------------
Total other cash provided......................... -- 3,662,933
------------ ------------
Other cash applied:
Net transfers to affiliates............................... 2,012,313 --
Other applications........................................ 3,165,556 3,495,334
------------ ------------
Total other cash applied.......................... 5,177,869 3,495,334
------------ ------------
Net cash from financing and miscellaneous sources........... (5,177,869) 167,599
------------ ------------
Net change in cash and short-term investments............... (2,272,284) 4,006,206
RECONCILIATION
Cash and short-term investments:
Beginning of year......................................... 8,910,304 4,904,098
------------ ------------
End of year............................................... $ 6,638,020 $ 8,910,304
============ ============
</TABLE>
See Notes to Financial Statements
F-4
<PAGE> 118
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING 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. (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 as 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)
provision is made for deferred income taxes relating to unrealized appreciation
on investments; (4) 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 income as opposed to
unassigned surplus; (5) non-admitted assets and statutory basis reserves are
restored to surplus; (6) the reserve for losses and loss expenses and reserve
for unearned premiums are presented gross of ceded reinsurance by establishing a
reinsurance asset; and (7) debt securities deemed to be available for sale and
trading securities are reported at fair value.
Other significant accounting practices are as follows:
A. The preparation of 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 effect 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 adjustors' evaluations and other estimates, including historical
loss experience. The methods of making such estimates and for establishing
the resulting
F-5
<PAGE> 119
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 $955,000
and $686,000 at December 31, 1996 and December 31, 1995, 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 market value.
Certain prior year 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/from the Parent.
The U.S. federal income tax rate applicable to ordinary income is 35% for
1996 and 1995. 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 approximately $2,961,000
and $2,258,000 in 1996 and 1995, 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-6
<PAGE> 120
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. INVESTMENTS:
The amortized cost and NAIC market values of investments in fixed
maturities carried at December 31, 1996 and December 31, 1995, were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NAIC
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1996
Fixed maturities:
States, municipalities and political
subdivisions.................................. $408,952 $19,818 $395 $428,375
-------- ------- ---- --------
Total bonds......................... $408,952 $19,818 $395 $428,375
======== ======= ==== ========
</TABLE>
<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
======== ======= ==== ========
</TABLE>
The amortized cost and NAIC market values of fixed maturities at December
31, 1996, 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
COST MARKET VALUE
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less..................................... $ 17,574 $ 18,409
Due after one year through five years....................... 30,505 31,954
Due after five years through ten years...................... 42,005 44,000
Due after ten years......................................... 318,868 334,012
-------- --------
Total............................................. $408,952 $428,375
======== ========
</TABLE>
Proceeds from sales of investments in fixed maturities during 1996 and 1995
were $40,033,470 and $91,960,014, respectively. Gross gains of $364,892 and
$1,822,167, and gross losses of $402,706 and $1,155,012 were realized on those
sales in 1996 and 1995, respectively.
Securities carried at amortized cost of $10,272,320 and $10,020,220 were
deposited with regulatory authorities as required by law, at December 31, 1996,
and December 31, 1995, respectively.
Included in "Net investment income earned" are investment expenses of
$229,672 and $200,564 for 1996 and 1995, respectively.
6. REINSURANCE:
In the ordinary course of business, the Company reinsures certain risks
with affiliates and other companies. Such arrangements serve to limit the
Company's maximum loss on catastrophes, large 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> 121
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>
1996
Affiliates........................................ $ 465,016 $1,413,526
Non-Affiliates.................................... 41,953 133,042
--------- ----------
Total................................... $ 506,969 $1,546,568
========= ==========
1995
Affiliates........................................ $ 330,190 $1,126,806
Non-Affiliates.................................... 52,364 161,213
--------- ----------
Total................................... $ 382,554 $1,288,019
========= ==========
</TABLE>
Net premiums written and earned comprise the following:
<TABLE>
<CAPTION>
WRITTEN EARNED
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
1996
Direct business............................................. $ 780,243 $ 655,126
Reinsurance assumed
Affiliates................................................ 31,522 18,502
Non-Affiliates............................................ -- 23
--------- ---------
Reinsurance ceded
Affiliates................................................ (645,572) (510,745)
Non-Affiliates............................................ (54,990) (65,401)
--------- ---------
Net premiums................................................ $ 111,203 $ 97,505
========= =========
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
========= =========
</TABLE>
For the years ended December 31, 1996 and 1995, reinsurance recoveries,
which reduced loss and loss expenses incurred, amounted to $523,014,777 and
$588,295,952, respectively.
The following unsecured reinsurance recoverables exceeded 3% of the capital
and surplus of the Company at December 31, 1996:
<TABLE>
<CAPTION>
REINSURER AMOUNT
--------- ----------
(IN THOUSANDS)
<S> <C>
Affiliates.................................................. $1,659,389
General Reinsurance Company................................. 54,528
----------
Total............................................. $1,713,917
==========
</TABLE>
F-8
<PAGE> 122
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 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,
1996, amounted to approximately $19,235,000.
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 indentify 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.
The Company has no known exposure to asbestos or environmental claims.
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>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net Balance at January 1.................................... $172,270 $142,296
Incurred related to:
Current year.............................................. 82,288 71,109
Prior years............................................... (174) (4,723)
-------- --------
Total incurred.................................... 82,114 66,386
-------- --------
Paid related to:
Current year.............................................. 7,280 3,277
Prior years............................................... 45,110 33,135
-------- --------
Total paid........................................ 52,390 36,412
-------- --------
Net Balance at December 31.................................. $201,994 $172,270
======== ========
</TABLE>
F-9
<PAGE> 123
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-10
<PAGE> 124
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-11
<PAGE> 125
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-12
<PAGE> 126
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 flows 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 flows 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-13
<PAGE> 127
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-14
<PAGE> 128
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-15
<PAGE> 129
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-16
<PAGE> 130
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.................................. -- --
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-17
<PAGE> 131
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-18
<PAGE> 132
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-19
<PAGE> 133
------------------------------------------------------
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..................... iii
Overview of Transaction................... iv
Summary................................... 1
Risk Factors.............................. 17
The Trust and the SUBI.................... 23
The Origination Trust..................... 24
Use of Proceeds........................... 27
The Transferor............................ 27
World Omni................................ 27
The Contracts............................. 34
Maturity, Prepayment and Yield
Considerations.......................... 39
Class A Note Factors and Trading
Information; Reports to Class A
Noteholders............................. 43
Description of the Notes.................. 44
Security for the Notes.................... 63
Additional Document Provisions............ 69
Certain Legal Aspects of the Origination
Trust and the SUBI...................... 82
Certain Legal Aspects of the Contracts and
the Leased Vehicles..................... 84
Material Income Tax Considerations........ 88
ERISA Considerations...................... 92
Underwriting.............................. 93
Notice to Canadian Residents.............. 94
Ratings of the Class A Notes.............. 95
Legal Matters............................. 95
Experts................................... 96
Index of Capitalized Terms................ 97
Global Clearance, Settlement and Tax
Documentation Procedures................ 103
Index to Financial Statements of American
International Specialty Lines Insurance
Company................................. 107
</TABLE>
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A
NOTES, 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.
------------------------------------------------------
------------------------------------------------------
$1,109,128,644 (Approximate)
WORLD OMNI
1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
$260,000,000 (Approximate)
% Automobile Lease
Asset Backed Notes,
Class A-1
$220,000,000 (Approximate)
% Automobile Lease
Asset Backed Notes,
Class A-2
$390,000,000 (Approximate)
% Automobile Lease
Asset Backed Notes,
Class A-3
$239,128,644 (Approximate)
% Automobile Lease
Asset Backed Notes,
Class A-4
WORLD OMNI LEASE
SECURITIZATION L.P.
(Transferor)
WORLD OMNI FINANCIAL CORP.
(Servicer)
PROSPECTUS
CREDIT SUISSE FIRST BOSTON
BANCAMERICA ROBERTSON STEPHENS
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY
SECURITIES, INC.
------------------------------------------------------
<PAGE> 134
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 Notes being
registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 336,100
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 60,000
Blue sky fees and expenses.................................. 25,000
Rating agency fees.......................................... 215,000
Trustee fees and expenses................................... 25,000
Printing.................................................... 125,000
Miscellaneous............................................... 13,900
----------
Total............................................. $1,050,000*
==========
</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> 135
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a.) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <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)
3.7 -- Form of Securitization Trust Agreement among World Omni
Lease Securitization L.P., PNC Bank, Delaware, as Owner
Trustee and U.S. Bank National Association, as Indenture
Trustee (including form of Transferor Certificate)*
4.1 -- Form of Indenture between World Omni 1997-B Automobile Lease
Securitization Trust and U.S. Bank National Association, as
Indenture Trustee (including forms of Class A Notes)*
5.1 -- Opinion of McDermott, Will & Emery with respect to legality*
8.1 -- Opinion of Cadwalader, Wickersham & Taft 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-B 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 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-B 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)
</TABLE>
II-2
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
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, dated as of October 1,
1996 between World Omni Financial Corp., and World Omni
Lease Securitization L.P., dated as of October 1, 1996
(incorporated by reference from Exhibit 10.10 to
Registration Statement on Form S-1, File No. 333-21917 (the
"1997-A Registration Statement"))
10.11 -- Amendment No. 3 to Support Agreement between World Omni
Financial Corp. and World Omni Lease Securitization L.P.
dated as of April 1, 1997 (incorporated by reference from
Exhibit 10.11 to the 1997-A Registration Statement)
10.12 -- Form of Amendment No. 4 to Support Agreement between World
Omni Financial Corp. and World Omni Lease Securitization
L.P.*
10.13 -- Form of Residual Value Insurance Policy*
23.1 -- Consent of McDermott, Will & Emery*
23.2 -- Consent of Cadwalader, Wickersham & Taft (included as a part
of Exhibit 8.1)
23.3 -- Consent of English, McCaughan & O'Bryan, P.A.*
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**
25.1 -- Form T-1 of U.S. Bank National Association*
</TABLE>
- ---------------------
* Filed herewith.
** Previously filed.
(b) Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake as follows:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
II-3
<PAGE> 137
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that the paragraphs (a)(i) and (a)(ii) do not apply
if the registration statement is on Form S-3, Form S-8, or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by any registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(b) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) 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.
(e) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of any
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.
(f) 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.
(g) 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-4
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each registrant
has duly caused this Amendment No. 1 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 October, 1997.
WORLD OMNI LEASE SECURITIZATION L.P.,
on behalf of itself and as originator of
the World Omni 1997-B 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)
II-5
<PAGE> 139
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 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 October 22, 1997
- ----------------------------------------------------- and Corporate Treasurer of
A. Tucker Allen the 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 October 22, 1997
- ----------------------------------------------------- Partner of each of World
Colin W. Brown Omni Lease Securitization
L.P. and Auto Lease Finance
L.P.
* Director of the General October 22, 1997
- ----------------------------------------------------- Partner of each of World
Jeffrey B. Shapiro Omni Lease Securitization
L.P. and Auto Lease Finance
L.P.
* Director of the General October 22, 1997
- ----------------------------------------------------- Partner of each of World
Christopher C. Wheeler Omni Lease Securitization
L.P. and Auto Lease Finance
L.P.
* Director and President of the October 22, 1997
- ----------------------------------------------------- General Partner of each of
Daryl P. Smith World Omni Lease
Securitization L.P. and
Auto Lease Finance L.P.
(Principal Executive
Officer)
* /s/ A. TUCKER ALLEN
- -----------------------------------------------------
A. Tucker Allen
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 140
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).....................................
3.7 -- Form of Securitization Trust Agreement among World Omni
Lease Securitization L.P., PNC Bank, Delaware, as Owner
Trustee and U.S. Bank National Association, as Indenture
Trustee (including form of Transferor Certificate)*.........
4.1 -- Form of Indenture between World Omni 1997-B Automobile Lease
Securitization Trust and U.S. Bank National Association, as
Indenture Trustee (including forms of Class A Notes)*.......
5.1 -- Opinion of McDermott, Will & Emery with respect to
legality*...................................................
8.1 -- Opinion of Cadwalader, Wickersham & Taft 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-B 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-B to Servicing Agreement between VT
Inc. and World Omni Financial Corp.*........................
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
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)..............................
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 (incorporated by reference from
Exhibit 10.10 to Registration Statement on Form S-1, File
No. 333-21917 (the "1997-A Registration Statement"))........
10.11 -- Amendment No. 3 to Support Agreement between World Omni
Financial Corp. and World Omni Lease Securitization L.P.
dated as of April 1, 1997 (incorporated by reference from
Exhibit 10.11 to the 1997-A Registration Statement).........
10.12 -- Form of Amendment No. 4 to Support Agreement between World
Omni Financial Corp. and World Omni Lease Securitization
L.P.*.......................................................
10.13 -- Form of Residual Value Insurance Policy*....................
23.1 -- Consent of McDermott, Will & Emery*.........................
23.2 -- Consent of Cadwalader, Wickersham & Taft (included as a part
of Exhibit 8.1).............................................
23.3 -- Consent of English, McCaughan & O'Bryan, P.A.*..............
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**.........................................
25.1 -- Form T-1 of U.S. Bank National Association*.................
</TABLE>
- ---------------
* Filed herewith.
** Included on page II-6.
<PAGE> 1
EXHIBIT 1.1
DRAFT DATED 10/21/97
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
$[ ]
[ ]% Automobile Lease Asset Backed Notes, Class A-1
$[ ]
[ ]% Automobile Lease Asset Backed Notes, Class A-2
$[ ]
[ ]% Automobile Lease Asset Backed Notes, Class A-3
$[ ]
[ ]% Automobile Lease Asset Backed Notes, Class A-4
UNDERWRITING AGREEMENT
October __, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
As Representative of the
Several Underwriters
Eleven Madison Avenue
6th Floor
New York, New York 10010-3629
Dear Sirs:
1. 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 $260,000,000 aggregate principal amount of [ ]% Automobile
Lease Asset Backed Notes, Class A-1 (the "Class A-1 Notes"), $220,000,000
aggregate principal amount of [ ]% Automobile Lease Asset Backed Notes, Class
A-2 (the "Class A-2 Notes"), $390,000,000 aggregate principal amount of [ ]%
Automobile Lease Asset Backed Notes, Class A-3 (the "Class A-3 Notes") and
$239,128,644 aggregate principal amount of [ ]% Automobile Lease Asset Backed
Notes, Class A-4 (the "Class A-4 Notes" and, together with the Class A-1
Notes, the Class A-2 Notes and the Class A-3 Notes, the "Class A Notes") of
the World Omni 1997-B Automobile Lease Securitization Trust
<PAGE> 2
(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 corpora tion 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 Notes, the Transferor
will cause the Trust to issue $65,948,190 aggregate principal amount of
Automobile Lease Asset Backed Notes, Class B (the "Class B Notes" and, together
with the Class A Notes, the "Notes"). The Notes will be issued pursuant to an
indenture, dated as of October 1, 1997 (the "Indenture"), between the Trust and
U.S. Bank National Association ("U.S. Bank") as indenture trustee (in such
capacity, the "Indenture Trustee"). The Transferor will own the undivided
equity interest in the Trust (the "Transferor Interest"). The Transferor
Interest will be evidenced by a certificate (the "Transferor Certificate")
issued pursuant to a securitization trust agreement, dated as of October 1,
1997 (the "Securitization Trust Agreement"), among the Transferor, PNC Bank,
Delaware ("PNC Bank"), as owner trustee (in such capacity, the "Owner Trustee")
and the Indenture Trustee. The Class B Notes will be subordinated to the
Class A Notes, and the Transferor Certificate will be subordinated to the
Notes, in each case to the extent described in the Securitization Trust
Agreement and the Indenture. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Indenture.
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, 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, policy number [ ], dated as of October 1, 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.
The Owner Trustee and the Trust will pledge the SUBI Interest and the other
property of the Trust to the Indenture Trustee to secure the Notes pursuant to
the Indenture.
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 October 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)
U.S. Bank, as trust
2
<PAGE> 3
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 October 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 October 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 Indenture, the
Servicing Agreement, the backup security agreement, dated as of October 1, 1997
(the "Backup Security Agreement"), among World Omni, ALFI L.P., the Origination
Trustee, the Transferor, the Owner Trustee and the Indenture 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 Indenture Trustee, the Origination Trustee, the Trust Agent,
the Owner Trustee and the other parties named in Appendix A thereto, together
with an accession agreement thereto (collectively, the "Intercreditor
Agreement"), between the Indenture Trustee and the Transferor, and the premium
payment agreement, dated as of October 1, 1997, 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. 333-35523),
including a form of prospectus, relating to the registration of the
Class A Notes has been filed with the Securities and Exchange
Commission (the "Commission") and, the offering thereof from time to
time in accordance with Rule 415 of the rules and regulations of the
Commission, 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 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
3
<PAGE> 4
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 Notes, 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 Notes 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 Notes will be identical
to the electronically transmitted copies thereof 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
4
<PAGE> 5
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 Notes and the Transferor Certificate conform in
all material respects to the description thereof and the statements in
relation thereto contained in the Prospectus; the Notes and the
Transferor Certificate have been duly and validly authorized and, when
executed, issued, authenticated and delivered in accordance with the
Indenture and the Securitization Trust Agreement, respectively, and,
in the case of the Class A Notes, 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
Indenture.
(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 $1,201,460,915.
(b) The Transferor and World Omni, as the WOLSI Limited Partner, as the
ALFI Limited Partner and on behalf of WOLSI as the WOLSI General Partner and on
behalf of ALFI L.P. as the ALFI General Partner, jointly and severally represent
and warrant to, and agree 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, of the Transferor, the
WOLSI General Partner, ALFI L.P. or the ALFI General Partner, whether
or not arising in the
5
<PAGE> 6
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. ss. 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, the Notes and the
Transferor Certificate; 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 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
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<PAGE> 7
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, the Notes and the Transferor
Certificate, 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 any 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.
(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, govern mental 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
Notes and the Transferor Certificate or the offering and sale of the
Notes, (C) the execution, delivery and performance by the Transferor
or ALFI L.P. of this Agreement, any Basic Document to which it is a
party, the Notes or the Transferor
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<PAGE> 8
Certificate 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
Notes 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 any 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.
(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.
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<PAGE> 9
(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 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
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<PAGE> 10
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 or
its ability to perform its obligations under each Basic Document to
which it is a party or by which it may be bound.
(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 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
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<PAGE> 11
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 each Partnership Agreement 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-B
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.
(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.
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<PAGE> 12
(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 Notes. 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 Notes 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 Notes, [ ]%, (ii) in the case of the
Class A-2 Notes, [ ]%, (iii) in the case of the Class A-3 Notes, [ ]% and (iv)
in the case of the Class A-4 Notes, [ ]%.
Each Class of Class A Notes will initially be represented by one or
more notes 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 Notes will be represented by book entries on the records of DTC
and participating members thereof. Definitive instruments evidencing the Class A
Notes will be available only under the limited circumstances specified in the
Indenture.
The Transferor will deliver the Class A Notes 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 Mayer, Brown & Platt, 190 South LaSalle Street,
Chicago, IL 60603 (or at such other location as agreed upon among the
Transferor, ALFI L.P., World Omni and the Representative) at 10:00 A.M.,
Chicago, Illinois time, on _________, 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 instruments evidencing the Notes and the
Transferor Certificate will be made available for inspection at the above
offices of Mayer, Brown & Platt
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<PAGE> 13
(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. Certain Agreements of the Underwriters.
(a) It is understood that the Underwriters propose to offer the
Class A Notes for sale to the public as set forth in the Prospectus.
(b) The Underwriters covenant and agree that prior to the date which
is one year and one day after the last date upon which (i) each Class of
Notes has been paid in full, and (ii) all obligations due under any
other Securitized Financing have been paid in full, the Underwriters will not
institute against, or join any other Person in instituting against, ALFI L.P.
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law. The foregoing shall not limit the right of any Underwriter to file any
claim in or otherwise take actions with respect to any such proceeding
instituted by any Person not under such a constraint.
(c) Until the Representative informs the Transferor in writing that
all of the Class A Notes have been sold by the Underwriters, each Underwriter
covenants and agrees to provide to the Transferor each day, with respect to
sales of the Class A Notes made by such Underwriter on such date at any price
other than the public offering price set forth on the cover page of the
Prospectus, the information in writing (which may be in the form of a telecopy)
necessary to enable the Transferor to prepare and file or transmit for filing
with the Commission the information requested by the Commission to be filed with
respect to the distribution of the Class A Notes.
5. Certain Agreements of the Transferor, ALFI L.P. and World Omni. Each
of the Transferor, ALFI L.P. and World Omni 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).
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<PAGE> 14
(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 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
Notes 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 Indenture Trustee to make generally available to the Class A
Noteholders 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 Notes 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 Notes, provided that neither the
Transferor nor ALFI L.P. shall be obligated to qualify to do business
nor become subject to service
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<PAGE> 15
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 Notes are outstanding, the Transferor,
ALFI L.P. or World Omni, as the case may be, will make good
faith efforts to deliver or cause to be delivered to the
Representative, as soon as each becomes available, copies of (i) each
report relating to the Notes delivered to Noteholders 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, the Notes or
the Transferor Certificate 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 Owner Trustee,
the Indenture 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"), Standard & Poor's ("Standard & Poor's")
and Fitch Investors Service, L.P. ("Fitch and, together with Moody's,
and Standard & Poor's, the "Rating Agencies") in connection with
the rating of each Class of Notes, (v) the fees of DTC in
connection with the book-entry registration of the Class A Notes 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 Notes 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
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<PAGE> 16
announce the offering of, in a public or private transaction, any other
collateralized securities similar to the Class A Notes.
(j) So long as any Class A Notes 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 Owner Trustee, the Indenture 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 Notes 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.
6. Conditions of the Obligations of the Underwriters. The obligation of
the several Underwriters to purchase and pay for the Class A Notes 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
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<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 to
the Underwriters, substantially 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 & Weddell L.L.C.,
special Georgia counsel to the Transferor, ALFI L.P. and World Omni and
(G) Kilpatrick Stockton LLP, special North Carolina counsel to the
Transferor, ALFI L.P. and World
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<PAGE> 18
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 the WOLSI
General Partner, ALFI, as the 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.
(vi)(a) The Notes are in due and proper form,
all conditions precedent provided for in the Indenture
relating to the issuance, authentication and delivery of the
Notes have been complied with and the Notes have been duly
and validly authorized and, when executed,
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<PAGE> 19
issued, authenticated and delivered pursuant to the Indenture,
and, in the case of the Class A Notes, 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 Indenture.
(b) The Transferor Certificate is in due and proper
form, all conditions precedent provided for in the
Securitization Trust Agreement relating to the issuance,
authentication and delivery of the Transferor Certificate have
been complied with and the Transferor Certificate has been
duly and validly authorized and, when executed, issued,
authenticated and delivered pursuant to the Securitization
Trust 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
Notes", "Security for the Notes", "The Residual Value
Insurance Policy" and "Additional Document Provisions",
insofar as such statements purport to summarize certain terms
or provisions of the
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<PAGE> 20
SUBI Interest, the Retained SUBI Interest, the Investor Notes
and the Transferor Certificate, the Basic Documents, the
Residual Value Insurance Policy and the Contingent and Excess
Liability Insurance Policies, provide a fair summary of such
provisions, and the statements in the Prospectus under "The
Origination Trust -- Allocation of Origination Trust
Liabilities", "Risk Factors -- Risks Associated With Consumer
Protection Laws", "-- Risks Associated With ERISA
Liabilities", "-- Risks Associated With Vicarious Tort
Liability" and "-- Risks in the Event of an 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, the Notes or the
Transferor Certificate, the offering of the Notes or the sale
of the Class A Notes 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)
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<PAGE> 21
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 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, the Trust Indenture Act of 1939,
as amended, 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 Indenture and the Backup Security
Agreement create a valid first priority perfected security
interest in favor of the Indenture Trustee, for the benefit
of the Noteholders, in the SUBI Collection Account,
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<PAGE> 22
the Distribution Account, the Reserve Fund and the proceeds
thereof (including Permitted Investments) for so long as they
are held in such accounts.
(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 Owner Trustee of the
SUBI Certificate creates a valid first priority perfected
security interest (subject to the rights of the Indenture
Trustee pursuant to the Indenture), for the benefit of the
Owner Trustee on behalf of the Noteholders and the holder of
the Transferor Certificate, in ALFI L.P.'s and the
Transferor's right, title and interest in the SUBI
Certificate. The Indenture and the delivery to and possession
by the Indenture Trustee of the SUBI Certificate creates a
valid first priority perfected security interest, for the
benefit of the Indenture Trustee on behalf of the
Noteholders, in the Trust's and the Owner Trustee'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.
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<PAGE> 23
(xxi) 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 Indenture Trustee of
a security interest in the 1997-B Leases pursuant to the Back
up Security Agreement will create a valid, first priority
perfected security interest in the 1997-B 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 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) 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 Indenture Trustee of
a security interest in the 1997-B Leases pursuant to the
Backup Security Agreement will create a valid, first priority
perfected security interest in the 1997-B 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
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<PAGE> 24
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.
(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 Notes will constitute
"indebtedness" for purposes of Florida income tax law, and the
Class B Notes 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 Notes 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
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<PAGE> 25
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 Cadwalader, Wickersham & Taft,
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 Notes will constitute "indebtedness" for federal
income tax purposes and the Class B Notes 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
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 Owner
Trustee, the Indenture Trustee, the Origination Trustee or either Rating Agency.
(7) The favorable opinion of Dorsey & Whitney, counsel to the
Indenture Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and counsel to the Underwriters, to the
effect that:
(i) U.S. Bank has been duly incorporated and
is validly existing as a 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 Indenture Trustee
and Trust Agent under each Basic Document to which U.S. Bank
is a party.
(ii) Each Basic Document to which U.S. Bank is
a party has been duly authorized, executed and delivered by
U.S. Bank and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, will constitute
a legal, valid and binding obligation of U.S. 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 Notes have been duly authenticated
and delivered by the Indenture Trustee.
(iv) Neither the execution nor delivery by
U.S. Bank of each Basic Document to which it is a party nor
the consummation of any of the transactions by U.S. Bank
contemplated thereby require the consent or approval of, the
giving of notice to, the registration with or the taking of
any other action
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<PAGE> 26
with respect to, any governmental authority or agency under
any existing federal or state law governing the banking or
trust powers of U.S. Bank.
(v) The execution and delivery of each Basic
Document to which U.S. Bank is a party and the performance by
U.S. 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 U.S. Bank, (B) the
Articles of Association or By-Laws of U.S. Bank or (C) to the
best knowledge of such counsel, any indenture, lease or
material agreement to which U.S. Bank is a party or to which
its assets are subject.
(vi) All of the issued and outstanding
capital stock of the Origination Trustee is owned by U.S.
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 and Illinois; 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 U.S. 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
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<PAGE> 27
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 Origination 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, 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 [name] [title] of the Insurer,
dated the Closing Date and satisfactory in form and substance to the
Representative and counsel to the Underwriters, substantially in the
form 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 Insurance Policy" 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" 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 Ballard, Spahr, Andrews &
Ingersoll, counsel to the Owner Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and counsel
to the Underwriters, to the effect that:
(i) PNC Bank has been duly incorporated and is
validly existing as a Delaware banking corporation, in good
standing under the laws of the State of Delaware 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 Owner
Trustee under each Basic Document to which PNC Bank is a
party; (x) to the best of such counsel's knowledge and
information, the Owner Trustee is duly qualified as a foreign
corporation to transact business and is in good standing in
Georgia, Florida, Alabama, North Carolina and South Carolina.
27
<PAGE> 28
(ii) Each Basic Document to which PNC Bank is
a party has been duly authorized, executed and delivered by
PNC Bank and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, will constitute
a legal, valid and binding obligation of PNC 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) Each Note has been duly executed and
delivered by the Owner Trustee. The Transferor Certificate
has been duly executed, authenticated and delivered by the
Owner Trustee.
(iv) Neither the execution nor delivery by PNC
Bank of each Basic Document to which it is a party nor the
consummation of any of the transactions by PNC 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 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 PNC Bank is a party and the performance by
PNC 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 PNC Bank, (B) the
Articles of Association or By-Laws of PNC Bank or (C) to the
best knowledge of such counsel, any indenture, lease or
material agreement to which PNC Bank is a party or to which
its assets are subject.
(11) The favorable opinion of Mayer, Brown & Platt, 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 Notes and the Transferor Certificate and such other related
matters as the Representative shall request. In rendering such
opinion, Mayer, Brown & Platt may rely on the opinions of (i) Hand
Arendall, L.L.C., as to all matters of Alabama law, (ii) Richards,
Layton & Finger and Ballard, Spahr, Andrews & Ingersoll, 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 Notes shall be rated in the highest
rating category by each of Moody's and Standard & Poor's and the Class B Notes
shall be rated at least Baa2 by Moody's and at least A- 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
28
<PAGE> 29
enabling them to pass upon the issuance of the Notes and the Transferor
Certificate and sale of the Class A Notes 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 conditions, herein contained;
and all proceedings taken by the parties to the Basic Documents in connection
with the issuance of the Notes and the Transferor Certificate and sale of the
Class A Notes 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.
29
<PAGE> 30
7. Indemnification and Contribution.
(a) The Transferor and World Omni will, jointly and severally,
indemnify and hold each Underwriter harmless against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any actual legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that neither the Transferor nor World Omni will be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Transferor or World Omni by any Underwriter through the Representative
specifically for use therein.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Transferor and World Omni against any losses, claims, damages
or liabilities to which the Transferor or World Omni may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Transferor or World Omni
by such Underwriter through the Representative specifically for use therein, and
will reimburse any actual legal or other expenses reasonably incurred by the
Transferor or World Omni in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of written notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
except and to the extent of any prejudice to such indemnifying party arising
from such failure to provide such notice. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the
30
<PAGE> 31
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
8. Contribution.
(a) If the indemnification provided for in Section 7 hereof is
unavailable or insufficient to hold harmless an indemnified party under Section
7 (a) or (b) hereof, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in Section 7 (a) or (b) hereof 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 Notes. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits 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 losses, claims, damages or
liabilities 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 and World Omni 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 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 losses,
claims, damages or liabilities referred to above in this subsection (a) 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 subsection (a). Notwithstanding the
provisions of this subsection (a), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Class A Notes 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. The Underwriters' obligations in this subsection (a) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
31
<PAGE> 32
(b) The obligations of the Transferor and World Omni under this Section
and Section 7 hereof shall be in addition to any liability which the Transferor
or World Omni may otherwise have and shall extend, upon the same terms and
conditions, to each Person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
and Section 7 hereof shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Transferor or World Omni, to each officer of
the Transferor who has signed the Registration Statement and to each Person, if
any, who controls the Transferor or World Omni within the meaning of the Act.
(c) Nothing in this Agreement will be construed to create, affect or in
any manner modify, the liability associated with any action arising under this
Agreement of an outside director (as defined in Section 21D(g) of the Exchange
Act) of any party hereto in respect of any loss, claim, damage or expense, with
the result that such liability varies or differs in any material respect from
the liability of an outside director as determined under Section 21D(g) of the
Exchange Act.
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 Notes. If for any reason the purchase of the Class A Notes 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 Notes 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 (including the reasonable fees and disbursements
of counsel) reasonably incurred by them in connection with the offering of the
Class A Notes.
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 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
32
<PAGE> 33
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 Notes or to enforce contracts for the sale
of any Class of Notes; (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 Notes 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 Notes, 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
Notes, 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.
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 Credit Suisse
First Boston Corporation, Eleven Madison Avenue, 6th Floor, New York, New York
10010-3629, Attention: Investment Banking Department, Transactions Advisory
Group (facsimile number (212) 325-8278); (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)
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<PAGE> 34
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.
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<PAGE> 35
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., its General Partner
By:
----------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
AUTO LEASE FINANCE L.P.
By: AUTO LEASE FINANCE INC.,
its General Partner
By:
----------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI FINANCIAL CORP.
By:
----------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
CONFIRMED AND ACCEPTED,
as of the date first above written.
CREDIT SUISSE FIRST BOSTON
CORPORATION
By:
------------------------------------------
Name:
Title:
For itself and as Representative of the other
Underwriters named in Schedule I hereto.
<PAGE> 36
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount
of Class A-1 of Class A-2 of Class A-3 of Class A-4
Name of Underwriter Notes Notes Notes Notes
- ------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston
Corporation............................. $ $ $ $
[ ]..............
Total.......................... $ $ $ $
================ ================ =============== ================
</TABLE>
SI-I
<PAGE> 1
EXHIBIT 3.7
MB&P Draft 10/14/97
-----------------------------------------------------------------
WORLD OMNI LEASE SECURITIZATION L.P.,
PNC BANK DELAWARE, AS OWNER TRUSTEE
AND
U.S. BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
SECURITIZATION TRUST AGREEMENT
--------------------------------------------------
DATED AS OF OCTOBER 1, 1997
-----------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS ......................................................................................................... 1
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions..................................................................................... 3
Section 1.02. Article and Section References..................................................................36
ARTICLE TWO
CREATION OF TRUST
Section 2.01. Creation of Trust...............................................................................36
Section 2.02. Conveyance of 99.8% 1997-B SUBI Interest........................................................36
Section 2.03. Acceptance by Owner Trustee.....................................................................37
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 3.01. Distribution Account............................................................................37
Section 3.02. Collections.....................................................................................38
Section 3.03. Distributions...................................................................................39
Section 3.04. Reserve Fund....................................................................................45
Section 3.05. Net Deposits....................................................................................47
Section 3.06. Statements to Noteholders.......................................................................48
ARTICLE FOUR
THE TRANSFEROR CERTIFICATE
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4.01. The Transferor Certificates.....................................................................51
Section 4.02. Authentication and Delivery of Transferor Certificate...........................................51
Section 4.03. No Transfer of Transferor Certificate...........................................................52
Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates...............................................52
Section 4.05. Persons Deemed Owners...........................................................................52
ARTICLE FIVE
THE TRANSFEROR
Section 5.01. Representations of Transferor...................................................................53
Section 5.02. Liability of Transferor; Indemnities............................................................55
Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of,
Transferor; Certain Limitations.................................................................55
Section 5.04. Limitation on Liability of Transferor and Others................................................57
Section 5.05. Transferor May Own Notes........................................................................58
Section 5.06. No Transfer.....................................................................................58
Section 5.07. Tax Matters Partner.............................................................................58
ARTICLE SIX
THE OWNER TRUSTEE
Section 6.01. Duties of Owner Trustee.........................................................................58
Section 6.02. Certain Matters Affecting the Owner Trustee.....................................................60
Section 6.03. Owner Trustee Not Liable for Notes, Transferor Certificate or Leases............................61
Section 6.04. Owner Trustee May Own Notes.....................................................................62
Section 6.05. Owner Trustee's Fees and Expenses...............................................................62
Section 6.06. Eligibility Requirements for Owner Trustee......................................................63
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
Section 6.07. Resignation or Removal of Owner Trustee.........................................................64
Section 6.08. Successor Owner Trustee.........................................................................64
Section 6.09. Merger or Consolidation of Owner Trustee........................................................65
Section 6.10. Appointment of Co-Trustee or Separate Owner Trustee.............................................65
Section 6.11. Representations and Warranties of Owner Trustee.................................................67
Section 6.12. Tax Returns.....................................................................................68
Section 6.13. Owner Trustee May Enforce Claims Without Possession of Transferor
Certificate.....................................................................................68
Section 6.14. Suit for Enforcement............................................................................68
Section 6.15. Rights of Indenture Trustee to Direct Owner Trustee.............................................69
Section 6.16. No Petition.....................................................................................69
ARTICLE SEVEN
TERMINATION
Section 7.01. Termination of the Trust........................................................................70
Section 7.02. Optional Purchase of 99.8% 1997-B SUBI Interest.................................................70
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS
Section 8.01. Early Amortization Events.......................................................................71
ARTICLE NINE
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment.......................................................................................74
Section 9.02. Protection of Title to Trust....................................................................77
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 9.03. Limitation on Rights of Transferor..............................................................78
Section 9.04. Governing Law...................................................................................78
Section 9.05. Notices.........................................................................................78
Section 9.06. Severability of Provisions......................................................................79
Section 9.07. Assignment......................................................................................79
Section 9.08. Transferor Certificate Nonassessable and Fully Paid.............................................79
ARTICLE TEN
AGENT FOR SERVICE
Section 10.01. Agent for Service of Transferor.................................................................79
Section 10.02. Agent of Owner Trustee..........................................................................79
EXHIBITS:
Exhibit A - Transferor Certificate...............................................................A-1
Exhibit B - Certificate of Trust.................................................................B-1
</TABLE>
-iv-
<PAGE> 6
SECURITIZATION TRUST AGREEMENT
THIS SECURITIZATION TRUST AGREEMENT, dated as of October 1, 1997,
is made with respect to the formation of the WORLD OMNI 1997-B 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"), PNC BANK, DELAWARE, a Delaware trust
company, as owner trustee (the "Owner Trustee"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as indenture trustee (the
"Indenture 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, U.S. Bank National Association, a
national banking association (formerly known as First Bank National Association
and successor trustee to Bank of America Illinois, an Illinois banking
corporation) (together with its successors, "U.S. 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 U.S. Bank,
and that certain Amended and Restated Trust Agreement dated as of June 1, 1994
among ALFI, ALFI LP, the Origination Trustee and U.S. 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 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, U.S. Bank and
WOLSI LP have entered into a Supplement 1997-B to Trust Agreement dated as of
October 1, 1997 (the "1997-B SUBI Supplement") pursuant to which the Origination
Trustee, on behalf of the Origination Trust and
<PAGE> 7
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-B 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-B SUBI Portfolio"), which 1997-B SUBI will be
evidenced by one SUBI Certificate (as defined in the Origination Trust
Agreement) representing a 99.8% beneficial interest in the 1997-B SUBI (the
"99.8% 1997-B SUBI Certificate") and a second SUBI Certificate representing the
remaining 0.2% beneficial interest in the 1997-B SUBI (the "0.2% 1997-B SUBI
Certificate" and, together with the 99.8% 1997-B SUBI Certificate, the "1997-B
SUBI Certificates"), all as set forth in the Origination Trust Agreement and the
1997-B 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-B
to Servicing Agreement dated as of October 1, 1997 (the "1997-B Servicing
Supplement"), pursuant to which the terms of the Servicing Agreement will be
supplemented insofar as they apply to the 1997-B SUBI Portfolio, providing for
further specific servicing obligations that will benefit the holders of the
1997-B 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 October 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-B SUBI and the 1997-B 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-B 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-B SUBI Portfolio
as of the Initial Cutoff Date (as defined in the 1997-B SUBI Supplement).
F. The parties desire to enter into this Agreement to create the
Trust.
G. Also concurrently herewith, the Indenture Trustee and the
Owner Trustee are entering into that certain Indenture dated as of October 1,
1997 (the "Indenture") pursuant to which, among other things, the Trust will
issue the Notes and the Trust will grant a security interest to the Indenture
Trustee with respect to all of the Trust Estate.
H. The parties hereto desire, pursuant to this Agreement, to
provide for the issuance by the Trust of the Transferor Certificate and to
provide for the exchange of the Transferor Certificate and the Notes for the
99.8% 1997-B SUBI Certificate in connection with a Securitized Financing (as
defined in the Origination Trust Agreement) by the Transferor.
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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-B SUBI Supplement or Section 6.01 of the 1997-B 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-B 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 Indenture, the Notes, 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-B Servicing Supplement.
"Aggregate Net Investment Value" means, as of any day, the sum of
(i) the aggregate of the Discounted Principal Balances of all 1997-B 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-B 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
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<PAGE> 9
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 (and amounts treated as Principal Collections pursuant to
the last sentence of Section 3.03(b)) that have not been reinvested in
additional 1997-B Leases and 1997-B Leased Vehicles pursuant to Section 11.02 of
the 1997-B SUBI Supplement.
"Aggregate Net Losses" means, with respect to a Collection
Period, an amount equal to the aggregate Discounted Principal Balances of all
1997-B 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 Securitization Trust Agreement and all
amendments hereof and supplements hereto.
"ALFI" means Auto Lease Finance, Inc. and its successors.
"ALFI LP" has the meaning set forth in Recital A.
"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 [ ] times
the Base Reserve Fund Formula, but which amount shall in no event be greater
than the Note Balance (after giving effect to reductions in the Note Balance) on
such Distribution Date.
"Amortization Date" means __________, 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 Notes have been paid in full and all unpaid Class A-1 Note Principal
Loss Amounts, Class A-2 Note Principal Loss Amounts, Class A-3 Note Principal
Loss Amounts, Class A-4 Note Principal Loss Amounts, Class B Note Principal Loss
Amounts and unpaid Class B Note 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
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<PAGE> 10
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) the amount of the Reserve Fund Initial Deposit and (ii) the Note Balance as
of the related Distribution Date (after giving effect to reductions in the Note
Balance on such Distribution Date).
"Book-Entry Notes" means a beneficial interest in the [Class A]
Notes, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
"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,
Wilmington, Delaware, Deerfield Beach, Florida, or Mobile, Alabama are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq.
"Capped Indenture Trustee Administrative Expenses" means the
compensation of the Indenture Trustee pursuant to Section 6.07 of the Indenture
and those other Administrative Expenses with respect to the Indenture and the
Notes, including those due under Section 6.07 of the Indenture that, together
with all such Administrative Expenses paid since the beginning of the calendar
year in which such Distribution Date occurs, do not exceed $ (or $ in any year
in which an Indenture Event of Default occurs and the Indenture Trustee sells
the property of the Trust pursuant to Section 5.17 of the Indenture).
"Capped Owner Trustee Administrative Expenses" means the
compensation of the Owner Trustee 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
such Distribution Date occurs, do not exceed $ (or $ in any year in which an
Indenture Event of Default occurs and the Indenture Trustee sells the property
of the Trust pursuant to Section 5.17 of the Indenture).
"Certificate" means the Transferor Certificate.
"Certificateholder" means the Transferor.
"Certificate of Trust" means the Certificate of Trust in the form
of Exhibit B filed for the Trust pursuant to the Business Trust Statute.
"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.
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"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 _______ and
_______ 1997 in the case of the ______ 1997 Determination Date, the months of
_______ and _______ 1997 and the __________ 1997 Collection Period in the case
of the _______ 1997 Determination Date, and the month of _______ 1997 and the
_______ and _______ 1997 Collection Periods in the case of the _______ 1997
Determination Date). The Charge-off Rate Test will be satisfied if such average
is [ %] or less.
"Class" means all Securities whose form is identical except for
variation in denomination, principal amount or owner.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes.
"Class A Note Balance" means the sum of the Class A-1 Note
Balance, the Class A-2 Note Balance, Class A-3 Note Balance and the Class A-4
Note Balance.
"Class A Noteholder" means any Holder of a Class A-1 Note, Class
A-2 Note, Class A-3 Note or Class A-4 Note.
"Class A Percentage" means the Class A Note Balance immediately
after the [Class A-3 Notes] have been paid in full as a percentage of the Note
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 respect of such Collection Period that is allocable to the 99.8% 1997-B SUBI
Interest.
"Class A-1 Allocation Percentage" means, as of any Distribution
Date, the Class A-1 Note Balance as of the last day of the related Collection
Period as a percentage of the Note Balance as of such last day.
"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
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<PAGE> 12
Amount incurred in respect of such Collection Period that is allocable to the
99.8% 1997-B 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 Note 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 Noteholders 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 Note Rate
or, in the case of the first Distribution Date, % of such amount, and (ii) the
Class A-1 Note Balance as of the immediately preceding Distribution Date (after
giving effect to changes in the Class A-1 Note Balance made on such immediately
preceding Distribution Date) or, in the case of the first Distribution Date, the
Initial Class A-1 Note 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-B SUBI Interest.
"Class A-1 Note" means one of the Notes executed and
authenticated by the Indenture Trustee in substantially the form set forth in
Exhibit A to the Indenture.
"Class A-1 Note Balance" shall initially equal the Initial Class
A-1 Note Balance and, on any date, shall equal the Initial Class A-1 Note
Balance, reduced by the sum of (i) all amounts distributed to Class A-1
Noteholders 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 Note Principal Loss
Amounts on or prior to such date exceeds (b) the aggregate of all Class A-1 Note
Principal Loss Amounts reimbursed on or prior to such date.
"Class A-1 Note Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-1 Note Balance as of the
close of business on such Distribution Date (after giving effect to all changes
in the Class A-1 Note Balance made on that date) divided by the Initial Class
A-1 Note Balance.
"Class A-1 Noteholder" means any Holder of a Class A-1 Note.
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<PAGE> 13
"Class A-1 Note 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 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-1 Notes pursuant to Section 3.03(b)(vi) or
(b)(vii) on such Distribution Date.
"Class A-1 Note Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-1 Note Rate) on the aggregate amount of unreimbursed
Class A-1 Note Principal Loss Amounts.
"Class A-1 Note Rate" means ____% per annum.
"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 Noteholders 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 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-B 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-B SUBI
Interest.
"Class A-2 Allocation Percentage" means, as of any Distribution
Date, the Class A-2 Note Balance as of the last day of the related Collection
Period as a percentage of the then Note Balance as of such last day.
"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-B 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
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<PAGE> 14
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 Note 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 Noteholders 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 Note Rate
or, in the case of the first Distribution Date, % of such amount, and (ii) the
Class A-2 Note Balance as of the immediately preceding Distribution Date (after
giving effect to changes in the Class A-2 Note Balance made on such immediately
preceding Distribution Date) or, in the case of the first Distribution Date, the
Initial Class A-2 Note 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-B SUBI Interest.
"Class A-2 Note" means one of the Notes executed by the Owner
Trustee and authenticated by the Indenture Trustee in substantially the form set
forth in Exhibit B to the Indenture.
"Class A-2 Note Balance" shall initially equal the Initial Class
A-2 Note Balance and, on any date, shall equal the Initial Class A-2 Note
Balance, reduced by the sum of (i) all amounts distributed to Class A-2
Noteholders 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 Note Principal Loss
Amounts on or prior to such date exceeds (b) the aggregate of all Class A-2 Note
Principal Loss Amounts reimbursed on or prior to such date.
"Class A-2 Note Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-2 Note Balance as of the
close of business on such Distribution Date (after giving effect to all changes
in the Class A-2 Note Balance made on that date) divided by the Initial Class
A-2 Note Balance.
"Class A-2 Noteholder" means any Holder of a Class A-2 Note.
"Class A-2 Note 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 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-2 Notes pursuant to Section 3.03(b)(vi) or
(b)(vii) on such Distribution Date.
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"Class A-2 Note Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-2 Note Rate) on the aggregate amount of unreimbursed
Class A-2 Note Principal Loss Amounts.
"Class A-2 Note Rate" means ____% per annum.
"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 Noteholders 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-B 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-B SUBI
Interest.
"Class A-3 Allocation Percentage" means, as of any Distribution
Date, the Class A-3 Note Balance as of the last day of the related Collection
Period as a percentage of the then Note Balance as of such last day.
"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-B 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 Note 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 Noteholders on such
current Distribution Date.
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"Class A-3 Interest Distributable Amount" means, with respect to
any Distribution Date, the product of (i) one-twelfth of the Class A-3 Note Rate
or, in the case of the first Distribution Date, % of such amount, and (ii) the
Class A-3 Note Balance as of the immediately preceding Distribution Date (after
giving effect to changes in the Class A-3 Note Balance made on such immediately
preceding Distribution Date) or, in the case of the first Distribution Date, the
Initial Class A-3 Note 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-B SUBI Interest.
"Class A-3 Note" means one of the Notes executed by the Owner
Trustee and authenticated by the Indenture Trustee in substantially the form set
forth in Exhibit C to the Indenture.
"Class A-3 Note Balance" shall initially equal the Initial Class
A-3 Note Balance and, on any date, shall equal the Initial Class A-3 Note
Balance, reduced by the sum of (i) all amounts distributed to Class A-3
Noteholders 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 Note Principal Loss
Amounts on or prior to such date exceeds (b) the aggregate of all Class A-3 Note
Principal Loss Amounts reimbursed on or prior to such date.
"Class A-3 Note Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-3 Note Balance as of the
close of business on such Distribution Date (after giving effect to all changes
in the Class A-3 Note Balance made on that date) divided by the Initial Class
A-3 Note Balance.
"Class A-3 Noteholder" means any Holder of a Class A-3 Note.
"Class A-3 Note 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 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-3 Notes pursuant to Section 3.03(b)(vi) or
(b)(vii) on such Distribution Date.
"Class A-3 Note Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-3 Note Rate) on the aggregate amount of unreimbursed
Class A-3 Note Principal Loss Amounts.
"Class A-3 Note Rate" means ____% per annum.
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"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 Noteholders 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-B 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-B SUBI
Interest.
"Class A-4 Allocation Percentage" means, as of any Distribution
Date, the Class A-4 Note Balance as of the last day of the related Collection
Period as a percentage of the then Note Balance as of such last day.
"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-B 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 Note 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-4 Noteholders 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 Note Rate
or, in the case of the first Distribution Date, % of such amount, and (ii) the
Class A-4 Note Balance as of the immediately preceding Distribution Date (after
giving effect to changes in the Class A-4 Note Balance made on such immediately
preceding Distribution Date) or, in the case of the first Distribution Date, the
Initial Class A-4 Note Balance.
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"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-B SUBI Interest.
"Class A-4 Note" means one of the Notes executed by the Owner
Trustee and authenticated by the Indenture Trustee in substantially the form set
forth in Exhibit D to the Indenture.
"Class A-4 Note Balance" shall initially equal the Initial Class
A-4 Note Balance and, on any date, shall equal the Initial Class A-4 Note
Balance, reduced by the sum of (i) all amounts distributed to Class A-4
Noteholders 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 Note Principal Loss
Amounts on or prior to such date exceeds (b) the aggregate of all Class A-4 Note
Principal Loss Amounts reimbursed on or prior to such date.
"Class A-4 Note Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-4 Note Balance as of the
close of business on such Distribution Date (after giving effect to all changes
in the Class A-4 Note Balance made on that date) divided by the Initial Class
A-4 Note Balance.
"Class A-4 Noteholder" means any Holder of a Class A-4 Note.
"Class A-4 Note 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 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-4 Notes pursuant to Section 3.03(b)(vi) or
(b)(vii) on such Distribution Date.
"Class A-4 Note Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-4 Note Rate) on the aggregate amount of unreimbursed
Class A-4 Note Principal Loss Amounts.
"Class A-4 Note Rate" means ____% per annum.
"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 Noteholders 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-B SUBI Interest.
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"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-B SUBI
Interest.
"Class B Allocation Percentage" means, as of any Distribution
Date, the Class B Note Balance as of the last day of the related Collection
Period as a percentage of the then Note Balance as of such last day.
"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-B 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 Note 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 Noteholders 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 Note Rate
or, in the case of the first Distribution Date, % of such amount, and (ii) the
Class B Note Balance as of the immediately preceding Distribution Date (after
giving effect to changes in the Class B Note Balance made on such immediately
preceding Distribution Date) or, in the case of the first Distribution Date, the
Initial Class B Note 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-B SUBI Interest.
"Class B Note" means any one of the Notes executed by the Owner
Trustee and authenticated by the Indenture Trustee in substantially the form set
forth in Exhibit E to the Indenture.
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"Class B Note Balance" shall initially equal the Initial Class B
Note Balance and, on any date, shall equal the Initial Class B Note Balance,
reduced by the sum of (i) all amounts distributed to Class B Noteholders and
allocable to principal on or prior to such date, (ii) the amount, if any, by
which (a) the aggregate of all Class B Note Principal Loss Amounts on or prior
to such date exceeds (b) the aggregate of all Class B Note 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 Note Principal Carryover Shortfalls on or
prior to such Distribution Date exceeds (b) the aggregate of all Class B Note
Principal Carryover Shortfalls reimbursed on or prior to such date.
"Class B Note Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class B Note Balance as of the
close of business on such Distribution Date (after giving effect to all changes
in the Class B Note Balance made on that date) divided by the Initial Class B
Note Balance.
"Class B Note Principal Carryover Shortfall" means, with respect
to any Distribution Date, the amount that otherwise would have been made
available for reinvestment in additional 1997-B SUBI Assets pursuant to Section
11.02 of the 1997-B SUBI Supplement (if on a Distribution Date related to a
Collection Period in the Revolving Period) or distributed to the Class B
Noteholders (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 Note Principal Carryover Shortfall Interest Amount"
means, with respect to any Distribution Date, the aggregate amount of accrued
and compounded interest (at the Class B Note Rate) on the aggregate amount of
unreimbursed Class B Note Principal Carryover Shortfall as of the immediately
preceding Distribution Date.
"Class B Note 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
Note 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 Note Principal Loss Interest Amount" means, with respect
to any Distribution Date, the aggregate amount of accrued and unpaid interest
(at the Class B Note Rate) on the aggregate amount of unreimbursed Class B Note
Principal Loss Amounts.
"Class B Note Rate" means ____% per annum.
"Class B Noteholder" means any Holder of a Class B Note.
"Class B Percentage" means the Class B Note Balance immediately
after the [Class A-3 Notes] have been paid in full as a percentage of the Note
Balance at such time.
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"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 Noteholders 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-B 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 _________, 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, (a) with respect to the Indenture
Trustee, as set forth in the Indenture, and (b) with respect to the Owner
Trustee, the Corporate Trust Department of the Owner Trustee located at 222
Delaware Avenue, 17th Floor, Wilmington, Delaware 14801-1600, or at such other
address as the Owner Trustee may designate from time to time by notice to the
Indenture Trustee, the Transferor, the Servicer and the Trust, or the principal
corporate trust office of any successor Owner Trustee.
"Current Lease" means each 1997-B Lease that is not a Charged-off
Lease, a Matured Lease, a Liquidated Lease or an Additional Loss Lease.
"Definitive Notes" shall have the meaning specified in Section
2.10 of the Indenture.
"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-B 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 without limitation because of a check being returned for insufficient
funds) 61 days or more after its Due Date (other than a 1997-B 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-B Servicing Supplement), whether or not (a) the
related 1997-B Leased Vehicle has been
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repossessed (or the process of repossession has been commenced) but has not yet
been 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 _______ and
_______ 1997 in the case of the __________ 1997 Determination Date, the months
of _______ and _______ 1997 and the __________ 1997 Collection Period in the
case of the _____ 1997 Determination Date, and the month of _______ 1997 and the
_______ and _______ 1997 Collection Periods in the case of the _______ 1997
Determination Date. The Delinquency Rate Test will be satisfied if such average
is ____% 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 _________, 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 rating on any Class of Notes.
"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
Notes.
"Downgrade Trigger Event" means that the RV Insurer's claims
paying ability is downgraded to "Aa3" or lower by Moody's, or below "AAA" by
Standard & Poors.
"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 by the
Servicer in the form of non-cash items, but only to the extent that such sum
exceeds the amount transferred to the 1997-B SUBI Collection Account from the
Residual Value Surplus
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Account on the related Deposit Date pursuant to clause (z) of Section 12.03(b)
of the 1997-B 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
Indenture Trustee and each Rating Agency to the effect set forth in Section
10.03(c) of the 1997-B 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.
"Flow-Through Entity" has the meaning set forth in Section
4.03(a).
"Holder" of a Note or "Noteholder" means the Person in whose name
such Note is registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, the interest evidenced by any Note 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. "Holder" of
the Transferor Certificate means the Transferor.
"Indenture" has the meaning set forth in Recital G.
"Indenture Event of Default" means an "Event of Default" as
defined in the Indenture.
"Indenture Trustee" means the Person acting as the Indenture
Trustee under this Agreement, its successor in interest, and any successor
trustee appointed.
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"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 ss. 230.405 of the Rules and Regulations
of the Commission, 17 C.F.R. ss. 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 ss. 230.405 of the Rules and Regulations
of the Commission, 17 C.F.R. ss. 230.405.
"Indorsement" has the meaning set forth in Section 8-304 of the
UCC.
"Initial Class A Note Balance" means the sum of the Initial Class
A-1 Note Balance, the Initial Class A-2 Note Balance, the Initial Class A-3 Note
Balance and the Initial Class A-4 Note Balance.
"Initial Class A-1 Note Balance" means $___________.
"Initial Class A-2 Note Balance" means $___________.
"Initial Class A-3 Note Balance" means $___________.
"Initial Class A-4 Note Balance" means $___________.
"Initial Class B Note Balance" means $___________.
"Initial Note Balance" means the sum of the Initial Class A Note
Balance and the Initial Class B Note Balance.
"Insurance Policy" means, with respect to a 1997-B Lease, 1997-B
Leased Vehicle or Obligor under a 1997-B Lease, 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.
"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-B SUBI Interest; and (ii) the shortfall if
any, described in clause [(ii)] of Section 3.03(e).
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"Investment Company Act" means the Investment Company Act of
1940, as amended.
"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-B SUBI Interest, the
percentage equivalent of a fraction (not to exceed 100%), the
numerator of which is the Note Balance as of the last day of the
immediately preceding Collection Period (or, in the case of the
first Collection Period, the Initial Note 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- B SUBI Interest, the percentage
equivalent of a fraction (not to exceed 100%), the numerator of
which is the Note 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-B 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-B Lease, the Servicer pursuant to the Servicing Agreement or 1997-B
Servicing Supplement, an insurer pursuant to an Insurance Policy or the
Residual Value Insurance Policy or otherwise.
"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-B Lease, including expenses incurred in
connection with the repossession of any 1997- B Leased Vehicle, the sale or
other disposition of a 1997-B Leased Vehicle, whether upon repossession or upon
return of a 1997-B Leased Vehicle related to a Matured Lease, any collection
effort (whether or not resulting in a lawsuit against the Obligor under such
1997-B 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-B Servicing Supplement" has the meaning set forth in
Recital D.
"1997-B SUBI" has the meaning set forth in Recital C.
"1997-B SUBI Certificates" has the meaning set forth in Recital
C.
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"1997-B SUBI Portfolio" has the meaning set forth in Recital C.
"1997-B SUBI Supplement" has the meaning set forth in Recital C.
"99.8% 1997-B SUBI Certificate" has the meaning set forth in
Recital C.
"99.8% 1997-B SUBI Interest" has the meaning set forth in Section
2.02.
"Note Balance" initially means the Initial Note Balance and, as
of any date, means the sum of the Class A Note Balance and the Class B Note
Balance as of the close of business on such date, after giving effect to any
changes therein on such date.
"Noteholder" means the Holder of a Note.
"Note Owner" means, with respect to a Book-Entry Note, the Person
who is the owner of such Book-Entry Note, 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
Note, the related Noteholder.
"Note Rate" means the Class A-1 Note Rate, the Class A-2 Note
Rate, the Class A-3 Note Rate, the Class A-4 Note Rate or the Class B Note Rate,
as the case may be.
"Note Register" means the register maintained pursuant to the
Indenture.
"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 Indenture Trustee or the
Owner Trustee, as applicable.
"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, in the case
of an opinion delivered to the Indenture Trustee or the Owner Trustee,
respectively, shall be reasonably acceptable to such Trustee.
"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.
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"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-B Servicing Supplement as applied to reimburse such
Advance as are unreimbursed or are Nonrecoverable Advances.
"Owner Trustee" means the Person acting as Owner Trustee under
this Agreement, its successor in interest, and any successor trustee appointed
pursuant to Section 6.08.
"Percentage Interest" means, as to any Note, the percentage
obtained by dividing the outstanding principal balance of such Note by the Note
Balance or by the Class A Note Balance, the Class A-1 Note Balance, the Class
A-2 Note Balance, the Class A-3 Note Balance, the Class A-4 Note Balance or the
Class B Note 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 Noteholders 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 Note 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 equivalent to the rating of the Class A Notes
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 Indenture Trustee or Owner 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 Indenture 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 Securities;
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(c) repurchase obligations held by the Indenture
Trustee that are acceptable to the Indenture 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 insti tution or trust company
(including the Indenture 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 Indenture Trustee or Owner 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 Indenture 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
Indenture 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 Indenture 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 Securities, 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 Indenture 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 Indenture 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
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approved in writing by each Rating Agency) as collateral for
securities having ratings equivalent to the ratings of the Rated
Securities 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 Securities 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
Indenture Trustee 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 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 Securities 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 Indenture
Trustee acquires physical possession of such
certificated security, or
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(B) a person, other than a Securities Intermediary,
acquires possession of such certificated security
on behalf of the Indenture Trustee; and
(ii) in the case of a certificated
security that is in registered form, (A)(1) the
Indenture 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
Indenture Trustee, or (3) a Securities Intermediary
acting on behalf of the Indenture Trustee acquires
possession of such certificated security and such
certificated security has been specially indorsed
to the Indenture Trustee, and (B) (1) such
certificated security is indorsed to the Indenture
Trustee or in blank by an effective Indorsement, or
(2) such certificated security is registered in the
name of the Indenture Trustee;
(c) any of the foregoing that constitutes an
uncertificated security shall not be considered a Permitted
Investment unless (A) the Indenture 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 Indenture Trustee, or
(C) the issuer of such uncertificated security agrees that it
will comply with the instructions originated by the Indenture
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 Indenture Trustee becomes the
Entitlement Holder thereof, or (B) the Securities Intermediary
has agreed to comply with the Entitlement Orders originated by
the Indenture Trustee without further consent by the Entitlement
Holder; and
(e) any of the foregoing shall not constitute a
Permitted Investment unless the Indenture 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 Securities by such Rating Agency.
"Rated Securities" means each Class of Securities 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
any other nationally recognized statistical rating agency, but only if it has
rated any Class of Notes as of the Closing Date at the request of the Transferor
and continues to do so.
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"Reallocation Deposit Amount" means any amount required to be
deposited by the Servicer into the 1997-B SUBI Collection Account pursuant to
the last sentence of Section 8.03(a) of the 1997-B Servicing Supplement.
"Record Date" means, with respect to each Distribution Date, (i)
in the case of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes or
the Class A-4 Notes, the calendar day immediately preceding such Distribution
Date (or, if Definitive Notes have been issued, the last day of the immediately
preceding calendar month) and (ii) in the case of the Class B Notes, 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-B 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-B 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-B 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 a RV
Insurer Trigger Event or Downgrade Trigger Event shall have occurred and be
continuing, (i) if only one of the RV Insurer 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 RV Insurer Trigger Event Reserve Fund Formula or Downgrade Reserve Fund
Formula, as applicable, or (ii) if both the RV Insurer 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)
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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 RV Insurer Reserve Fund Formula or Downgrade Reserve Fund Formula from
time to time; or (b) if the ERISA Compliance Test is satisfied as of such
Distribution Date and no RV Insurer 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 $_____________.
"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) $__________ less the aggregate of all amounts previously
deposited by or on behalf of the Transferor into the Reserve Fund to satisfy a
Reserve Fund Deficiency.
"Residual Value Insurance Policy" means that certain Residual
Value Insurance Policy number __________ issued effective __________, 1997 by
the RV Insurer, in favor of the Servicer, the Transferor, the Indenture Trustee,
the Owner 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-B 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-B SUBI Supplement: (a) the Booked Residual Values
of all 1997-B 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 Owner Trustee or
Indenture Trustee, as applicable, assigned to the applicable Corporate Trust
Office, including any Vice President, any
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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 Owner Trustee or Indenture Trustee, as applicable, to whom a
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"RV Insurer" means American International Specialty Lines
Insurance Company.
"RV Insurer 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)
$__________.
"RV Insurer Trigger Event" means any of the following:
(a) The RV Insurer shall file a petition commencing
a voluntary case under any chapter of the Federal bankruptcy
laws; or the RV Insurer 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 RV Insurer 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;
(b) any order for relief against the RV Insurer
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 RV Insurer 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, receivership or insolvency of the RV
Insurer 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 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 been
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 Securities being qualified,
reduced or withdrawn), provided that the Origination Trustee, the Owner Trustee
and the Indenture Trustee shall at all times have the same rights with respect
to any replacement policy
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as with respect to the original policy; or (ii) an alternative mechanism to
support the Booked Residual Values of the 1997-B Leased Vehicles having been
approved in accordance with the procedures set forth in Section 9.01 for the
amendment hereof.
"RV Insurer Trigger Event Reserve Fund Formula" means
$____________.
"Securities" means the Notes and the Transferor Certificate.
"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-B
Leases and 1997-B 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-B 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-B
Servicing Supplement.
"Servicing Agreement" has the meaning set forth in Recital B.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc., 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-B SUBI Supplement.
"Transferor" means WOLSI LP, in its capacity as transferor of the
99.8% 1997-B SUBI Certificate and the 99.8% 1997-B SUBI Interest under this
Agreement, and each successor thereto (in the same capacity) pursuant to Section
2.02.
"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
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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 Owner Trustee in substantially the form set forth in
Exhibit A 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 Note 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-B SUBI Interest, less the Transferor Percentage of Capped Indenture Trustee
Administrative Expenses, Capped Owner Trustee Administrative Expenses
and Uncapped Administrative Expenses.
"Transferor Percentage" means, with respect to Interest
Collections and Principal Collections allocable to the 99.8% 1997-B 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-B SUBI
Interest.
"Trust" means the World Omni 1997-B Automobile Lease
Securitization Trust created by this Agreement, the estate of which consists or
will consist of the Trust Estate.
"Trust Estate" means (i) a 99.8% interest in the 1997-B SUBI, the
99.8% 1997-B 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-B SUBI Interest as a third-party
beneficiary of the Origination Trust Agreement, the 1997-B SUBI Supplement, the
Servicing Agreement and the 1997-B Servicing Supplement; and (iv) all proceeds
of the foregoing.
"UCC" means (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, the Uniform Commercial Code as in effect in the relevant jurisdiction.
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"Uncapped Administrative Expenses" means Administrative Expenses
that would be Capped Contingent and Excess Liability Premiums, Capped
Origination Trust Administrative Expenses, Capped Indenture Trustee
Administrative Expenses or Capped Owner Trustee Administrative Expenses,
respectively, except that they exceed $ , $ , $ (or $ , as applicable), 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-B SUBI Collection Account that have not been reinvested
in additional 1997-B Leases and 1997-B Leased Vehicles as contemplated by
Section 8.02 of the 1997-B Servicing Supplement.
"United States" means the United States of America, its
territories and possessions and areas subject to its jurisdiction.
"U.S. Bank" has the meaning set forth in Recital A.
"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-B 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.
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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-B Automobile Lease Securitization Trust.
It is the intention of the parties hereto that Issuer constitute a business
trust under the Business Statute and that this Agreement constitute the
governing instrument of such business trust. Owner Trustee shall file the
Certificate of Trust with the Secretary of State of Delaware.
SECTION 2.02. CONVEYANCE OF 99.8% 1997-B SUBI INTEREST.
In consideration of the Owner Trustee's delivery to, or upon the
order of, the Transferor of executed and authenticated Notes, in authorized
denominations, in an aggregate amount equal to the sum of the Initial Class A
Note Balance and the Initial Class B Note Balance, and of the executed and
authenticated Transferor Certificate, the Transferor does hereby transfer,
assign and otherwise convey to the Owner Trustee, in trust for the benefit of
the Noteholders and Certificateholder, 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-B SUBI and the 99.8% 1997-B
SUBI Certificate evidencing that interest in the 1997-B SUBI
(such interest, the "99.8% 1997-B 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-B SUBI Interest;
(iii) all rights accruing to the holder of the 99.8% 1997-B
SUBI Interest as a third-party beneficiary under the Origination
Trust Agreement, the 1997-B SUBI Supplement, the Servicing
Agreement and the 1997-B Servicing Supplement; and
(iv) all proceeds of the foregoing.
The Transferor also does hereby grant to the Owner Trustee a
security interest in all of the foregoing, and the Owner Trustee shall have all
the rights, powers and privileges of a secured party under the UCC.
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE.
The Owner Trustee does hereby accept all consideration conveyed
by the Transferor pursuant to Section 2.02 and declares that the Owner Trustee
shall hold such consideration in
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trust as herein set forth for the benefit of the Noteholders and the
Certificateholder, subject to the terms and provisions of this Agreement and the
Indenture.
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
SECTION 3.01. DISTRIBUTION ACCOUNT.
(a) Pursuant to Section 9.02(d) of the 1997-B Servicing
Supplement, the Servicer (on behalf of the Owner Trustee) shall establish the
Distribution Account in the name of the Indenture Trustee for the benefit of the
Noteholders and the Certificateholder. The Distribution Account shall be an
account initially established with the Indenture Trustee and maintained with the
Indenture Trustee so long as (i) the commercial paper or other short-term
unsecured debt obligations of the Indenture 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 Noteholders and Certificateholders, which
Distribution Account is located in the corporate trust department of the
Indenture Trustee and, so long as Moody's is a Rating Agency, the Indenture
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 Indenture Trustee no longer
meets either of the requirements stated above, then the Servicer shall, with the
Indenture Trustee's assistance as necessary, cause the Distribution Account to
be moved to a bank or trust company that satisfies the above-mentioned
requirements. The Owner Trustee hereby grants a security interest in the
Distribution Account, and all Permitted Investments therein, to the Indenture
Trustee for the benefit of the Noteholders.
(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-B 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
Estate, 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-B
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-B
SUBI Supplement and Section 9.02(f) of the 1997-B Servicing
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Supplement, on each Deposit Date the Servicer shall cause the transfer from the
1997-B 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 cause the transfer from the 1997-B SUBI Collection
Account to the Distribution Account 99.8% of all Reallocation Deposit Amounts
and Uninvested Principal Collections on deposit in the 1997-B 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 Indenture 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-B SUBI Interest transferred to the Indenture Trustee,
on behalf of the Securityholders, in accordance with such provisions, in the
Distribution Account or the Reserve Fund, as the case may be. The Indenture
Trustee shall be deemed to have 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-B Servicing Supplement, the Servicer shall calculate the amounts to be
distributed to the holders of the 1997- B 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 Noteholders to receive
distributions of Interest Collections allocable to the 99.8% 1997-B SUBI
Interest in respect of the Class B Notes shall be and are subordinated to the
rights of the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3
Noteholders and the Class A-4 Noteholders to receive distributions of Interest
Collections allocable to the 99.8% 1997-B SUBI Interest in respect of the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes to
the extent provided in this Agreement and the Indenture. On each Distribution
Date the Indenture 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 Indenture Trustee from the 1997-B 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-B 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 Noteholders
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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 Indenture Event of Default as a
result of which the Indenture Trustee has elected or has been
instructed to sell the property of the Trust pursuant to
Section 5.17 of the Indenture, to the Indenture Trustee, the
Investor Percentage of Capped Indenture Trustee Administrative
Expenses and to the Owner Trustee, the Investor Percentage of
Capped Owner Trustee 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 Distributable Amount
for such Distribution Date together with any unpaid Class A-2
Interest Carryover Shortfall, the unpaid 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 Noteholders,
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 Noteholders;
(iv) in circumstances other than those set forth in clause
(i), the Investor Percentage of Capped Indenture Trustee
Administrative Expenses for the preceding Collection Period to
the Indenture Trustee and the Investor Percentage of Capped Owner
Trustee Administrative Expenses for the preceding Collection
Period to the Owner Trustee;
(v) until the amount on deposit in the Reserve Fund equals
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
Noteholders respectively;
(vii) to the Class A-1, the Class A-2, the Class A-3 and the
Class A-4 Noteholders, respectively, the aggregate amounts of the
Class A-1 Note Principal Loss Amounts, Class A-2 Note Principal
Loss Amounts, Class A-3 Note Principal Loss Amounts, and Class A-
4 Note 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 Noteholders pursuant to this
clause (vii);
(viii) the Class A-1 Note Principal Loss Interest Amount, the
Class A-2 Note Principal Loss Interest Amount, the Class A-3 Note
Principal Loss Interest Amount and the Class
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A-4 Note 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 Noteholders, respectively;
(ix) the Class B Loss Amount to the Class B Noteholders;
(x) to the Class B Noteholders the aggregate amount
of the Class B Note Principal Loss Amounts and Class B Note
Principal Carryover Shortfall, if any, for previous Distribution
Dates that has not been previously reimbursed to the Class B
Noteholders pursuant to this clause (x);
(xi) the Class B Note Principal Loss Interest Amount and
the Class B Note Principal Carryover Shortfall Interest
Amount, if any, for such Distribution Date to the Class B
Noteholders;
(xii) the Investor Percentage of Uncapped Administrative
Expenses, (A) to the Origination Trustee, the Indenture Trustee
or the Owner 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-B 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 Noteholders, but shall be treated as
Principal Collections for purposes of Section 11.02 of the 1997-B SUBI
Supplement.
(c) On each Distribution Date, the Indenture 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, then as follows:
(A) if (1) the ERISA Compliance Test is unsatisfied,
or (2) if a Downgrade Trigger Event has occurred and is
continuing, the 60 day period set forth in the fourth
sentence of Section 3.04(b) has elapsed, and the Transferor
cannot comply with the requirements of either clause (i) or
clause (ii) thereof or has determined in good faith that such
compliance would not be commercially reasonable, then any
remainder to the Reserve Fund; and
(B) if Excess Collections are not required to be
applied as set forth in clause (A) above, then any remainder
to the Transferor;
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(ii) if the Distribution Date relates to a Collection Period
in the Amortization Period, then as follows:
(A) 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 Noteholders as
follows: the Accelerated Principal Distribution Amount will
be distributed first to the Class A-1 Noteholders until the
Class A-1 Notes have been paid in full, second, to the Class
A-2 Noteholders until the Class A-2 Notes have been paid in
full, third, to the Class A-3 Noteholders until the Class A-3
Notes have been paid in full and fourth, the Class A
Percentage and the Class B Percentage of any remaining amount
will be distributed to the Class A-4 Noteholders and the
Class B Noteholders, respectively, until such Notes have been
paid in full;
(B) if (1) the ERISA Compliance Test is unsatisfied,
or (2) if a Downgrade Trigger Event has occurred and is
continuing, the 60 day period set forth in the fourth
sentence of Section 3.04(b) has elapsed, and the Transferor
cannot comply with the requirements of either clause (i) or
clause (ii) thereof or has determined in good faith that such
compliance would not be commercially reasonable, then the
balance of any remainder to the Reserve Fund; and
(C) if Excess Collections are not required to be
applied as set forth in clause (B) above, then the balance of
any remainder to the Transferor.
Notwithstanding the foregoing, the Transferor may instruct the Indenture Trustee
and the Servicer to redeposit into the 1997-B 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. By so instructing the Indenture Trustee and the Servicer, the
Transferor waives any right that it may be deemed to have in the related
Undistributed Transferor Excess Collections, except insofar as they become
Excess Collections payable to the Transferor in respect of a subsequent
Collection Period.
(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 Notes] have been paid in full, the Indenture 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 99.8% 1997-B SUBI Interest to (w) the Class A-1 Noteholders until the Class
A-1 Notes have been paid in full, (x) the Class A-2 Noteholders until the Class
A-2 Notes have been paid in full, (y) the Class A-3 Noteholders until the Class
A-3 Notes have been paid in full and (z) the Class A Percentage and the Class B
Percentage thereof to the Class A-4 Noteholders and Class B Noteholders,
respectively. On each Distribution Date after the Class A-3 Notes have been paid
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in full, the Indenture Trustee shall distribute (i) to the Class A-4
Noteholders, the Class A Percentage of Principal Collections collected or
received in respect of the related Collection Period allocable to the 99.8%
1997-B SUBI Interest and (ii) subject to subsection (e) below, to the Class B
Noteholders, the Class B Percentage of such Principal Collections. Distributions
to Noteholders 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 Noteholders shall not exceed the Initial Note
Balance attributable to that Class of Notes.
(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-B 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) pursuant to Section 3.03(b) and clauses (a) through
(c) of the definition of the term "Interest Collections" in the 1997-B 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 (other than any shortfall in amounts available to apply
as set forth in clause (v) of Section 3.03(b)) 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) and clauses (a) through (c) of the
definition of the term "Interest Collections" in the 1997-B SUBI
Supplement, the proceeds of any claim made by the Servicer
pursuant to Section 9.10(b) of the 1997-B Servicing Supplement
will be applied towards such shortfall;
(iii) if after giving effect to clauses (i) and (ii), there
is still a shortfall (other than any shortfall in amounts
available to apply as set forth in clause (v) of Section 3.03(b))
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) and clauses (a) through
(c) of the definition of the term "Interest Collections" in the
1997-B 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- B SUBI Assets
pursuant to Section 11.02 of the 1997-B SUBI Supplement) pursuant
to clause (vi), (vii) or (viii) of Section 3.03(b), amounts
otherwise available for distribution
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to the Class B Noteholders 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 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders and the
Class A-4 Noteholders, the amounts available will be distributed pro rata to
Class A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class
A-4 Noteholders 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
Indenture 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 Noteholders pursuant to Section 3.03(d).
Upon any distribution of amounts to the Transferor, the Noteholders will have no
further rights, in, or claims to, such amounts.
(g) On the Final Scheduled Maturity Date an additional payment to
the Holders in any Class shall be made to the extent required by Section
3.04(f).
SECTION 3.04.RESERVE FUND.
(a) (i) In order to assure that sufficient amounts to make
required distributions to Noteholders will be available, pursuant to Section
9.02(e) of the 1997-B Servicing Supplement the Servicer shall establish and
maintain with the Indenture Trustee a separate trust account to be known as the
"Reserve 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 Indenture Trustee and
maintained with the Indenture Trustee so long as (A) the commercial paper or
other short-term unsecured debt obligations of the Indenture 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 Noteholders, which Reserve Fund is located in the corporate
trust department of the Indenture Trustee and, so long as Moody's is a Rating
Agency, the Indenture Trustee has a long-term deposit rating from Moody's of at
least Baa3 (or such lower rating as Moody's shall
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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 Indenture Trustee no longer meets either of the requirements
stated above, then the Servicer shall, with the Indenture 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-B 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 Indenture Trustee a security interest
in such initial deposit, and the Indenture 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 other funds as and to the extent described elsewhere in this Agreement.
Within 60 days after receipt of notice that an RV Insurer Trigger Event exists
and is continuing, the Transferor shall deposit into the Reserve Fund an
additional cash amount equal to the RV Insurer Reserve Fund Supplemental
Requirement. Within 60 days after the occurrence of a Downgrade Trigger Event,
then either: (i) the Transferor shall (A) cause one or more policies with
substantially similar coverage and provisions to the Residual Value Insurance
Policy to be 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 Securities being qualified,
reduced or withdrawn), provided that the Origination Trustee and the Indenture
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-B Leased Vehicles to
be implemented and approved in accordance with the procedures set forth in
Section 9.01 for the amendment hereof; or (ii) the Transferor shall deposit into
the Reserve Fund an additional cash amount equal to the Downgrade Reserve Fund
Supplemental Requirement; provided that if the Transferor cannot comply with
either clause (i) or clause (ii) or determines in good faith that such
compliance would be commercially unreasonable, Excess Collections shall be
deposited into the Reserve Fund as provided in Section 3.03(c). 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 and Excess Collections
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are not required to be deposited into the Reserve Fund pursuant to Section
3.03(c), the Indenture 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 fifth 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), or complies with neither of such clauses, the Rating
Agencies may impose additional conditions to the maintenance of their
then-current ratings on any Class of Notes, 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 Noteholders, and for payment of any remaining
amounts due to the Indenture Trustee and the Owner 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 Indenture Trustee, the
Owner Trustee or the Noteholders and shall not be available to the Indenture
Trustee, the Owner Trustee or the Trust for the purpose of making deposits to
the Reserve Fund or making payments to the Noteholders, nor shall the Transferor
be required to refund any amount properly received by it.
(f) On the Final Scheduled Maturity Date to the extent that the
Class A-1 Initial Note Balance, the Class A-2 Initial Note Balance, the Class
A-3 Initial Note Balance, the Class A-4 Initial Note Balance or the Class B
Initial Note Balance have not been reduced to zero the Indenture Trustee shall
withdraw funds from the Reserve Fund, if available, in an amount equal to the
lesser of (A) the Class A-1 Note Balance, the Class A-2 Note Balance, the Class
A-3 Note Balance, the Class A-4 Note Balance and the Class B Note Balance and
(B) the amount in the Reserve Fund and shall pay such funds to the Holders of
such Class of Notes.
SECTION 3.05. NET DEPOSITS.
For so long as WOFCO shall be the Servicer, the Servicer and the
Indenture 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.
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SECTION 3.06. STATEMENTS TO NOTEHOLDERS.
(a) On each Distribution Date, the Indenture Trustee shall
include with each distribution to each Noteholder 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-B 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 Noteholders in
such distribution;
(iii) the total amount being distributed to each Class of
Noteholders in such distribution;
(iv) the total amount of interest being distributed to each
Class of Noteholders 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;
(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 Noteholders 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;
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(ix) the amount, if any, of the reimbursement of Class A-1
Note Principal Loss Amounts, Class A-2 Note Principal Loss
Amounts, Class A-3 Note Principal Loss Amounts, Class A-4 Note
Principal Loss Amounts and Class B Note Principal Loss Amounts
included in such distribution;
(x) the amount, if any, of the aggregate of unreimbursed
Class A-1 Note Principal Loss Amounts, Class A-2 Note Principal
Loss Amounts, Class A-3 Note Principal Loss Amounts, Class A-4
Note Principal Loss Amounts and Class B Note Principal Loss
Amounts after giving effect to such distribution;
(xi) the amount, if any, of accrued Class A-1 Note
Principal Loss Interest Amounts, Class A-2 Note Principal Loss
Interest Amounts, Class A-3 Note Principal Loss Interest
Amounts, Class A-4 Note Principal Loss Interest Amounts and
Class B Note Principal Loss Interest Amounts included in such
distribution;
(xii) the amount, if any, of accrued and unpaid Class A-1
Note Principal Loss Interest Amounts, Class A-2 Note Principal
Loss Interest Amounts, Class A-3 Note Principal Loss Interest
Amounts, Class A-4 Note Principal Loss Interest Amounts and Class
B Note Principal Loss Interest Amounts after giving effect to
such distribution;
(xiii) the amount, if any, of accrued and unpaid Class B
Note Principal Carryover Shortfall after giving effect to such
distribution;
(xiv) the Investor Percentage of the Servicing Fee
allocable to the 99.8% 1997-B SUBI Interest for such
Distribution Date and any unpaid previous such amounts with
respect to prior Distribution Dates;
(xv) the Note Balance, the Class A-1 Note Balance, the
Class A-2 Note Balance, the Class A-3 Note Balance, the Class
A-4 Note Balance, the Class B Note Balance, the Class A-1 Note
Factor, the Class A-2 Note Factor, the Class A-3 Note Factor,
the Class A-4 Note Factor and the Class B Note 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
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preceding Distribution Date, the Reserve Fund Cash Requirement,
the Reserve Fund Supplemental Requirement (if any), the RV
Insurer 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-B
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;
(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-B 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 a Note.
Any Note Owner may obtain a copy of any such statement, of any Servicer's
Certificate required pursuant to Section 10.01(b) of the 1997-B 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-B
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-B
Servicing Supplement, upon written request to the Indenture 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
Indenture Trustee shall mail to each Person who at any time during such calendar
year shall have been a Holder of a Note, 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 a Note during a portion of such calendar
year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any
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other information reasonably necessary under applicable law for the preparation
of such income tax returns.
ARTICLE FOUR
THE TRANSFEROR CERTIFICATE
SECTION 4.01. THE TRANSFEROR CERTIFICATES.
A single Transferor Certificate shall be issued. The Transferor
Certificate shall be executed on behalf of the Owner Trustee by manual or
facsimile signature of a Responsible Officer under the Owner Trustee's seal
imprinted thereon and attested on behalf of the Owner Trustee by the manual or
facsimile signature of a Responsible Officer. A Transferor Certificate 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 Owner Trustee
shall be a valid and binding obligation 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 Transferor Certificate or did not hold such
offices at the date of such Transferor Certificate. The Transferor Certificate
shall be dated the date of its authentication.
SECTION 4.02. AUTHENTICATION AND DELIVERY OF TRANSFEROR
CERTIFICATE.
In exchange for, and simultaneously with the sale, assignment and
transfer to the Owner Trustee of the 99.8% 1997-B SUBI Interest, the 99.8%
1997-B SUBI Certificate and the other assets of the Trust, the Transferor shall
receive the Transferor Certificates and the Notes. The Owner Trustee shall cause
to be executed, authenticated and delivered to or upon the order of the
Transferor the Transferor Certificate, duly authorized by the Owner Trustee, and
evidencing the entire ownership of the Trust. The Transferor Certificate shall
not 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 to this
Agreement executed by the Owner Trustee by manual signature, and such
certificate upon the Transferor Certificate shall be conclusive evidence, and
the only evidence, that such Transferor Certificate has been duly authenticated
and delivered under this Agreement.
SECTION 4.03. NO TRANSFER OF TRANSFEROR CERTIFICATE.
Subject to Section 5.03, the Transferor Certificate shall be
owned by the Transferor and may not be transferred, as provided by Section 5.06.
SECTION 4.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Transferor Certificate is surrendered to the
Owner Trustee, or the Owner Trustee receives evidence to its satisfaction of the
destruction, loss or theft of the Transferor Certificate, and (ii) there is
delivered to the Owner Trustee such security or indemnity
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as may be required by it to save itself and the Trust harmless, then, in the
absence of notice that such Transferor Certificate has been acquired by a bona
fide purchaser, the Owner Trustee on behalf of the Trust shall execute and the
Owner Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Transferor Certificate, a new
Transferor Certificate of like tenor and fractional undivided interest. Any
duplicate Transferor 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 Transferor
Certificate shall be found at any time, and any such lost, stolen or destroyed
Transferor Certificate shall, upon issuance of any such duplicate Transferor
Certificate, be null, void and of no effect.
SECTION 4.05. PERSONS DEEMED OWNERS.
The Owner Trustee shall treat the Transferor as the owner of the
Transferor Certificate for the purpose of receiving distributions pursuant to
Section 3.03 and for all other purposes whatsoever.
ARTICLE FIVE
THE TRANSFEROR
SECTION 5.01. REPRESENTATIONS OF TRANSFEROR.
The Transferor hereby makes the following representations on
which the Owner Trustee relies in accepting the 99.8% 1997-B SUBI Interest and
99.8% 1997-B SUBI Certificate in trust and executing and authenticating the
Transferor Certificate and executing the Notes and on which the Indenture
Trustee relies in authenticating the Notes. 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-B SUBI Interest and 99.8% 1997-B SUBI
Certificate to the Indenture Trustee and the Owner 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-B SUBI Interest and 99.8%
1997-B 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.
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(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 Owner Trustee as part of the Trust and has duly
authorized such sale and assignment to the Owner 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-B SUBI
Interest and 99.8% 1997-B 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 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 Transferor Certificate, (ii)
seeking to prevent the issuance of the Transferor Certificate 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 Transferor Certificate or (iv) relating to
the Transferor and which might adversely affect the federal or
Alabama income tax attributes of the Transferor Certificate.
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(g) Title to 99.8% 1997-B SUBI Certificate. The Transferor
has good title to, and is the sole legal and beneficial owner of,
the 99.8% 1997-B SUBI Certificate, free and clear of Liens.
(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 payments to
Noteholders.][NOTE: TO BE DELETED, SUBJECT TO CONFIRMATION BY TAX LAWYERS.]
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 confirmation (written or oral) from each Rating Agency
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 Securities.
(b) (i) Subject to subparagraph (ii) below, the purpose of the
Transferor shall be to engage in any lawful activity for 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.
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(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;
(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
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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 NOTES.
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 of Notes 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 "Noteholder."
Notes 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 Notes. 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 Notes.
SECTION 5.06. NO TRANSFER.
Subject to Section 5.03, 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 Noteholders, in their capacities as
partners in a partnership for tax purposes, before taxing
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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 Noteholders 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 Noteholders and adjusting the Trust's federal, state or local tax returns.]
The Transferor shall not be liable to the Trust or to any Noteholder 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 OWNER TRUSTEE
SECTION 6.01. DUTIES OF OWNER TRUSTEE.
(a) The Owner Trustee, both prior to and after the occurrence of
a 1997-B Servicer Event of Default under the Servicing Agreement and the 1997-B
Servicing Supplement, undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement.
(b) The Owner Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Owner 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 Owner 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 Owner Trustee shall be
determined solely by the express provisions of this Agreement,
the Owner 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 Owner Trustee, the permissive
right of the Owner 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 Owner Trustee, the Owner 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 Owner Trustee and
conforming to the requirements of this Agreement;
(ii) the Owner 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 Owner
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Trustee was negligent in performing its duties in accordance
with the terms of this Agreement; and
(iii) the Owner 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 Transferor
relating to the time, method and place of conducting any
proceeding for any remedy available to the Owner Trustee, or
exercising any trust or power conferred upon the Owner Trustee,
under this Agreement or the Origination Trust Agreement (as
supplemented by the 1997-B SUBI Supplement).
(d) The Owner 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 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 Owner Trustee regarding the
Obligors and the Leases contained in the 1997-B SUBI, whether upon the exercise
of its rights under this Agreement or otherwise, shall be maintained by the
Owner 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 OWNER TRUSTEE.
Except as otherwise provided in Section 6.01:
(i) the Owner 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 Owner 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 Owner 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-B SUBI Supplement), or to institute, conduct or defend
any litigation under this Agreement or the Origination Trust
Agreement (as supplemented by the 1997-B SUBI Supplement), or in
relation to this Agreement or the Origination Trust Agreement (as
supplemented by the 1997-B SUBI Supplement), at the request,
order or direction of the Indenture Trustee or the Transferor
pursuant to the provisions of this
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Agreement or the Origination Trust Agreement (as supplemented by the 1997-B SUBI
Supplement), unless the Noteholders, the Indenture Trustee or the Transferor
shall have offered to the Owner Trustee reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or thereby;
(iv) the Owner 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;
(v) the Owner 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 the Indenture Trustee or the Transferor; provided, however,
that if the payment within a reasonable time to the Owner 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
Owner Trustee, not reasonably assured to the Owner Trustee by the
security afforded to it by the terms of this Agreement, the Owner
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 Owner 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 Owner 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.
SECTION 6.03. OWNER TRUSTEE NOT LIABLE FOR NOTES, TRANSFEROR
CERTIFICATE OR LEASES.
The Owner Trustee shall make no representations as to the
validity or sufficiency of this Agreement, the Indenture, the Notes, the
Transferor Certificate (other than the execution by the Owner Trustee on behalf
of the Trust of the Indenture, the Notes and the Transferor Certificate, and the
certificate of authentication on, the Transferor Certificate), or of the 99.8%
1997-B SUBI Interest or 99.8% 1997-B SUBI Certificate. The Owner Trustee shall
have no obligation to perform any of the duties of the Transferor unless
explicitly set forth in this Agreement. The Owner Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity
and enforceability of the Indenture, the Notes, the 99.8% 1997-B SUBI Interest
or 99.8% 1997-B SUBI Certificate or any 1997-B Lease, any ownership interest in
any 1997-B 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 the Noteholder or the Certificateholder under this
Agreement, including without limitation the validity of the assignment of the
99.8% 1997-B SUBI Interest or 99.8% 1997-B SUBI Certificate to the Trust or of
any intervening assignment; the existence, condition, location and ownership of
any 1997-
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B Lease or 1997-B Leased Vehicle; the existence and enforceability of
any physical damage or credit life or credit disability insurance; the existence
and contents of any 1997-B Lease or any computer or other record thereof; the
completeness of any 1997-B 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 Owner 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 Owner Trustee taken at the instruction of the
Servicer; provided, however, that the foregoing shall not relieve the Owner
Trustee of its obligation to perform its duties under this Agreement. Except
with respect to a claim based on the failure of the Owner Trustee to perform its
duties under this Agreement or based on the Owner Trustee's willful misconduct,
bad faith or negligence, no recourse shall be had for any claim based on any
provision of this Agreement, the Transferor Certificate, the 99.8% 1997-B SUBI
Interest or 99.8% 1997-B SUBI Certificate or assignment thereof against the
institution serving as Owner Trustee in its individual capacity. The Owner
Trustee shall not have any personal obligation, liability or duty whatsoever to
any Noteholder, the Indenture Trustee, the Transferor 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 Owner Trustee shall not be accountable for the use or application
by the Transferor of any of the Transferor Certificate or of the proceeds of the
Notes or the Transferor Certificates, or for the use or application of any funds
paid to the Servicer in respect of the 99.8% 1997-B SUBI Interest or 99.8%
1997-B SUBI Certificate.
SECTION 6.04. OWNER TRUSTEE MAY OWN NOTES.
The Owner Trustee in its individual or any other capacity may
become the owner or pledgee of Notes with the same rights as it would have if it
were not Owner Trustee.
SECTION 6.05. OWNER TRUSTEE'S FEES AND EXPENSES.
The Owner 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 Owner Trustee under this
Agreement, and payment or reimbursement upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Owner Trustee in
its capacity as Owner Trustee in accordance with any of the provisions of this
Agreement (including the reasonable 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
the Indenture Trustee, the Noteholders or the Transferor under this Agreement or
any other Transaction Document. Such compensation and reimbursement shall be
paid as set forth in Section 3.03(b) hereof or Section 10.01 of the 1997-B SUBI
Supplement (in the definitions of the terms "Principal Collections" and
"Interest Collections"). Additionally, the Transferor, pursuant to
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Section 6.02(a)(iii) or (v), may agree to indemnify the Owner Trustee under
certain circumstances.
SECTION 6.06. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE.
The Owner 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 Owner 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 Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 6.07.
SECTION 6.07. RESIGNATION OR REMOVAL OF OWNER TRUSTEE.
(a) The Owner 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 Owner Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Owner Trustee
and one copy to the successor Owner Trustee. If no successor Owner Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Owner Trustee may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
(b) If at any time the Owner 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 Owner Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Transferor may remove the Owner Trustee. If it shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Transferor shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Owner Trustee so removed and one copy to the successor Owner
Trustee, and payment of all fees owed to the outgoing Owner Trustee.
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(c) Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section shall not become effective until acceptance of appointment by the
successor Owner Trustee as provided in Section 6.08. The Servicer shall give the
Indenture Trustee and each Rating Agency notice of any such resignation or
removal of the Owner Trustee and appointment and acceptance of a successor Owner
Trustee.
SECTION 6.08. SUCCESSOR OWNER TRUSTEE.
Any successor Owner Trustee appointed as provided in Section 6.07
shall execute, acknowledge and deliver to the Transferor and to its predecessor
Owner Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner 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 Owner Trustee. The predecessor Owner Trustee shall deliver
to the successor Owner Trustee all documents and statements held by it under
this Agreement; and the Transferor and the predecessor Owner 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
Owner Trustee all such rights, powers, duties and obligations. No successor
Owner Trustee shall accept appointment as provided in this Section unless at the
time of such acceptance such successor Owner Trustee shall be eligible under the
provisions of Section 6.06. Upon acceptance of appointment by a successor Owner
Trustee as provided in this Section, the Transferor shall cause notice of the
successor of such Owner Trustee under this Agreement to be given by mail to the
Indenture Trustee and each Rating Agency. If the Transferor fails to mail or
cause to be mailed such notice within ten days after acceptance of appointment
by the successor Owner Trustee, the successor Owner Trustee shall cause such
notice to be mailed at the expense of the Transferor.
SECTION 6.09. MERGER OR CONSOLIDATION OF OWNER TRUSTEE.
Any corporation (i) into which the Owner Trustee may be merged or
consolidated, (ii) which may result from any merger, conversion, or
consolidation to which the Owner Trustee shall be a party, or (iii) which may
succeed to the corporate trust business of the Owner Trustee, shall be the
successor of the Owner 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 Owner 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
Owner Trustee, either generally or particularly as provided herein. Notice of
any such event shall be given by the Owner Trustee to each Rating Agency.
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SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE OWNER
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
Owner Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Owner Trustee to
act as co-trustee, jointly with the Owner 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 Noteholders and the Transferor
Certificateholder, 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 Owner 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 Owner 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 Owner Trustee pursuant to Section 6.06 and no notice of a successor
Owner Trustee pursuant to Section 6.08 and no notice to Noteholders or the
Indenture Trustee 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:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner 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 Owner 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 Owner 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 Owner 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 Owner 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 Owner 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 Owner
Trustee or separately, as may be
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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 Owner Trustee. Each
such instrument shall be filed with the Owner Trustee and a copy thereof given
to the Transferor and the Servicer.
Any separate trustee or co-trustee may at any time appoint the
Owner 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 Owner 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 not relieve the Owner Trustee of its obligations and duties
under this Agreement.
SECTION 6.11. REPRESENTATIONS AND WARRANTIES OF OWNER TRUSTEE.
The Owner Trustee makes the following representations and
warranties on which the Transferor and the Noteholders may rely:
(i) Organization and Good Standing. The Owner 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 Owner 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 Owner Trustee.
(iv) Enforceability. This Agreement constitutes the legal,
valid and binding obligation of the Owner 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 Owner 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 Notes 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
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deliver any such returns to the Owner Trustee for signature at least five days
prior to the date such returns are required by law to be filed.]
SECTION 6.13. OWNER TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF TRANSFEROR CERTIFICATE.
All rights of action and claims under this Agreement or the
Transferor Certificate may be prosecuted and enforced by the Owner Trustee
without the possession of the Transferor Certificate or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Owner 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 Owner Trustee, its agents and
counsel, be for the ratable benefit of the Noteholders and the Certificateholder
in respect of which such judgment has been obtained.
SECTION 6.14. SUIT FOR ENFORCEMENT.
If a 1997-B Servicer Event of Default shall occur and be
continuing under the Servicing Agreement, as supplemented by the 1997-B
Servicing Supplement with respect to the 1997-B SUBI Portfolio, or if the RV
Insurer shall have failed to comply with its obligations to the Indenture
Trustee or the Owner Trustee as an insured party under the Residual Value
Insurance Policy, the Indenture Trustee or the Owner 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-B Servicing Supplement (with respect to the Servicer), and
the terms of the Residual Value Insurance Policy (with respect to the RV
Insurer) proceed to protect and enforce its rights and the rights of the
Noteholders and Certificateholder under this Agreement, the Servicing Agreement
and the 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 Indenture Trustee or the Owner Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Indenture Trustee
or the Owner Trustee or the Noteholders and Certificateholder.
SECTION 6.15. RIGHTS OF INDENTURE TRUSTEE TO DIRECT OWNER
TRUSTEE.
The Indenture Trustee (and, after payment in full of the Notes,
the Transferor) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Owner Trustee under
this Agreement, or exercising any trust or power conferred on the Owner Trustee
by this Agreement; provided, however, that (a) subject to Sections 6.01 and
6.02, the Owner Trustee shall have the right to decline to follow any such
direction if the Owner Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Owner Trustee in good
faith shall, by a Responsible Officer, determine that the proceedings so
directed would be illegal or subject it to personal liability and (b) nothing in
this
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Agreement shall impair the right of the Owner Trustee to take any action deemed
proper by the Owner Trustee and which is not inconsistent with such direction by
the Indenture Trustee (and, after payment in full of the Notes, the Transferor).
SECTION 6.16. NO PETITION.
The Owner 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
Notes has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Owner 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 Owner 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 Owner 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 Owner Trustee under this Agreement.
ARTICLE SEVEN
TERMINATION
SECTION 7.01. TERMINATION OF THE TRUST.
The Trust and the respective obligations and responsibilities of
the Transferor, the Indenture Trustee and the Owner 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 Notes have been paid
in full and after which there is no unreimbursed Class A-1 Note Principal Loss
Amount, Class A-2 Note Principal Loss Amount, Class A-3 Note Principal Loss
Amount, Class A-4 Note Principal Loss Amount, Class B Note Principal Loss
Amount, Class A-1 Note Principal Loss Interest Amount, Class A-2 Note Principal
Loss Interest Amount, Class A-3 Note Principal Loss Interest Amount, Class A-4
Note Principal Loss Interest Amount, Class B Note Principal Loss Interest
Amount, Class B Note Principal Carryover Shortfall or Class B Note Principal
Carryover Shortfall Interest Amount or (iii) the expiration, disposition or
termination of the 99.8% 1997-B SUBI Interest; provided, however, that in no
event shall the trust created by this Agreement continue beyond the 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 Owner Trustee and each Rating Agency of
any prospective termination of the Trust.
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SECTION 7.02. OPTIONAL PURCHASE OF 99.8% 1997-B SUBI INTEREST.
(a) On each Distribution Date following the last day of a
Collection Period as of which the Note Balance shall be less than or equal to
ten percent (10%) of the Initial Note Balance, the Transferor shall have the
option to purchase the corpus of the Trust. To exercise such option, the
Transferor shall notify the Indenture Trustee, the Owner 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 Note 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 Note Principal Loss Amount, unpaid Class A-2 Note Principal Loss
Amount, unpaid Class A-3 Note Principal Loss Amount, unpaid Class A-4 Note
Principal Loss Amount, unpaid Class B Note Principal Loss Amount and unpaid
Class B Note Principal Carryover Shortfall, and (E) any accrued and unpaid Class
A-1 Note Principal Loss Interest Amount, unpaid Class A-2 Note Principal Loss
Interest Amount, unpaid Class A-3 Note Principal Loss Interest Amount, unpaid
Class A-4 Note Principal Loss Interest Amount, unpaid Class B Note Principal
Loss Interest Amount and Class B Note 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 Trust corpus.
(b) The corpus of the Trust may only be purchased pursuant to
this Section 7.02 if the Indenture 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 Indenture
Trustee).
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-B SUBI, the
99.8% 1997-B SUBI Interest, or the Notes under this Agreement,
the Origination Trust Agreement or the 1997-B SUBI Supplement, or
the Servicing Agreement or the 1997-B 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;
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(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-B SUBI Supplement, or the Servicing Agreement or the 1997-B
Servicing Supplement, which failure materially and adversely
affects the rights of the holder of the 99.8% 1997- B SUBI
Interest or of the Notes and which continues unremedied and
continues to affect materially and adversely the rights of the
holder of the 99.8% 1997-B SUBI Interest or of the Notes 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 Indenture
Trustee, Owner Trustee or the Origination Trustee, or (ii) to the
Transferor or the Servicer, as the case may be, and to the
Indenture Trustee by the Holders of Notes 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-B Servicing Supplement or any
certificate given pursuant to Section 8.02(b) of the 1997-B
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-B SUBI Interest or of
the Noteholders are materially and adversely affected and which
continues to be incorrect in any material respect and continues
to affect materially and adversely affect the interests of the
holder of the 99.8% 1997-B SUBI Interest or of the Noteholders
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 Indenture Trustee, Owner Trustee or the Origination Trustee,
or (ii) to ALFI LP, the Transferor or the Servicer, as the case
may be, and to the Indenture Trustee by the Holders of Notes
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-B Servicing Supplement
and has reallocated the relevant 1997-B Lease and 1997-B 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
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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 Indenture, the Origination Trust Agreement or the
1997-B SUBI Supplement, the Servicing Agreement or the 1997-B
Servicing Supplement, or the Backup Security Agreement, shall be
created on or extend to or otherwise arise upon or burden the
99.8% 1997-B SUBI Interest, the 99.8% 1997-B SUBI Certificate, or
the 1997-B Leases or 1997-B 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-B 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 Indenture, the Origination Trust Agreement or the
1997-B SUBI Supplement, the Servicing Agreement or the 1997-B
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 __________ 1997) the aggregate amount of Principal
Collections (and amounts treated as Principal Collections
pursuant to the last sentence of Section 3.03(b)) collected
through the last day of the related Collection Period that have
not been reinvested in new 1997-B Leases and 1997-B Leased
Vehicles, as contemplated by Section 11.02 of the 1997-B SUBI
Supplement, exceeds $1,000,000;
(j) a 1997-B Servicer Event of Default has occurred;
(k) an Indenture Event of Default has occurred;
(l) 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
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(m) any 1997-B 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
Securities being qualified, reduced or withdrawn); provided that
the Origination Owner Trustee, the Indenture Trustee and the
Owner 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-B Leased Vehicle that has 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.
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
Noteholders, 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 Notes; provided, however, that any such action shall not, in the good
faith judgment of the parties hereto or thereto, adversely affect in any
material respect the interests of the Noteholders and the Origination Trustee
and the Indenture Trustee shall have received an Opinion of Counsel to the
effect that such action shall not affect the legal interests or positions of the
Noteholders.
(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 RV Insurer
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 RV Insurer 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 from assets or cash flow otherwise payable to the
Transferor), (iii) the need for the Residual Value Surplus Account, (iv)
changing the
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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-B Leased Vehicles and Early Termination
Amounts, if either (A) the Indenture 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 Securities to be
qualified, reduced or withdrawn, or (B) the Indenture Trustee has received the
consent of the Holders of Notes representing more than 50% of the aggregate
Percentage Interests, acting as a single Class (which consent of any Holder of a
Note 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 Note and of any Note issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Note); provided, however, that: [(1) any amendment (x) eliminating
the Reserve Fund or the Residual Value Insurance Policy, (y) reducing the
Reserve Fund Cash Requirement to less than the lesser of the Reserve Fund
Initial Deposit and the Note Balance as of the related Distribution Date (after
giving effect to reductions in the Note Balance on such Distribution Date), or
(z) eliminating or reducing the RV Insurer Reserve Fund Supplemental
Requirement, shall also require that the Indenture 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 Notes will properly be characterized
as indebtedness that is secured by the assets of the Trust;] (2) with respect to
an amendment replacing the Residual Value Insurance Policy with an alternate
mechanism, the Servicer also shall have provided to the Indenture Trustee and
the Origination Trustee an Officer's Certificate to the effect that the 1997-B
Leases may properly be treated as finance leases for purposes of generally
accepted accounting principles, consistently applied, by virtue of some reason
other than maintenance of that policy, and describing such reasons (which shall
be in accordance with generally accepted accounting principles, consistently
applied); and (3) 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-B SUBI or any 1997-B
SUBI Certificate or distributions that shall be required to be made on any Note
or the applicable Note Rate or (z) reduce the aforesaid percentage of the
aggregate Percentage Interest of the Notes of each Class required to consent to
any such amendment, without the consent of the Holders of all Notes of such
Class then outstanding.
(c) The Indenture 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 Indenture Trustee shall furnish written notification of the
substance of such amendment or consent to each Noteholder. It shall not be
necessary for the consent of Noteholders pursuant to Section 9.01(b) to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if
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such consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization by Noteholders of the execution
thereof shall be subject to such reasonable requirements as the Indenture
Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement,
the Indenture Trustee and the Owner 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 Indenture Trustee and the Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects such 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 Noteholders and the
Owner Trustee under this Agreement in the 99.8% 1997-B SUBI Interest, the 99.8%
1997-B SUBI Certificate and in the proceeds thereof. The Transferor shall
deliver (or cause to be delivered) to the Owner 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 Owner 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 Owner 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 Owner 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 continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee in the 99.8% 1997-B 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 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes [and the Class B Notes] to be
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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 TRANSFEROR.
The incapacity, bankruptcy or insolvency of the Transferor shall
not operate to terminate this Agreement or the Trust, nor entitle the
Transferor'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 (except to the extent set forth herein or in
the other Transaction Documents) the rights, obligations and liabilities of the
parties to this Agreement, the other Transaction Documents or any of them.
SECTION 9.04. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT THAT THE GRANT OF A SECURITY
INTEREST IN ANY ACCOUNT AND THE FUNDS AND PROPERTY THEREIN AND THE PERFECTION,
EFFECT OF PERFECTION, AND PRIORITY OF SUCH SECURITY INTEREST SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF ILLINOIS.
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 Owner Trustee and the Indenture Trustee; (ii) in the
case of the Indenture Trustee, at the Corporate Trust Office of the Indenture
Trustee; (iii) in the case of the Owner Trustee, at the Corporate Trust Office
of the Owner Trustee; (iv) in the case of Standard & Poor's, at 25 Broadway,
20th Floor, New York, New York 10004, Attention: Asset Backed Surveillance
Department; and (v) 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 Noteholder shall be given as provided in Section
1.05 of the Indenture. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder shall receive such notice.
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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 Securities 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 Notes
evidencing more than 50% of the aggregate Percentage Interests (acting as a
single Class). The Transferor shall provide a copy of any such assignment to
each Rating Agency.
SECTION 9.08. TRANSFEROR CERTIFICATE NONASSESSABLE AND FULLY
PAID.
Except as provided in Section 5.02(b) with regard to the
Transferor, the Transferor shall not be personally liable for obligations of the
Trust. The interest represented by the Transferor Certificate 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 Owner
Trustee pursuant to Section 4.02, 4.03 or 4.04, the Transferor Certificate is
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 OWNER TRUSTEE.
The Owner Trustee shall maintain an office or offices or agency
or agencies where notices and demands to or upon the Owner Trustee in respect of
the Transferor Certificate and this Agreement may be served. The initial such
office shall be the Corporate Trust Office. The Owner Trustee shall give prompt
written notice to the Transferor, the Servicer and the Indenture Trustee of any
change in the location of any such office or agency.
[SIGNATURES ON NEXT PAGE]
-68-
<PAGE> 74
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:
----------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
PNC BANK, DELAWARE, as Owner Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as Indenture
Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-69-
<PAGE> 75
EXHIBIT A
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-B 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-B SUBI Interest") in World
Omni LT, an Alabama business trust, which 99.8% 1997-B 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-B 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 Notes in the World Omni 1997-B Automobile Lease Securitization Trust (the
"Trust") formed by the Transferor. The Trust was created pursuant to a
Securitization Trust Agreement dated as of October 1, 1997 (the "Agreement"),
among the Transferor, PNC Bank, Delaware, a Delaware trust company, as trustee
(the "Owner Trustee"), and U.S. Bank National Association, a national banking
association, as indenture 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 the duly authorized Transferor Certificate
issued under the Agreement and designated as the "World Omni 1997-B Automobile
Lease Securitization Trust Automobile Lease Asset Backed Transferor Certificate"
(the "Transferor Certificate"). This Transferor Certificate is issued under and
is subject to the terms, provisions and conditions of the
<PAGE> 76
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-B SUBI
Interest") in World Omni LT, an Alabama business trust (the "Origination
Trust"), which 99.8% 1997-B SUBI Interest represents a beneficial interest in,
among other things, 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-B 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-B
SUBI Portfolio. During the Revolving Period, Principal Collections allocable to
the 99.8% 1997-B SUBI Interest generally will be applied towards the allocation
to the 1997-B 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-B SUBI Interest will be
allocated between the Notes and this 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, that the Notes 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 Owner Trustee and the Transferor, as the Holder of
this Certificate, by acceptance of this Certificate, agree to treat the Notes,
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-B
SUBI Portfolio as 1997-B SUBI Assets and those proceeds or assets derived from
or earned by such 1997-B 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 Notes 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 Notes, together with this Certificate, as representing
an interest in a partnership for all tax purposes, (ii) to treat all payments in
respect of such Certificate (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
<PAGE> 77
This Certificate does not represent an obligation of, or an
interest in, the Transferor, the Servicer, the Indenture Trustee, the Owner
Trustee, the Origination Trust or any of their respective affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
respecting the 99.8% 1997-B SUBI Interest and 1997-B SUBI Certificate, Insured
Residual Value Loss Amounts paid under the Residual Value Insurance Policy and
certain monies on deposit in the Reserve Fund and the Residual Value Surplus
Account and in certain other accounts, 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 Owner Trustee,
and at such other places, if any, designated by the Owner Trustee, by the
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 Certificateholder under the Agreement at
any time by the Transferor, the Servicer, the Indenture Trustee and the Owner
Trustee. In certain limited circumstances, the Agreement may only be amended
with the consent of the Holders of Notes evidencing more than 50% of the
aggregate Percentage Interests of all Notes, voting together as a single class.
As provided in the Agreement, this Certificate shall be owned by
the Transferor and may not be transferred.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the payment to Noteholders 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-B SUBI Interest and 99.8% 1997-B SUBI
Certificate and other property of the Trust will effect early retirement of this
Certificate; 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 Note Balance shall be less than or equal to ten percent (10%) of the Initial
Note Balance.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner 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.
A-3
<PAGE> 78
IN WITNESS WHEREOF, the Owner 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-B AUTOMOBILE LEASE
SECURITIZATION TRUST
PNC BANK, DELAWARE, as Owner Trustee
(SEAL) By:
----------------------------------------
Authorized Officer
ATTEST:
_____________
A-4
<PAGE> 79
This is the Transferor Certificate referred
to in the within-mentioned Agreement.
PNC BANK, DELAWARE, as Owner Trustee
By:
---------------------------------
A-5
<PAGE> 80
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
THIS Certificate of Trust of World Omni 1997-B Automobile Lease
Securitization Trust (the "Trust"), dated as of __________, 1997, is being duly
executed and filed by PNC Bank, Delaware, a Delaware banking corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is WORLD
OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST.
2. Delaware Trustee. The name and business address of the trustee
of the Trust resident in the State of Delaware is PNC Bank, Delaware, 222
Delaware Avenue, 17th Floor, Wilmington, Delaware, 19801-1600.
3. This Certificate of Trust will be effective ____________,
1997.
IN WITNESS WHEREOF, the undersigned, being the trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
PNC Bank, Delaware, a Delaware banking
corporation, not in its individual
capacity, but solely as owner trustee
of the Trust.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<PAGE> 1
EXHIBIT 4.1
MB&P DRAFT 10/21/97
------------------------
WORLD OMNI 1997-B AUTOMOBILE
LEASE SECURITIZATION TRUST
__% Automobile Lease Asset Backed Notes, Class A-1
__% Automobile Lease Asset Backed Notes, Class A-2
__% Automobile Lease Asset Backed Notes, Class A-3
__% Automobile Lease Asset Backed Notes, Class A-4
__% Automobile Lease Asset Backed Notes, Class B
-------
INDENTURE
Dated as of October 1, 1997
U.S. BANK NATIONAL ASSOCIATION
as Indenture Trustee
------------------------
<PAGE> 2
TRUST INDENTURE ACT
CROSS-REFERENCE CHART(1)/
<TABLE>
<CAPTION>
TIA SECTION REFERENCE IN THE INDENTURE
----------- --------------------------
<S> <C>
310(a)(1)................................................6.08(a)
................................................6.08(b)
310(a)(2)................................................6.08(b)
310(a)(3)................................................6.13
310(a)(4)................................................Not applicable
310(a)(5)................................................6.08(c)
310(b)...................................................6.08(d)
310(c)...................................................Not applicable
311(a)...................................................6.16
311(b)...................................................6.16
311(c)...................................................Not applicable
312(a)...................................................7.01
...................................................7.02(a)
312(b)...................................................7.02(b), 7.02(c)
313(a)...................................................7.03(a)
313(b)...................................................7.03(a)
313(c)...................................................7.03(a)
313(d)...................................................7.03(b)
314(a)...................................................3.09, 7.04
314(b)...................................................3.06
314(c)(1)................................................11.01
314(c)(2)................................................11.01
314(c)(3)................................................Not applicable
314(d)...................................................8.04
314(e)...................................................11.01(b)
315(a)...................................................6.01(a)
315(b)...................................................6.02
315(c)...................................................6.01(b)
315(d)...................................................6.01
315(d)(1)................................................6.01(a), 6.01(c)(i)
315(d)(2)................................................6.01(c)(ii)
315(d)(3)................................................6.01(c)(iii)
315(e)...................................................5.16
316(a)...................................................5.14
</TABLE>
- ----------------------------
(1)/ This Trust Indenture Act Cross-Reference Chart is not a part of this
- Indenture.
<PAGE> 3
<TABLE>
<S> <C>
...................................................5.15
316(a)(1)(A).............................................5.14
316(a)(1)(B).............................................5.15
316(a)(2)................................................Not applicable
316(b)...................................................5.10
317(a)(1)................................................5.03
317(a)(2)................................................5.06
317(b)...................................................3.03
318(a)...................................................11.07
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS .........................................................................................................1
GRANTING CLAUSE...................................................................................................1
ARTICLE ONE -- DEFINITIONS........................................................................................2
Section 1.01. Definitions...............................................................................2
ARTICLE TWO -- THE NOTES..........................................................................................8
Section 2.01. Form Generally............................................................................8
Section 2.02 Denominations.............................................................................8
Section 2.03. Execution, Authentication, Delivery and Dating............................................9
Section 2.04. Registration of Notes.....................................................................9
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes...............................................12
Section 2.06. Payment of Interest and Principal; Principal and Interest
Rights Preserved....................................................................12
Section 2.07. Persons Deemed Owners....................................................................14
Section 2.08. Cancellation.............................................................................14
Section 2.09. Authentication and Delivery of Notes.....................................................14
Section 2.10 Book-Entry Notes.........................................................................14
Section 2.11. Notices to the Clearing Agency...........................................................15
Section 2.12. Definitive Notes.........................................................................15
Section 2.13. Tax Treatment............................................................................16
ARTICLE THREE -- COVENANTS AND REPRESENTATIONS...................................................................16
Section 3.01. Payment of Notes.........................................................................16
Section 3.02. Maintenance of Office or Agency..........................................................16
Section 3.03. Money for Note Payments to be Held in Trust..............................................16
Section 3.04. Existence................................................................................18
Section 3.05. Protection of Trust Estate...............................................................18
Section 3.06. Opinions as to Trust Estate..............................................................19
Section 3.07. Performance of Obligations...............................................................19
Section 3.08. Negative Covenants.......................................................................19
Section 3.09. Statements as to Compliance..............................................................20
ARTICLE FOUR -- SATISFACTION AND DISCHARGE.......................................................................21
Section 4.01. Satisfaction and Discharge of Indenture..................................................21
Section 4.02. Application of Trust Money...............................................................23
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE FIVE -- DEFAULTS AND REMEDIES............................................................................23
Section 5.01. Events of Default........................................................................23
Section 5.02. Acceleration of Maturity; Rescission and Annulment.......................................24
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee...................................................................25
Section 5.04. Remedies.................................................................................25
Section 5.05. Optional Preservation of Trust Estate....................................................26
Section 5.06. Indenture Trustee May File Proofs of Claim...............................................26
Section 5.07. Indenture Trustee May Enforce Claims Without Possession of Notes.........................27
Section 5.08. Application of Money Collected...........................................................27
Section 5.09. Limitation on Suits......................................................................27
Section 5.10 Unconditional Rights of Noteholders to Receive Note Payements............................28
Section 5.11. Restoration of Rights and Remedies.......................................................28
Section 5.12. Rights and Remedies Cumulative...........................................................29
Section 5.13. Delay or Omission Not Waiver.............................................................29
Section 5.14. Control by Noteholders...................................................................29
Section 5.15. Waiver of Past Defaults..................................................................30
Section 5.16. Undertaking for Costs....................................................................30
Section 5.17. Sale of Trust Estate.....................................................................30
Section 5.18. Action on Notes..........................................................................32
Section 5.19. Notes held by Issuer or Affiliates Not to Share in Distribution..........................32
ARTICLE SIX -- THE INDENTURE TRUSTEE.............................................................................32
Section 6.01. Certain Duties and Responsibilities......................................................32
Section 6.02. Notice of Unmatured Event of Default.....................................................33
Section 6.03. Certain Rights of Indenture Trustee......................................................34
Section 6.04. Not Responsible for Recitals or Issuance of Notes........................................34
Section 6.05. May Hold Notes...........................................................................35
Section 6.06. Money Held in Trust......................................................................35
Section 6.07. Trustee's Fees and Expenses..............................................................35
Section 6.08. Eligibility; Corporate Indenture Trustee Required........................................36
Section 6.09. Cessation of Eligibility.................................................................36
Section 6.10. Resignation and Removal; Appointment of Successor........................................36
Section 6.11. Acceptance of Appointment by Successor...................................................38
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee........................................................38
Section 6.13. Co-Trustees and Separate Trustees........................................................39
Section 6.14. Authenticating Agent.....................................................................40
Section 6.15. Withholding Taxes........................................................................41
Section 6.16. Preferential Collection of Claims against the Issuer.....................................41
Section 6.17. Nonpetition Covenant.....................................................................41
</TABLE>
ii
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE SEVEN -- NOTEHOLDERS' LISTS AND REPORTS..................................................................42
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders......................................................................42
Section 7.02. Preservation of Information; Communications to Noteholders...............................42
Section 7.03. Reports by Indenture Trustee; Responses to Noteholder Inquiries..........................42
Section 7.04. Reports by the Issuer....................................................................43
ARTICLE EIGHT -- ACCOUNTS, DISBURSEMENTS AND RELEASES............................................................44
Section 8.01. Collection of Moneys.....................................................................44
Section 8.02. Trust Accounts...........................................................................44
Section 8.03. General Provisions Regarding the Accounts................................................44
Section 8.04. Release of Trust Estate..................................................................46
Section 8.05. Opinion of Counsel.......................................................................46
ARTICLE NINE -- SUPPLEMENTAL INDENTURES..........................................................................47
Section 9.01. [Intentionally Blank].................................................................47
Section 9.02. Supplemental Indentures Without Consent of Noteholders...................................47
Section 9.03. [Intentionally Blank].....................................................................47
Section 9.04. Execution of Supplemental Indentures.....................................................47
Section 9.05. Effect of Supplemental Indentures........................................................47
Section 9.06. Reference in Notes to Supplemental Indentures............................................47
Section 9.07. Compliance With TIA......................................................................47
ARTICLE TEN -- OPTIONAL REDEMPTION OF NOTES......................................................................48
Section 10.01. General.................................................................................48
Section 10.02. Redemption Notice...............................................................48
Section 10.03. Notes Payable on Redemption Date........................................................49
ARTICLE ELEVEN -- MISCELLANEOUS..................................................................................49
Section 11.01. Compliance Certificates and Opinions....................................................49
Section 11.02. Documents Delivered to Indenture Trustee........................................50
Section 11.03. Acts of Noteholders.....................................................................50
Section 11.04. Notices, etc., to Indenture Trustee and Issuer..........................................51
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices...................................51
Section 11.06. Rules by Indenture Trustee and Agents...................................................52
Section 11.07. Conflict with Trust Indenture Act.......................................................52
Section 11.08. Effect of Headings and Table of Contents................................................52
Section 11.09. Successors and Assigns..................................................................52
Section 11.10. Severability............................................................................52
Section 11.11. Benefits of Indenture...................................................................53
Section 11.12. Legal Holidays..........................................................................53
Section 11.13. Governing Law...........................................................................53
Section 11.14. Counterparts............................................................................53
Section 11.15. Recording of Indenture..................................................................53
</TABLE>
iii
<PAGE> 7
<TABLE>
<S> <C>
Section 11.16. Trust Obligation........................................................................53
Section 11.17. Inspection..............................................................................54
Section 11.18. Waiver of Stay, Extension Laws, Trial by Jury...........................................54
Section 11.19. Maximum Interest Payable................................................................54
</TABLE>
<TABLE>
<S> <C>
EXHIBIT A - FORM OF CLASS A-1 NOTE..............................................................................A-1
EXHIBIT B - FORM OF CLASS A-2 NOTE..............................................................................B-1
EXHIBIT C - FORM OF CLASS A-3 NOTE..............................................................................C-1
EXHIBIT D - FORM OF CLASS A-4 NOTE..............................................................................D-1
EXHIBIT E - FORM OF CLASS B NOTE................................................................................E-1
EXHIBIT F-1 - FORM OF NON-RULE 144A REPRESENTATION LETTER...................................................... F-1
EXHIBIT F-2 - FORM OF RULE 144A REPRESENTATION LETTER...........................................................F-2
</TABLE>
iv
<PAGE> 8
INDENTURE, dated as of October 1, 1997, between WORLD OMNI
1997-B AUTOMOBILE LEASE SECURITIZATION TRUST, a Delaware business trust (the
"Issuer"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association,
solely as indenture trustee and not in its individual capacity (the "Indenture
Trustee").
RECITALS
WHEREAS, the Issuer has duly authorized the creation of an
issue of its notes of substantially the tenor hereinafter provided; and, to
secure the notes and to provide for the authentication and delivery thereof, the
Issuer has duly authorized the execution and delivery of this Indenture;
WHEREAS, the notes, to be known as _____% Automobile
Lease-Secured Notes, Class A-1 (the "Class A-1 Notes"), _____% Automobile Lease
Asset Backed Notes, Class A-2 (the "Class A-2 Notes"), _____% Automobile Lease
Asset Backed Notes, Class A-3 (the "Class A-3 Notes"), _____% Automobile Lease
Asset Backed Notes, Class A-4 (the "Class A-4 Notes" and, together with the
Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the "Class A Notes") and
_____% Automobile Lease Asset Backed Notes, Class B (the "Class B Notes" and,
together with the Class A Notes, the "Notes"), and the certificate of
authentication for the Notes, are to be substantially in the forms set forth in
Exhibits A, B, C, D and E attached hereto, respectively, with such variations as
are permitted in this Indenture; and
WHEREAS, all acts necessary to make the Notes, when executed,
authenticated and issued, the valid obligations of the Issuer, and to constitute
this Indenture a valid and binding instrument for the security of the Notes, in
accordance with its and their terms, have been done; NOW, THEREFORE,
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee or its
nominee all of the Issuer's right, title and interest in, to and under the
following property:
(i) all right, title and interest of the Issuer in and
to a 99.8% interest in the 1997-B SUBI and SUBI Assets and the 99.8%
1997-B SUBI Certificate evidencing the 99.8% 1997-B 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-B SUBI Interest;
(iii) all rights accruing to the holder of the 99.8% 1997-B
SUBI Interest as a third-party beneficiary under the Origination Trust
Agreement, the 1997-B SUBI Supplement, the Servicing Agreement and the
1997-B Servicing Supplement;
1
<PAGE> 9
(iv) the Residual Value Insurance Policy;
(v) the Accounts; and
(vi) all proceeds of the foregoing.
Such Grants are made, however, in trust, to secure the Notes
equally and ratably without prejudice, priority or distinction, except as
expressly provided in the Transaction Documents, between any Note and any other
Note by reason of difference in time of issuance or otherwise, and to secure (i)
the payment of all amounts due on the Notes in accordance with their terms; (ii)
the payment of all other sums payable under this Indenture; and (iii) compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee acknowledges such Grants, accepts the
trusts hereunder in accordance with the provisions hereof and agrees to perform
the duties herein required to the end that the interests of the Noteholders may
be adequately and effectively protected.
ARTICLE ONE -- DEFINITIONS
SECTION 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires, (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include (i) the plural as well as the singular and (ii) all genders; (b) all
other terms used herein which are defined in the TIA, either directly or by
reference therein, have the meanings assigned to them therein; (c) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted accounting principles as at the time
applicable in the United States; (d) all references in this instrument to
designated "Articles", "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this instrument as originally
executed and amended from time to time; and (e) the words "herein", "hereof",
"hereunder" and other words of similar import refer to this Indenture as a
whole. Capitalized terms used herein which are not defined herein shall have the
meanings set forth in the Securitization Trust Agreement dated as of the date
hereof (the "Securitization Trust Agreement") among the Transferor, PNC Bank,
Delaware, as Owner Trustee and the Indenture Trustee, the Origination Trust
Agreement, the 1997-B SUBI Supplement or the 1997-B Servicing Supplement (as
such terms are defined in the Securitization Trust Agreement), as applicable.
"Account" means any of the 1997-B SUBI Collection Account, the
Distribution Account, any Reserve Account and any 1997-B SUBI Lease Account.
2
<PAGE> 10
"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 Issuer or of an Affiliate of the Issuer.
"Act", with respect to any Noteholder, has the meaning
specified in Section 11.03.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicants" shall have the meaning specified in Section 7.02
(b).
"Authenticating Agent" means any Authenticating Agent
appointed as such pursuant to Section 6.14, and includes any successor thereto.
"Book-Entry Note" means the direct or indirect interest
beneficially owned by any Note Owner in any Note held by or on behalf of DTC as
Noteholder pursuant to Section 2.10 hereof.
"Cash" means such coin or currency of the United States as at
the time shall be legal tender for payment of public and private debts.
"Cede" means Cede & Co., as the nominee of DTC, the initial
Clearing Agency.
"Class A-1 Stated Maturity" means the November 2003
Distribution Date.
"Class A-2 Stated Maturity" means the November 2003
Distribution Date.
"Class A-3 Stated Maturity" means the November 2003
Distribution Date.
"Class A-4 Stated Maturity" means the November 2003
Distribution Date.
"Class B Stated Maturity" means the November 2003
Distribution Date.
3
<PAGE> 11
"Corporate Trust Office" means (a) with respect to the
Indenture Trustee, the Corporate Trust Department of the Indenture Trustee
located at One Illinois Center, 111 East Wacker Drive, Suite 3000, Chicago,
Illinois 60601, Attention: Corporate Trust Office, or at such other address as
the Indenture Trustee may designate from time to time by notice to the
Noteholders, the Servicer and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee, except that, with respect to
presentation of Notes for payment, for registration of transfer or for exchange,
and with respect to the location of the Note Register, such term shall mean the
office or agency of the Indenture Trustee maintained for that purpose, which as
of the date of this Indenture is the same as set forth above, and (b) with
respect to the Owner Trustee, shall have the meaning set forth in the
Securitization Trust Agreement.
"Definitive Notes" shall have the meaning specified in Section
2.10.
"DTC" means The Depository Trust Company and its successors.
"Event of Default" has the meaning specified in Section 5.01.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to the Indenture. A Grant of the Trust Estate or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Trust Estate and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto. Other forms of the verb "to
Grant" shall have correlative meanings.
"Indenture" or "this Indenture" means this instrument as
originally executed, as the same may from time to time be amended or modified
and in effect.
"Indenture Trustee" means U.S. Bank National Association,
until a successor Person shall have become the Indenture Trustee pursuant to
Article Six of this Indenture, and thereafter "Indenture Trustee" shall mean
such successor Person.
"Independent" means, when used with respect to any specified
Person, such a Person who (a) is in fact independent of the Issuer, any other
obligor upon the Notes and any of their respective Affiliates; (b) does not have
any direct financial interest or any material indirect financial interest in the
Issuer, any such other obligor or any of their respective Affiliates; and (c) is
not connected with the Issuer, any such other obligor 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
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Accountant, who may also be the Accountant who audits the books of the Issuer,
any other obligor upon the Notes or any of their respective Affiliates, who is
independent with respect to the Issuer, any other obligor upon the Notes 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 Indenture Trustee, such Person shall be
acceptable to the Indenture Trustee if selected in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read this
direction and that the signer is independent within the meaning thereof.
"Issuer" means the World Omni 1997-B Automobile Lease
Securitization Trust and its successors.
"Issuer Order" and "Issuer Request" means a written order or
request signed by any officer of Owner Trustee who is authorized to act for the
Issuer, and delivered to the Indenture Trustee.
"Lien" means a mortgage, pledge, lien, security interest or
other charge or encumbrance of any kind, including the retained interest of a
conditional vendor or lessor.
"Maturity" means the date on which the entire unpaid principal
amount of the Class A-1 Notes, Class A-2 Notes, Class A-3, Class A-4 Notes or
Class B Notes becomes due and payable as therein or herein provided, whether at
the Class A-1 Stated Maturity, Class A-2 Stated Maturity, Class A-3 Stated
Maturity, Class A-4 Stated Maturity or Class B Stated Maturity, respectively, or
otherwise.
"Note Register" and "Note Registrar" shall have the respective
meanings specified in Section 2.04 hereof.
"Notes" means the Class A Notes and the Class B Notes.
"Outstanding" means, with respect to the Notes, as of any date
of determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(b) Notes or portions thereof for whose payment or
redemption Cash in the necessary amount has been theretofore
irrevocably deposited with the Indenture Trustee or any Paying Agent
in trust for the Holders of such Notes; provided, however, that, if
such Notes or portions thereof are to be redeemed,
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notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(c) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a holder in due course;
provided, however, that for purposes of determining required percentages for
voting rights, consents and other actions of the Noteholders hereunder, Notes
owned by the Transferor or any Affiliate of the Transferor, as shown on the
Note Register, shall not be deemed to be Outstanding.
"Overdue Interest Rate" means the lesser of (1) the highest
legally permissible interest rate per annum and (2) the greater of (a) the Class
A-1 Note Interest Rate, Class A-2 Note Interest Rate, Class A-3 Note Interest
Rate, Class A-4 Note Interest Rate or Class B Note Interest Rate, as applicable,
plus 2% per annum, or (b) the interest rate per annum announced from time to
time by the Indenture Trustee as its reference rate.
"Paying Agent" means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.08 hereof and is authorized by the Issuer to pay on behalf of the
Issuer the principal or any interest that may become payable on any Notes.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint stock company, trust,
bank, trust company or estate (including any beneficiaries thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Notes" means, with respect to any particular
Note, every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.05 in lieu of a mutilated,
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Redemption Date" means, with respect to any Note to be
redeemed pursuant to Article Ten hereof, any date fixed for such redemption
pursuant to this Indenture, which date shall be a Distribution Date.
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"Redemption Price" means:
(a) with respect to any Class A-1 Note to be redeemed,
the sum of (A) the Class A-1 Note Balance, (B) the
accrued and unpaid Class A-1 Interest Distributable
Amount, (C) any accrued and unpaid Class A-1 Interest
Carryover Shortfall, (D) any unpaid Class A-1 Note
Principal Loss Amount, and (E) any accrued and unpaid
Class A-1 Note Principal Loss Interest Amount, in
each case through the day preceding the final
Distribution Date;
(b) with respect to any Class A-2 Note to be redeemed,
the sum of (A) the Class A-2 Note Balance, (B) the
accrued and unpaid Class A-2 Interest Distributable
Amount, (C) any accrued and unpaid Class A-2 Interest
Carryover Shortfall, (D) any unpaid Class A-2 Note
Principal Loss Amount, and (E) any accrued and unpaid
Class A-2 Note Principal Loss Interest Amount, in
each case through the day preceding the final
Distribution Date;
(c) with respect to any Class A-3 Note to be redeemed,
the sum of (A) the Class A-3 Note Balance, (B) the
accrued and unpaid Class A-3 Interest Distributable
Amount, (C) any accrued and unpaid Class A-3 Interest
Carryover Shortfall, (D) any unpaid Class A-3 Note
Principal Loss Amount, and (E) any accrued and unpaid
Class A-3 Note Principal Loss Interest Amount, in
each case through the day preceding the final
Distribution Date;
(d) with respect to any Class A-4 Note to be redeemed,
the sum of (A) the Class A-4 Note Balance, (B) the
accrued and unpaid Class A-4 Interest Distributable
Amount, (C) any accrued and unpaid Class A-4 Interest
Carryover Shortfall, (D) any unpaid Class A-4 Note
Principal Loss Amount, and (E) any accrued and unpaid
Class A-4 Note Principal Loss Interest Amount, in
each case through the day preceding the final
Distribution Date; and
(e) with respect to any Class B Note to be redeemed, the
sum of (A) the Class B Note Balance, (B) the accrued
and unpaid Class B Interest Distributable Amount, (C)
any accrued and unpaid Class B Interest Carryover
Shortfall, (D) any unpaid Class B Note Principal Loss
Amount, (E) any accrued and unpaid Class B Note
Principal Loss Interest Amount,(F) any unpaid Class B
Note Principal Carryover Shortfall, and (G) any Class
B Note Principal Carryover Shortfall Interest Amount,
in each case through the day preceding the final
Distribution Date.
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"Residual Note" has the meaning set forth in Section 2.02(b).
"Sale" has the meaning specified in Section 5.17(a).
"Stated Maturity" means, with respect to any Note, as
applicable, the Class A-1 Stated Maturity, the Class A-2 Stated Maturity, the
Class A-3 Stated Maturity, the Class A-4 Stated Maturity or the Class B Stated
Maturity.
"Transferor" means World Omni Lease Securitization L.P. and
its successors.
"Trust Estate" means all money, instruments and other
property, agreements and intangible rights subject or intended to be subject to
the Lien of this Indenture for the benefit of the Noteholders as of any
particular time (including, without limitation, all property, rights and
interests Granted to the Indenture Trustee in this Indenture). The term "Trust
Estate" does not include any assets of the Origination Trust or any rights of
the Indenture Trustee under the Back- up Security Agreement.
"Trustees" means the Indenture Trustee and the Owner Trustee.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Unmatured Event of Default" means any occurrence which with
notice or the lapse of time or both would become an Event of Default.
ARTICLE TWO -- THE NOTES
SECTION 2.01. FORM GENERALLY. The Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes, and the certificates
of authentication thereon, shall be in substantially the forms set forth in
Exhibits A, B, C, D and Exhibit E hereto, respectively with such appropriate
insertions, omissions, substitutions and other variations as are required by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. Any portion of the text of any Note may be
set forth on the reverse thereof, in which case the following reference to the
portion of the text appearing on the reverse of the Note shall be inserted on
the face of the Note, immediately prior to the paragraph stating that the
certificate of authentication on the Note must be executed by manual signature
of the Indenture Trustee or an Authenticating Agent as a condition to the
validity of such Note:
"Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof which provisions shall
for all purposes have the same effect as if set forth at this
place."
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The Notes shall be printed, lithographed, typewritten,
mimeographed, photocopied or otherwise produced or may be produced in any other
manner as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution thereof.
SECTION 2.02. DENOMINATIONS.
(a) Subject to Section 2.12 hereof, the Notes will be issued in
book-entry form.
(b) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes shall be issuable in minimum denominations of $1,000 and
integral multiples in excess thereof and the Class B Notes shall be issuable in
minimum denominations of $250,000 and integral multiples of $1,000 in excess
thereof (provided that no Class B Note 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 Noteholders); provided, however,
that one Class A- 1 Note, one Class A-2 Note, one Class A-3 Note, one Class A-4
Note and one Class B Note may be issued in a denomination that includes any
remaining portion of the Initial Class A-1 Note Balance, the Initial Class A-2
Note Balance, the Initial Class A-3 Note Balance, the Initial Class A-4 Note
Balance and the Initial Class B Note Balance, respectively (each, a "Residual
Note").
SECTION 2.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Issuer by a Responsible Officer of
the Owner Trustee, which signature may be in facsimile form and be imprinted or
otherwise reproduced thereon.
Notes bearing the manual or facsimile signature of individuals
who were at any time the proper officers of the Owner Trustee shall bind the
Issuer, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of issuance of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture and the collateral assignment to the Indenture
Trustee of the portion of the Trust Estate to be Granted to the Indenture
Trustee on the Closing Date, the Issuer may deliver Notes executed by the Issuer
to the Indenture Trustee for authentication, and the Indenture Trustee shall
authenticate and deliver such Notes as provided in this Indenture and not
otherwise.
Notes which are authenticated and delivered by the Indenture
Trustee or the Authenticating Agent to or upon the order of the Issuer on the
Closing Date shall be dated as of the Closing Date. All other Notes which are
authenticated after the Closing Date for any other purpose hereunder shall be
dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form hereinbefore provided
for executed by the Indenture Trustee or the
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Authenticating Agent by the manual signature of one of its authorized officers,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
SECTION 2.04. REGISTRATION OF NOTES. The Issuer shall cause to
be kept a register (the "Note Register") in which, subject to such reasonable
regulations as it may prescribe, the Issuer shall provide for the registration
of Notes and the registration of transfers of Notes. The Indenture Trustee is
hereby initially appointed "Note Registrar" for the purposes of maintaining the
Note Register and registering Notes and transfers of Notes as herein provided,
and the Indenture Trustee hereby accepts such appointment.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.02
hereof, the Issuer shall execute, and the Indenture Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations and of the same aggregate
principal amount.
At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of the same class and of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver, the Notes
which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall (if so required by the Issuer or the Indenture
Trustee) be duly endorsed, or be accompanied by such other documentation
reasonably satisfactory to the Issuer and the Indenture Trustee, duly executed
by the Holder thereof or its attorney-in-fact duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge which may be imposed in
connection with any registration of transfer or exchange of Notes.
No transfer of a Class B Note 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 a transfer is to be made in reliance upon an exemption
from the Securities Act and such state securities laws, the Indenture Trustee
shall require one of the following, at the option of the Noteholder desiring to
effect such transfer: (i) that such Noteholder and its
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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
Indenture Trustee and the Transferor upon which the Indenture 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 Issuer, the Indenture 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 Transferor and the Indenture Trustee
(provided that the forms attached as Exhibits F-1 and F-2 shall be deemed
acceptable if completed in a manner acceptable to the Indenture Trustee)
certifying to the Issuer, the Indenture Trustee, the Transferor and the
Servicer the facts surrounding such transfer, which representation letter shall
not be an expense of the Issuer, the Indenture Trustee, the Transferor or the
Servicer. The Holder of a Class B Note desiring to effect such transfer shall,
and does hereby agree to, indemnify the Issuer, the Indenture 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 Issuer, the Transferor, the Servicer nor the
Indenture Trustee is under any obligation to register the Class B Notes 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 Note 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 Noteholders and (ii) the
Indenture Trustee shall have received either a representation letter or Opinion
of Counsel from the prospective transferee of such Class B Note, in form and
substance satisfactory to the Transferor and the Indenture Trustee (provided
that the forms attached as Exhibits F-1 and F-2 shall be deemed acceptable) if
completed in a manner acceptable to the Indenture Trustee), to the effect that
(A)(1) such transferee will not acquire such Class B Note on behalf of or with
the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA,
or (2) no "prohibited transaction" under ERISA or the Internal Revenue Code of
1986, as amended, will occur in connection with such transferee's acquisition
or holding of such Class B Notes because the relevant conditions for exemptive
relief under one or more of the following prohibited transaction class
exemptions have been satisfied: Prohibited Transaction Class Exemption
("PTCE") 96-23, regarding transactions effected by "In-House Asset Managers";
PTCE 95-60, regarding transactions for insurance company general accounts; PTCE
90-1, regarding transactions effected for bank collective investment funds; or
PTCE 84-14, regarding transactions effected by "Qualified Professional Asset
Managers", 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 Note) is a partnership, grantor trust or S corporation for
federal income tax purposes (a "Flow-Through Entity"), any Class B Notes 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 Notes will be made among the beneficial owners of such Flow-Through
Entity. Each prospective transferee of any Class B Note will be required to
represent to the Indenture Trustee whether it will purchase such Class B Note
with the assets of an "employee benefit plan" as defined under ERISA or other
benefit plan investor.
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The Class B Notes, this Indenture 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 Notes 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.
No Class B Note shall be listed for trading on any recognized
securities exchange or treated as traded on "established securities market" as
defined in Treas. Reg. ss.1.7704-1(e) (including an interdealer quotation system
that regularly disseminates firm buy or sell quotations by identified brokers or
dealers by electronic means or otherwise).
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If
(a) any mutilated Note is surrendered to the Indenture Trustee, or the Issuer
and the Indenture Trustee receive evidence to their mutual satisfaction of the
mutilation, destruction, loss or theft of any Note, and (b) there is delivered
to the Issuer and the Indenture Trustee such security or indemnity as may be
reasonably required by them to save each of them harmless, then the Issuer shall
execute and, upon receipt of an Issuer Request, the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Class A-1 Note, Class A-2 Notes, Class A-3
Note, Class A-4 Note or Class B Note, as the case may be, of the same tenor and
principal amount (expressed in terms of the principal amount on the date the
original Note was first issued and authenticated) bearing a number not
contemporaneously outstanding; provided, however, that if any such mutilated,
destroyed, lost or stolen Note shall have become or shall be about to become due
and payable, or shall have been selected or called for redemption in full,
instead of issuing a new Note, the Issuer may pay such Note without surrender
thereof, except that any mutilated Note shall be surrendered.
Upon the issuance of any new Note under this Section, the
Issuer may require the payment of a sum sufficient to cover any transfer tax or
other governmental charge that may be imposed in relation thereto.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
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SECTION 2.06. PAYMENT OF INTEREST AND PRINCIPAL; PRINCIPAL AND
INTEREST RIGHTS PRESERVED.
(a) Interest and principal, if any, payable on any Note on any
Distribution Date shall be paid to the Person in whose name such Note is
registered at the close of business on the Record Date for such Distribution
Date by (i) check mailed to such Person's address as it appears in the Note
Register on such Record Date, (ii) if DTC, its nominee or a Clearing Agency is
such Person, by wire transfer of immediately available funds or pursuant to
other arrangements, or (iii) with respect to a registered owner of a Class B
Notes having an aggregate initial denomination of $250,000 or more, upon written
instructions received by the Indenture 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 Person at a depositary institution in the United
States having appropriate facilities therefor except in any case for the final
payment of principal of and interest on a Note, which shall be payable only upon
presentation and surrender of such Note as provided in subsection (b) of this
Section.
Any payments on the Notes and checks for amounts that include
principal on a Note shall be paid to the Person entitled thereto at the address
of such Person as it appears on the Note Register as of the applicable Record
Date or, in the event such payment is to be paid by wire transfer, to the Person
entitled thereto at the wire transfer account as specified in clause (a)(ii) or
(a)(iii) of this Section 2.06, in either case without requiring that such Note
be submitted for notation of payment, and checks returned undelivered will be
held for payment to the Person entitled thereto, subject to the terms of Section
3.03 hereof, at the office or agency in the United States designated by the
Issuer for such purpose pursuant to Section 3.02 hereof. Any reduction in the
principal amount of a Note (or any one or more Predecessor Notes) effected by
any payments made on any Distribution Date shall be binding upon all future
Holders of such Note and of any Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, whether or not noted
thereon.
(b) Interest and principal of each Note shall be payable in
accordance with Section 3.03 of the Securitization Trust Agreement, but no later
than the Class A-1 Stated Maturity, Class A-2 Stated Maturity, Class A-3 Stated
Maturity, Class A-4 Stated Maturity or Class B Stated Maturity, as applicable,
unless such Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise. The final payment of principal
of and interest on each Note (or the payment of the Redemption Price thereof in
the case of a Note called for redemption pursuant to Article Ten hereof) shall
be payable only upon presentation and surrender thereof on or after the Maturity
of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes or
Class B Notes, as applicable, at the Corporate Trust Office of the Indenture
Trustee or at the office of any Paying Agent. The Indenture Trustee shall notify
the Person in whose name a Note is registered at the close of business on the
Distribution Date immediately preceding the month in which the Distribution Date
on which the Issuer expects that the final payment of principal of and interest
on such Note will be paid is to occur. Such notice shall be given no earlier
than the thirtieth day and no later than the fifteenth day
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prior to such final Distribution Date, shall specify that such final payment
will be payable only upon presentation and surrender of such Note, and shall
specify the place where such Note may be presented and surrendered for such
final payment.
(c) No further interest will accrue with respect to any Note
from and after the final Distribution Date with respect thereto.
(d) The rights of the Class B Noteholders shall be and hereby
are subordinated to the rights of the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A- 3 Noteholders and the Class A-4 Noteholders to the
extent provided in Section 3.03 of the Securitization Trust Agreement and
Section 5.08 of this Indenture.
(e) Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture upon registration or transfer of or in
exchange for or in lieu of any other Note shall carry the rights to unpaid
principal and interest, if any, that were carried by such other Note.
SECTION 2.07. PERSONS DEEMED OWNERS. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or of the Indenture Trustee may treat the Person in
whose name any Note is registered as the owner of such Note for the purpose of
receiving payments of the principal and interest on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
SECTION 2.08. CANCELLATION. All Notes surrendered for payment,
registration of transfer or exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by it. The Issuer may at any time deliver to the
Indenture Trustee for cancellation any Note previously authenticated and
delivered hereunder that the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
All canceled Notes held by the Indenture Trustee shall be destroyed unless the
Issuer shall direct by an Issuer Order that they be returned to it.
SECTION 2.09. AUTHENTICATION AND DELIVERY OF NOTES. The
aggregate principal amount of Notes that may be authenticated and delivered
under this Indenture is limited to an amount equal to the Initial Note Balance,
and the aggregate principal amount of Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes and Class B Notes respectively, that may be issued
and delivered under this Indenture is limited to an amount equal to the Initial
Class A-1 Note Balance, the Initial Class A-2 Note Balance, the Initial Class
A-3 Note Balance, the Initial Class A-4 Note Balance and the Initial Class B
Note Balance, respectively, except for
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Notes authenticated and delivered upon registration and transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Sections 2.04 or 2.05
hereof.
Notes complying with the foregoing requirements may from time
to time be executed by the Issuer and delivered to the Indenture Trustee for
authentication, and the same shall be authenticated and delivered by the
Indenture Trustee upon Issuer Request.
SECTION 2.10. BOOK-ENTRY NOTES. Unless otherwise specified,
the Class A Notes (except for any Residual Notes), upon original issuance, will
be issued in the form of one or more Notes representing the Book-Entry Notes, to
be delivered to the Indenture Trustee, as agent for DTC, the initial Clearing
Agency, by, or on behalf of, the Issuer. The Class A Notes delivered to DTC
evidencing the Book-Entry Notes shall initially be registered on the Note
Register in the name of Cede, and no Note Owner will receive an individual
definitive, fully-registered note (collectively, the "Definitive Notes")
representing such Note Owner's interest in the Class A Notes, except as provided
in Section 2.12 hereof. Subject to Section 2.12 hereof, unless and until
Definitive Notes have been issued to Note Owners of Class A Notes pursuant to
Section 2.12:
(i) the provisions of this Section shall be in
full force and effect;
(ii) the Issuer, the Transferor, the Servicer, the
Note Registrar and the Indenture Trustee may deal with the
Clearing Agency for all purposes (including the making of
distributions on the Notes) as the authorized representative
of the Class A Note Owners;
(iii) to the extent that the provisions of this
Section conflict with any other provisions of this Indenture,
the provisions of this Section shall control;
(iv) the rights of Note Owners of Class A Notes
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 Note
Owners and the Clearing Agency and/or the Clearing Agency
Participants and, unless and until Definitive Notes are issued
pursuant to Section 2.12 hereof, the Clearing Agency will make
book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal and
interest on such Notes to such Clearing Agency Participants;
and
(v) whenever this Indenture requires or permits
actions to be taken based upon instructions or directions of
Noteholders of Class A Notes evidencing a specified aggregate
Percentage Interest of Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, the Clearing Agency shall be
deemed to represent such percentage (if and to the extent that
it will act on behalf of Note Owners and/or Clearing Agency
Participants) only to the extent that it has received
instructions to such effect from Note Owners and/or Clearing
Agency
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Participants owning or representing, respectively, such
required percentages of the beneficial interest in such Notes
and has delivered such instructions to the Indenture Trustee.
SECTION 2.11. NOTICES TO THE CLEARING AGENCY. Whenever notice
or other communication to any Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued pursuant to Section
2.12 hereof, the Indenture Trustee and the Servicer shall give solely to the
Clearing Agency all such notices and communications specified herein to be given
to the Holders.
SECTION 2.12. DEFINITIVE NOTES. If (i)(A) the Transferor
advises the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Class A Notes and (B) the Indenture Trustee or the Issuer is unable to locate a
qualified successor, (ii) the Transferor, at its option, advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency, or (iii) after the occurrence of an Event of Default, Note
Owners representing beneficial interests in the Class A Notes aggregating more
than 50% of the aggregate Percentage Interests (voting as a single Class)
thereof advise the Indenture Trustee through the Clearing Agency, in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of such Note Owners, then the Indenture Trustee
shall notify all Note Owners of such Notes, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes to such
Note Owners requesting the same. Upon surrender to the Indenture Trustee of the
Class A Notes by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Indenture Trustee shall issue
Definitive Notes and deliver such Definitive Notes in accordance with the
instructions of the Clearing Agency. Neither the Issuer, the Transferor, the
Servicer, the Note Registrar nor the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of such
Definitive Notes, the Indenture Trustee shall recognize the holders of such
Definitive Notes as Noteholders hereunder. The Indenture Trustee shall not be
liable if the Indenture Trustee or the Issuer is unable to locate a qualified
successor to DTC.
SECTION 2.13. TAX TREATMENT. Issuer has entered into this
Indenture, and the Notes shall be issued, with the intention that, for federal,
state and local income and franchise tax purposes, the Notes shall qualify as
indebtedness of the Issuer secured by the Trust Estate. Issuer, by entering into
this Indenture, and each Noteholder, by its acceptance of a Note (and each Note
Owner by its acceptance of an interest in the applicable Book-Entry Note), agree
to treat the Notes for federal, state and local income and franchise tax
purposes as indebtedness of Issuer.
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ARTICLE THREE -- COVENANTS AND REPRESENTATIONS
SECTION 3.01. PAYMENT OF NOTES. The Issuer will cause to be
duly and punctually paid the principal and interest on the Notes in accordance
with the terms of the Notes, the Securitization Trust Agreement and this
Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain at least one office or agency, which may be changed in the discretion
of the Issuer, within the United States at which Notes may be presented or
surrendered for payment, Notes may be surrendered for registration of transfer
or exchange and notices and demands to or upon the Issuer in respect of the
Notes and this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee at its Corporate Trust Office as such office or agency. The
Issuer will give prompt written notice to the Indenture Trustee of the location,
and of any change in the location, of any such office or agency. If at any time
the Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Indenture Trustee at its Corporate
Trust Office its agent to receive all such presentations, surrenders, notices
and demands.
SECTION 3.03. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. All
payments of amounts due and payable with respect to the Notes that are to be
made from amounts withdrawn from the Accounts pursuant to Section 8.02(b) hereof
shall be made on behalf of the Issuer by the Indenture Trustee or by a Paying
Agent, and no amounts so withdrawn from any Account shall be paid over to or at
the direction of the Issuer except as provided in the Transaction Documents.
Whenever the Issuer shall have a Paying Agent other than the
Indenture Trustee, it will, on or before the Business Day next preceding each
Distribution Date, direct the Indenture Trustee to deposit with such Paying
Agent an aggregate sum sufficient to pay the amounts then becoming due or
payable, such sum to be held in trust for the benefit of the Persons entitled
thereto.
The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee, subject to
the provisions of this Section 3.03, that such Paying Agent, in acting as Paying
Agent, is an express agent of the Indenture Trustee and, further, that such
Paying Agent will:
(a) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
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(b) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) in the making of any
payment required to be made with respect to the Notes;
(c) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(d) immediately resign as a Paying Agent and forthwith pay to
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(e) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which such sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for three years after the Maturity of the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes, as the case may be,
upon receipt of an Issuer Request, shall be paid to the Issuer (or, after
termination of the Issuer, the Transferor) and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer (or, after
termination of the Issuer, the Transferor) for payment thereof (but only to the
extent of the amounts so paid to the Issuer (or, after termination of the
Issuer, the Transferor)), and all liability of the Indenture Trustee or such
Paying Agent with respect to such trust money shall thereupon cease. The
Indenture Trustee may adopt and employ, at the expense of the Issuer, any
reasonable means of notification of such payment by the Indenture Trustee to the
Issuer (or, after termination of the Issuer, the Transferor) (including, but not
limited to, mailing notice of such payment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from records
of the Indenture Trustee or any Paying Agent, at the last address of record for
each such Holder).
SECTION 3.04. EXISTENCE. The Issuer will keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware and the Issuer will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction
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in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, and each instrument or agreement
included in the Trust Estate.
SECTION 3.05. PROTECTION OF TRUST ESTATE. The Issuer will from
time to time execute, deliver and file all financing statements, continuation
statements, instruments of further assurance and other instruments reasonably
required or necessary to maintain the Lien and security interest created by this
Indenture or to protect the Trust Estate generally, and will take such other
action necessary or advisable to:
(i) Grant more effectively all or any portion of
the Trust Estate to or for the benefit of the Indenture Trustee;
(ii) maintain or preserve the Lien of this Indenture
or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of, or protect the
validity of, any Grant made or to be made by this Indenture;
(iv) enforce any of the Contracts; or
(v) preserve and defend title to the Trust Estate
and the rights of the Indenture Trustee and the Noteholders in such
Trust Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute and file any financing statement, continuation
statement or other instrument designated in writing by the Issuer pursuant to
this Section. It is understood that in no event will the Issuer be required to
take any action to cause any Lien notation on, or any other action with respect
to, any Certificate of Title for any 1997-B Leased Vehicle.
SECTION 3.06. OPINIONS AS TO TRUST ESTATE. On or before
October 15 in each calendar year commencing with the October 15 occurring at
least six months after the Closing Date, the Issuer shall furnish to the
Indenture Trustee Opinions of Counsel, either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording, filing,
re-recording and re-filing of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is necessary to
maintain the Liens and security interests created by this Indenture and the
Backup Security Agreement and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary to so maintain
such Liens and security interests. Such Opinions of Counsel shall also describe
the recording, filing, rerecording and re-filing of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the Liens and
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security interests of this Indenture and the Backup Security Agreement until
October 15 in the following calendar year.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS.
(a) The Issuer will punctually perform and observe all of its
obligations and agreements contained in each of the Transaction Documents to
which it is a party or by which it is bound, including without limitation its
obligation under Section 3.05 hereof.
(b) The Issuer will not take any action or permit any action
to be taken by others that would release any Person from any of such Person's
material covenants or obligations under any instrument included in the Trust
Estate, or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
such instrument, except as expressly provided in the Transaction Documents or
any such instrument.
(c) If the Issuer shall have knowledge of the occurrence of
(i) an Event of Default or an Unmatured Event of Default, or (ii) a 1997-B
Servicer Event of Default, the Issuer shall promptly notify the Indenture
Trustee and each Rating Agency thereof by means of an Officer's Certificate
specifying the action, if any, the Issuer is taking in respect of such Event of
Default, Unmatured Event of Default or 1997-B Servicer Event of Default.
SECTION 3.08. NEGATIVE COVENANTS. So long as any Notes are
outstanding, the Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by the Transaction
Documents;
(b) claim any credit on, or make any deduction from, the
principal or interest on the Notes by reason of the payment of any
taxes levied or assessed upon any part of the Trust Estate;
(c) without the consent of the Noteholders representing 100%
of the aggregate Percentage Interests (voting as a single Class) (with
respect to which the Issuer promptly shall notify the Rating Agencies),
(i) engage in any business or activity other than financing, owning,
managing and selling the Trust Estate and the issuance of the Notes
pursuant to this Indenture and the other Transaction Documents or (ii)
create, incur, assume or in any manner become liable in respect of any
indebtedness for money borrowed other than the Notes;
(d) dissolve, reorganize or liquidate in whole or in part;
(e) merge or consolidate with any corporation;
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(f) (to the extent that it may lawfully so covenant) without
the consent of the Owner Trustee, voluntarily commence any proceeding
or file any petition under any bankruptcy, insolvency or similar law or
seek dissolution or reorganization or the appointment of a receiver,
trustee, custodian or liquidator for itself or a substantial portion of
its property, assets or business or to effect such a plan or other
arrangement with its creditors;
(g) (i) permit the validity or effectiveness of this Indenture
to be impaired, or permit the Lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under this
Indenture, except as may be expressly permitted hereby; (ii) permit any
Lien, charge, security interest, mortgage or other encumbrance (other
than the Lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or
any interest therein or the proceeds thereof; or (iii) permit the Lien
of this Indenture not to constitute a valid first priority perfected
security interest in the Trust Estate.
SECTION 3.09. STATEMENTS AS TO COMPLIANCE.
(a) The Issuer will deliver to the Indenture Trustee and each
Rating Agency, within 120 days after December 31 of each year, an Officer's
Certificate stating, as to the signer thereof, that
(i) a review of the activities of the Issuer during
such year (or since the Closing Date in the case of the first such
statement) and of performance under this Indenture has been made under
such officer's supervision; and
(ii) to the best of such officer's knowledge, based
on such review, the Issuer has fulfilled all its obligations under this
Indenture throughout such year (or since the Closing Date in the case
of the first such statement), or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof.
(b) The Issuer will deliver to the Indenture Trustee, within
thirty days after June 30 and December 31 of each year commencing with December
31, 1997, a certificate of the Issuer, stating that (i) a review of all
releases and reallocations of 1997-B SUBI Assets during the preceding
semi-annual period has been made under its supervision; (ii) to the best of its
knowledge, all of such releases and reallocations complied with all of the
requirements of the relevant provisions of the Transaction Documents and were
made in the ordinary course of the businesses of the Origination Trust and the
Issuer; (iii) all proceeds from the disposition of such released 1997-B SUBI
Assets were used in the businesses of the Origination Trust and the Issuer to
make payments on the Notes or as otherwise permitted by the Transaction
Documents; and (iv) in its opinion, such releases and reallocations did not
impair the securitity under the Indenture in contravention of the provisions
thereof.
ARTICLE FOUR -- SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE.
(a) This Indenture shall cease to be of further effect, and
the Indenture Trustee, at the request of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when:
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(i) either
(A) all Notes theretofore authenticated and
delivered (other than (1) Notes which have been mutilated,
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.05 hereof, and (2) Notes for whose
payment money has theretofore been deposited in trust or
segregated and held in trust and thereafter repaid or
discharged from such trust, as provided in Section 3.03
hereof) have been delivered to the Indenture Trustee for
cancellation; or
(B) all Notes not theretofore delivered to the
Indenture Trustee for cancellation (other than Notes described
in clauses (i)(A)(1) or (i)(A)(2) above)
(1) have become due and payable, or
(2) are to be called for redemption pursuant to
Article Ten within one year under arrangements
satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture Trustee in the name,
and at the expense, of the Issuer,
and the Issuer, in the case of either of clauses (i)(B)(1) or
(i)(B)(2) above, has irrevocably deposited or caused to be
irrevocably deposited in a segregated account with the
Indenture Trustee, in trust for such purpose, an amount of
Cash sufficient to pay and discharge the entire indebtedness
on such Notes not theretofore delivered to the Indenture
Trustee for cancellation, for principal and interest to the
Class A-1 Stated Maturity, the Class A-2 Stated Maturity, the
Class A-3 Stated Maturity, the Class A-4 Stated Maturity or
Class B Stated Maturity, as applicable, or the applicable
Redemption Date, as the case may be, and in the case of Notes
which were not paid at the Class A-1 Stated Maturity, the
Class A-2 Stated Maturity, the Class A-3 Stated Maturity, the
Class A-4 Stated Maturity or Class B Stated Maturity, as
applicable, for all overdue principal and all interest payable
on such Notes through the next succeeding Distribution Date
therefor, in each case without reliance upon anticipated
investment earnings on such Cash, and if any Notes are to be
redeemed prior to the Class A-1 Stated Maturity, the Class A-2
Stated Maturity, the Class A-3 Stated Maturity, the Class A-4
Stated Maturity or Class B Stated Maturity, as applicable, the
Issuer has made irrevocable arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption by
the Indenture Trustee in the name and at the expense of the
Issuer;
(ii) the Issuer has paid or caused to be paid all other
amounts payable hereunder or under any of the Transaction
Documents by the Issuer; and
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(iii) the Issuer has delivered to the Indenture
Trustee and the Servicer an Officer's Certificate and an
Opinion of Counsel stating that all conditions precedent
herein provided for the satisfaction and discharge of this
Indenture have been complied with.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the provisions of Articles Eight and Nine hereof, the obligations of
the Indenture Trustee to Noteholders and the Issuer under Section 3.03 hereof,
of the Issuer to the Indenture Trustee under Section 6.07 hereof, of the
Indenture Trustee to Noteholders under Section 4.02 hereof, and of the Indenture
Trustee under Section 6.17 hereof, and the provisions of this Indenture with
respect to registration of transfers of Notes, replacement of mutilated,
destroyed, lost or stolen Notes, and rights to receive payments of principal of
and interest on the Notes, shall survive the termination of this Indenture.
SECTION 4.02. APPLICATION OF TRUST MONEY. All money deposited
with the Indenture Trustee pursuant to Section 4.01 hereof shall be held in
trust and applied by the Indenture Trustee, in accordance with the provisions of
the Notes and this Indenture, as the case may be, to the payment, either
directly or through any Paying Agent, as the Indenture Trustee may determine, to
the Persons entitled thereto, of the principal and any interest for whose
payment such money has been deposited with the Indenture Trustee.
ARTICLE FIVE -- DEFAULTS AND REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default", wherever
used herein, means, with respect to the Notes, any one of the following events
(whatever the reason for such Event of Default, and whether it shall be
voluntary or involuntary, or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if the Issuer shall default in the payment of any interest
or principal on any Note for a period of five Business Days
after any such payment is due;
(b) failure on the part of the Issuer duly to observe or
perform in any material respect any other covenants or agreements of
the Issuer set forth in any of the Transaction Documents, or any
representation or warranty made by the Issuer in any Transaction
Document shall fail to have been correct in any material respect when
made or given, which failure materially and adversely affects the
rights of the Holders of the Notes and which continues unremedied and
continues to affect materially and adversely the rights of the Holders
of the Notes 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 Issuer by the Indenture Trustee, or (ii) to the Issuer and to
the Indenture Trustee by the Holders of Notes representing not less
than 25% of the aggregate Percentage Interests (voting as a single
Class);
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(c) the Issuer shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or the Issuer
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 Issuer 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; or
(d) any order for relief against the Issuer 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 Issuer 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 Issuer or of any
substantial part of its property, or for the winding up or liquidation
of its affairs, shall have been entered, and any such order or decree
shall remain unstayed and in effect for a period of 60 consecutive
days.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
(a) If an Event of Default occurs and is continuing and no
election to act in accordance with the provisions of Section 5.05 shall have
been made (or, if made, have been rescinded), then and in every such case the
Indenture Trustee or Noteholders representing not less than 25% of the aggregate
Percentage Interests (voting as a single Class) may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
Notes shall become immediately due and payable; provided, that, if an Event of
Default specified in Section 5.01(c) or (d) hereof shall occur, the Notes shall
become immediately due and payable automatically without the giving of any
notice.
(b) At any time after such a declaration of acceleration of
maturity has been made and before a judgment or decree for payment of the money
due has been obtained by the Indenture Trustee as hereinafter in this Article
provided, Noteholders representing more than 50% of the aggregate Percentage
Interests (voting as a single Class), by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
(i) (A) the Issuer has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
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(1) all payments of principal and interest
on the Notes and all other amounts which would then
be due hereunder or upon the Notes if the Event of
Default giving rise to such acceleration had not
occurred; and
(2) all sums paid or advanced by the
Indenture Trustee hereunder and the reasonable
compensation and reasonable and documented expenses,
disbursements and advances of the Indenture Trustee,
its agents and counsel; and
(B) all Events of Default, other than the
nonpayment of the interest on or the principal of the Notes
which have become due solely by such acceleration, have been
cured or waived as provided in Section 5.15 hereof; or
(ii) the Indenture Trustee elects or is required to
act in accordance with the provisions of Section 5.05 with
respect to the Event of Default that gave rise to such
declaration.
(c) No such rescission shall affect any subsequent Event
of Default or impair any right consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY INDENTURE TRUSTEE. The Issuer covenants that if an Event of
Default shall occur and be continuing, the Issuer will, upon demand of the
Indenture Trustee in accordance with the provisions of this Indenture, pay to
it, for the benefit of the Noteholders, (a) the entire unpaid principal amount
of all Notes; (b) interest on the entire unpaid principal amount of all Notes
and interest on any principal and accrued interest on such Notes that was not
paid when due, at the applicable Overdue Interest Rate but only to the extent
that payments of interest at such rate shall be legally enforceable; and (c) in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation and reasonable
and documented expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel (including in-house counsel).
If the Issuer fails to pay such amounts forthwith upon such
demand, the Indenture Trustee, in its own name and as Indenture Trustee of an
express trust, may institute a Proceeding for the collection of the sums so due
and unpaid, and may prosecute such Proceeding to judgment or final decree, and
may enforce the same against the Issuer or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law.
If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Noteholders by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in
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this Indenture or in aid of the exercise of any power granted herein, or enforce
any other proper remedy.
SECTION 5.04. REMEDIES. If an Event of Default shall have
occurred and be continuing, the Indenture Trustee may, to the extent not
inconsistent with the provisions of Section 5.05 hereof, if applicable, do one
or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and the
Trust Estate moneys adjudged due;
(b) subject to Section 5.17 hereof, sell the Trust Estate or
any portion thereof or rights or interest therein, at one or more public or
private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the UCC or
other applicable law and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of the
Notes hereunder; and
(e) as provided in Section 6.15 of the Securitization Trust
Agreement, direct the Owner Trustee with regard to appropriate actions
thereunder.
SECTION 5.05. OPTIONAL PRESERVATION OF TRUST ESTATE.
Notwithstanding anything in this Indenture to the contrary (including, without
limitation, Sections 5.14 and 5.17), if the Notes have been declared due and
payable (and such declaration shall not have been rescinded or annulled), then
the Indenture Trustee may, in its sole discretion, retain the Trust Estate and
apply all amounts receivable with respect to the Trust Estate to the payment of
principal and interest on the Notes as and when such principal and interest
would have become due pursuant to the terms of the Notes and the Transaction
Documents if there had not been a declaration of acceleration of the Maturity of
the Notes.
SECTION 5.06. INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other similar Proceeding relative to
the Issuer or any other obligor upon any of the Notes or the property of the
Issuer or of such other obligor or their respective creditors, the Indenture
Trustee (irrespective of whether the Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Issuer for the payment of
overdue principal of or any interest on the Notes) and the Owner Trustee shall
be entitled and empowered, by intervention in such Proceeding or otherwise:
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(i) to file such proofs of claim for the whole
amount owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee and the Owner Trustee (including
any claim for the reasonable compensation and reasonable and documented
expenses, disbursements and advances of the Indenture Trustee and the
Owner Trustee and their respective agents and counsel, including
in-house counsel) and of the Noteholders allowed in such Proceeding,
and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such Proceeding is hereby authorized by each Noteholder to make
such payments to the Indenture Trustee and the Owner Trustee and, in the event
that the Indenture Trustee shall consent to the making of such payments directly
to the Noteholders, to pay to the Indenture Trustee and the Owner Trustee any
amount due to it for the reasonable compensation and reasonable and documented
expenses, disbursements and advances of the Indenture Trustee and the Owner
Trustee and their respective agents and counsel (including in-house counsel),
and any other Capped Indenture Trustee Administrative Expenses due the Indenture
Trustee and Capped Owner Trustee Administrative Expenses due the Owner Trustee.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment, or composition
affecting any of the Notes or the rights of any Holder thereof, or to authorize
the Indenture Trustee to vote in respect of the claim of any Noteholder in any
such Proceeding.
SECTION 5.07. INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF NOTES. All rights of action and claims under this Indenture or any
of the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee
shall be brought in its own name as Indenture Trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation and reasonable and documented expenses, disbursements
and advances of the Indenture Trustee, its agents and counsel (including
in-house counsel), be for the ratable benefit of the Noteholders in respect of
which such judgment has been recovered.
SECTION 5.08. APPLICATION OF MONEY COLLECTED. Except as
provided in Section 5.05 hereof, if applicable, any money collected by the
Indenture Trustee pursuant to this Article Five shall be applied in the order
provided for Principal Collections and Interest Collections received during the
Amortization Period under the Securitization Trust Agreement at the date or
dates fixed by the Indenture Trustee and, in case of the distribution of the
entire amount due on account of principal of and any interest on the Notes, upon
presentation and surrender thereof; provided that amounts received upon a Sale
of all or any portion of the Trust Estate and treated
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as Principal Collections will be distributed first, upon the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, ratably, without
preference or priority of any kind, and second, upon the Class B Notes, ratably,
without preference or priority of any kind, according to such amounts due and
payable on such Notes; and provided further that the Servicer, on behalf of the
Indenture Trustee, shall determine conclusively without liability for such
determination the amount of the proceeds of such Sale which are allocable to
Interest Collections and the amount of such proceeds which are allocable to
Principal Collections.
SECTION 5.09. LIMITATION ON SUITS.
(a) No Noteholder shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder unless:
(i) such Holder has previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(ii) Noteholders representing not less than 25% of
the aggregate Percentage Interests (voting as a single Class)
shall have made a written request to the Indenture Trustee to
institute Proceedings in respect of such Event of Default in
its own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the
Indenture Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with
such request;
(iv) the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has
failed to institute any such Proceeding; and
(v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such
60-day period by Noteholders representing more than 50% of the
aggregate Percentage Interests (voting as a single Class);
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Noteholders or to obtain or to seek to obtain priority or preference over
any other Holders (other than the subordination of the Class B Notes to the
extent set forth in the Transaction Documents) or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all Noteholders.
(b) No Noteholder shall have any right to vote (except as provided in
the Transaction Documents) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to any of the
Transaction Documents, nor shall any Noteholder be
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under any liability to any third person by reason of any action pursuant to any
provision of the Transaction Documents. However, in connection with any action
as to which Noteholders are entitled to vote or consent under the Transaction
Documents, the Issuer may set a record date for purposes of determining the
identity of Noteholders entitled to vote or consent in accordance with TIA
Section 316(c).
SECTION 5.10. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
NOTE PAYMENTS. Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the right which is absolute and unconditional to
receive payment of the principal of and interest on such Note, on or after the
due date therefor as specified in such Note, and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 5.11. RESTORATION OF RIGHTS AND REMEDIES. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture or any other Transaction Document and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Noteholder, then and in
every such case the Issuer, the Indenture Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as though
no such Proceeding had been instituted.
SECTION 5.12. RIGHTS AND REMEDIES CUMULATIVE. Except as
otherwise expressly provided in Section 2.05 hereof, no right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.13. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Indenture Trustee or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article Five or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
SECTION 5.14. CONTROL BY NOTEHOLDERS. Subject to the
provisions of Sections 5.09, 6.03(d) and 6.03(e) hereof, the Holders of Notes
representing more than 50% of the aggregate Percentage Interests (voting as a
single Class) shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or with respect to exercising any trust power conferred on
the Indenture Trustee, including without limitation the Indenture Trustee's
power to direct the action of the Owner Trustee pursuant to Section 6.15 of the
Securitization Trust Agreement; provided that:
(a) such direction shall not, as determined by the
Indenture Trustee based on the advice of counsel, be in
conflict with any rule of law or with this Indenture;
(b) any Sale of the Trust Estate shall be subject to
Section 5.17 hereof;
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(c) if any other provision of the Transaction
Documents requires the vote of a greater Percentage Interest
for a particular action, or Class voting, such greater
Percentage Interest or Class voting shall be required; and
(d) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee which is not
inconsistent with such direction; provided, however, that,
subject to Section 6.01 hereof, the Indenture Trustee need not
take any action which it determines might involve it in
liability or be unjustly prejudicial to the Noteholders not
consenting.
SECTION 5.15. WAIVER OF PAST DEFAULTS. The Holders of Notes
representing more than 50% of the aggregate Percentage Interests, (voting as a
single Class), may on behalf of the Holders of all the Notes waive any past
Unmatured Event of Default or Event of Default hereunder and its consequences,
except that Holders of Notes representing 100% of the aggregate Percentage
Interest shall be required to waive an Unmatured Event of Default or Event of
Default:
(a) in the payment of principal of or interest due on
any Note, or
(b) in respect of a covenant or provision hereof
which under Section 9.03 hereof cannot be modified or amended
without the consent of the Holder of each Outstanding Note
affected.
Upon any such waiver, such Unmatured Event of Default or Event
of Default shall cease to exist and shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Unmatured Event of Default or Event of Default or impair any right
consequent thereon.
SECTION 5.16. UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, including those of the Indenture
Trustee (except that the Indenture Trustee need not be required to post an
undertaking to pay its costs of any such suit), and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
then aggregate Percentage Interests, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
on or after the Maturity of such Note.
SECTION 5.17. SALE OF TRUST ESTATE.
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(a) If an Event of Default shall have occurred and be
continuing, the Indenture Trustee may, and, subject to paragraph (b) of this
Section 5.17, upon receipt of a notice from Noteholders representing more than
50% of the aggregate Percentage Interests of the Class A Notes (voting as a
single Class) or 50% of the aggregate Percentage Interests of all Notes (voting
as a single Class), shall (i) publish a notice in Authorized Newspapers that the
Indenture Trustee intends to sell, dispose of or otherwise liquidate (a "Sale")
the 99.8% 1997-B SUBI Interest, the 99.8% 1997-B SUBI Certificate and the other
property of the Trust Estate in a commercially reasonable manner. Following such
publication, the Indenture Trustee shall, unless otherwise prohibited by
applicable law from any such action, sell, dispose of, or otherwise liquidate
the 99.8% 1997-B SUBI Interest, the 99.8% 1997-B SUBI Certificate and the other
property of the Trust Estate, 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. The Transferor
and the Servicer shall be permitted to bid for the Trust Estate. The Indenture
Trustee may obtain a prior determination from the conservator, receiver, or
trustee in bankruptcy of the Issuer that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The power to
effect any Sale of any portion of the Trust Estate pursuant to Section 5.04
hereof and this Section 5.17 shall not be exhausted by any one or more Sales as
to any portion of such Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes and under this Indenture shall have been paid. The
Indenture Trustee may from time to time postpone any Sale by public announcement
made at the time and place of such Sale.
(b) Notwithstanding the foregoing, the Indenture Trustee shall
not sell or otherwise dispose of the Trust Estate following an Event of Default
(i) unless the anticipated proceeds of such Sale or other disposition
distributable to the Noteholders will be sufficient to discharge in full the
amounts then due and unpaid upon the Notes for principal and interest, or (ii)
if such proceeds will not be sufficient, unless the Indenture Trustee obtains
the consent of the Holders of all Notes then Outstanding, provided that without
the consent or direction to the contrary by the Holders of all Notes then
Outstanding, at any Sale at which no other Person bids an amount equal to or
greater than the amount described in clause (i) above, the Indenture Trustee
shall bid on behalf of the Noteholders an amount at least equal to $1.00 more
than the highest other bid.
(c) The Indenture Trustee may bid for and acquire any portion
of the Trust Estate in connection with a Sale thereof, and may pay all or part
of the purchase price by crediting against amounts owing on the Notes or other
amounts secured by this Indenture, all or part of the net proceeds of such Sale
after deducting the costs, charges and expenses incurred by the Indenture
Trustee in connection with such Sale notwithstanding the provisions of any other
Section hereof. The Notes need not be produced in order to complete any such
Sale. The Indenture Trustee may, subject to this Indenture, hold, lease,
operate, manage or otherwise deal with any property so acquired in any manner
permitted by law.
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(d) The Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion of
a Trust Estate in connection with a Sale thereof. In addition, the Indenture
Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the
Issuer to transfer and convey its interest in any portion of a Trust Estate in
connection with a Sale thereof (including changing the designation of the
secured party on any financing or continuation statements), and to take all
action necessary to effect such Sale. No purchaser or transferee at such a Sale
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
SECTION 5.18. ACTION ON NOTES. The Indenture Trustee's right
to seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the Lien of this Indenture nor any
rights or remedies of the Indenture Trustee or Noteholders shall be impaired by
the recovery of any judgment by the Indenture Trustee against the Issuer or by
the levy of any execution under such judgment upon any portion of the Trust
Estate.
SECTION 5.19. NOTES HELD BY ISSUER OR AFFILIATES NOT TO SHARE
IN DISTRIBUTION. Notes owned or held by, or for the account or benefit of, the
Issuer or any Affiliate thereof shall not be entitled to share in any payment or
distribution provided for in this Article.
ARTICLE SIX -- THE INDENTURE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture and, pursuant to clause (e) below, the other
Transaction Documents; and
(ii) in the absence of bad faith on its part or as
otherwise required by TIA, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates, opinions or reports furnished to the Indenture
Trustee and conforming to the requirements of this Indenture,
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture, but need not verify the accuracy of the contents
thereof or whether procedures specified by or pursuant to the
provisions of this Indenture have been followed in the
preparation thereof.
(b) In case an Event of Default has occurred and is
continuing, the Indenture Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the
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same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances.
(c) No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of Noteholders
representing more than 50% of the aggregate Percentage
Interests (voting as a single Class) relating to the time,
method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or
power conferred upon the Indenture Trustee, under this
Indenture; and
(iv) no provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of and affording protection to the Indenture Trustee shall be subject to the
provisions of this Section.
(e) The Indenture Trustee agrees to comply with all of the
provisions of and to perform all of the obligations under the Transaction
Documents required to be complied with or performed by the Indenture Trustee,
whether or not the Indenture Trustee is expressly a party thereto.
SECTION 6.02. NOTICE OF UNMATURED EVENT OF DEFAULT. Within 60
days after the occurrence of any Unmatured Event of Default, the Indenture
Trustee shall transmit by mail notice of such Unmatured Event of Default
hereunder known to it to all Noteholders, unless such Unmatured Event of Default
shall have been cured or waived; provided, however, that except in the case of
an Unmatured Event of Default in the payment of the principal of or any interest
on any Note, the Indenture Trustee shall be protected in withholding such notice
if and so long as a corporate trust committee of the Corporate Trust Department
and/or Responsible Officers of the
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Indenture Trustee in good faith determine(s) that the withholding of such notice
is in the interests of the Noteholders.
SECTION 6.03. CERTAIN RIGHTS OF INDENTURE TRUSTEE. Except as
otherwise provided in Section 6.01 hereof:
(a) in the absence of negligence or bad faith, the Indenture
Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note
or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Request or Issuer Order;
(c) whenever in the administration of this Indenture the
Indenture Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Indenture Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Indenture Trustee may consult with counsel, and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at
the request or direction of any of the Noteholders pursuant to this
Indenture, unless such Noteholders shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document;
(g) the Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder; and
(h) the Indenture Trustee shall not be liable for any action
taken, suffered or omitted by it without negligence and in good faith
and believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Indenture.
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SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
NOTES. The recitals contained herein and in the Notes, except the certificates
of authentication on the Notes, shall be taken as the statements of the Issuer,
and the Indenture Trustee assumes no responsibility for their correctness. The
Indenture Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Notes. The Indenture Trustee shall not be accountable
for the use or application by the Issuer of Notes or the proceeds thereof.
SECTION 6.05. MAY HOLD NOTES. The Indenture Trustee, any
Paying Agent, Note Registrar, Authenticating Agent or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or pledgee
of Notes and may otherwise deal with the Issuer with the same rights it would
have if it were not Indenture Trustee, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
SECTION 6.06. MONEY HELD IN TRUST. Money held by the Indenture
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by this Indenture or by law. The Indenture Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Issuer and except to the extent of income or other
gain on investments which are obligations of the Indenture Trustee and income or
other gain actually received by the Indenture Trustee on Permitted Investments.
SECTION 6.07. INDENTURE TRUSTEE'S FEES AND EXPENSES.
(a) The Indenture Trustee shall be entitled to reasonable
compensation for all services rendered by it pursuant to the Transaction
Documents and in the exercise and performance of any of the powers and duties of
the Indenture Trustee under this Indenture, and payment or reimbursement upon
its request for all reasonable expenses, disbursements and advances incurred or
made by the Indenture Trustee in its capacity as Indenture Trustee in accordance
with any of the provisions of this Indenture (including the reasonable
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 the Transferor or the Issuer under the Transaction
Documents. Such compensation and reimbursement shall be paid as set forth in
Section 3.03(b) of the Securitization Trust Agreement or Section 10.01 of the
1997-B SUBI Supplement (in the definitions of the terms "Principal Collections"
and "Interest Collections"). Additionally, the Transferor, pursuant to Section
6.02(iii) or (v) of the Securitization Trust Agreement, may agree to
indemnify the Indenture Trustee under certain circumstances.
(b) The Indenture Trustee shall not institute any Proceeding,
or make any filing, on account of the Issuer failing to perform its obligations
under this Section that might result, with the giving of notice or the passage
of time or both, in the occurrence of any Event of Default specified in Sections
5.01(c) or 5.01(d) hereof. Notwithstanding the failure of the Issuer to perform
any of its obligations under this Section, the Indenture Trustee shall continue
to perform its obligations under this Indenture.
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(c) Prior to the termination of this Indenture, the
obligations of the Indenture Trustee hereunder shall not be subject to any
defense, counterclaim or right of offset which the Indenture Trustee in its
individual capacity has or may have against the Issuer, the Transferor or the
Servicer, whether in respect of this Indenture, the Notes, the Transaction
Documents or otherwise, and the Indenture Trustee hereby waives any and all
statutory or common law rights of setoff or banker's lien against the Issuer or
any of its assets that the Indenture Trustee may have in any capacity other than
on behalf of the Noteholders, including without limitation, any rights under UCC
Section 9-306(4)(d) as enacted in the State of Illinois.
SECTION 6.08. ELIGIBILITY; CORPORATE INDENTURE TRUSTEE
REQUIRED.
(a) This Indenture shall always have a Indenture Trustee who
satisfies the requirements of TIA Section 310(a)(1).
(b) There shall at all times be a Indenture Trustee hereunder
that shall (i) be a corporation organized and doing business under the laws of
the United States or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$100,000,000, and subject to supervision or examination by federal or State
authority and (ii) either have a rating from Moody's for its long term deposits
of at least Baa3 or be otherwise acceptable to each of Moody's and Standard &
Poor's, as evidenced by a letter to such effect from each of Moody's and
Standard & Poor's. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes 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.
(c) Neither the Issuer nor any affiliate thereof may serve as
Indenture Trustee.
SECTION 6.09. CESSATION OF ELIGIBILITY.
If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.11 hereof.
(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Issuer and the Noteholders. If an instrument of
acceptance by a successor Indenture Trustee shall not have been delivered to the
Indenture Trustee within 30 days after the
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giving of such notice of resignation, the resigning Indenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
(c) The Indenture Trustee may be removed at any time by Act of
Noteholders representing more than 50% of the aggregate Percentage Interests
(voting as a single Class) delivered to the Indenture Trustee and to the Issuer.
(d) If at any time:
(i) the Indenture Trustee shall cease to be eligible
under Section 6.08 hereof and shall fail to resign after
written request therefor by the Issuer or by any Noteholder,
or
(ii) the Indenture Trustee shall become incapable of
acting or shall be adjudged bankrupt or insolvent, or a
receiver of the Indenture Trustee or of its property shall be
appointed, or any public officer shall take charge or control
of the Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case (A) the Issuer may remove the Indenture Trustee, or (B)
subject to Section 5.16 hereof, any Noteholder who has been a bona fide
Noteholder for at least six months may, on behalf of such Noteholder and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee. In any event, should the Indenture Trustee cease to be eligible under
Section 6.08(b), the Issuer shall, within thirty (30) days after notice thereof,
remove the Indenture Trustee and replace the Indenture Trustee with a successor
Indenture Trustee meeting the eligibility requirements of Section 6.08.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Indenture Trustee for any cause, the Issuer shall promptly appoint a successor
Indenture Trustee, provided that Noteholders representing more than 50% of the
aggregate Percentage Interests (voting as a single class) shall not have
objected to such appointment. If within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Indenture
Trustee shall be appointed by Act of Noteholders representing more than 50% of
the aggregate Percentage Interests (voting as a single Class) delivered to the
Issuer and the retiring Indenture Trustee, the successor Indenture Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Indenture Trustee and supersede the successor Indenture Trustee
appointed by the Issuer. If no successor Indenture Trustee shall have been so
appointed by the Issuer or Noteholders and shall have accepted appointment in
the manner hereinafter provided, any Noteholder who has been a bona fide
Noteholder for at least six months may, on behalf of such Noteholder and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee. The appointment by the Noteholders
or a court of
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a successor Indenture Trustee shall not invalidate or void any act taken by a
prior successor Indenture Trustee appointed by the Issuer.
(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee by mailing written notice of such event to the Noteholders and each of
Moody's and Standard & Poor's. Each such notice shall include the name of the
successor Indenture Trustee and the address of its Corporate Trust Office.
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) Every successor Indenture Trustee appointed hereunder
shall execute, acknowledge and deliver to the Issuer and the retiring Indenture
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Indenture Trustee shall become effective and such
successor Indenture Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Indenture Trustee; but, on request of the Issuer or the successor Indenture
Trustee, such retiring Indenture Trustee shall, upon payment of its charges in
connection therewith and all amounts owing under Section 6.07(a) hereof, execute
and deliver an instrument transferring to such successor Indenture Trustee all
the rights, powers and trusts of the retiring Indenture Trustee, and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder. Upon request of any
such successor Indenture Trustee, the Issuer shall execute and deliver any and
all instruments necessary or appropriate for more fully and certainly vesting in
and confirming to such successor Indenture Trustee all such rights, powers and
trusts.
(b) No successor Indenture Trustee shall accept its
appointment unless at the time of such acceptance such successor Indenture
Trustee shall be qualified and eligible under this Article.
(c) Upon any successor Indenture Trustee being appointed and
accepting its appointment, the Issuer shall, within 120 days thereafter, cause
all acts to be done and file all instruments in each jurisdiction to the extent
necessary to perfect in the name of the successor Indenture Trustee the Lien in
the Trust Estate Granted by this Indenture to the same extent as such Lien had
previously been perfected in the Indenture Trustee.
SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS OF INDENTURE TRUSTEE. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Indenture Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. Upon request of any successor to the
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Indenture Trustee pursuant to this Section 6.12, the Issuer shall execute any
and all instruments necessary or appropriate for more fully and certainly
vesting in and confirming to such successor Indenture Trustee all rights, powers
and trusts of the Indenture Trustee. In case any Notes have been authenticated,
but not delivered, by the Indenture Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Indenture Trustee may
adopt such authentication and deliver the Notes so authenticated with the same
effect as if such successor Indenture Trustee had itself authenticated such
Notes.
SECTION 6.13. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time
or times, for the purpose of meeting the legal requirements of any jurisdiction
in which any of the Trust Estate may at any time be located, the Issuer and the
Indenture Trustee shall have power to appoint, and, upon the written request of
the Indenture Trustee or of Noteholders representing at least 25% of the
aggregate Percentage Interests (acting as a single Class), the Issuer shall for
such purpose join with the Indenture Trustee in the execution, delivery and
performance of all instru ments and agreements necessary or proper to appoint
one or more banks or trust companies approved by the Indenture Trustee either to
act as co-trustee, jointly with the Indenture Trustee, of all or any part of
such Trust Estate, or to act as separate trustee of any such property, in either
case with such powers as may be provided in the instrument of appointment, and
to vest in such Person or Persons in the capacity aforesaid any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section. If the Issuer does not join in such appointment within 15 days
after the receipt by it of a request to do so, or in case an Event of Default
has occurred and is continuing, the Indenture Trustee alone shall have the power
to make such appointment.
Should any written instrument from the Issuer be required by
any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(a) The Notes shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, Cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee or by
the Indenture Trustee and such co-trustee or separate trustee jointly,
as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or
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unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in
writing executed by it, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section, and, in
case an Event of Default has occurred and is continuing, the Indenture
Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the
Issuer. Upon the written request of the Indenture Trustee, the Issuer
shall join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-trustee
or separate trustee so resigned or removed may be appointed in the
manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee, or any other such Indenture Trustee hereunder, and each
co-trustee or separate trustee hereunder shall not be liable for any
action taken, suffered or omitted by it without negligence and in good
faith and believed by it to be authorized or within the discretion or
powers conferred upon it by this Indenture.
(e) Any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 6.14. AUTHENTICATING AGENT. Upon the request of the
Issuer, the Indenture Trustee shall appoint an Authenticating Agent with power
to act on its behalf and subject to its direction in the authentication and
delivery of the Notes designated for such authentication by the Issuer and
containing provisions therein for such authentication (or with respect to which
the Issuer has made other arrangements, satisfactory to the Indenture Trustee
and such Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges of Notes under Sections
2.04 and 2.05 hereof, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those Sections to
authenticate and deliver Notes. For all purposes of this Indenture, the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section shall be deemed to be the authentication and delivery of Notes by
the Indenture Trustee. Such Authenticating Agent shall at all times be a Person
that meets the requirements of Section 6.08 hereof for the Indenture Trustee
hereunder.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation is otherwise
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eligible under this Section, without the execution or filing of any further act
on the part of the parties hereto or the Authenticating Agent or such successor
corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Indenture Trustee and the Issuer. The
Indenture Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
the Issuer. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section, the Indenture Trustee may promptly appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Issuer and shall mail notice of such appointment to all Noteholders as the
names and addresses of such Holders appear on the Note Register.
The Indenture Trustee agrees to pay to the Authenticating
Agent from time to time reasonable compensation for its services and the
Indenture Trustee shall be entitled to be reimbursed for such payments, subject
to Section 6.07 hereof. The provisions of Sections 2.09, 6.04 and 6.05 hereof
shall be applicable to any Authenticating Agent.
SECTION 6.15. WITHHOLDING TAXES. Whenever it is acting as a
Paying Agent for the Notes, the Indenture Trustee shall comply with all
requirements of the Code, and all regulations thereunder, with respect to the
withholding from any payments made on such Notes of any withholding taxes
imposed thereon and with respect to any reporting requirements in connection
therewith.
SECTION 6.16. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
ISSUER. The Indenture Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
SECTION 6.17. NONPETITION COVENANT. Notwithstanding any prior
termination of this Agreement, the Indenture Trustee (or any co-trustee or
separate trustee appointed pursuant to Section 6.13) shall not, prior to the
date which is one year and one day after the payment in full of the Notes,
acquiesce, petition or otherwise invoke or cause the Issuer, the Transferor,
the Origination Trustee or the Origination Trust to invoke the process of any
court or governmental authority for the purpose of commencing or sustaining a
case against the Issuer under any federal or State bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer, the Transferor, the
Origination Trustee or the Origination Trust or any substantial part of its
respective property, or ordering the winding up or liquidation of the affairs
of the Issuer, the Transferor, the Origination Trustee or the Origination Trust
in each case because of any fee, expense reimbursement or other obligation of
the Issuer, the Transferor, the Origination Trustee or the Origination Trust
due to the Indenture Trustee hereunder for its own account, provided, however,
that nothing contained in this Section 6.17 shall be construed to limit or
restrict in any way the rights, powers or remedies of the Indenture Trustee
acting on behalf of the Noteholders or of any Noteholder.
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ARTICLE SEVEN -- NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) quarterly, not more than 45 days after each March 15,
June 15, September 15, and December 15 Distribution Date, a list in such form as
the Indenture Trustee may reasonably require, of the names and addresses of
Noteholders, and (b) at such other times, as the Indenture Trustee may
reasonably request in writing, within 30 days after receipt by the Issuer of any
such request, a list of similar form and content; provided, however, that so
long as either (y) the Indenture Trustee is the Note Registrar or (z) a Class of
Notes is issued in book-entry form, no such list (with respect to such Class, if
applicable) shall be required to be furnished. Any such list which is required
to be furnished may be dated as of a date not more than 15 days prior to the
time such list is furnished and need not include information received after such
date.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 hereof and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in said Section 7.01 upon receipt
of a new list so furnished.
(b) If three or more Noteholders or holders of Notes
evidencing not less than 25% of the aggregate Percentage Interests of any Class
(hereinafter referred to as "Applicants") apply in writing to the Indenture
Trustee, and such application states that the Applicants desire to communicate
with other Noteholders with respect to their rights under this Agreement or
under the Notes and such application is accompanied by a copy of the
communication that such Applicants propose to transmit, then the Indenture
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 Noteholders. Every Noteholder, by receiving and holding a Note, agrees with
the Servicer, the Transferor, the Issuer and the Indenture Trustee that neither
the Servicer, the Transferor, the Issuer nor the Indenture Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Note holders under the Indenture, regardless of the source
from which such information was derived.
(c) The Note Registrar shall furnish or cause to be furnished
to the Servicer, within 15 days after receipt by the Note 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 Noteholders as of the most
recent Record Date.
SECTION 7.03. REPORTS BY INDENTURE TRUSTEE; RESPONSES TO
NOTEHOLDER INQUIRIES.
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(a) Within 60 days after December 31 in each year, commencing
with the December 31 that is six months after the Closing Date, the Indenture
Trustee shall mail to the Holders a brief report dated as of such reporting date
that complies with TIA Section 313(a); provided, however, if no event described
in TIA Section 313(a) shall have occurred within such calendar year no report
need be transmitted. The Indenture Trustee also shall comply with TIA Section
313(b). The Indenture Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
(b) A copy of each such report shall, at the time of such
transmission to Noteholders, be filed by the Indenture Trustee with each stock
exchange upon which the Notes are listed, and also with the Commission. The
Issuer will notify the Indenture Trustee when the Notes are listed on any stock
exchange.
(c) Copies of the above reports need not be mailed to
Noteholders who have previously requested that they not receive copies of such
reports.
(d) The Indenture Trustee shall acknowledge and respond to any
reasonable inquiry of any Noteholder relating to the Trust Estate or this
Indenture, provided, however, that in making such response, the Indenture
Trustee shall have no obligation to (i) seek or obtain information not otherwise
within its possession or control or (ii) expend its own funds.
SECTION 7.04. REPORTS BY THE ISSUER. The Issuer will:
(a) File with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act; or, if the
Issuer is not required to file information, documents or reports pursuant to
either of said Sections, then it will file with the Indenture Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports that may be required pursuant to Section 13 or 15 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(b) File with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
(c) Transmit by mail to all Noteholders, as their names and
addresses appear in the Note Register, within 30 days after the filing thereof
with the Indenture Trustee, such summaries of any information, documents and
reports required to be filed by the Issuer pursuant
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to Subsections (a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT -- ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEYS. Except as otherwise
expressly provided herein or in the Transaction Documents, the Indenture Trustee
shall have the right, but not the obligation, to demand payment or delivery of,
and shall receive and collect, directly and without intervention or assistance
of any fiscal agent or other intermediary, all money and other property payable
to or receivable by the Indenture Trustee pursuant to this Indenture and the
other Transaction Documents. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate, and shall apply them as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture, if any default occurs in the making of any payment or performance
under any of the Transaction Documents, the Indenture Trustee may, and upon the
request of Noteholders representing more than 50% of the aggregate Percentage
Interests (voting as a single Class) shall, take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings, and including directing the Owner
Trustee under Section 6.15 of the Securitization Trust Agreement with regard to
appropriate action thereunder. Any such action shall be without prejudice to any
right to claim an Unmatured Event of Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article Five hereof.
SECTION 8.02. TRUST ACCOUNTS
(a) On or prior to the Closing Date, Issuer shall cause
Servicer to establish, in the name of the Indenture Trustee, for the benefit of
the Noteholders the Distribution Account pursuant to Section 3.01 of the
Securitization Trust Agreement, the 1997-B SUBI Collection Account pursuant to
Section 12.01 of the 1997-B SUBI Supplement , the 1997-B SUBI Lease Account
pursuant to Section 12.02 of the 1997-B SUBI Supplement and the Reserve Account
pursuant to Section 3.04 of the Securitization Trust Agreement.
(b) On each Distribution Date, subject to the provisions of
Article Five, the Indenture Trustee shall make all of the distributions set
forth in Section 3.03 of the Securitization Trust Agreement in the order of
priority set forth therein.
SECTION 8.03. GENERAL PROVISIONS REGARDING THE ACCOUNTS.
(a) All Accounts and all deposits therein shall constitute a
portion of the Trust Estate. Other than as expressly provided for in this
Indenture or the other Transaction Documents, neither the Issuer nor the
Servicer shall have any claim upon or rights in such Accounts or the deposits
therein or any right to cause the withdrawal of funds therefrom. So long as no
Event of Default shall have occurred and be continuing, but subject to the
remaining provisions of this Section 8.03, all or a portion of the funds in the
Accounts shall be separately
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invested and reinvested by the Indenture Trustee at the Servicer's direction in
one or more Permitted Investments. All income or other gain from investment of
moneys deposited in any Account shall be deposited therein immediately upon
receipt, and any loss resulting from such investment shall be charged to such
respective account, as the case may be.
(b) The Servicer shall not direct the Indenture Trustee to
make any investment of any funds in any Account or to sell any Permitted
Investment held in any Account except under the following terms and conditions:
(i) (A) each such investment shall be made in the name of the Indenture Trustee
(in its capacity as such) or its nominee (or, if, as indicated by an Opinion of
Counsel delivered to the Indenture Trustee, applicable law provides for
perfection of pledges of an investment not evidenced by a certificate or other
instrument through registration of such pledge on books maintained by or on
behalf of the issuer of such investment, such pledge may be so registered); (B)
the Indenture Trustee shall have sole physical control over such investment, the
income thereon and the proceeds thereof; and (C) any instrument evidencing such
investment shall be delivered directly to the Indenture Trustee or its agent;
and (ii) the proceeds of each such Sale of an investment shall be remitted by
the purchaser thereof directly to the Indenture Trustee for deposit in the
respective account or fund in which such investment was held.
(c) Absent negligence or bad faith on its part, the Indenture
Trustee shall not in any way be held liable by reason of any insufficiency in
any Accounts resulting from any loss on any Permitted Investment included
therein.
(d) All investments of funds in any Account and all sales of
Permitted Investments held in any such Account shall, except as otherwise
expressly provided in this Indenture, be made by the Indenture Trustee as
directed by the Servicer. Such direction may specify specific actions or may
be a general, standing order authorizing the Indenture Trustee to act within
certain general parameters or to act on written, telegraphic or telephonic
instructions of specified personnel or agents of the Servicer.
In the event that:
(i) the Servicer shall have failed to give investment
directions to the Indenture Trustee by 11:00 a.m., New York City time,
on any Business Day authorizing the Indenture Trustee to invest the
funds then in any Account;
(ii) an Event of Default shall have occurred but the
Notes shall not have been declared due and payable, or if the Notes
shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the related Trust Estate are being
applied in accordance with Section 5.05 hereof; or
(iii) an Event of Default shall have occurred, the
Notes shall have been declared due and payable, and amounts collected
or receivable from the related Trust Estate are being applied in
accordance with Section 5.08 hereof,
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the Indenture Trustee shall invest and reinvest the funds then in each such
account in United States Treasury Bills maturing no later than the Business Day
immediately preceding the next succeeding Distribution Date.
(e) Upon the satisfaction and discharge of this Indenture in
accordance with Article Four hereof, the Indenture Trustee shall pay or transfer
to the Issuer all remaining money or Permitted Investments then in the Accounts.
SECTION 8.04. RELEASE OF TRUST ESTATE.
(a) The Indenture Trustee may, and when required by the provisions of
this Indenture or the Transaction Documents shall, execute instruments to
release property from the lien of this Indenture and the Backup Security
Agreement, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article Eight shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding, release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture, release to Issuer or any other Person
entitled thereto any funds then on deposit in the Accounts and release any
property subject to the lien of the Backup Security Agreement.
(c) In particular, but without limitation of subparagraphs (a) and (b),
it is understood that the Servicer shall have the authority to sell and/or
reallocate out of the 1997-B SUBI free and clear of any Lien under this
Indenture and the Backup Security Agreement, 1997-B SUBI Assets in accordance
with the provisions of the Transaction Documents. In all circumstances other
than the foregoing, the Indenture Trustee shall release property from the lien
of this Indenture and the Backup Security Agreement pursuant to this paragraph
only upon receipt of an Issuer Request accompanied by an Officer's Certificate,
an Opinion of Counsel and (if required by the TIA) a certificate or opinion of
an Independent appraiser in accordance with TIA ss.ss. 314(c) and 314(d)(1),
in each case meeting any applicable requirements of Section 11.1.
SECTION 8.05. OPINION OF COUNSEL. The Indenture Trustee shall receive
at least seven days' notice when requested by Issuer to take any action pursuant
to Section 8.04(a) (other than as set forth in the first sentence of Section
8.04(c)), accompanied by copies of any instruments involved, and (also except as
set forth in the first sentence of Section 8.04(c)) the Indenture Trustee may
also require as a condition to such action, an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee, stating the legal effect of any
such action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been complied
with and such action will not materially and adversely impair the legal
interests of the Noteholders in contravention of the provisions of this
Indenture; provided that in no event shall such Opinion of Counsel be required
to express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely,
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without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to Indenture Trustee in connection
with any such action.
ARTICLE NINE -- SUPPLEMENTAL INDENTURES
SECTION 9.01. [INTENTIONALLY BLANK]
SECTION 9.02. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS. The Issuer and the Indenture Trustee, at any time and from time to
time, may amend the Indenture or enter into one or more indentures supplemental
hereto, only as to the extent provided in Section 4.01 of the Securitization
Trust Agreement.
SECTION 9.03. [INTENTIONALLY BLANK]
SECTION 9.04. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, in addition to any opinion of Counsel required
pursuant to Section 9.01 of the Securitization Trust Agreement, the Indenture
Trustee also shall be entitled to receive, an Opinion of Counsel stating that
the execution of such supplemental indenture conforms to the requirements of
TIA, to the extent applicable. Subject to Section 9.01 of the Securitization
Trust Agreement, the Indenture Trustee shall be fully protected in relying on
any such Opinion of Counsel. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.05. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Notes which have
theretofore been or thereafter are authenticated and delivered hereunder shall
be bound thereby.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee, the Issuer and the Company, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
SECTION 9.07. COMPLIANCE WITH TIA. Each supplemental
indenture shall comply with the applicable requirements therefor contained in
TIA.
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ARTICLE TEN -- OPTIONAL REDEMPTION OF NOTES
SECTION 10.01. GENERAL. (a) The Notes are subject to
redemption in whole, but not in part, at the direction of Transferor pursuant to
Section 7.02 of the Securitization Trust Agreement, on any Distribution Date on
which the Transferor exercises its option to purchase the corpus of the Trust
pursuant to said Section, for a redemption price equal to the Redemption Price
for such Notes. If the Notes are to be redeemed pursuant to this Section, the
Issuer shall furnish notice of such election to the Indenture Trustee not later
than the time required for the delivery of its notice that it desires to
purchase the corpus of the Trust pursuant to Section 7.02 of the Securitization
Trust Agreement. The Issuer shall deposit with the Indenture Trustee in the
Distribution Account the Redemption Price of the Notes to be redeemed as
required pursuant to Section 7.02 of the Securitization Trust Agreement
whereupon all such Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 10.02 to each Holder of a
Note.
SECTION 10.02. FORM OF REDEMPTION NOTICE. Notice of redemption
shall be given by the Issuer or by the Indenture Trustee pursuant to Section
11.05 in the name of and at the expense of the Issuer, not more than 30 days and
not less than 15 days prior to the applicable Redemption Date to each Holder of
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, or Class B
Notes, as applicable, such Holders being determined as of the most recent Record
Date.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note, and that,
upon the irrevocable deposit of such funds with the
Indenture Trustee on or before such Redemption Date,
the amount payable on each such Note shall be limited
to the Redemption Price therefor and that no interest
shall accrue on such Redemption Price or the Notes
for any period after the date fixed for redemption;
and
(d) the place where such Notes are to be surrendered for
payment of the Redemption Price, which shall be the
office or agency of the Issuer to be maintained as
provided in Section 3.02 hereof.
Failure to give notice of redemption, or any defect therein,
to any Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
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SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes so
to be redeemed shall, on the applicable Redemption Date, become due and payable
at the Redemption Price and (unless the Issuer shall default in the payment of
the Redemption Price) no interest shall accrue on the Notes for any period after
such Redemption Date. Upon surrender of such Notes for redemption in accordance
with said notice, such Notes shall be paid by the Issuer at the Redemption
Price.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the amount of the Redemption Price shall,
until paid, bear interest from the Redemption Date at the applicable Overdue
Interest Rate (but only to the extent permitted by applicable law).
ARTICLE ELEVEN -- MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or request by the Issuer to the
Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee (with a copy to the other party
hereto) an Officer's Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
(b) Every certificate or opinion (other than any Opinion of
Counsel) with respect to compliance with a condition or covenant provided for in
this Indenture (including one furnished pursuant to specific requirements of
this Indenture relating to a particular application or request) shall include:
(i) a statement that each individual signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
individual, such individual has made such examination or
investigation as is necessary to enable him or her to express
an informed opinion as to whether or not such covenant or
condition has been complied with; and
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(iv) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE
TRUSTEE. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer stating that the
information with respect to such factual matters is in the possession of the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Wherever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
and to the sufficiency of such certificate or report.
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture or any other
Transaction Document to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, where
it is hereby or thereby expressly required, to the Issuer, the Owner Trustee or
other applicable party. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein
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<PAGE> 58
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
or any other Transaction Document and (subject to Section 6.01 hereof)
conclusive in favor of the Indenture Trustee, the Issuer, the Owner Trustee or
other applicable party if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee the Issuer, the Owner Trustee or other applicable party in
reliance thereon, whether or not notation of such action is made upon such
Notes.
(e) In the event of any vote to be taken pursuant thereto by
Noteholders or Note Owners, no vote may be cast by the Holder or Note Owner of
any Note issued to or held on behalf of the Issuer, or any Affiliate thereof,
and the outstanding principal balance of each such Note shall be deducted from
the aggregate Percentage Interest before making any calculation of whether the
necessary percentage of such aggregate Percentage Interest has been met with
respect to any vote.
SECTION 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE AND ISSUER.
All demands notices or communications under this Indenture 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
Indenture Trustee, at the Corporate Trust Office of the Indenture Trustee; (ii)
in the case of the Owner Trustee, at the Corporate Trust Office of the Owner
Trustee. Any notice required or permitted to be mailed to a Noteholder shall be
given as provided in Section 11.05 hereof. Any notice so mailed within the
time prescribed in this Indenture shall be conclusively presumed to have been
duly given, whether or not the Noteholder shall receive such notice.
SECTION 11.05. NOTICES AND REPORTS TO NOTEHOLDERS; WAIVER OF
NOTICES. Where this Indenture or any other Transaction Document provides for
notice to Noteholders of any event or the mailing of any report to Noteholders,
such notice or report shall be sufficiently given (unless otherwise herein
expressly provided) if mailed, first-class postage prepaid, or
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<PAGE> 59
delivered by prepaid courier service to each Noteholder affected by such event
or to whom such report is required to be mailed, at the address of such
Noteholder as it appears on the Note Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such notice
or the mailing of such report. In any case where notice or report to Noteholders
is mailed or transmitted in the matter provided above, neither the failure to
mail or transmit such notice or report, nor any defect in any notice or report
so mailed or transmitted, to any particular Noteholder shall affect the
sufficiency of such notice or report with respect to other Noteholders, and any
notice or report which is mailed or transmitted in the manner herein provided
shall be conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be reasonable under the circumstances to
the Indenture Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 11.06. RULES BY INDENTURE TRUSTEE AND AGENTS. The
Indenture Trustee may make reasonable rules for any meeting of Noteholders. Each
of the Note Registrar, Paying Agent or any Authenticating Agent may make
reasonable rules and set reasonable requirements for its respective functions.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any
provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this Indenture by any of the provisions of
the TIA, such required provision shall control.
SECTION 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.09. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture shall bind, and inure to the benefit of, the
parties hereto and their successors and permitted assigns, whether so expressed
or not.
SECTION 11.10. SEVERABILITY. In case one or more of the
provisions contained in this Indenture or in the Notes should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall not
in any way be affected or impaired thereby.
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SECTION 11.11. BENEFITS OF INDENTURE. Nothing in this
Indenture or in the Notes, expressed or implied, shall give to any Person, other
than the parties hereto and their successors and permitted assigns hereunder,
any separate Indenture Trustee or co-Indenture Trustee appointed under Section
6.13 hereof and the Noteholders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.12. LEGAL HOLIDAYS. In any case where the date of
any Distribution Date or Redemption Date, or any date on which principal of or
interest on any Note is proposed to be paid shall not be a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
shall be made on the next succeeding Business Day with the same force and effect
as if made on the nominal date of any such Distribution Date or Redemption Date,
as the case may be, and no interest shall accrue for the period from and after
any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE AND EACH NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICT OF LAWS.
SECTION 11.14. COUNTERPARTS. This instrument may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. RECORDING OF INDENTURE. This Indenture is
subject to recording in all appropriate public recording offices, such recording
to be effected by the Issuer and at its expense on direction by the Indenture
Trustee accompanied by an Opinion of Counsel to the Indenture Trustee and the
Noteholders (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
SECTION 11.16. TRUST OBLIGATION. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer on the
Notes or the obligations of the Indenture Trustee, the Servicer, the Transferor,
the Issuer or the Owner Trustee under any Transaction Document or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Servicer, the Transferor, the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Servicer, the Transferor, the Indenture Trustee or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Servicer, the Transferor, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Servicer, the Transferor, the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity). For all purposes of this Indenture, in the performance of any duties
or
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obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Article Six of the
Securitization Trust Agreement.
SECTION 11.17. INSPECTION. The Issuer agrees that it will
permit any representative of the Indenture Trustee, during the Issuer's normal
business hours and, except during the continuation of an Event of Default, upon
reasonable notice, to examine all of the books of account, records, reports and
other papers of the Issuer relating to the Notes, to make copies and extracts
therefrom, to cause such books to be audited by Independent Accountants
selected by the Indenture Trustee, and to discuss the Issuer's finances and
accounts with its officers, employees and Independent Accountants (and by this
provision the Issuer hereby authorizes its Independent Accountants to discuss
with such representatives such affairs, finances and accounts). Such rights
shall include, but shall not be limited to, any off-site storage facilities at
which any data (including, without limitation, computerized records), together
with all operating software and appropriate documentation, may be held. The
Indenture Trustee shall keep confidential all confidential information of the
Issuer and the Servicer acquired during any such examination as if such
information were its own confidential information, except to the extent
necessary for the purposes of this Indenture.
SECTION 11.18. WAIVER OF STAY, EXTENSION LAWS, TRIAL BY JURY.
The Issuer covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants in or the performance
of this Indenture; and the Issuer and the Indenture Trustee (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, including any right to trial by jury to which it may be entitled in
any such proceeding; and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 11.19. MAXIMUM INTEREST PAYABLE. Anything herein to
the contrary notwithstanding, the sum of all interest and all other amounts that
would be deemed interest under Illinois or other applicable law which may be
paid to a Noteholder pursuant to this Indenture shall not exceed the maximum
lawful interest rate permitted by such law from time to time. The Issuer and the
Indenture Trustee intend and agree that under no circumstances shall the Issuer
be required to pay interest on the Notes at a rate in excess of the maximum
interest rate permitted by applicable law from time to time, and in the event
any such interest is received by the Noteholders in excess of that rate, the
Issuer shall be entitled to an immediate refund of any such excess interest by a
credit to and payment toward the unpaid principal of the Notes (such credit to
be considered to have been made at the time of the payment of the excess
interest) with any excess interest retained by the Indenture Trustee or
recovered from any Noteholder and not so credited to be immediately paid to the
Issuer by the Indenture Trustee.
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[INTENTIONALLY LEFT BLANK.]
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<PAGE> 63
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
By:
--------------------------------
PNC Bank, Delaware, a Delaware
banking corporation, not in its
individual capacity but solely as
Owner Trustee,
By:
--------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
a national banking association, not
in its individual capacity but
solely as Indenture Trustee,
By:
--------------------------------
Name:
Title:
56
<PAGE> 64
EXHIBIT A
FORM OF CLASS A-1 NOTES
Unless this Note 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 Note 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.
REGISTERED $____________2
No. R-___ CUSIP NO. _____________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-1
The World Omni 1997-B Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of __________________ DOLLARS
($___________), in monthly installments on each Distribution Date, commencing on
November 25, 1997, and to pay interest on the Class A-1 Note Balance, each as
and to the extent described below; provided that the entire Class A-1 Note shall
be due and payable on the earlier of the Class A-1 Stated Maturity and the
Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
- ---------------
(2)/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
-
<PAGE> 65
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: __________, 1997
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware banking
corporation, not in its individual
capacity but solely as Owner
Trustee under the Trust Agreement
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
<PAGE> 66
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 1997
U.S. BANK NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, but
solely as Indenture Trustee
By:
-----------------------------------------------
Authorized Signatory
<PAGE> 67
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ____% Automobile Lease Asset Backed Notes, Class A-1 (herein
called the "Class A-1 Notes" or the "Notes"), all issued under an Indenture
dated as of October 1, 1997 (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and U.S. Bank National
Association, a national banking association, not in its individual capacity but
solely as trustee (the "U.S. Bank National Association"), which term includes
any successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1997 (the "Agreement"), among the Transferor, PNC Bank,
Delaware, as owner trustee (the "Owner Trustee") and the Indenture Trustee. All
capitalized terms used in this Note, whether first used above or below, that are
not otherwise defined herein shall have the meanings assigned to them pursuant
to the Indenture.
Under the Indenture, there will be distributed on each Distribution
Date (i.e., the twenty-fifth day of each month or, if such twenty-fifth day is
not a Business Day, the next succeeding Business Day), commencing on November
25, 1997, to the Person in whose name this Class A-1 Note is registered at the
close of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-1 Noteholder's Percentage
Interest multiplied by (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 Note
Principal Loss Amounts and Class A-1 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
<PAGE> 68
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Transferor, the Servicer, the Noteholders and
the Note Owners that, for purposes of Federal and State income tax and any other
tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, and the
Note Owners, by acceptance of a beneficial interest in a Note, agree to treat,
and to take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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-B SUBI Portfolio as 1997-B SUBI
Assets and those proceeds or assets derived from or earned by such 1997-B SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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
Notes has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Holder or Note 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 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 Indenture.
<PAGE> 69
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision
of this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
<PAGE> 70
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: */
------------- ------------------------------- -
Signature Guaranteed:
----------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
*/ NOTE: The signature to this assignment must correspond with the name of
- the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 71
EXHIBIT B
FORM OF CLASS A-2 NOTES
Unless this Note 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 Note 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.
REGISTERED $____________3
No. R-___ CUSIP NO. _____________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-2
The World Omni 1997-B Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of __________________ DOLLARS
($___________), in monthly installments on each Distribution Date, commencing on
November 25, 1997, and to pay interest on the Class A-2 Note Balance, each as
and to the extent described below; provided that the entire Class A-2 Note shall
be due and payable on the earlier of the Class A-2 Stated Maturity and the
Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
- ---------------
(3)/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
-
<PAGE> 72
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: __________, 1997
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware banking
corporation, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
<PAGE> 73
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 1997
U.S. BANK NATIONAL ASSOCIATION, a national
banking association, not in its individual
capacity, but solely as Indenture Trustee
By:
--------------------------------------------
Authorized Signatory
<PAGE> 74
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ____% Automobile Lease Asset Backed Notes, Class A-1 (herein
called the "Class A-1 Notes" or the "Notes"), all issued under an Indenture
dated as of October 1, 1997 (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and U.S. Bank National
Association, a national banking association, not in its individual capacity but
solely as trustee (the "U.S. Bank National Association"), which term includes
any successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1997 (the "Agreement"), among the Transferor, PNC Bank,
Delaware, as owner trustee (the "Owner Trustee") and the Indenture Trustee. All
capitalized terms used in this Note, whether first used above or below, that are
not otherwise defined herein shall have the meanings assigned to them pursuant
to the Indenture.
Under the Indenture, there will be distributed on each Distribution
Date (i.e., the twenty-fifth day of each month or, if such twenty-fifth day is
not a Business Day, the next succeeding Business Day), commencing on November
25, 1997, to the Person in whose name this Class A-1 Note is registered at the
close of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-1 Noteholder's Percentage
Interest multiplied by (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 Note
Principal Loss Amounts and Class A-1 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
B-4
<PAGE> 75
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Transferor, the Servicer, the Noteholders and
the Note Owners that, for purposes of Federal and State income tax and any other
tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, and the
Note Owners, by acceptance of a beneficial interest in a Note, agree to treat,
and to take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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-B SUBI Portfolio as 1997-B SUBI
Assets and those proceeds or assets derived from or earned by such 1997-B SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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
Notes has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Holder or Note 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 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 Indenture.
<PAGE> 76
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision
of this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
<PAGE> 77
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: (*)/
------------------- --------------------------------
Signature Guaranteed:
--------------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
(*)/ NOTE: The signature to this assignment must correspond with the name of
- the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 78
EXHIBIT C
FORM OF CLASS A-3 NOTES
Unless this Note 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 Note 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.
REGISTERED $____________4
No. R-___ CUSIP NO. _____________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-3
The World Omni 1997-B Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of __________________ DOLLARS
($___________), in monthly installments on each Distribution Date, commencing on
November 25, 1997, and to pay interest on the Class A-3 Note Balance, each as
and to the extent described below; provided that the entire Class A-3 Note shall
be due and payable on the earlier of the Class A-3 Stated Maturity and the
Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
- ----------------
(4)/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
-
<PAGE> 79
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: __________, 1997
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware banking
corporation, not in its individual capacity but
solely as Owner Trustee under the Trust
Agreement
By:
-----------------------------------------------------
Name:
---------------------------------------------------
Title:
--------------------------------------------------
<PAGE> 80
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 1997
U.S. BANK NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, but
solely as Indenture
Trustee
By:
-----------------------------------------------
Authorized Signatory
<PAGE> 81
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ____% Automobile Lease Asset Backed Notes, Class A-3 (herein
called the "Class A-3 Notes" or the "Notes"), all issued under an Indenture
dated as of October 1, 1997 (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and U.S. Bank National
Association, a national banking association, not in its individual capacity but
solely as trustee (the "U.S. Bank National Association"), which term includes
any successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1997 (the "Agreement"), among the Transferor, PNC Bank,
Delaware, as owner trustee (the "Owner Trustee") and the Indenture Trustee. All
capitalized terms used in this Note, whether first used above or below, that are
not otherwise defined herein shall have the meanings assigned to them pursuant
to the Indenture.
Under the Indenture, there will be distributed on each Distribution
Date (i.e., the twenty-fifth day of each month or, if such twenty-fifth day is
not a Business Day, the next succeeding Business Day), commencing on November
25, 1997, to the Person in whose name this Class A-3 Note is registered at the
close of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-3 Noteholder's Percentage
Interest multiplied by (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 Note
Principal Loss Amounts and Class A-3 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
<PAGE> 82
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Transferor, the Servicer, the Noteholders and
the Note Owners that, for purposes of Federal and State income tax and any other
tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, and the
Note Owners, by acceptance of a beneficial interest in a Note, agree to treat,
and to take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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-B SUBI Portfolio as 1997-B SUBI
Assets and those proceeds or assets derived from or earned by such 1997-B SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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
Notes has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Holder or Note 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 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 Indenture.
<PAGE> 83
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision
of this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
<PAGE> 84
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: (*)/
-------------- ----------------------------------------
Signature Guaranteed:
--------------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
(*)/ NOTE: The signature to this assignment must correspond with the name of
- the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 85
EXHIBIT D
FORM OF CLASS A-4 NOTES
Unless this Note 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 Note 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.
REGISTERED $___________(5)
No. R-___ CUSIP NO. _____________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-4
The World Omni 1997-B Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of __________________ DOLLARS
($___________), in monthly installments on each Distribution Date, commencing on
November 25, 1997, and to pay interest on the Class A-4 Note Balance, each as
and to the extent described below; provided that the entire Class A-4 Note shall
be due and payable on the earlier of the Class A-4 Stated Maturity and the
Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
- -----------------
(5)/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
-
<PAGE> 86
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: __________, 1997
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware banking
corporation, not in its individual capacity but
solely as Owner Trustee under the Trust
Agreement
By:
------------------------------------------------------
Name:
-----------------------------------------------------
Title:
----------------------------------------------------
<PAGE> 87
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 1997
U.S. BANK NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, but
solely as Indenture Trustee
By:
-----------------------------------------------
Authorized Signatory
<PAGE> 88
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ____% Automobile Lease Asset Backed Notes, Class A-4 (herein
called the "Class A-4 Notes" or the "Notes"), all issued under an Indenture
dated as of October 1, 1997 (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and U.S. Bank National
Association, a national banking association, not in its individual capacity but
solely as trustee (the "U.S. Bank National Association"), which term includes
any successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1997 (the "Agreement"), among the Transferor, PNC Bank,
Delaware, as owner trustee (the "Owner Trustee") and the Indenture Trustee. All
capitalized terms used in this Note, whether first used above or below, that are
not otherwise defined herein shall have the meanings assigned to them pursuant
to the Indenture.
Under the Indenture, there will be distributed on each Distribution
Date (i.e., the twenty-fifth day of each month or, if such twenty-fifth day is
not a Business Day, the next succeeding Business Day), commencing on November
25, 1997, to the Person in whose name this Class A-4 Note is registered at the
close of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-4 Noteholder's Percentage
Interest multiplied by (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 Note
Principal Loss Amounts and Class A-4 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
<PAGE> 89
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Transferor, the Servicer, the Noteholders and
the Note Owners that, for purposes of Federal and State income tax and any other
tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, and the
Note Owners, by acceptance of a beneficial interest in a Note, agree to treat,
and to take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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-B SUBI Portfolio as 1997-B SUBI
Assets and those proceeds or assets derived from or earned by such 1997-B SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial
interest in a Note, each Note Owner) 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
Notes has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Holder or Note 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 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 Indenture.
<PAGE> 90
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision
of this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
<PAGE> 91
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: (*)/
--------------- ------------------------------------------
Signature Guaranteed:
----------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
(*)/ NOTE: The signature to this assignment must correspond with the name of
- the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 92
EXHIBIT E
FORM OF CLASS B NOTES
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES,
THE CLASS A-2 NOTES, THE CLASS A-3 NOTES AND THE CLASS A-4 NOTES AS DESCRIBED IN
THE INDENTURE AND THE TRANSACTION DOCUMENTS REFERRED TO HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR WITH ANY STATE SECURITIES OR BLUE SKY AUTHORITY UNDER 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 NOTE MAY BE MADE UNLESS
SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 2.04 OF THE
INDENTURE 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 U.S. BANK NATIONAL
ASSOCIATION, AS INDENTURE TRUSTEE (THE "INDENTURE TRUSTEE"), IS OBLIGATED TO
REGISTER THE NOTES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAWS. IN THE EVENT THAT THE TRANSFER OF A CLASS B NOTE 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 INDENTURE
TRUSTEE AND THE TRANSFEROR, IS REQUIRED TO BE DELIVERED TO THE INDENTURE
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 NOTE MAY BE MADE UNLESS THE
INDENTURE TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER OR OPINION OF
COUNSEL FROM THE TRANSFEREE OF THIS NOTE, ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRANSFEROR AND THE INDENTURE
<PAGE> 93
TRUSTEE, TO THE EFFECT THAT: (A)(1) SUCH TRANSFEREE WILL NOT ACQUIRE THIS NOTE
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"), OR (2) NO "PROHIBITED TRANSACTION" UNDER ERISA OR THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, WILL OCCUR IN CONNECTION WITH SUCH
TRANSFEREE'S ACQUISITION OR HOLDING OF THIS CLASS B NOTE BECAUSE THE RELEVANT
CONDITIONS FOR EXEMPTIVE RELIEF UNDER ONE OR MORE OF THE FOLLOWING PROHIBITED
TRANSACTION CLASS EXEMPTIONS HAS BEEN SATISFIED: PROHIBITED TRANSACTION CLASS
EXEMPTION ("PTCE") 96-23, REGARDING TRANSACTIONS EFFECTED BY "IN-HOUSE ASSET
MANAGERS"; PTCE 95-60, REGARDING TRANSACTIONS FOR INSURANCE COMPANY GENERAL
ACCOUNTS; PTCE 90-1, REGARDING TRANSACTIONS EFFECTED FOR BANK COLLECTIVE
INVESTMENT FUNDS; OR PTCE 84-14, REGARDING TRANSACTIONS EFFECTED BY "QUALIFIED
PROFESSIONAL ASSET MANAGERS" 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 NOTE) IS A PARTNERSHIP, GRANTOR TRUST OR S
CORPORATION FOR FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH ENTITY"), ANY
CLASS B NOTES 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 NOTES 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.
REGISTERED $__________(6)
No. R-___ CUSIP NO. _____________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS SUBORDINATED TO THE CLASS A NOTES
TO THE EXTENT PROVIDED IN THE INDENTURE AND THE TRANSACTION DOCUMENTS.
- ------------------
(6) Denominations of $250,000 and integral multiples of $1,000 in excess
thereof.
<PAGE> 94
WORLD OMNI 1997-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS B
World Omni 1997-B Automobile Lease Securitization Trust, a trust
organized and existing under the laws of the State of Delaware (including any
successor, the "Issuer"), for value received, hereby promises to pay to _______,
or registered assigns, the principal sum of __________________ DOLLARS
($___________), partially payable on each Distribution Date in an amount equal
to the result obtained by multiplying (i) a fraction the numerator of which is
the initial principal amount of this Note and the denominator of which is the
aggregate initial principal amount of the Class B Notes ("the Fraction") by (ii)
the aggregate amount, if any, payable from the Distribution Account in respect
of principal on the Class B Notes pursuant to Section 3.03 of the Securitization
Trust Agreement in accordance with the provisions of Sections 2.06 and 3.01 of
the Indenture; provided that the entire Class B Note Balance of this Note shall
be due and payable on the earlier of the Final Scheduled Distribution Date for
the Class B Notes and the Redemption Date, if any, pursuant to Section 10.01 of
the Indenture. The Issuer will pay interest on this Note on each Distribution
Date until the principal of this Note is paid or made available for payment in
an amount equal to the product of the Class B Interest Distributable Amount for
the related Distribution Date multiplied by the Fraction, subject to certain
limitations contained in Section 3.03 of the Securitization Trust Agreement.
Such principal of and interest on this Note shall be paid in the manner
specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
<PAGE> 95
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: __________, 1997
WORLD OMNI 1997-B AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware banking
corporation, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
<PAGE> 96
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 1997
U.S. BANK NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, but
solely as Indenture Trustee
By:
------------------------------------------------
Authorized Signatory
<PAGE> 97
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ____% Automobile Lease Asset Backed Notes, Class B (herein
called the "B Notes" or the "Notes"), all issued under an Indenture dated as of
_______________, 1997 (such Indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and U.S. Bank National Association,
a national banking association, not in its individual capacity but solely as
trustee (the "Indenture Trustee"), which term includes any successor Indenture
Trustee under the Indenture, to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are not otherwise defined herein and that are defined in the
Indenture shall have the meanings assigned to them in or pursuant to the
Indenture.
The Notes are subordinated to the Class A Notes and are secured by the
collateral pledged as security therefor on a subordinated basis as provided in
the Indenture and the Transaction Documents.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Transferor, the Servicer, the Noteholders and
the Note Owners that, for purposes of Federal and State income tax and any other
tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, and the
Note Owners, by acceptance of a beneficial interest in a Note, agree to treat,
and to take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
<PAGE> 98
By accepting this Note, 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 Notes 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.
By accepting this Note, 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-B
SUBI Portfolio as 1997-B SUBI Assets and those proceeds or assets derived from
or earned by such 1997-B SUBI Assets.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
<PAGE> 99
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: (*)/
----------------- -----------------------------------
Signature Guaranteed:
----------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
(*)/ NOTE: The signature to this assignment must correspond with the name of
- the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 100
EXHIBIT F-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
U.S. Bank National Association
One Illinois Center
111 E. Wacker Dr., Suite 3000
Chicago, IL 60601
Credit Suisse First Boston Corporation
Eleven Madison Avenue
6th Floor
New York, New York 10010-3629
Re: World Omni 1997-B Automobile Lease Securitization Trust
____% Automobile Lease Asset Backed Notes, Class B
Ladies and Gentlemen:
The undersigned purchaser (the "Purchaser") understands that
the purchase of the above-referenced Notes (the "Notes") 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 Notes 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. Capitalized terms not defined herein have the
meanings assigned to such terms in or pursuant to the Indenture described below.
Representations and Warranties
The Purchaser makes the following representations
and warranties in order to permit U.S. Bank National Association, as indenture
trustee (the "Indenture Trustee"), World Omni 1997-B Automobile Lease
Securitization Trust (the "Trust"), World Omni Lease
<PAGE> 101
Securitization L.P. (the "Transferor") and Credit Suisse First Boston
Corporation to determine its suitability as a purchaser of Notes 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 Notes 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 Indenture Trustee is required to register the Notes under the
Securities Act or any applicable state securities laws and that any transfer
must comply with Section 2.04 of the Indenture dated as of October 1, 1997 (the
"Indenture") between the Trust and the Indenture Trustee.
2. The Purchaser will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the Notes.
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 Notes) and is capable of evaluating the merits and risks of its
investment in the Notes and is able to bear the economic risk of such
investment. The Purchaser has been given such information concerning the Notes,
the Trust, World Omni Financial Corp. and the Transferor as it has requested.
4. The Purchaser is acquiring the Notes 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 Note, any
interest in any Note 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 Note, any interest in any Note 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 Notes under the Securities Act or
which would render the disposition of any Note 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
<PAGE> 102
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 Notes.
6. The Purchaser has reviewed the Private Placement Memorandum
with respect to the Notes dated October __, 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. Purchaser required to select applicable sentence:
[The Purchaser will not acquire the Notes on behalf of 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").]
[No "prohibited transaction" under ERISA or the Internal
Revenue Code of 1986, as amended, will occur in connection with such
transferee's acquisition or holding of the Class B Notes because the relevant
conditions for exemptive relief under one or more of the following prohibited
transaction class exemptions have been satisfied: Prohibited Transaction
Class Exemption ("PTCE") 96-23, regarding transactions effected by "In-House
Asset Managers"; PTCE 95-60, regarding transactions for insurance company
general accounts; PTCE 90-1, regarding transactions effected for bank
collective investment funds; or PTCE 84-14, regarding transactions effected by
"Qualified Professional Asset Managers".]
<PAGE> 103
8. The Purchaser understands that the Notes will bear a legend
substantially as set forth in the form of Note included as Exhibit E to the
Indenture.
9. The Purchaser understands that there is no market, nor is
there any assurance that a market will develop, for the Notes and that the
Transferor does not have any obligation to make or facilitate any such market
(or to otherwise repurchase the Notes 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 Notes, is aware that
its taxable income with respect to the Notes in any accounting period may not
correspond to the cash flow (if any) from the Notes for such period, and is not
purchasing the Notes in reliance on any representations of the Transferor or its
counsel with respect to tax matters.
11. The Purchaser represents, on behalf of itself (or any
person or entity for whom the Purchaser is acting as agent or custodian in
connection with the acquisition of the Notes) that if the Purchaser or any such
other person or entity is a partnership, grantor trust or S corporation for
federal income tax purposes (a "Flow-Through Entity"), any Notes 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 Notes will be made among the
beneficial owners of such Flow-Through Entity.
12. The Purchaser agrees that it will obtain from any
subsequent purchaser of the Notes substantially the same representations,
warranties and agreements contained in the foregoing paragraphs 1 through 11 and
in this paragraph 12.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture 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.
<PAGE> 104
Executed at ___________________, this ____ day of ___________ 199_____
----------------------------------
Purchaser's Name (Print)
By
--------------------------------
Signature
Its
-------------------------------
----------------------------------
Address of Purchaser
----------------------------------
Purchaser's Taxpayer
Identification Number
<PAGE> 105
EXHIBIT F-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
U.S. Bank National Association
One Illinois Center
111 E. Wacker Drive, Suite 3000
Chicago, IL 60601
Credit Suisse First Boston Corporation
Eleven Madison Avenue
6th Floor
New York, New York 10010-3629
Re: World Omni 1997-B Automobile Lease Securitization Trust
____% Automobile Lease Asset Backed Notes, Class B
Ladies and Gentlemen:
__________________ (the "Purchaser") is today purchasing in a
private resale from ______________________ (the "Transferor") $_________
aggregate principal amount of the above-captioned Notes (the "Notes"), issued
pursuant to the Indenture dated as of __________, 1997 (the "Indenture") between
World Omni 1997-B Automobile Lease Securitization Trust (the "Trust") and U.S.
Bank National Association, as indenture trustee (the "Indenture Trustee").
In connection with the purchase of the Notes, the Purchaser
hereby represents and warrants to each of you as follows:
1. The Purchaser understands that the Notes 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 Notes 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
<PAGE> 106
remain at all times within its control). The Purchaser is not an affiliate of
the Transferor, World Omni, the Indenture Trustee, the Owner Trustee, any
custodian of the Notes or any of their respective affiliates.
3. The Purchaser agrees that the Notes must be held
indefinitely by it unless (i) the Notes 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 Notes, it will not transfer or exchange any of
the Notes unless such transfer or exchange is in accordance with the provisions
of Section 2.04 of the Indenture.
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 Notes for its own account or for the account of a qualified
institutional buyer and it understands that such Notes 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 Note, any
interest in any Note 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 Note any interest in any Note 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 Notes under the Securities Act or
which would render the disposition of any Note 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 Notes.
7. Purchaser required to select applicable sentence:
[The Purchaser will not acquire the Notes on behalf of 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").]
<PAGE> 107
[No "prohibited transaction" under ERISA or the Internal
Revenue Code of 1986, as amended, will occur in connection with such
transferee's acquisition or holding of the Class B Notes because the relevant
conditions for exemptive relief under one or more of the following prohibited
transaction class exemptions have been satisfied: Prohibited Transaction Class
Exemption ("PTCE") 96-23, regarding transactions effected by "In-House Asset
Managers"; PTCE 95-60, regarding transactions for insurance company general
accounts; PTCE 90-1, regarding transactions effected for bank collective
investment funds; or PTCE 84-14, regarding transactions effected by "Qualified
Professional Asset Managers".]
8. The Purchaser understands that there is no market, nor is
there any assurance that a market will develop, for the Notes and that the
Transferor does not have any obligation to make or facilitate any such market
(or to otherwise repurchase the Notes from the Purchaser) under any
circumstances.
9. 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 Notes, is aware that
its taxable income with respect to the Notes in any accounting period may not
correspond to the cash flow (if any) from the Notes for such period, and is not
purchasing the Notes in reliance on any representations of the Transferor or its
counsel with respect to tax matters.
10. The Purchaser has reviewed the Private Placement
Memorandum with respect to the Notes dated October __, 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 verify the accuracy and
<PAGE> 108
completeness of any information furnished to the Purchaser or to which the
Purchaser had access.
11. The Purchaser understands that the Notes will bear a
legend substantially as set forth in the form of Note included as Exhibit E to
the Indenture.
12. The Purchaser hereby further agrees to be bound by all the
terms and conditions of the Notes as provided in the Indenture.
13. The Purchaser represents that if the Purchaser (or any
other person or entity for whom the Purchaser is acting as agent or custodian in
connection with the acquisition of the Notes) is a partnership, grantor trust or
S corporation for federal income tax purposes (a "Flow-Through Entity"), any
Notes 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 Notes will be
made among the beneficial owners of such Flow-Through Entity.
14. If the Purchaser sells any of the Notes, 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 Indenture 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
<PAGE> 109
ANNEX 1 TO EXHIBIT F-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 Notes 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 144 A") because (i) the
Purchaser owned and/or invested on a discretionary basis $_________7 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 tobanking 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.
___ 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
- ------------------
(7)/ 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.
<PAGE> 110
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
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 Notes 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.
<PAGE> 111
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
Notes 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 Notes, 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 Notes 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, 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:
----------------------------
<PAGE> 112
ANNEX 2 TO EXHIBIT F-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 Notes 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).
<PAGE> 113
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 Notes 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 Notes, the
undersigned will notify the parties listed in the Rule 144A Transferee Note 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
Notes 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:
---------------------------
<PAGE> 1
Exhibit 5.1
October 20, 1997
World Omni Lease Securitization L.P.
6150 Omni Park Avenue
Mobile, Alabama 36609
Re: World Omni 1997-B Automobile Lease Securitization Trust
____%, Automobile Lease Asset Backed Notes, Class A-1 (the
"CLASS A-1 NOTES"), Automobile Lease Asset Backed Notes, Class
A-2 (the "CLASS A-2 NOTES"), Automobile Lease Asset Backed
Notes, Class A-3 (the "CLASS A-3 NOTES"), and Automobile Lease
Agreement Backed Notes, Class A-4 (the "CLASS A-4 NOTES" and,
together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "CLASS A NOTES")
---------------------------------------------------------------
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 Notes, $____________ initial principal amount of
Class A-2 Notes, $___________ initial principal amount of Class A-3 Notes and
$_____________ initial principal amount of Class A-4 Notes, to be issued
pursuant to an Indenture, dated as of October 1, 1997 (the "INDENTURE"), between
U.S. Bank National Association, as indenture trustee (in such capacity, the
"INDENTURE TRUSTEE"), and World Omni 1997-B Automobile Lease Securitization
Trust, as issuer (in such capacity, the "ISSUER"). The Class A Notes are to be
acquired by Credit Suisse First Boston Corporation, as representative of the
several underwriters (collectively, the "UNDERWRITERS") named in the
Underwriting Agreement (the "UNDERWRITING AGREEMENT"), dated October __, 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. 333-35523), filed with the Securities and Exchange Commission
("SEC") on September 12, 1997, as amended by Amendment No. 1, dated October __,
1997 (the "REGISTRATION STATEMENT").
In connection with the 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.
<PAGE> 2
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement, the form of
Indenture filed as Exhibit 4.1 to the Registration Statement, including the form
of each Class A Note 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 Note,
when issued, will conform to the form thereof attached to the Indenture, each
Class A Note has been duly and validly executed and delivered in accordance with
the terms of the Indenture and the Underwriting Agreement, and each Class A Note
constitutes the legal, valid and binding obligation of the Issuer in accordance
with its terms.
Based upon and subject to the foregoing, it is our opinion that when each
Class A Note is executed by PNC Bank, Delaware, as owner trustee, on behalf of
the Issuer and is issued and authenticated by the Indenture Trustee, in each
case in accordance with the terms of the indenture, 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 assumed 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
October , 1997
World Omni Lease Securitization L.P.
6150 Omni Park Drive
Mobile, Alabama 36609
Re: World Omni 1997-B 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. 333-35523) with the Securities and
Exchange Commission (the "Commission") on September 12, 1997, as amended by
Amendment No. 1, 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 $260,000,000 aggregate
principal amount of World Omni 1997-B Automobile Lease Securitization Trust __%
Automobile Lease Asset Backed Notes, Class A-1 (the "Class A-1 Notes"),
approximately $220,000,000 aggregate principal amount of World Omni 1997-B
Automobile Lease Securitization Trust __% Automobile Lease Asset Backed Notes,
Class A-2 (the "Class A-2 Notes"), approximately $390,000,000 aggregated
principal amount of World Omni 1997-B Automobile Lease Securitization Trust __%
Automobile Lease Asset Backed Notes, Class A-3 (the "Class A-3 Notes") and
approximately $239,128,643 aggregated principal amount of World Omni 1997-B
Automobile Lease Securitization Trust __% Automobile Lease Asset Backed Notes,
Class A-4 (the "Class A-4 Notes" and, together with the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes, the "Notes") to be issued pursuant to
an Indenture dated as of October 1, 1997 (the "Indenture"), between PNC Bank,
Delaware, as owner trustee and U.S. Bank National Association, as indenture
trustee (the "Trustee")
As such counsel, we have reviewed the Registration Statement, the
Prospectus, the form of the Indenture filed as an exhibit to the Registration
Statement, the forms of the Notes included in the Indenture 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 Notes. 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/ Cadwalader, Wickersham & Taft
<PAGE> 1
EXHIBIT 8.2
JUDITH L. KEISER
Admitted in Florida and New York
October 20, 1997
World Omni Lease Securitization L.P., Auto Lease Finance, L.P.,
Limited Partnership Limited Partnership
6150 Omni Park Drive 6150 Omni Park Drive
Mobile, Alabama 36609 Mobile, Alabama 36609
World Omni LT, an Alabama Trust
6150 Omni Park Drive
Mobile, Alabama 36609
Re: WORLD OMNI 1997-B
AUTOMOBILE LEASE SECURITIZATION TRUST
Ladies and Gentlemen:
We have acted as special Florida tax counsel for: World Omni
Financial Corp., a Florida corporation ("WOFCO"); World Omni Lease
Securitization L.P., Limited Partnership, a Delaware limited partnership ("WOLS
LP" or "TRANSFEROR"); World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI"); Auto Lease Finance, Inc., a Delaware corporation
("ALFI"); Auto Lease Finance L.P., Limited Partnership, a Delaware limited
partnership ("ALFI LP"); World Omni LT, an Alabama trust (the "ORIGINATION
TRUST"); and World Omni 1997-B Automobile Lease Securitization Trust, a
Delaware business trust (the "TRUST") (WOFCO, Transferor, WOLSI, ALFI, ALFI LP,
the Origination Trust and the Trust are referred to collectively as the
"CLIENTS") in connection with certain matters of Florida law arising in
connection with the offering by Transferor of: (a) $_______________ principal
amount of ___% Automobile Lease Asset Backed Notes, Class A-1; $_____________
principal amount of ___% Automobile Lease Asset Backed Notes, Class A-2;
$____________ principal amount of ___% Automobile Lease Asset Backed Notes,
Class A-3; and $________________ principal amount of ____% Automobile Lease
Asset Backed Notes, Class A-4 (collectively, the "CLASS A NOTES"); and (b)
$_____________ principal amount of ___% Automobile Lease Asset Backed Notes,
Class B (the "CLASS B NOTE", and together with the Class A Notes, the "NOTES"),
to be issued pursuant to an Indenture, dated October 1, 1997 (the "INDENTURE"),
between PNC Bank, Delaware ("PNC BANK") as
<PAGE> 2
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 20, 1997
Page 2
Owner Trustee (the "OWNER TRUSTEE") and U.S. Bank National Association ("U.S.
BANK") as Indenture Trustee (the "Indenture Trustee"). The Trust will be formed
pursuant to a Securitization Trust Agreement dated as of October 1, 1997 (the
"SECURITIZATION TRUST AGREEMENT") among Transferor, the Owner Trustee, and the
Indenture Trustee. Simultaneously with the issuance of the Notes, pursuant to
the Securitization Trust Agreement, the Trust will issue a certificate
representing the interest in the Trust not evidenced by the Notes (the
"TRANSFEROR CERTIFICATE" and together with the Notes, the "SECURITIES").
This Opinion is solely for the benefit of and may be relied upon
only by you in connection with the transactions contemplated by the Indenture
and the Securitization Trust Agreement.
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
Indenture or the Securitization Trust Agreement, unless otherwise defined
herein, are used herein with such meanings. The term "Florida Contract" shall
refer to any of the Contracts, in the forms attached hereto as EXHIBIT A,
entered into on or after November 1, 1993, in the State of Florida, and
governed by the laws of the State of Florida. All references in this Opinion to
Florida Statutes ("F.S.") shall refer to F.S. 1996 and the Laws of 1997 in
effect as of the date hereof. As used in this Opinion, the phrase "TO OUR
KNOWLEDGE" shall mean to the actual knowledge and conscious attention of the
attorneys of this firm who are materially involved in this matter, without any
further independent investigation of any kind except as set forth herein.
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:
(i) the securities laws, the tax laws, and the
regulations of Florida (or any other state) and
the federal government (except as provided in
numbered paragraphs 1 and 2 of this Opinion);
(ii) laws or regulations relating to
<PAGE> 3
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 20, 1997
Page 3
commodity and other futures indices and other
similar instruments;
(iii) pension and employee benefit laws and regulations;
(iv) state or federal antitrust and unfair competition
laws and regulations;
(v) state or federal laws and regulations concerning
filing and notice requirements;
(vi) fraudulent transfer and fraudulent conveyance laws;
or
(vii) other federal laws,
to the transactions contemplated by the Reviewed Documents (as hereinafter
defined)(the "TRANSACTIONS").
DOCUMENTS REVIEWED; INVESTIGATIONS; AND ASSUMPTIONS
In connection with this Opinion, we have examined copies of the
following documents (the "REVIEWED DOCUMENTS"):
(i) the Securitization Trust Agreement, the Indenture
and the other Transaction Documents;
(ii) the Underwriting Agreement dated October __, 1997
(the "UNDERWRITING AGREEMENT"), among Transferor,
ALFI LP, WOFCO, and the Underwriters;
(iii) the registration statement on Form S-1 (No.
333-35523) filed by Transferor with the Securities
and Exchange Commission (the "COMMISSION") on
September 12, 1997 pursuant to the Securities Act
of 1933, as amended (the "ACT"), as amended by
Amendment No. 1 thereto filed with the Commission
on
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_______, 1997 (the registration statement in the
amended form in which it became effective on
_________, 1997 and the related prospectus
contained therein, the "REGISTRATION STATEMENT" and
the "PROSPECTUS"); and
(iv) the Florida Contracts.
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 (the "OFFICER'S CERTIFICATES"), 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 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 your express
consent and approval. 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.
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OPINIONS
Based on the foregoing, it is our opinion that(1):
i. THE NOTES 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 Notes will represent debt (i.e., will be treated as indebtedness) and
the Class B Note 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 Notes will represent debt under all such
definitions and, accordingly, the Notes 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 Notes will represent debt, rather than equity, and that the Class B Note
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 Notes
will represent debt, rather than equity, and the Class B Note 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
- --------
(1) 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 Transaction Documents (as defined in the Securitization
Trust Agreement) which have been delivered to us as of the date
hereof, and that 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.
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criteria, the Class A Notes will represent debt, rather than equity, and the
Class B Note should represent debt, rather than equity, for purposes of Florida
law generally.
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 Notes represent debt for purposes of Florida law. For example,
it is clear that the Notes will represent debt for purposes of the Florida
Statutes governing attachment and garnishment. Similarly, it is clear that the
Notes 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 Notes 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 Notes.
In light of the foregoing, and because the Notes will represent
unconditional promises to pay sums certain plus interest on definitely
ascertainable dates, it is our opinion that the Class A Notes will represent
debt (i.e., will be treated as indebtedness) and the Class B Note 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 Note is 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 Transferor and the holder of the Class B
Note, and (iii) if the Trust is characterized as a partnership formed between
Transferor and the holder of the Class B Note, the portion of the amounts paid
to each such Class B Noteholder corresponding to interest paid on the Class B
Note will
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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 Transferor. As partners of a partnership, corporate holders of the
Class B Note 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.
ii. FLORIDA LOAN RULE
Although the matter is not free from doubt, and assuming that
the Notes 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 Notes with absolutely no other Florida contacts(2) to Florida
income or franchise taxation solely as a result of an investment in an Investor
Note.
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).(3) 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,
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(2) 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.
(3) 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.
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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.
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
which 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.(4)
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(4) 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 Trust generally is being disregarded and treated as
a mere security device, it might not have to be entirely
disregarded, and the Noteholders might not have to be treated
as secured by tangible property. Rather, they might be treated
as secured by intangible property,
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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 Notes 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 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
- ---------
that is, by a pledge of the beneficial interest owned by the
Trust. See 1959 Op. Atty. Gen. 059-229 (Nov. 16, 1959). The
Loan Rule does not apply to loans secured by intangible property.
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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.
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.(5)
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(5) 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
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The dubious constitutional status of the Loan Rule is
exacerbated by its uncertain scope and its uncertain statutory underpinning.(6)
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 Notes were deemed to be loans for purposes
of the Loan Rule, and even if the Loan Rule were upheld on constitutional
grounds, the Notes 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 Notes merely have a beneficial interest in the Trust which in
turn has a beneficial interest in the Origination Trust. Although the corpus of
the Origination Trust does contain vehicles, some of which are located in
Florida, the Notes are not directly secured by those vehicles.
Our opinions in this numbered paragraph 2 are limited to the
possible subjugation of holders of Notes, which holders are financial
organizations with no other Florida contacts, to Florida income or franchise
taxation solely as a result of their investment in a Note. 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 Note were deemed not to be debt and the Trust were characterized as a
partnership formed between Transferor and the holder of the Class B Note 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
- ----------
for the loan consists of Florida real or tangible property.
(6) 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.
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federal tax consequences, any other state tax consequences or any local tax
consequences.
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 "Material Income Tax Considerations - Florida
Income Taxation" in the Prospectus constituting part of the Registration
Statement.
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.
Very truly yours,
ENGLISH, McCAUGHAN & O'BRYAN, P.A.
By: /s/ JUDITH L. KEISER
--------------------------------
Judith L. Keiser, Vice President
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
AUTO LEASE FINANCE L.P.,
VT INC.,
AS TRUSTEE OF WORLD OMNI LT,
AND
FOR CERTAIN LIMITED PURPOSES ONLY
U.S. BANK NATIONAL ASSOCIATION
(FORMERLY KNOWN AS FIRST BANK NATIONAL ASSOCIATION AND
SUCCESSOR TRUSTEE TO BANK OF AMERICA ILLINOIS)
SUPPLEMENT 1997-B TO
TRUST AGREEMENT
DATED AS OF OCTOBER 1, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS .........................................................................................................1
PART X
DEFINITIONS.......................................................................................................3
Section 10.01. Definitions............................................................................3
Section 10.02. Rights in Respect of 1997-B SUBI......................................................17
PART XI
CREATION OF 1997-B SUBI..........................................................................................17
Section 11.01. Initial Creation of 1997-B SUBI Portfolio and 1997-B S................................17
Section 11.02. Subsequent Additions to 1997-B SUBI Portfolio.........................................18
Section 11.03. Issuance and 1997-B SUBI Certificates.........................................20
Section 11.04. Actions and Filings...................................................................21
Section 11.05. Termination of 1997-B SUBI............................................................21
Section 11.06. Merger or Consolidation of Trustee....................................................21
Section 11.07. Representations and Warranties of Trustee.............................................22
Section 11.08. Other SUBIs...........................................................................22
Section 11.09. Retained SUBI Interest................................................................23
Section 11.10. Minimum Net Worth.....................................................................23
PART XII
SUBI ACCOUNTS....................................................................................................23
Section 12.01. 1997-B SUBI Collection Account........................................................23
Section 12.02. 1997-B SUBI Lease Account.............................................................25
Section 12.03. Residual Value Surplus Account........................................................25
Section 12.04. Servicer Calculations.................................................................26
PART XIII
MISCELLANEOUS PROVISIONS.........................................................................................26
Section 13.01. Amendment, Etc........................................................................26
Section 13.02. Governing Law.........................................................................27
Section 13.03. Notices...............................................................................28
Section 13.04. Severability of Provisions............................................................28
Section 13.05. Effect of Supplement on Trust Agreement...............................................28
</TABLE>
i
<PAGE> 3
EXHIBITS:
<TABLE>
<S> <C>
EXHIBIT A - Schedule of 1997-B Leases and 1997-B Leased
Vehicles as of the Initial Cutoff Date..................................................... A-1
EXHIBIT B - 1997-B SUBI Certificates................................................................... B-1
EXHIBIT C - Forms of 1997-B Leases ............................................................................ C-1
EXHIBIT D - Current Credit and Collection Policy .............................................................. D-1
</TABLE>
ii
<PAGE> 4
SUPPLEMENT 1997-B TO
TRUST AGREEMENT
SUPPLEMENT 1997-B TO TRUST AGREEMENT (the "Supplement"), dated and
effective as of October 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, U.S.
BANK NATIONAL ASSOCIATION, a national banking association (formerly known as
First Bank National Association and successor to Bank of America Illinois, an
Illinois banking corporation) (together with any predecessor or successor,
("U.S. Bank").
RECITALS
A. The Grantor, the Trustee and U.S. 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 U.S. 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 U.S.
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, 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
<PAGE> 5
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-B 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-B SUBI
Certificates") that, collectively, evidence the entire beneficial interest in
the related SUBI (the "1997-B 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 October 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-B SUBI and the 1997-B 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-B 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-B 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, PNC Bank, Delaware,
as owner trustee (the "Owner Trustee") and U.S. Bank, as indenture trustee (the
"Indenture Trustee") are entering into that certain Securitization Trust
Agreement dated as of October 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-B SUBI (the "99.8% 1997-B
SUBI Certificate") will be transferred by the Transferor to the Owner Trustee,
in that capacity, and pledged to the Indenture Trustee, in that capacity, in
connection with a Securitized Financing (as defined in the Trust Agreement), but
the SUBI Certificate representing a 0.2% beneficial interest in the 1997-B SUBI
(the "0.2% 1997-B SUBI Certificate") will be retained by the Transferor and not
used in connection with a Securitized Financing.
G. Also concurrently herewith, the Indenture Trustee and the
Owner Trustee are entering into that certain Indenture dated as of October 1,
1997 (the "Indenture") pursuant to which, among other things, the Securitization
Trust will issue the Notes (as defined in the Indenture) and the Securitization
Trust will grant a security interest to the Indenture Trustee with respect to
all of the assets held by the Securitization Trust, including the 99.8% 1997-B
SUBI Certificate.
H. Also concurrently herewith, the Trustee, on behalf of the
Trust, and the Servicer also are entering into that certain Supplement 1997-B to
Servicing Agreement dated as of October 1, 1997 (the "Servicing Supplement")
pursuant to which, among other things, the
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terms of the Servicing Agreement will be supplemented insofar as they apply to
the 1997-B SUBI Portfolio, providing for further specific servicing obligations
that will benefit the holders of the 1997-B 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-B 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 to Claims by Persons other than the
Trustee, the Trust Agent, the Servicer, the Indenture Trustee, the Owner
Trustee, the Certificateholders, and any other beneficiary of the Trust against
or with respect to the 1997-B 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-B 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).
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"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 October 1, 1997, among WOFCO, the Grantor, the Trustee on
behalf of the Trust, the Transferor and the Indenture Trustee.
"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-B SUBI Portfolio, provided, however, that to the extent that the
portion of such amount allocable to the 99.8% 1997-B SUBI Certificate, 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-B SUBI Portfolio, but
specifically not including any premiums on any portion of the Contingent and
Excess Liability Insurance Policies allocable to the 1997-B SUBI Portfolio;
provided, however, that to the extent the portion of such Administrative
Expenses allocable to the 99.8% 1997-B 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).
"Certificateholders" has the meaning set forth in the
Securitization Trust Agreement.
"Certificate" has the meaning set forth in the Securitization
Trust Agreement.
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"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.
"Closing Date" means October 1, 1997.
"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-B Leases and 1997-B 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-B 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 Value Insurance Policy, and (B) shall in no event
include, and shall be net of, the following, which shall be retained in the
1997-B 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-B 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-B Lease or 1997-B
Leased Vehicle.
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"Contract Rights" means all of the Trustee's right, title, and
interest in, to, and under any 1997-B 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-B
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.
"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 $40.00 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 ____% per annum.
"Discounted Lease" means a 1997-B Lease with a Lease Rate of
less than ____%.
"Discounted Principal Balance" means (i) with respect to any
1997-B 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-B 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-B Lease, its
Outstanding Principal Balance at such time.
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"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-B Lease.
"Early Termination Lease" means a 1997-B Lease which is
terminated prior to its Maturity Date by agreement between the Servicer and the
Obligor 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-B Lease; provided, however, that such a 1997-B 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 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
Noteholders, the holders of the 1997-B 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 a 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;
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(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 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 the appropriate
titling authority) and all transfer and similar taxes imposed in
connection therewith have been paid;
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(l) that arises under a closed-end Lease that (i) requires
equal monthly payments to be made within a fixed time period from the
date of origination of such Lease, such time period to be at least 24
months and no more than 60 months, 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) $_______, 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-B 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;
(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;
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(x) the related Leased Vehicle of which has not been used
commercially as a taxi cab, public omnibus, livery, sightseeing
conveyance or for any carrying of goods or passengers for hire; and
(y) 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 __________, 199__ (in the case of
Leases allocated to the 1997-B SUBI Portfolio as of the Initial Cutoff
Date) or on or before __________, 199__ (in the case of Leased Vehicles
allocated to the 1997-B SUBI Portfolio as of a Subsequent Cutoff Date);
(iii) has a Maturity Date on or after __________, 199__ and no later
than __________, 200__ (in the case of Leases allocated to the 1997-B
SUBI Portfolio as of the Initial Cutoff Date) or no later than
__________, 200__ (in the case of Leases allocated to the 1997-B 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-B 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-B Lease by the Obligor in exchange for the extension.
"Grantor" has the meaning set forth in the Preamble.
"Indenture" has the meaning set forth in Recital G.
"Indenture Trustee" has the meaning set forth in Recital F.
"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
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
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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 October 1, 1997.
"Insurance Expenses" means any amount of Insurance Proceeds
(a) applied to the repair of the related 1997-B 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-B Lease,
1997-B 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-B Lease,
1997-B 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-B Lease, 1997-B 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-B 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 (as defined in the Securitization Trust Agreement) of
Interest Collections allocable to the 99.8% 1997-B 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) 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-B 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-B 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
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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-B Lease,
the fully executed 1997-B Lease and any agreement(s) modifying such 1997-B Lease
(including, without limitation, any extension agreement(s) relating to extended
1997-B 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-B 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-B Lease, including expenses
incurred in connection with any collection effort (whether or not resulting in a
lawsuit against the Obligor under such 1997-B 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 connection with the realization of the full amounts due
or to become due under any 1997-B 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-B SUBI Collection Account pursuant to Section 8.03
thereof) or otherwise.
"Matured Lease" means any 1997-B 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-B Leased Vehicle included in Matured Leased Vehicle
Inventory.
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"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 months of July, August and September
1997 in respect of any date during the October 1997 Collection Period, the
months of August and September 1997 and the October 1997 Collection Period in
respect of any date during the November 1997 Collection Period, and the month of
September 1997 and the October and November 1997 Collection Periods in respect
of any date during the December 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 calender months
and/or Collection Periods, as applicable.
"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-B 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-B Leased
Vehicle the related 1997-B 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-B Leased Vehicle as of
such date.
"Maturity Date" means, with respect to any 1997-B Lease, the
date on which the last scheduled Monthly Lease Payment shall be due and payable,
as such date may be extended pursuant 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
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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-B Lease" has the meaning set forth in Section 11.01(a).
"1997-B Leased Vehicle" has the meaning set forth in Section
11.01(a).
"1997-B SUBI" has the meaning set forth in Recital D.
"1997-B SUBI Asset" has the meaning set forth in Section
11.01(a).
"1997-B SUBI Certificate" has the meaning set forth in Recital
D.
"1997-B SUBI Collection Account" means the separate account
established and maintained by the Indenture Trustee as the initial repository of
all proceeds received with respect to all 1997-B SUBI Assets, pursuant to
Section 12.01(a).
"1997-B SUBI Lease Account" has the meaning set forth in
Section 12.02(a).
"1997-B SUBI Portfolio" has the meaning set forth in Recital
D.
"99.8% 1997-B SUBI Certificate" has the meaning set forth in
Recital F.
"0.2% 1997-B SUBI Certificate" has the meaning set forth in
Recital F.
"Noteholders" has the meaning set forth in the Indenture.
"Notes" has the meaning set forth in the Indenture.
"Obligee" means each Person who is the lessor under a 1997-B
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-B 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-B Lease (determined in
accordance with the actuarial method as applied to the Lease Rate for such
1997-B Lease in
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accordance with the Servicer's usual practices), plus (b) the Booked Residual
Value of the related Leased Vehicle.
"Owner Trustee" has the meaning set forth in Recital F.
"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-B Lease in excess of the Monthly Lease Payment due during
such Collection Period with respect to such 1997-B 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, limited liability company, 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-B Lease (exclusive of any 1997-B Lease
referred to in the definition of the term "Charged-off Lease") or such lesser
amount as may be provided for in such 1997-B 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-B 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-B Lease (including any payment
in respect of the Booked Residual Value of the related 1997-B 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-B 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-B Leased Vehicle that has been
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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-B Lease.
"Residual Value Surplus Account" means the separate account
established and maintained by the Indenture Trustee pursuant to Section
12.03(a).
"Revolving Period" means the period from the Initial Cutoff
Date to but not including the earlier of [__________], 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 Securitization Trust Agreement, the
Indenture, the Backup Security Agreement, the 1997-B SUBI Certificates, the
Notes and the Certificates, as the same may be amended, supplemented or modified
from time to time, and each to the extent that it relates to the 1997-B 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-B
SUBI).
"Security Deposit" means, with respect to any 1997-B Lease,
the refundable security deposit specified in such 1997-B 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 H.
"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-B 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 [_______] 1997)
specified as such by the Servicer in its notice and certificate pursuant to
Section 8.02(b) of the Servicing Supplement.
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"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.
"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.
"U.S. Bank" has the meaning set forth in the Preamble.
"WOFCO" has the meaning set forth in Recital A.
SECTION 10.02. RIGHTS IN RESPECT OF 1997-B SUBI.
Each holder of a 1997-B SUBI Certificate (including the Owner
Trustee) and each pledgee of a 1997-B SUBI Certificate (including the Indenture
Trustee, on behalf of the Noteholders) is a third-party beneficiary of the Trust
Agreement and this Supplement, insofar as they apply to the 1997-B SUBI and the
holders or pledgees of 1997-B 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 Owner Trustee acting with the consent or upon
the instruction of the Indenture Trustee acting at its own instigation or upon
the instruction of Noteholders representing more than 50% of the aggregate
Percentage Interests (acting as a single class) during such time as any Note
shall remain outstanding and, if no Notes remain outstanding, shall be deemed to
refer to the Owner Trustee acting at its own instigation or upon the instruction
of the Transferor.
PART XI
CREATION OF 1997-B SUBI
SECTION 11.01. INITIAL CREATION OF 1997-B SUBI
PORTFOLIO AND 1997-B 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
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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-B 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 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-B SUBI Portfolio (such Leases and Leased
Vehicles, together with those additional Leases and Leased Vehicles allocated to
the 1997-B SUBI Portfolio during the Revolving Period, the "1997-B Leases" and
the "1997-B 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-B SUBI Assets"). In addition to the conveyance of
such 1997-B 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-B SUBI". The
1997-B SUBI shall represent a specific divided beneficial interest solely in the
1997-B SUBI Portfolio and the 1997- B 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-B SUBI Portfolio and of the terms and
provisions of (x) this Supplement and (y) the Securitized Financing contemplated
by the 1997-B Securitization Trust Agreement and (ii) after giving effect to the
creation of the 1997-B SUBI, the transfer to the Beneficiary of both 1997-B 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-B 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, Leased Vehicles and other associated Trust
Assets then owned by the Trustee on behalf of the
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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-B SUBI Portfolio effective as of the relevant Subsequent
Cutoff Date as additional 1997-B Leases, 1997-B Leased Vehicles and 1997-B 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 (and
amounts treated as Principal Collections pursuant to the last sentence of
Section 3.03(b)) 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-B Leases, 1997-B Leased Vehicles and related 1997-B 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-B 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-B
SUBI Collection Account to the Lease Funding Account an amount equal to the
aggregate Discounted Principal Balance as of the related Subsequent Cutoff Date
of the 1997-B Leases then being added to the 1997-B SUBI Portfolio pursuant to
Section 11.02(a) hereof.
(d) To the extent that, for any reason, the additional 1997-B
Leases allocated to the 1997-B 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 (and
amounts treated as Principal Collections pursuant to the last sentence of
Section 3.03(b)) received since the Initial Cutoff Date and prior to the
termination of the Revolving Period which have not yet been reinvested in
additional 1997-B Leases, 1997-B Leased Vehicles and related 1997-B SUBI Assets,
the balance of such Principal Collections and other amounts ("Unallocated
Principal Collections") shall continue to be invested and reinvested in
Permitted Investments as part of the 1997-B 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 _______l 1998 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).
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(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-B SUBI Collection Account to
the 1997-B SUBI Lease Account those Principal Collections (and amounts treated
as Principal Collections pursuant to the last sentence of Section 3.03(b))
received since the Initial Cutoff Date that have not yet been reinvested in
additional 1997-B Leases, 1997-B Leased Vehicles and related 1997-B SUBI Assets,
to be applied in accordance with Section 7.03 of the Trust Agreement.
(f) Neither any interest in the 1997-B SUBI nor any 1997-B
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-B SUBI and the 1997-B SUBI
Certificates may be sold to the Transferor pursuant to the SUBI Certificate
Agreement, and (ii) the 99.8% 1997-B SUBI Certificate and the interest in the
1997- B 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-B
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-B 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-B SUBI CERTIFICATES.
(a) The 1997-B SUBI shall be represented by two 1997-B SUBI
Certificates: the 99.8% 1997-B SUBI Certificate, and the 0.2% 1997-B SUBI
Certificate, each of which shall represent a beneficial interest in the 1997-B
SUBI and the 1997-B SUBI Portfolio, as further set forth herein. The 1997-B SUBI
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-B 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 SUBI Certificate set forth on the reverse
hereof, which provisions shall for all purposes have
the same effect as if set forth at this place."
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The 1997-B 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-B SUBI Certificate shall contain an express written waiver of any
claim by any holder thereof or owner of a beneficial interest or security
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-B SUBI
Portfolio as 1997-B SUBI Assets and those proceeds or assets derived from or
earned by such 1997-B 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-B SUBI Portfolio and the backup security interest
therein of the Indenture Trustee, 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 Indenture and 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 Owner Trustee or the Indenture
Trustee in any 1997-B Leased Vehicle. The Grantor hereby irrevocably 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-B SUBI.
In connection with any purchase by the Transferor of 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-B SUBI represented by the 1997-B SUBI Certificates,
should all of the interest in the 1997-B SUBI thereafter be transferred to the
UTI Holder, whether by sale or otherwise, then upon the direction of the UTI
Holder the 1997-B SUBI shall be terminated, the 1997-B 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-B
Leases, 1997-B Leased Vehicles and related 1997-B SUBI Assets to the UTI
Portfolio.
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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-B SUBI Certificate
(and beneficial owner of any portion thereof in connection with a Securitized
Financing, including the Owner Trustee, the Indenture Trustee and the
Noteholders) 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;
(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.
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SECTION 11.08. OTHER SUBIS.
The Trustee will not create any SUBI other than the 1997-B
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-B SUBI any Leases, Leased Vehicles or associated Trust Assets
booked on the Servicer's records from __________, 1997 through __________, 1997
that would be eligible to be allocated as 1997-B 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 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-B SUBI before allocating Trust Assets to the 1997-B 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-B SUBI at a minimum a
two-tenths of one percent (0.2%) interest in the 1997-B SUBI and the related
1997-B 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-B SUBI and 1997-B SUBI Portfolio, and (b) a capital account balance (or
capital investment) in the 1997-B SUBI and 1997-B 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.
Notwithstanding 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-B SUBI COLLECTION ACCOUNT.
(a) The Trustee shall establish and maintain with respect to
the 1997-B SUBI a "1997-B SUBI Collection Account" in the name of the Indenture
Trustee, for the benefit of the holders of the Notes and the holders of 1997-B
SUBI Certificates, which account shall constitute a SUBI Collection Account. The
1997-B SUBI Collection Account initially shall be established with the Indenture
Trustee, and at all times shall be an Eligible Account. In the event that
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the Indenture Trustee 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-B SUBI Collection Account to be moved to a bank or
trust company that satisfies those requirements. The 1997-B SUBI Collection
Account shall relate solely to the 1997-B SUBI and the 1997-B 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-B 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. The Trustee
hereby grants a security interest in the 1997-B SUBI Collection Account, and all
Permitted Investments therein to the Indenture Trustee for the benefit of the
holder of the Notes.
(b) On each Deposit Date, the Indenture Trustee shall transfer
or cause the transfer from the 1997-B 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 Indenture Trustee shall transfer
or cause the transfer of all Principal Collections and Interest Collections in
the 1997-B SUBI Collection Account with respect to the related Collection Period
to the holders of the 1997-B SUBI Certificates (and more particularly, with
regard to the 99.8% 1997-B SUBI Certificate, to the Distribution Account), pro
rata in proportion to the relative percentage of the 1997-B SUBI represented by
each; provided, however, that on each Deposit Date related to a Collection
Period in the Revolving Period, the Indenture 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-B SUBI
Certificate shall be made as directed pursuant to the Securitization Trust
Documents. Any transfer to the holder of the 0.2% 1997-B 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, the Owner Trustee and the Indenture
Trustee a letter from each Rating Agency to the effect that the utilization by
24
<PAGE> 28
the Servicer of an alternative remittance schedule with respect to collections
arising out of the 1997-B SUBI Portfolio to be deposited in the 1997-B 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 Securities (as defined in the
Securitization Trust Agreement) by such Rating Agency, (i) the Servicing
Supplement may be so modified without the consent of any Noteholders pursuant to
Section 12.02 thereof and (ii) the Servicer may remit such collections to the
1997-B 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-B 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. 1997-B 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-B SUBI a "1997-B SUBI Lease Account" in the name of the Indenture Trustee,
for the benefit of the holders of the Notes and the holders of the 1997-B SUBI
Certificates, which account shall constitute a SUBI Lease Account. Any 1997-B
SUBI Lease Account initially shall be established with the Indenture Trustee and
at all times shall be an Eligible Account. In the event that the Indenture
Trustee no longer meets the requirements stated in the definition of "Eligible
Account", then the Servicer shall, with the Indenture Trustee's assistance as
necessary, cause the 1997-B SUBI Lease Account to be moved to a bank or trust
company that satisfies those requirements. The 1997-B SUBI Lease Account shall
relate solely to the 1997-B SUBI and the 1997-B 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-B SUBI Lease 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. The Trustee hereby
grants a security interest in any 1997-B SUBI Lease Account, and all Permitted
Investments therein, to the Indenture Trustee for the benefit of the holders of
the Notes.
25
<PAGE> 29
(b) All transfers of funds into and out of the 1997-B 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-B SUBI a "Residual Value Surplus Account" in the name of the Indenture
Trustee, for the benefit of the holders of the Notes and the holders of 1997-B
SUBI Certificates of the Trust. The Residual Value Surplus Account initially
shall be established with the Indenture Trustee, and at all times shall be an
Eligible Account. In the event that the Indenture Trustee no longer meets the
requirements stated in the definition of "Eligible Account", then the Servicer
shall, with the Indenture 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-B SUBI and the 1997-B 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. The Trustee hereby grants a
security interest in the Residual Value Surplus Account, and all Permitted
Investments therein, to the Indenture Trustee for the benefit of the holders of
the Notes.
(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-B Leases became Early
Termination Leases during such Collection Period, then on the related Deposit
Date, the Indenture Trustee shall transfer or cause the transfer from the
Residual Value Surplus Account to the 1997-B 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 without reference to payments
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.
26
<PAGE> 30
SECTION 12.04. SERVICER CALCULATIONS.
Neither the Trustee nor the Indenture Trustee shall be under
any obligation to recalculate or reverify any calculations made by the Servicer
with respect to any amounts to be transferred by the Indenture 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- B SUBI and the 1997-B SUBI Portfolio, may be amended from
time to time only in a writing signed by the Trustee and the Beneficiary (and by
U.S. Bank to the extent that any such amendment affects it as Trust Agent), with
the prior written consent of the Indenture Trustee and the Owner 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-B 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 Notes.
(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,
trust company or bank 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 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.
27
<PAGE> 31
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
Indenture Trustee shall be addressed as follows:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois
Attention Corporate Trust Office
and any notice to the Owner Trustee shall be addressed as follows:
PNC Bank, Delaware
222 Delaware Avenue
17th Floor
Wilmington, DE 19801-1600
Attention: Mr. Michael McCarthy, Corporate Trust Department
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 Owner Trustee and the Indenture 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-B SUBI Certificates or the rights of the holders
thereof. 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.
28
<PAGE> 32
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-B
SUBI, the provisions of this Supplement shall prevail.
(b) For purposes of determining the parties' obligations under
this Supplement with respect to the 1997-B SUBI, general references in the Trust
Agreement to: (i) a SUBI Account shall be deemed to refer more specifically to
the 1997-B SUBI Account; (ii) a SUBI Asset shall be deemed to refer more
specifically to a 1997-B SUBI Asset; (iii) an appropriate or applicable SUBI
Collection Account shall be deemed to refer more specifically to the 1997-B SUBI
Collection Account; (iv) an appropriate or applicable SUBI Lease Account shall
be deemed to refer more specifically to a 1997-B SUBI Lease Account; (v) a SUBI
Portfolio shall be deemed to refer more specifically to the 1997-B 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]
29
<PAGE> 33
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) U.S. 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:
--------------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
VT INC., as Trustee
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as Trust
Agent and Indenture Trustee
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:
-------------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
30
<PAGE> 34
COUNTY OF COOK )
)
STATE OF ILLINOIS )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that Patrick C. Ossenbeck, whose name as Assistant
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: __________
31
<PAGE> 35
COUNTY OF COOK )
)
STATE OF ILLINOIS )
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: __________
32
<PAGE> 36
COUNTY OF COOK )
)
STATE OF ILLINOIS )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of U.S. 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: __________
33
<PAGE> 37
COUNTY OF COOK )
)
STATE OF ILLINOIS )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that Patrick C. Ossenbeck, whose name as Assistant
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: --------------
34
<PAGE> 38
EXHIBIT A
SCHEDULE OF 1997-B LEASES AND
1997-B LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Trustee, the
Indenture Trustee and the Owner Trustee.]
A-1
<PAGE> 39
EXHIBIT B
FORM OF 1997-B SUBI CERTIFICATES
WORLD OMNI LT
SPECIAL UNIT OF BENEFICIAL INTEREST 1997-B CERTIFICATE
evidencing a fractional undivided __% interest in all 1997-B SUBI
Assets (as defined below).
(This 1997-B SUBI 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-B SUBI-__
THIS CERTIFIES THAT __________________________________ is the
registered owner of a nonassessable, fully-paid, fractional undivided interest
in the 1997-B SUBI Assets (such interest, a "1997-B 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, U.S. Bank National Association, a
national banking association (formerly known as First Bank National Association
and successor to Bank of America Illinois, an Illinois banking corporation)
("U.S. Bank"), as supplemented by that certain 1997-B Supplement to Trust
Agreement dated and effective as of October 1, 1997 among the Grantor, the
Beneficiary, the Trustee, U.S. 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.
This 1997-B SUBI Certificate is one of the duly authorized certificates
issued under the Agreement and designated as "World Omni LT Special Unit of
Beneficial Interest 1997-B Certificates" (the "1997-B SUBI Certificates"). This
1997-B SUBI Certificate is issued under
B-1
<PAGE> 40
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the holder of this 1997-B 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 SUBI & UTI 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-B SUBI Certificates, the "SUBI Certificates" and, together with
the Undivided Trust Interest Certificates, the "SUBI & UTI 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- B 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-B SUBI Supplement, various SUBI Assets (the "1997-B SUBI Assets") were
identified and allocated on the records of the Trust into a separate SUBI
Portfolio (the "1997-B SUBI Portfolio"), and the beneficial interest in the
1997-B SUBI Portfolio was designated as a separate SUBI known as the "1997-B
SUBI". The rights of the holder of this SUBI Certificate to certain of the
proceeds of the 1997-B SUBI Assets are and will be further set forth in the
Agreement.
The SUBI & UTI Certificates do not represent an obligation of, or an
interest in, the Grantor, WOFCO or any of their respective Affiliates. The SUBI
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-B 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.
B-2
<PAGE> 41
By accepting this SUBI 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-B SUBI Portfolio as 1997-B SUBI Assets and those
proceeds or assets derived from or earned by such 1997-B 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- B SUBI Assets, the 1997-B SUBI
Portfolio and the 1997-B SUBI and the rights of holders of 1997-B SUBI
Certificates at any time by the Beneficiary and the Trustee, only with the
consent of U.S. Bank, as Trustee (the "Indenture Trustee") under that certain
Indenture dated as of October 1, 1997 between PNC Bank, Delaware, as trustee
(the "Owner Trustee") of the World Omni 1997-B Automobile Lease Securitization
Trust and the Indenture Trustee, as set forth in that certain Securitization
Trust Agreement dated as of October 1, 1997 (the "Securitization Trust
Agreement"), between the Transferor and the Owner Trustee, and with the consent
of the Owner 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 Notes evidencing more than 50% of the aggregate
Percentage Interests (as all such terms are defined in the Securitization Trust
Agreement), voting together as a single class. If approval of any holder of this
SUBI Certificate is required, any such consent shall be conclusive and binding
on such holder and on all future holders hereof and of any SUBI 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 SUBI
Certificate.
As provided in the Agreement, this SUBI 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-B SUBI CERTIFICATE.] Such a transfer of this SUBI Certificate
is registrable upon surrender of this 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 hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new 1997-B SUBI Certificates of a like aggregate fractional undivided interest
will be issued to the designated permitted transferee.
Prior to due presentation of this SUBI 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 SUBI
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.
B-3
<PAGE> 42
Unless this SUBI Certificate shall have been executed by an authorized
officer of the Trustee, by manual signature, this SUBI 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 1997-B SUBI Certificate to be duly executed.
Dated: WORLD OMNI LT
By: VT INC., as Trustee
(SEAL) By:
---------------------------------
Authorized Officer
ATTEST:
- -------------------------
B-4
<PAGE> 43
EXHIBIT C
FORMS OF 1997-B LEASE
C-1
<PAGE> 44
EXHIBIT D
CREDIT AND COLLECTION POLICY
D-1
<PAGE> 1
EXHIBIT 10.4
MAYER, BROWN & PLATT
DRAFT DATED 10/14/97
- --------------------------------------------------------------------------------
VT INC.,
AS TRUSTEE OF
WORLD OMNI LT
AND
WORLD OMNI FINANCIAL CORP.
SUPPLEMENT 1997-B TO
SERVICING AGREEMENT
DATED AS OF OCTOBER 1, 1997
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS.............................................................................................. 1
ARTICLE SIX........................................................................................... 3
DEFINITIONS........................................................................................... 3
Section 6.01. Definitions.............................................................. 3
ARTICLE SEVEN
REPRESENTATIONS AND WARRANTIES OF SERVICER............................................................ 7
Section 7.01. Organization and Standing................................................ 7
Section 7.02. Authorization, Execution and Delivery; No Conflicts...................... 7
Section 7.03. Approvals................................................................ 8
Section 7.04. Enforceability........................................................... 8
Section 7.05. Litigation............................................................... 8
Section 7.06. Representations to the RV Insurer........................................ 9
ARTICLE EIGHT
CREATION OF 1997-B SUBI............................................................................... 9
Section 8.01. Initial Creation of 1997-B SUBI Portfolio................................ 9
Section 8.02. Subsequent Additions to 1997-B SUBI Portfolio............................10
Section 8.03. Servicer Payment in Respect of Certain Leases and Leased
Vehicles.................................................................11
Section 8.04. Filings..................................................................12
ARTICLE NINE
SPECIFIC REQUIREMENTS FOR ADMINISTRATION AND SERVICING
OF LEASES IN 1997-B SUBI PORTFOLIO....................................................................13
Section 9.01. Servicer Bound by Servicing Agreement....................................13
Section 9.02. Collection of Monthly Lease Payments and Remittances;
Application of Proceeds; Accounts........................................14
Section 9.03. Records..................................................................19
Section 9.04. Advances.................................................................20
Section 9.05. Payment of Certain Fees and Expenses; No Offset..........................20
Section 9.06. Servicing Compensation...................................................21
Section 9.07. Repossession and Sale of Leased Vehicles.................................22
Section 9.08. Indemnification by Servicer..............................................22
Section 9.09. Third Party Claims.......................................................23
Section 9.10. Insurance Policies.......................................................23
Section 9.11. Servicer Not to Resign; Assignment.......................................24
Section 9.12. Obligor Insurance Coverage in Respect of Leased Vehicles.................25
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 9.13. Corporate Existence; Status; Merger.....................................26
Section 9.14. Mobile Leased Premises..................................................26
ARTICLE TEN
STATEMENTS AND REPORTS................................................................................27
Section 10.01. Reporting by the Servicer...............................................27
Section 10.02. Annual Accountants' Reports.............................................28
Section 10.03. Other Certificates and Notices from Servicer............................28
Section 10.04. Tax Returns...........................................................................28
ARTICLE ELEVEN
SERVICER DEFAULT......................................................................................29
Section 11.01. Events of Default; Termination of Servicer as to 1997-B
SUBI Portfolio..........................................................29
Section 11.02. No Effect on Other Parties..............................................33
ARTICLE TWELVE
MISCELLANEOUS.........................................................................................34
Section 12.01. Termination of Agreement................................................34
Section 12.02. Amendment...............................................................34
Section 12.03. Governing Law...........................................................35
Section 12.04. Notices.................................................................35
Section 12.05. Severability............................................................35
Section 12.06. Inspection and Audit Rights.............................................35
Section 12.07. Binding Effect..........................................................36
Section 12.08. Article and Section Headings............................................36
Section 12.09. Execution in Counterparts...............................................36
Section 12.10. Rights Cumulative.......................................................36
Section 12.11. Further Assurances......................................................36
Section 12.12. Third-Party Beneficiaries...............................................37
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
EXHIBIT A - Schedule of 1997-B Leases and 1997-B
Leased Vehicles as of the Initial Cutoff
Date...................................................................A-1
EXHIBIT B - Servicer's Certificate............................................................B-1
</TABLE>
ii
<PAGE> 4
SUPPLEMENT 1997-B TO
SERVICING AGREEMENT
SUPPLEMENT 1997-B TO SERVICING AGREEMENT (the "Supplement"),
dated as of October 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, U.S. Bank National
Association (formerly known as First Bank National Association and successor
trustee to Bank of America Illinois, an Illinois banking corporation) (together
with its successors, "U.S. 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 U.S. Bank, and that
certain Amended and Restated Trust Agreement dated as of June 1, 1994 among
ALFI, ALFI LP, the Origination Trustee and U.S. 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.
C. Concurrently herewith, and as contemplated by the Servicing
Agreement and the Origination Trust Agreement, ALFI LP, the Origination Trustee,
U.S. Bank and World Omni Lease Securitization L.P. (the "Transferor") are
entering into that certain Supplement 1997-B to Trust Agreement dated as of
October 1, 1997 (the "1997-B SUBI Supplement"), pursuant to which the
Origination Trustee, on behalf of the Origination Trust and at the direction
<PAGE> 5
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-B 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-B
SUBI Portfolio"), a SUBI Certificate (as defined in the Origination Trust
Agreement) representing a 99.8% beneficial interest in the 1997-B SUBI (such
SUBI Certificate, the "99.8% 1997-B SUBI Certificate") and a SUBI Certificate
representing the remaining 0.2% beneficial interest in the 1997-B SUBI (such
SUBI Certificate, the "0.2% 1997-B SUBI Certificate" and, together with the
99.8% 1997-B SUBI Certificate and any replacements of either of them, the
"1997-B SUBI Certificates"), all as set forth in the Origination Trust Agreement
and the 1997-B 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 October 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-B SUBI and the 1997-B 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-B 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-B SUBI Portfolio as of the Initial Cutoff Date (as defined in the 1997-B
SUBI Supplement).
E. Also concurrently herewith, and as contemplated by the
Servicing Agreement and the Origination Trust Agreement, the Transferor, PNC
Bank, Delaware, as owner trustee (the "Owner Trustee") and U.S. Bank, as
indenture trustee (the "Indenture Trustee") are entering into that certain
Securitization Trust Agreement dated as of October 1, 1997 (the "Securitization
Trust Agreement") pursuant to which the 99.8% 1997-B SUBI Certificate will be
transferred to the Owner Trustee, in that capacity and then pledged to the
Indenture 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-B SUBI Certificate will be retained by the Transferor and not used in
connection with such Securitized Financing.
F. Also concurrently herewith, the Indenture Trustee and the
Owner Trustee are entering into that certain Indenture dated as of October 1,
1997 (the "Indenture") pursuant to which, among other things, the Trust will
issue the Notes (as defined below) and the Trust will grant a security interest
to the Indenture Trustee with respect to all of the Trust Estate.
G. The parties desire to supplement the terms of the Servicing
Agreement insofar as they apply to the 1997-B SUBI, the 1997-B SUBI Portfolio,
and the 1997-B SUBI Certificates to provide for further specific servicing
obligations that will benefit the holders of the 1997-B 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.
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<PAGE> 6
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-B 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-B
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- B 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-B SUBI Supplement, except that it shall refer to 1997-B 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-B 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
3
<PAGE> 7
qualified and has the capacity to service the 1997-B 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.
"Indenture" has the meaning set forth in Recital F.
"Indenture Trustee" has the meaning set forth in Recital E.
"1997-B SUBI" has the meaning set forth in Recital C.
"1997-B SUBI Account" means any SUBI Account related to the
1997-B SUBI.
"1997-B Servicer Event of Default" means any of the acts, events
or occurrences set forth in Section 11.01.
"1997-B SUBI Portfolio" has the meaning set forth in Recital C.
"1997-B 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(f).
"Origination Trustee" has the meaning set forth in the Preamble.
"Owner Trustee" has the meaning set forth in Recital E.
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<PAGE> 8
"Plan" means an "employee benefit plan," as such term is defined
in Section 3(3) of ERISA.
"Prospectus" means that certain prospectus dated _________, 1997
relating to the public offering of the Class A Notes 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 May 15, 1997.
"Securitization Trust" means the trust created by the
Securitization Trust Agreement.
"Securitization Trust Agreement" 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-B SUBI Assets to the 1997-B SUBI Collection Account.
"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.
"U.S. Bank" has the meaning set forth in Recital A.
5
<PAGE> 9
ARTICLE SEVEN
REPRESENTATIONS AND WARRANTIES OF SERVICER
The Servicer represents and warrants to the Owner Trustee and
Indenture 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.
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.
6
<PAGE> 10
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 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 THE RV INSURER.
The Servicer has made no material misrepresentations to the RV
Insurer regarding any matter in the process of arranging for and negotiating the
terms of the Residual Value Insurance Policy.
ARTICLE EIGHT
CREATION OF 1997-B SUBI
SECTION 8.01. INITIAL CREATION OF 1997-B SUBI PORTFOLIO.
(a) Pursuant to Section 4.02 of the Origination Trust Agreement
and Section 11.01 of the 1997-B 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.
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<PAGE> 11
(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-B 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-B SUBI Portfolio.
(c) The Servicer hereby represents and warrants to the
Origination Trustee, on behalf of the Origination Trust, to the Owner Trustee,
on behalf of the Certificateholder, and to the Indenture Trustee, on behalf of
the Noteholders, that (i) all 1997-B 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-B Leases, and (iii) it is not
aware of any bias in the selection of such 1997-B Leases that would cause the
delinquencies or losses therein to be worse than those of other Leases.
SECTION 8.02. SUBSEQUENT ADDITIONS TO 1997-B SUBI PORTFOLIO.
(a) Pursuant to Section 11.02 of the 1997-B 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-B 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-B SUBI Portfolio as
additional 1997-B SUBI Assets.
(b) The Servicer shall give one Business Day's prior notice to
the Indenture 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, and the Indenture Trustee, on behalf of the Noteholders, an Officer's
Certificate certifying that (i) all 1997-B Leases added to the 1997-B 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-B Leases, (iii) it is not aware of any bias in the selection of such 1997-B
Leases that would cause the delinquencies or losses thereof to be worse than
other Leases, other than the fact that such 1997-B Leases were selected from all
Eligible Leases not then allocated to any SUBI Portfolio or reserved for
allocation to another
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<PAGE> 12
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-B SUBI
Supplement) and (iv) unless the Indenture 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 Notes, after giving effect to such reallocation
(A) each such 1997-B Lease will be allocated to the 1997-B SUBI Portfolio based
upon its Discounted Principal Balance as of the relevant Subsequent Cutoff Date,
(B) the weighted average remaining term of all 1997-B Leases will be not greater
than ___ months, and (C) the weighted average Booked Residual Value of all
1997-B Leases, as a percentage of the aggregate Outstanding Principal Balance of
the 1997-B Leases, will be not greater than __%, based on the characteristics of
each 1997-B Lease as of its date of origination.
(c) Except in the circumstances set forth in Section 11.02(e) of
the 1997-B SUBI Supplement, on each Transfer Date, the Servicer shall transfer
from the 1997-B 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-B Leases then being added to the 1997-B SUBI
Portfolio pursuant to Section 11.02(a) of the 1997-B SUBI Supplement.
(d) In the circumstances set forth in Section 11.02(e) of the
1997-B SUBI Supplement, the Servicer shall transfer from the 1997-B SUBI
Collection Account to the 1997-B 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-B Lease shall survive delivery of the
related Lease Documents to the Servicer and shall continue so long as such
1997-B 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 Owner Trustee, the Indenture Trustee
or the Servicer that any such representation or warranty was incorrect as of the
time effective and materially and adversely affects such 1997-B 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 the 1997-B 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
9
<PAGE> 13
1997-B SUBI Portfolio to the UTI Portfolio, and (iii) indemnify, defend and hold
harmless the holders of any 1997-B SUBI Certificate (including without
limitation the Owner Trustee on behalf of the Certificateholder and the
Indenture Trustee on behalf of the Noteholders) 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-B 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-B SUBI Portfolio, the Servicer shall, within two Business Days of receipt
thereof, deposit such funds into the 1997-B 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-B 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-B SUBI Portfolio and the
backup security interest therein of the Indenture Trustee 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 Indenture and the Backup Security Agreement), whether on its own behalf or
pursuant to the power of attorney granted by the Grantor pursuant to Section
11.04 of the 1997-B 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 Indenture Trustee in any 1997-B Leased Vehicle.
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<PAGE> 14
ARTICLE NINE
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF LEASES
IN 1997-B 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-B 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-B 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-B 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-B SUBI Account; (ii) a SUBI Asset shall be
deemed to refer more specifically to a 1997-B SUBI Asset; (iii) an appropriate
or applicable SUBI Collection Account shall be deemed to refer more specifically
to the 1997-B SUBI Collection Account; (iv) an appropriate or applicable SUBI
Lease Account shall be deemed to refer more specifically to a 1997-B SUBI Lease
Account; (v) a SUBI Portfolio shall be deemed to refer more specifically to the
1997-B 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-B SUBI
Supplement.
(c) Coincident with the execution and delivery of this
Supplement, the Servicer shall furnish the Indenture Trustee, on behalf of the
Noteholders 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-B SUBI Portfolio, which list shall from time to time be
updated by the Servicer.
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-B SUBI
Collection Account any Extension Fee that it may receive in connection with the
extension of a 1997-B Lease;
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(ii) except as provided in clause (iii) below, the extended
Maturity Date of any 1997-B 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-B 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-B 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-B 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-B 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-B 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 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-B 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 and the
Indenture Trustee, shall establish and maintain the 1997-B SUBI Collection
Account in the circumstances set forth in Section 12.01(a) of the 1997-B SUBI
Supplement. The Servicer, on behalf of the Origination Trustee and the Indenture
Trustee, shall establish and maintain the Residual Value
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Surplus Account in the circumstances set forth in Section 12.03(a) of the 1997-B
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 Indenture Trustee to
holders of the 1997-B SUBI Certificates on the related Distribution Date in
accordance with Section 12.01(c) of the 1997-B 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-B
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 Noteholders 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-B SUBI Collection Account to the Residual Value Surplus
Account as provided in Section 12.01(b) of the 1997-B SUBI Supplement or make
the transfer from the Residual Value Surplus Account to the 1997-B SUBI
Collection Account as provided in Section 12.03(b) of the 1997-B SUBI
Supplement, as appropriate, and (ii) cause the transfers from the 1997-B SUBI
Collection Account in respect of the 1997-B 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-B
SUBI Supplement. On each Distribution Date, the Servicer shall make the
distributions from the Distribution Account and the Reserve Fund in respect of
the Notes, as provided in Section 3.03 of the Securitization Trust Agreement,
including without limitation any redeposit of Undistributed Transferor Excess
Collections into the 1997-B SUBI Collection Account upon receipt of appropriate
instructions from the Transferor pursuant to Section 3.03(c) 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 Indenture Trustee an Officer's
Certificate setting forth the basis for its determination of any such amount,
and (x) the Indenture 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
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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 Liquidation Expenses or Insurance Expenses; (iii) any
Monthly Lease Payments arising from a Lease allocated to the 1997-B 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
Indenture Trustee an Officer's Certificate setting forth the basis for its
determination of any such amount and (2) the Indenture Trustee shall promptly
transfer an amount equal to the aggregate of such amounts from the 1997-B 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 Indenture 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-B 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, the
Indenture Trustee and the Owner Trustee with respect to the 1997-B SUBI
Portfolio separately from any other Portfolio.
(j) The Servicer shall direct the Indenture Trustee's investments
from time to time of funds in the 1997-B 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-B 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-B 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 Indenture Trustee 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
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during the Revolving Period of Principal Collections on deposit in the 1997-B
SUBI Collection Account, which may mature on such dates as specified by the
Indenture 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 Indenture Trustee, to the effect
that the utilization by the Servicer of an alternative remittance schedule with
respect to collections arising out of the 1997-B SUBI Portfolio to be deposited
in the 1997-B 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 Notes by such Rating
Agency, (i) this Supplement may be so modified without the consent of any
Noteholders 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-B 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 Owner
Trustee of the initial proceeds of the 99.8% 1997-B SUBI Certificate contained
in the Distribution Account and the Reserve Fund and, except as provided in this
Supplement, the 1997-B 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-B 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.
SECTION 9.03. RECORDS.
Upon the occurrence and during the continuance of a 1997-B
Servicer 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 Indenture Trustee or, as provided in Section 11.01(b) hereof, upon demand
of Noteholders representing more than 50% of the aggregate Percentage Interests
(acting as a single Class)), deliver to the Origination Trustee all such data,
operating software and appropriate documentation necessary for the servicing of
the 1997-B
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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-B
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-B Leases, and any 1997-B 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-B 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 Indenture Trustee, the Noteholders representing more than 50%
of the aggregate Percentage Interests (acting as a single Class), or otherwise),
deliver to the Origination Trustee all such data, operating software and
appropriate documentation necessary for the servicing of the 1997-B Leases and
all moneys collected by it and required to be deposited, as appropriate, in any
1997-B 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-B 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-B SUBI Collection Account.
(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 Indenture 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-B 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, the Owner Trustee or
the Indenture Trustee as Capped Origination Trust Administrative Expenses,
Capped Owner Trustee Administrative Expenses, Capped Indenture Trustee
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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, the Owner
Trustee and the Indenture 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-B 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-B SUBI Portfolio and thereafter if such
termination results from a 1997-B Servicer Event of Default, the obligations of
the Servicer with respect to the 1997-B 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, the Owner Trustee or the Indenture
Trustee, whether in respect of this Supplement, the 1997-B SUBI Supplement, the
Servicing Agreement, any Securitization Trust Document, any 1997-B Lease, any
related Lease Document, any 1997-B 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-B SUBI Portfolio shall be 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-B SUBI Portfolio shall be
paid out of cash flows arising from the 1997-B SUBI Portfolio as and to the
extent set forth in Section 12.01(c) of the 1997-B 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-B 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-B
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 all Excess Collections are not
required to be retained in the Reserve Fund pursuant to Section 3.03(c) of the
Securitization Trust Agreement) 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 Indenture 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
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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-B 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-B 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).
SECTION 9.08. INDEMNIFICATION BY SERVICER.
The Servicer agrees to indemnify, defend and hold harmless the
Owner Trustee, the Indenture Trustee and their respective 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 Owner
Trustee, the Indenture Trustee or their respective 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-B
Leases and 1997-B Leased Vehicles, the servicing of the 1997-B 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-B 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-B
SUBI Portfolio), the Owner Trustee or the Indenture Trustee.
SECTION 9.09. THIRD PARTY CLAIMS.
The Servicer shall immediately notify the Owner Trustee and the
Indenture Trustee and any other holder of any 1997-B 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 Owner Trustee, the Indenture Trustee, any
1997-B 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-B SUBI
Portfolio) or the servicing thereof or with respect to any other Trust Asset
(whether or not constituting a 1997-B SUBI Asset).
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SECTION 9.10. INSURANCE POLICIES.
(a) So long as any 1997-B 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-B
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 Affiliates), and (B) either each Rating Agency has confirmed
(orally or in writing) to the Indenture 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 Notes 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-B
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-B Leased Vehicle under the Residual Value Insurance
Policy except (i) in accordance with its customary and usual procedures and (ii)
in a manner as will not result in such 1997-B Leased Vehicle not being covered
by the Residual Value Insurance Policy.
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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 Indenture 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 Indenture 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 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-B 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-B 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
Indenture 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-B Leased Vehicles into the 1997-B SUBI Collection Account
shall be made within two Business Days after receipt thereof.
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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
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 Indenture 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
Indenture 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 Indenture 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 Indenture Trustee a revised Schedule of Leases and Leased Vehicles,
containing data as of the last day of the prior
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<PAGE> 25
Collection Period (in the case of 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-B Leases and 1997-B Leased Vehicles, the Discounted
Principal Balance of each 1997-B Lease and the related Cutoff Date for each
1997-B Lease, and on or prior to each Determination Date, shall cause to be
delivered to the Origination Trustee, the Indenture 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-B SUBI Supplement, 3.03 of the Securitization Trust
Agreement and Section 8.02(b) of the Indenture 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 Indenture 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 Indenture Trustee the
statements required by that Section. Any Noteholder or Note 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 Indenture 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
Indenture Trustee and each Rating Agency.
(b) The Servicer shall deliver to the Indenture 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 specifying the nature and status of any event which with
the giving of notice or lapse of time, or both, would become a 1997-B Servicer
Event of Default.
(c) On or prior to each Determination Date, the Servicer shall
cause to be delivered to the Indenture 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
22
<PAGE> 26
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 Owner 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 Notes 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 Owner Trustee
for signature at least five days prior to the date such returns are required by
law to be filed.]
ARTICLE ELEVEN
SERVICER DEFAULT
SECTION 11.01. EVENTS OF DEFAULT; TERMINATION OF SERVICER AS TO
1997-B SUBI PORTFOLIO.
(a) Any of the following acts or occurrences shall constitute a
1997-B Servicer 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-B SUBI Certificates or to the Indenture
Trustee for distribution to the Noteholders 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
Origination Trustee, the Indenture Trustee or Noteholders
representing not less than 25% of the aggregate Percentage
Interests;
(ii) The Origination Trustee or the Indenture Trustee shall
not have received any report relating to the 1997-B 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-B SUBI Portfolio, which
default materially and adversely affects the rights of holders
of 1997-B SUBI Certificates, the Certificate or the Noteholders,
and such default shall have continued for a period of 60 days
after written notice thereof shall have
23
<PAGE> 27
been given to the Servicer by the Origination Trustee, the
Indenture Trustee or by Noteholders 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-B SUBI Portfolio or any certificate, report
or other writing delivered pursuant hereto or thereto relating
to the 1997-B 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
Indenture Trustee or Noteholders 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 Trustee, the
Indenture Trustee or Noteholders 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
Indenture Trustee or Noteholders 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 the fourth sentence of Section 3.04(b) of the
Securitization Trust Agreement with regard to the deposit into
the Reserve Fund of an amount equal to the RV Insurer Reserve
Fund Supplemental Requirement in the event of an RV Insurer
Trigger Event.
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<PAGE> 28
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-B Servicer 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 Indenture Trustee, the Origination
Trustee, the Transferor and the Noteholders 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-B SUBI Portfolio absent a 1997-B Servicer Event of Default,
as further set forth below. The consequences of a 1997-B Servicer 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 those
purposes, references in Section 4.01(b) of the Servicing Agreement, to an Event
of Default shall mean a 1997-B Servicer Event of Default. Further, in the case
of the 1997-B SUBI, references to "the holder of the requisite percentage of any
SUBI" shall refer either to the Indenture Trustee, or to Noteholders
representing more than 50% of the aggregate Percentage Interests (acting as a
single Class). If a 1997-B Servicer Event of Default shall have occurred and be
continuing, the Origination Trustee, on behalf of the Origination Trust, upon
the direction of the Indenture Trustee or Noteholders representing more than 50%
of the aggregate Percentage Interests (acting as a single class), 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-B 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-B SUBI Portfolio, whether with respect to the related Lease Documents, the
related Title Documents or Lease Records, the 1997-B SUBI Collection Account,
the Distribution Account, any 1997-B 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-B Leases and the
1997-B 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-B Leases to the Trust Agent or new servicer, and as promptly as
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<PAGE> 29
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-B 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-B SUBI Portfolio by giving written notice of such resignation or
declination to the Origination Trustee and the Indenture 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
Indenture 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 Indenture Trustee and
the Noteholders, to obtain a new servicer for the 1997-B 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 Indenture Trustee referred to above, the Origination
Trustee shall not have obtained such a new servicer for the 1997-B SUBI
Portfolio, the Indenture Trustee may appoint, or may petition a court of
competent jurisdiction to appoint, a successor servicer to service the 1997-B
Leases.
No termination of the Servicer as to the 1997-B 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-B 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-B 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-B 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-B SUBI Portfolio, all
the rights, powers, duties and obligations of the Origination Trustee, the
Indenture Trustee, the Owner Trustee, the UTI Holder and the Transferor under
this Agreement, the Securitization Trust Agreement, the Indenture, the 1997-B
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.
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<PAGE> 30
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TERMINATION OF AGREEMENT.
(a) In connection with any purchase by the Transferor of 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-B SUBI represented by the 1997-B SUBI Certificates, and
if the UTI Holder shall thereafter succeed to such interest in the 1997-B SUBI,
the Servicer, upon the direction of the UTI Holder as provided in Section 11.05
of the 1997-B SUBI Supplement, shall reallocate all 1997-B Leases, 1997-B Leased
Vehicles and related 1997-B 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-B 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-B 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-B 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 Indenture
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-B SUBI or requires approval of any Rating
Agency.
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.
27
<PAGE> 31
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
Indenture Trustee shall be addressed as follows:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attention: Corporate Trust Office
and any notice to the Owner Trustee shall be addressed as follows:
PNC Bank, Delaware
222 Delaware Avenue
17th Floor
Wilmington, DE 19801-1600
Attention: Mr. Michael McCarthy,
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 Owner Trustee or Indenture
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-B SUBI Portfolio.
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<PAGE> 32
SECTION 12.07. BINDING EFFECT.
The provisions of the Servicing Agreement and this Supplement,
insofar as they relate to the 1997-B 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, the Owner Trustee and the Indenture Trustee, on
behalf of the Noteholders.
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, the Owner Trustee or the Indenture 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- B 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-B SUBI Certificates (including without
limitation the Indenture Trustee, the Owner Trustee, the Certificateholder and
the Noteholders),
29
<PAGE> 33
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]
30
<PAGE> 34
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:
-------------------------------------
Patrick C. Ossenbeck
Assistant 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:
-------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
31
<PAGE> 35
U.S. BANK NATIONAL ASSOCIATION, as Trust
Agent (solely for purposes of Section 11.01(b))
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Acknowledged and Agreed:
U.S. BANK NATIONAL ASSOCIATION, as
Indenture Trustee
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PNC BANK, DELAWARE, as Owner Trustee
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
32
<PAGE> 36
EXHIBIT A
SCHEDULE OF 1997-B LEASES AND
1997-B LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Origination
Trustee, the Owner Trustee and the Indenture Trustee.]
A-1
<PAGE> 37
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
B-1
<PAGE> 1
EXHIBIT 10.12
AMENDMENT NO. 4
TO
SUPPORT AGREEMENT
AMENDMENT NO. 4 TO SUPPORT AGREEMENT dated as of October 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
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 as of May 1,
1996, Amendment No. 2 to Support Agreement dated as of October 1, 1996, and
Amendment No. 3 to Support Agreement dated as of May 1, 1997 (as so amended, the
"Support Agreement") to provide support to WOLS LP in maintaining a favorable
financial condition, the 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 $60 million in the aggregate" and inserting in its place
"provided that such obligations of World Omni under this Support Agreement
shall not exceed $___ 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 convenants, 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.
[SIGNATURE ON FOLLOWING PAGE]
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 4 to
Support Agreement to be duly executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By:
-----------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
Inc., its general partner
By:
---------------------
Patrick C. Ossenbeck
Assistant Treasurer
3
<PAGE> 1
EXHIBIT 10.13
[LETTERHEAD]
A Member Company
of American International Group, Inc.
AMERICAN INTERNATIONAL
SPECIALTY LINES INSURANCE COMPANY
A Capital Stock Insurance Company
c/o American International Surplus Lines Agency, Inc.
Harborside Financial Center, 401 Plaza 3
Jersey City, NJ 07311
POLICY NUMBER:
RESIDUAL VALUE INSURANCE POLICY
DECLARATIONS
ITEM 1. INSURED: World Omni Financial Corp. as Servicer (and any successor
Servicer), World Omni Lease Securitization L.P., Auto Lease
Finance L.P., VT Inc. as Owner Trustee of World Omni LT,
U.S. Bank National Association, as Indenture Owner Trustee
and PNC Bank Delaware, as Owner Trustee for the World Omni
1997-B Automobile Lease Securitization Trust
ADDRESS: 120 NW Twelfth Avenue
Deerfield Beach, FL 33442
ITEM 2. POLICY PERIOD: From:______, 1997 To: ______, 2003
(12:01 A.M. Standard Time at the address stated in Item 1)
ITEM 3. LIMIT OF LIABILITY: The maximum Limit of Liability of the Insurer on
any one Leased Vehicle shall not exceed the
lesser of: (a) $60,000, or (b) the Residual
Value of such Leased Vehicle. Furthermore, the
maximum Limit of Liability of the Insurer for
all Insured Residual Value Loss Amount under
this policy shall not exceed the Total Residual
Value.
ITEM 4. VEHICLES COVERED: Leased Vehicles as Per Premium Schedule
ITEM 5. PREMIUM: 4% of the Total Residual Value
----------------------------------------------
Authorized Representative or
Countersignature (in states where applicable)
Broker: Minet, Inc.
1114 Avenue of the Americas
New York, NY 10036-7703
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<PAGE> 2
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY
RESIDUAL VALUE INSURANCE POLICY
In consideration of the payment of Premium, and in reliance upon the statements
made to American International Specialty Lines Insurance Company (the "Insurer")
by the Insured, and subject to the terms, conditions, exclusions and limitations
contained herein or added thereto, all of which collectively constitute the
"Policy", the Insurer hereby agrees as follows:
SECTION 1 - INSURING CLAUSE
The Insurer, subject to the terms, conditions, exclusions and limitations
hereof, shall indemnify the Insured for Insured Residual Value Loss Amount (as
defined herein).
SECTION 2 - DEFINITIONS
All capitalized terms used in this Policy and not otherwise defined shall have
the meanings given to them in the Securitization Trust Agreement and any
amendments thereto (the agreement between World Omni Lease Securitization L.P.
and PNC Bank, Delaware, as Owner Trustee, dated as of ________, 1997).
A. APPROVED RESIDUAL VALUE PUBLICATION - See Endorsement #1.
B. BORROWER - The person with whom the Insured has entered into a Contract
for the purpose of purchasing or leasing a Leased Vehicle.
C. CONDITION REPORT - A comprehensive report prepared at the Insured's
expense within thirty (30) days of the Lease Termination Date,
detailing for each Leased Vehicle the nature and extent of all wear and
tear and excess mileage, including dollar estimates of the cost to
repair or replace all missing or damaged parts, accessories or optional
equipment and to restore the Leased Vehicle to good working condition.
D. CONTRACT - Closed-end retail automobile or light duty truck lease
contract originated by a motor vehicle dealer. The Contract is on file
with the Insured, and represents the agreement between the Insured and
the Borrower, and sets forth excess wear and tear provisions, mileage
requirements and other provisions related to the condition of a Leased
Vehicle. A Contract must have an original term of not more than 60
months.
E. LEASE ORIGINATION DATE - The date on which a Contract becomes
effective.
F. LEASE TERMINATION DATE - The date on which a Contract terminates as set
forth at the time of enrollment of a Leased Vehicle, exclusive of any
extensions granted. Extensions of up to 6 months beyond the Lease
Termination Date may be granted by the Insured, subject to the Residual
Value being reduced by the amount of monthly depreciation scheduled in
the original Contract for each month of the extension. A copy of the
written extension agreement will be required in the event of a claim.
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<PAGE> 3
G. LEASED VEHICLE - An automobile or light duty truck relating to a
Contract which is scheduled in the Premium Schedule and is on file with
the Insurer. The Leased Vehicles will be comprised of automobiles and
light duty trucks. As of the time of origination of a Contract, the
related Leased Vehicle will be either a new vehicle, dealer
demonstrated vehicle or manufacturers' program vehicle. The Insurer may
from time to time require, at the Insured's expense, the independent
certification that all Leased Vehicles for which a Contract exists have
been provided coverage in accordance with the terms and conditions of
this Policy.
H. INSURED - The entities named in Item 1 of the Declarations, which are
the beneficiaries of the coverages contained herein for each Leased
Vehicle, or any Additional Insured named in an endorsement attached to
the Policy.
I. INSURED RESIDUAL VALUE LOSS AMOUNT - If and to the extent a claim is
made by the Servicer for payment under this Policy in accordance with
Section 3.03(e) of the Securitization Trust Agreement, the Insurer
shall pay to the Insured the "Insured Residual Value Loss Amount", as
defined in Section 1.01 of the Securitization Trust Agreement.
J. LIMIT OF LIABILITY - The limit of the Insurer's liability under this
Policy for the Policy Period shall be that amount described in Item 3
of the Declarations.
K. PREMIUM SCHEDULE - A schedule of Leased Vehicles delivered to the
Insurer by the Insured for which insurance coverage under this Policy
is requested. Leased Vehicles may only be enrolled, and Premium
Schedules may only be delivered to the Insurer: (i) on the inception
date of the Policy; (ii) during each month of the Revolving Period; or
(iii) thirty (30) days after the month immediately following the end of
the Revolving Period. However, in all cases this Premium Schedule must
be submitted to the Insurer by the Insured within thirty (30) days
after the end of the month of enrollment stating the following:
1. Year and Vehicle Identification Number of each Leased Vehicle;
2. Manufacturer's Suggested Retail Price of each Leased Vehicle,
or other approved basis;
3. Capitalized Cost of each Leased Vehicle;
4. Residual Value of each Leased Vehicle;
5. Lease Origination Date of each Leased Vehicle;
6. Lease Termination Date of each Leased Vehicle;
7. Lease term of each Leased Vehicle;
8. Amount of Premium tendered for each Leased Vehicle;
9. Such other information as may be requested by the Insurer from
time to time.
It is a condition of this Policy that the Premium Schedules shall be
submitted in any event, even if no vehicles have been enrolled by the
Insured during the applicable month.
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<PAGE> 4
L. PROOF OF LOSS - The schedule attached to this Policy as Exhibit 1 which
outlines the initial information to be submitted to the Insurer by the
Insured in the event of a claim.
M. RESIDUAL VALUE - The residual value of the related Leased Vehicle
established at the time of origination of such Contract. The Residual
Value shall be calculated utilizing the Approved Residual Value
Publication which sets forth Residual Values of each Leased Vehicle at
specific future periods by make, model, optional equipment and
geographic location. The Residual Value of a Leased Vehicle shall be
adjusted as provided in the Approved Residual Value Publication for
additions and deductions due to the presence or absence of optional
equipment. The Insured may, from time to time, request approval to
change the approved publication and upon receiving written approval
from the Insurer may utilize the new publication on the approved
effective date. Such published value shall be the Residual Value for
purposes of this Policy, unless the Insured establishes a lower
Residual Value, however designated, in a specific Contract or in the
Premium Schedule, in which case such lower Residual Value shall be the
Residual Value. In the event a claim is made for an Insured Residual
Value Loss Amount all Residual Value calculations are subject to audit
by the Insurer.
If the Lease Termination Date falls between the designated period set
forth in the Approved Residual Value Publication, the Residual Value
will be prorated to reflect the value on the Lease Termination Date. No
Leased Vehicle with a Contract term of less than 24 months or more than
60 months shall be accepted by the Insurer without prior approval in
writing.
N. TERMINATION SCHEDULE - A monthly report of all Leased Vehicles which
have been terminated must be submitted to the Insurer by the Insured
within thirty (30) days after the end of the month of termination
stating the following:
1. Same information as provided in Premium Schedule (see Section
2.K.1-9.);
2. Early Termination or Termination on Lease Termination Date;
3. If an Early Termination or a Termination on Lease Termination
Date, then include the following:
a. Residual Value;
4. Such other information as may be requested by the Insurer from
time to time.
It is a condition of this Policy that the Termination Schedules shall
be submitted in any event, even if no Leased Vehicles have been
terminated during the applicable month.
O. TOTAL INSURED RESIDUAL VALUE LOSS AMOUNT - The sum of all Insured
Residual Value Loss Amounts paid by the Insurer under this Policy.
P. TOTAL PREMIUM - The sum of the Premium (as defined in Item 5 of the
Declarations and in Section 5.D.) for all Leased Vehicles under this
Policy.
Q. TOTAL RESIDUAL VALUE - The sum of the Residual Value for all Leased
Vehicles.
SECTION 3 - CONDITIONS PRECEDENT TO LIABILITY
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<PAGE> 5
The Insurer shall not be liable for any Insured Residual Value Loss Amount
hereunder unless the following conditions precedent shall have been fulfilled:
A. The Insured shall furnish to the Insurer on a monthly basis as outlined
in Section 2.K., Definitions, a Premium Schedule designating each and
every Leased Vehicle which it enrolls under the terms and conditions of
this Policy, and shall tender the appropriate premium therefor.
B. The Insured shall furnish to the Insurer on a monthly basis as outlined
in Section 2.N., Definitions, a Termination Schedule designating each
and every Leased Vehicle which is terminated under the terms and
condition of this Policy.
C. In the event of a claim for Insured Residual Value Loss Amount, the
Insured shall give written notice to the Insurer as soon as practicable
and make available copies of all readily available documentation the
Insured has on file. The Insured shall give the Insurer full
cooperation and such information as it may reasonably require. The
Insured shall submit to the Insurer the requested Proof of Loss
documentation as soon as practicable but not later than thirty (30)
days after requested (subject to the Insured's rights to an extension).
All notices of claims, applications, demands or requests provided for
in this Policy shall be: (i) in writing and addressed to Michael
Mitrovic, Attorney At Law, Divisional President, AIG Technical
Services, Inc., Claims Division, P.O. Box 2603, Jersey City, NJ 07303;
and (ii) confirmed by telephone at (201)309-1123.
D. Any amendments to the standard contract and associated documents (on
file with the Insured) which result in significant impact to the
Insured Residual Value Loss Amount under this policy shall be submitted
to the Insurer prior to use by the Insured.
E. The Insured must have custody, care, and control of the Leased Vehicle.
F. Procedure for Leased Vehicles which make it to their Lease Termination
Dates:
All Leased Vehicles must be sold as soon as practicable after the Lease
Termination Date at the Insured's expense and in accordance with World
Omni Policies and Procedures on file with the Insurer.
SECTION 4 - EXCLUSIONS
The Insurer shall not be liable hereunder for any Leased Vehicle Loss or any
portion of Insured Residual Value Loss Amount directly or indirectly caused by
or attributable to:
A. Physical or mechanical damage, destruction or disappearance of the
Leased Vehicle;
B. Fraudulent, dishonest, criminal, or malicious acts of the Insured, the
Borrower, or any agent, servant, or employee of either of them;
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<PAGE> 6
C. The inability of the Insured to obtain possession of the Leased Vehicle
on or after the Lease Termination Date (subject to any rights of the
Borrower to extend the Contract as permitted herein, or purchase the
Leased Vehicle) for any reason whatsoever;
D. Failure of the Insured to report for coverage and pay ____% of the
Premium to enroll a vehicle in accordance with the terms and conditions
of this Policy;
E. Enrollment of any vehicle which is not produced by the original
manufacturer to U.S. specifications and standards, evidenced by the
Vehicle identification number which must be within the approved series
for the make and model at the time of enrollment;
F. Commercial use of a Leased Vehicle as a taxi cab, public omnibus,
livery, sightseeing conveyance or for any carrying of goods or
passengers for hire.
SECTION 5 - GENERAL POLICY PROVISIONS
A. PAYMENT OF INSURED RESIDUAL VALUE LOSS AMOUNT
1. The Insured shall be entitled to make a claim for payment
under this Policy for Insured Residual Value Loss Amount
provided that such claim is made in accordance with Section
3.03(e) of the Securitization Trust Agreement.
2. The Insured Residual Value Loss Amount shall be equal to the
amount set forth in Definition 2.I., Insured Residual Value
Loss Amount.
3. The Insurer will pay to the Insured the Insured Residual Value
Loss Amount within five (5) calendar days after the Insured
makes a claim hereunder.
B. CANCELLATION
This Policy may not be canceled by the Insurer.
C. PREMIUM
The Insured shall pay the Insurer a Premium per Leased Vehicle of 4% of
Residual Value. Premium due or received by the Insurer shall be
non-refundable and fully earned as of the enrollment date of such
Leased Vehicle under this Policy. The Premium shall be due and payable
on a monthly basis based on actual Leased Vehicles enrolled under the
Policy in the past month. ___% of the Premium shall be due and payable
to the Insurer upon the enrollment of each Leased Vehicle.
D. ABANDONMENT - There shall be no abandonment of any Leased Vehicle to
the Insurer.
E. EXAMINATION OF RECORDS - The Insured shall, by mutual agreement to time
and place with the Insurer and as often as may be reasonably required
during the term of this Policy and the years thereafter up to two years
following the date the last Leased Vehicle reached its Lease
Termination Date, produce for examination by the Insurer or its duly
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<PAGE> 7
authorized representatives, all books and records, inventories and
accounts relating to this Policy.
F. INSPECTION - The Insurer, or its designee or representative, shall have
the right but not the obligation to inspect the Leased Vehicles at any
time and the Insured, insofar as it is within the Insured's power,
shall cooperate with the Insurer in any such inspection.
G. ASSIGNMENT - This Policy shall not be assigned or transferred without
the prior written consent of the Insurer; provided, however, such prior
written consent shall not be required in connection with any financing
by the Insured of the Contracts or the Leased Vehicles.
H. SUBROGATION - In the event of any payment under this Policy, the
Insurer shall be subrogated to all the Insured's rights of recovery
therefore against any person or entity other than the entity named in
Item 1 of the Declarations or any Additional Insured named in a written
endorsement to the Policy and the Insured shall execute and deliver all
instruments and papers and do whatever else is necessary to secure such
rights. The Insured shall do nothing to prejudice such rights.
I. OTHER INSURANCE - If the Insured has any bond, indemnity or other
insurance which would insure a Loss hereunder, in whole or in part,
this Policy will insure such Loss in excess of the amount of such other
bond, indemnity or insurance, subject to the Policy terms and
conditions.
J. MISREPRESENTATION - No misrepresentations or breach of warranty made by
the Insured on its behalf in the negotiation of this Policy affects the
Insurer's obligation under this Policy unless the Insurer relies on it
and it is either material or made with intent to deceive or unless the
facts misrepresented or falsely warranted materially contribute to the
Insured Residual Value Loss Amount.
No failure of a condition under Section 3 prior to a claim being made
for the Insured Residual Value Loss Amount and no breach of a warranty
affects the Insurer's obligation under this Policy unless it exists at
the time of a claim being made for the Insured Residual Value Loss
Amount and either materially increases the risk at the time of a claim
being made for the Insured Residual Value Loss Amount or materially
contributes to the Insured Residual Value Loss Amount. The provisions
of this condition do not apply to failure to tender payment of Premium.
K. ACTION AGAINST THE INSURER - No actions shall lie against the Insurer
unless, as a condition precedent thereto, there shall have been full
compliance by the Insured with all the terms of this Policy.
M. It is hereby understood and agreed that all disputes or differences
which may arise under or in connection with the Policy, whether arising
before or after termination of this Policy, including any determination
of the amount of the Insured Residual Value Loss Amount, shall be
between the Insurer and the Insured and submitted to the American
Arbitration Association under and in accordance with its then
prevailing commercial arbitration rules. The arbitrators shall be
chosen in the manner and within the time frames provided by such rules.
If permitted under such rules, the arbitrators shall be
6
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<PAGE> 8
three disinterested individuals having knowledge of the legal,
corporate management, or insurance issues relevant to the matter in
dispute.
Any party may commence such arbitration proceedings in New York, New
York; Atlanta, Georgia; Chicago, Illinois; or Denver, Colorado. The
arbitrator shall give due consideration to the general principles of
Delaware law in the construction and interpretation of the provisions
of this policy; provided, however, that the terms, conditions,
provisions and exclusions of this Policy are to be construed in an
evenhanded fashion as between the parties including without limitation,
where the language of this Policy is alleged to be ambiguous or
otherwise unclear, the issue shall be resolved in the manner most
consistent with the relevant terms, conditions, provisions, or
exclusions of the Policy (without regard to the authorship of the
language, the doctrine of reasonable expectation of the parties and
without any presumptions or arbitrary interpretation or construction in
favor of either party or parties, and in accordance with the intent of
the parties.)
The written decision of the arbitrators shall be provided to both
parties and shall be binding on them. The arbitrators' award shall not
include punitive damages, attorney fees or other costs.
Each party shall bear equally the expenses of the arbitration.
N. TERMS OF POLICY CONFORMED TO STATUTE - Terms of this Policy which are
in conflict with the statutes of the State wherein this Policy is
issued are hereby amended to conform to such statutes. This Policy
shall be deemed to be issued under, and shall be governed by and
construed under, the laws of the State of Florida.
O. DECLARATIONS - By acceptance of this Policy, the Insured agrees that
this Policy supersedes all agreements existing between Insured and the
Insurer relating to this insurance.
P. BANKRUPTCY - Bankruptcy or insolvency of the Insured or the Insured's
estate shall not relieve the Insurer of any of its obligations
hereunder. If, however, the Insured shall die or be adjudged bankrupt
or insolvent within the policy term, this Policy shall cover the
Insured's legal representative for the unexpired portion of such term.
Q. WAIVER - No waiver or modification of this Policy shall be effective
unless it be in writing and signed by a duly authorized officer of the
Insurer and World Omni Financial Corp., as Servicer. The failure of the
Insurer to enforce any provision of this Policy shall not constitute a
waiver by the Insurer of any such provision. The past waiver of a
provision by the Insurer shall not constitute a course of conduct or a
waiver in the future of that same provision.
R. SERVICE OF SUIT
Subject to Section 5.M, it is agreed that in the event of failure of
the Insurer to pay any amount claimed to be due hereunder, the Insurer,
at the request of the Insured, will submit to the jurisdiction of a
court of competent jurisdiction within the United States. Nothing in
this condition constitutes or should be understood to constitute a
waiver of
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<PAGE> 9
the Insurer's right to commence an action in any court of competent
jurisdiction in the United States, to remove an action to a United
States District Court or to seek a transfer of a case to another court
as permitted by the laws of the United States or of any state in the
United States. It is further agreed that service of process in such
suit may be made upon Counsel, Legal Department, American International
Specialty Lines Insurance Company, c/o American International Surplus
Lines Agency, Inc., Harborside Financial Center, 401 Plaza 3, 4th
Floor, Jersey City, NJ 07311, or his or her representative, and that in
any suit instituted against the Insurer upon this Policy, the Insurer
will abide by the final decision of such court or of any appellate
court in the event of any appeal.
Further, pursuant to any statute of any state, territory, or district
of the United States which makes provision therefor, the Insurer hereby
designates the Superintendent, Commissioner, or Director of Insurance,
or other officer specified for that purpose in the statute, or his or
her successor or successors in office as its true and lawful attorney
upon whom may be served any lawful process in any action, suit, or
proceeding instituted by or on behalf of the Insured or any beneficiary
hereunder arising out of this Policy of insurance, and hereby
designates the above named Counsel as the person to whom the said
officer is authorized to mail such process or a true copy thereof.
IN WITNESS WHEREOF, the Insurer has caused this Policy to be signed by its
President and Secretary and signed on the Declarations by a duly authorized
representative of the Insurer.
SECRETARY PRESIDENT
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<PAGE> 10
ENDORSEMENT #1
--------------
This endorsement, effective 12:01 AM,_______, 1997, forms a part of
policy number
issued to World Omni Financial Corp. as Servicer (and any successor Servicer),
World Omni Lease Securitization L.P., Auto Lease Finance L.P., VT Inc.
as Owner Trustee of World Omni LT, U.S. Bank National Asociation, as
Indenture Owner Trustee, and PNC Bank, Delaware, First Bank National
Association, as Owner Trustee for the World Omni 1997-B Automobile
Lease Securitization Trust
by American International Specialty Lines Insurance Company
DEFINITION OF APPROVED RESIDUAL VALUE PUBLICATION
In consideration of the premium charged, it is hereby understood and agreed that
Approved Residual Value Publication shall mean:
(1) World Omni National VT Accounts Residual Lease Guide/Dealer
Bulletins
(2) World Omni Mercedes Benz Residual Lease Guide/Dealer Bulletins
(3) World Omni Land Rover Residual Lease Guide/Dealer Bulletins
(4) World Omni/Southeast Toyota Finance Residual Lease
Guide/Dealer Bulletins
All other terms, conditions and exclusions remain unchanged.
---------------------------------------------
Authorized Representative or
Countersignature (in states where applicable)
9
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<PAGE> 1
Exhibit 23.1
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
<PAGE> 1
EXHIBIT 23.3
ENGLISH, McCAUGHAN & O'BRYAN, P.A.
[LETTERHEAD]
OCTOBER 20, 1997
CONSENT OF ENGLISH, McCAUGHAN & O'BRYAN, P.A.
BY LEE W. HARVATH, JR.
We hereby consent to the use of our name under the headings "Legal
Matters" and "Certain Income Tax Considerations -- Florida Income Taxation" in
the prospectus included in the Registration Statement on Form S-1 (No.
333-35523) filed by World Omni Lease Securitization L.P. with the Securities and
Exchange Commission (the "SEC") September 12, 1997, as it may be further amended
and declared effective by the SEC.
ENGLISH, McCAUGHAN & O'BRYAN, P.A.
By: /s/ LEE W. HARVATH, JR.
--------------------------------
Lee W. Harvath, Jr.
President
<PAGE> 1
EXHIBIT 23.4
WILLIAMS & CONNOLLY
725 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20005
CONSENT OF WILLIAMS & CONNOLLY
We hereby consent to the use of our name under the headings "Legal
Matters" and "Risk Factors -- Risks in the Event of an Insolvency of World
Omni; Substantive Consolidation with World Omni" in the Prospectus included in
the Registration Statement on Form S-1 (No. 333-35523) 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 September 12, 1997, as it may
be further amended and declared effective by the SEC.
Date: october 20, 1997 WILLIAMS & CONNOLLY
By: /s/ CHARLES A. SWEET
--------------------------
Charles A. Sweet, a partner
<PAGE> 1
EXHIBIT 23.5
October 17, 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. 333-35523) 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 September 12, 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
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Amendment No. 1 to Form S-1 of World Omni 1997-B
Automobile Lease Securitization Trust of our report dated May 20, 1997 (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, 1996 and
1995 and each of the two years in the period ended December 31, 1996. We also
consent to the inclusion 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. Furthermore, we consent to the
reference to our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
New York, New York
October 20, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
F.K.A. FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer Identification No.)
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
(Address of Principal Executive Offices) (Zip Code)
World Omni 1997-B Automobile Lease Securitization Trust
(exact name of registrant as specified in its charter)
Delaware 63-1120743
(State of Incorporation) (I.R.S. Employer
Identification No.)
120 Northwest 12th Avenue
Deerfield Beach, FL 33442
(Address of Principal Executive Offices) (Zip Code)
Lease Asset-Backed Notes
(Title of the Indenture Securities)
<PAGE> 2
GENERAL
1. GENERAL INFORMATION Furnish the following as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
(Yes)
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
of eligibility and qualification.
*1. Copy of Articles of Association.
*2. Copy of Certificate of Authority to commence Business.
*3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).
*4. Copy of existing By-Laws. ATTACHED HEREWITH.
*5. Copy of each Indenture referred to in Item 4. N/A
*6. The consents of the Trustee required by Section 321(b) of the act.
**7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
--------------
* INCORPORATED BY REFERENCE TO FILE NUMBER 333-30939
** INCORPORATED BY REFERENCE TO FILE NUMBER 333-26679
<PAGE> 3
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Chicago and State of Illinois on the 15th day of October, 1997.
U.S. BANK NATIONAL ASSOCIATION
/s/ PATRICIA M. CHILD
----------------------------
PATRICIA M. CHILD
Vice President
/s/ MICHAEL T. GOODWIN
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MICHAEL T. GOODWIN
Assistant Secretary
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CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: October 15, 1997
U.S. BANK NATIONAL ASSOCIATION
/s/ PATRICIA M. CHILD
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PATRICIA M. CHILD
Vice President
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BYLAWS
OF
U.S. BANK NATIONAL ASSOCIATION
ARTICLE I.
MEETINGS OF SHAREHOLDERS
The regular annual meeting of the shareholders for the election of
directors and for the transaction of such other business as properly may come
before the meeting shall be held at the main banking house of the Association in
the City of Minneapolis, Minnesota, or other convenient place duly authorized by
the Board of Directors (hereinafter referred to as the "Board"), on the last
Thursday in February of each year at 9:30 o'clock A.M. of said day, or such
other date or time which the Board may designate at any Board meeting held prior
to the required date for sending notice of the annual meeting to the
shareholders. The holders of a majority of the outstanding shares entitled to
vote, and represented at any annual or special meeting of the shareholders, may
choose persons to act as Chairman and as Secretary of the meeting.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. NUMBER. As provided in the Articles of Association, the
Board of this Association shall consist of not less than five nor more than
twenty-five members. At any meeting of the shareholders held for the purpose of
electing directors, or changing the number thereof, the number of directors may
be determined by a majority of the votes cast by the shareholders in person or
by proxy. Any vacancy occurring in the Board shall be filled by the remaining
directors. Between meetings of the shareholders held for the purpose of electing
directors, the Board by a majority vote of the full Board may increase the size
of the Board by not more than four directors in any one year, but not to more
than a total of twenty-five directors, and fill any vacancy so created in the
Board. All directors shall hold office until their successors are elected and
qualified.
Section 2. POWERS. The Board shall have and may exercise all of the
powers granted to or conferred upon it by the Articles of Association and Bylaws
of the Association and by law. The Board may appoint from time to time one or
more committees for any purposes and with such powers as the Board may
determine.
Section 3. ORGANIZATION. The President or the Chairman of the Board
shall notify the directors-elect of their election and of the time at which they
are required to meet for the purpose of organizing the new Board. If, at the
time fixed for such
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meeting, there is not a quorum in attendance, the members present may adjourn
from time to time until a quorum is secured, and no business shall be transacted
until a majority of the directors-elect shall have taken the oath of office
prescribed by law and shall otherwise duly qualified.
The Board shall appoint one of its members President of this
Association, who shall be Chairman of the Board, but the Board may appoint a
Director in lieu of the President, to be Chairman of the Board, in which case
the latter shall preside at all meetings and shall perform such other duties as
may be designated by the Board. If a Chairman of the Board is so appointed in
lieu of the President, in his absence the President shall preside at meetings of
the Board. In the absence of a presiding officer, the Board shall appoint a
Chairman pro tem. The Board shall appoint a recording officer who shall keep a
record of the meetings and proceedings of the Board. The recording officer need
not be a member of the Board.
Section 4. MEETINGS. The regular meetings of the Board shall consist of
the annual meeting following the annual election of directors by the
shareholders, and quarterly meetings which shall be held at such place and at
such time as the Chairman or President from time to time may designate. When the
date of any regular meeting of the Board falls on a holiday, the meeting shall
be held on the next ensuing business day other than a Saturday, or on such day
and at such time as may have been ordered.
Special meetings of the Board shall be held at any time upon the call
of the Chairman of the Board, a Vice Chairman, the President, or the acting
Chief Executive Officer, or upon written request of any three (3) directors.
Notice of all meetings of the Board, whether regular or special, shall
be given to each director either orally in person or by mail, telegraph or
telephone, on or before the day of the meeting. Meetings of the Board or
shareholders may be held by conference telephone or similar communication device
by means of which all persons participating in the meeting can simultaneously
hear each other. Participating in such a meeting shall constitute presence in
person at such meeting.
Section 5. QUORUM. A majority of all the qualified directors shall
constitute a quorum and shall be necessary for the transaction of business, but,
if at any meeting there shall be less than a quorum present, a majority of those
present may adjourn the meeting from time to time until a quorum is in
attendance.
Section 6. ADVISORY BOARD OF DIRECTORS. The Board may appoint persons,
who need not be shareholders or directors, to serve as advisory directors on an
Advisory Board of Directors established to serve this bank or a group of
affiliated
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banks of which this bank is one. An advisory director shall have such
power and duties as may be determined by the Board, provided that advisory
directors shall have no power to vote on matters presented to the Board for
final decision and, provided further, that the Board's responsibility for the
affairs of the Association shall in no respect be delegated or diminished.
Section 7. DIRECTORS' FEES, ETC. The Board shall have the power to fix
and vote fees and compensation to directors and advisory directors of the
Association for their services as directors and advisory directors, and also for
their services as member of any committee or committees of the Association
contemplated by these Bylaws or otherwise created or appointed by the Board, the
Executive Committee, or the President of the Association. Nothing herein
contained shall be construed to preclude any director or advisory director from
serving the Association in any other capacity and being paid compensation
therefor by the Association.
ARTICLE III.
OFFICERS
Section 1. OFFICERS. The Board may elect a Chairman of the Board of
Directors and one (1) or more Vice Chairmen. The Board shall also elect a
President. The Board shall elect, as appropriate, such additional officers as it
may determine, including Executive Vice Presidents or Senior Vice Presidents.
The Chief Executive Officer or in the absence of the Chief Executive Officer,
the President, may appoint such other officers necessary to conduct the affairs
of the Association.
Section 2. CHIEF EXECUTIVE OFFICER. The Board of Directors may
designate a Chief Executive Officer of the Association, who shall be either the
President or Chairman of the Board. The Board may also designate an officer or
director to serve as acting Chief Executive Officer in the absence or incapacity
of the Chief Executive Officer. Subject to the law and the control of the Board
and the Executive Committee, the Chief Executive Officer, or, in the absence of
the Chief Executive Officer, the President shall have authority to manage the
affairs and business of the Association and prescribe and define the duties of
its officers, agents and employees.
Section 3. TERM OF OFFICE. Any officer elected by the Board shall hold
his office for the current year for which the Board by which he is elected was
elected, unless he shall resign, become disqualified or be removed. The
Chairman, Vice Chairman, and President can be removed by action of a majority of
the Board. All other elected officers can be removed by order of the Chief
Executive Officer, or in
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his absence, the President. Any other officer shall hold his office at the
pleasure of the Chief Executive Officer, or, in his absence, the President.
Section 4. BONDS. All officers, agents or employees as the business of
the Association may require, shall give bond with surety to be approved and in a
sum to be fixed by the Board or the Chairman or the President, conditioned upon
the faithful and honest discharge of their respective duties.
ARTICLE IV.
STOCK CERTIFICATES
Section 1. FORMS. Certificates of stock, signed by any elected officer
and any other officer, shall be issued to the shareholders, and each certificate
shall state upon its face that such stock is transferable only upon the books of
the Association.
Section 2. TRANSFERS. Certificates of stock of this Association shall
be assignable and transferable only on the books of this Association subject to
the restrictions and provisions of the national banking laws, and a transfer
book shall be provided in which all assignments and transfers of stock shall be
made. When stock is transferred, the certificates representing the same shall be
returned to the bank, canceled and preserved, and new certificates issued.
Section 3. DIVIDENDS. Transfers of stock shall not be suspended
preparatory to the declaration of dividends; and, unless an agreement to the
contrary shall be expressed in the assignment or assignments, dividends shall be
paid to the shareholders in whose name the stock shall stand at the date of
declaration of dividends.
ARTICLE V.
MINUTE BOOK
The organization papers of this Association, the Bylaws as revised or
amended from time to time and the proceedings of all regular and special
meetings of the shareholders and the directors shall be recorded in a minute
book or books. All reports of committees required to be made to the Board shall
be recorded in a minute book or shall be filed by the recording officer. The
minutes of each meeting of the shareholders and the Board shall be signed by the
recording officer and approved by the Chairman of the meeting.
ARTICLE VI.
CONVEYANCES, CONTRACTS, ETC.
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All transfers and conveyances of real estate, mortgages, and transfers,
endorsements or assignments of stock, bonds, notes, debentures or other
negotiable instruments, securities or personal property shall be signed by any
elected or appointed officer.
All checks, drafts, certificates of deposit and all funds of the
Association held in its own or in a fiduciary capacity may be paid out by an
order, draft or check bearing the manual or facsimile signature of any elected
or appointed officer of the Association.
All mortgage satisfactions, releases, all types of loan agreements, all
routine transactional documents of the Association, and all other instruments
not hereinabove specifically provided for, whether to be executed in a fiduciary
capacity or otherwise, may be signed on behalf of the Association by any elected
or appointed officer thereof.
The Secretary of the Association or other proper officer may execute
and certify that required action or authority has been given or has taken place
by resolution of the Board under this Bylaw without the necessity of further
action by the Board.
ARTICLE VII.
SEAL
The Association shall have no corporate seal; provided, however, that
if the use of a seal is required by, or is otherwise convenient or advisable
pursuant to, the laws or regulations of any jurisdiction, the following seal may
be used:
ARTICLE VIII.
INDEMNIFICATION OF DIRECTORS,
OFFICERS, AND EMPLOYEES
Section 1. The Association shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed
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action, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the pertinent corporation) by reason
of the fact that he is or was a director, advisory director or officer of the
Association, or is or was serving at the request of the Association as a
director or officer of another corporation, partnership, joint venture, trust,
or other enterprise, against expenses (including attorneys' fees), judgments,
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interest
of the pertinent corporation. The termination of any action, suit, or proceeding
by judgment, order, settlement, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the pertinent corporation.
Section 2. The Association shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the pertinent corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, advisory director or officer of the Association, or is or was serving
at the request of the Association as a director or officer of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses, (including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the pertinent corporation and except that no indemnification
shall be made in respect to any claim, issue, or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the pertinent corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which such court shall deem proper.
Section 3. To the extent that a director, advisory director, or officer
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding referred to in Sections 1 or 2 of this Article, or in defense of
any claim, issue, or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this Article
(unless ordered by a court) shall be made by the Association only upon a
determination that indemnification of the director, advisory director, or
officer is proper in the circumstances because he has met the applicable
standards of conduct set fourth in said Sections 1 and 2. Such determination
shall be made: (a) by the Board of the
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Association by a majority vote of a quorum consisting of directors who were not
parties to such action, suit, or proceeding; or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel (who may be regular counsel for the
Association or pertinent corporation) in a written opinion; or (c) by the
stockholders of the Association.
Section 5. Expenses incurred by any person who may have a right of
indemnification under this Article in defending a civil or criminal action,
suit, or proceeding may be paid by the Association in advance of the final
disposition of such action, suit, or proceeding as authorized by its Board upon
receipt of an undertaking by or on behalf of such person, to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Association pursuant to this Article.
Section 6. The indemnification provided by this Article is in addition
to and independent of and shall not be deemed exclusive of any other rights to
which any person may be entitled under any certificate of incorporation,
articles of incorporation, articles of association, bylaw, agreement, vote of
stockholders, or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another while holding such office, and
shall continue as to a person who has ceased to be a director, advisory
director, or officer and shall inure to the benefit of the heirs, executors, and
administrators of such a person; provided, that any indemnification realized
other than under this Article shall apply as a credit against any
indemnification provided by this Article.
Section 7. The Association may purchase and maintain insurance on
behalf of any person who is or was a director, advisory director, officer,
employee, or agent of the Association, or is or was serving at the request of
the Association as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, if the Association would have the power to
indemnify him against such liability under the provisions of the Article or of
applicable law, if and whenever the Board of the Association deems it to be in
the best interest of the Association to do so.
Section 8. For purposes of this Article and indemnification hereunder,
any person who is or was a director or officer of any other corporation of which
the Association owns or controls or at the time owned or controlled directly or
indirectly a majority of the shares of stock entitled to vote for election of
directors of such other corporation shall be conclusively presumed to be serving
or to have served as such director or officer at the request of the Association.
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Section 9. The Association may provide indemnification under this
Article to any employee or agent of the Association or of any other corporation
of which the Association owns or controls or at the time owned or controlled
directly or indirectly a majority of the shares of stock entitled to vote for
election of directors or to any director, officer, employee, or agent of any
other corporation, partnership, joint venture, trust, or other enterprise in
which the Association has or at the time had an interest as an owner, creditor,
or otherwise, if and whenever the Board of the Association deems it in the best
interest of the Association to do so.
Section 10. The Association may, to the fullest extent permitted by
applicable law from time to time in effect, indemnify any and all persons whom
the Association shall have power to indemnify under said law from and against
any and all of the expenses, liabilities, or other matters referred to in or
covered by said law, if and whenever the Board of the Association deems it to be
in the best interest of the Association to do so.
ARTICLE IX.
AMENDMENTS
These Bylaws, or any of them, may be added to, altered, amended or
repealed by the Board at any regular or special meeting of the Board.
(As adopted on August 1, 1997)
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