<PAGE> 1
Rule 424(b)(1)
Reg. No. 333-3816
$175,000,000
World Omni Wholesale Master Trust
$167,500,000
Series 1996-2, Floating Rate Dealer Loan
Backed Certificates, Class A
$7,500,000
Series 1996-2, Floating Rate Dealer Loan
Backed Certificates, Class B
WORLD OMNI DEALER FUNDING INC.
TRANSFEROR
WORLD OMNI FINANCIAL CORP.
SERVICER
------------------
The Series 1996-2, Floating Rate Dealer Loan Backed Certificates, Class A (the
"Class A Certificates") and Class B (the "Class B Certificates" and, together
with the Class A Certificates, the"Certificates") offered hereby evidence
undivided interests in certain assets of the World Omni Wholesale Master
Trust (the "Trust") created pursuant to a Pooling and Servicing Agreement
among World Omni Dealer Funding Inc., as the transferor ("WODFI" or
the"Transferor"), World Omni Financial Corp., as servicer ("WOFCO" or the
"Servicer"), and Fleet National Bank, as trustee. The Trust assets will
include wholesale receivables (the "Receivables") generated by WOFCO
from time to time in a portfolio of revolving financing arrangements
(the "Accounts") with dealers to finance their automobile, light duty
truck and certain other motor vehicle inventory and to finance new and
used automobiles and light duty trucks purchased by such dealers at
certain auctions, together with collections on the Receivables.
Certain assets of the Trust will be allocated to the Series 1996-2
Certificates, which consist of the Class A Certificates and the
Class B Certificates, including the right to receive a varying
percentage of each month's collections with respect to the
Receivables at the times and in the manner described herein.
From time to time, subject to certain conditions, the Transferor
may offer other series of certificates (each, a "Series"), which
may have terms significantly different from the terms of the
Certificates, or may sell interests in the assets of the Trust
(each such interest a "Purchased Interest"), which may have
terms significantly different from the terms of the
Certificates. No Series or Class of Certificates may be senior
to the Class A Certificates.
(Cover continued on next page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGES 18 THROUGH 23 HEREIN.
------------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR, THE SERVICER
OR ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE RECEIVABLES ARE
INSURED OR GUARANTEED BY THE TRANSFEROR, THE SERVICER OR ANY AFFILIATE
THEREOF OR BY ANY GOVERNMENTAL AGENCY.
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>
<S> <C> <C> <C>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Transferor(1)(2)
------------------------------------------------------------
Per Class A Certificate................................. 100% 0.25% 99.75%
Per Class B Certificate................................. 100% 0.35% 99.65%
Total................................................... $175,000,000 $445,000 $174,555,000
</TABLE>
(1) Plus accrued interest, if any, at the Class A Certificate Rate or the Class
B Certificate Rate, as applicable, from May 21, 1996.
(2) Before deducting expenses payable by the Transferor, estimated to be
$425,000.
------------------
The Certificates are offered by the Underwriter when, as and if issued by
the Transferor, delivered to and accepted by the Underwriter and subject to its
right to reject orders in whole or in part. It is expected that delivery of the
Certificates will be made in book-entry form only through the facilities of The
Depository Trust Company on or about May 21, 1996 against payment in immediately
available funds.
CS First Boston
The date of this Prospectus is May 16, 1996.
<PAGE> 2
(Cover continued from previous page)
The Class A Certificates and the Class B Certificates are being offered hereby.
The right of the Class B Certificateholders to receive interest payments on the
Class B Certificates each month will be subordinated to the prior right of the
Class A Certificateholders to receive monthly payments of interest with
respect to the Class A Certificates, and the right of the Class B
Certificateholders to receive principal payments on the Class B
Certificates will be subordinated to the prior right of the Class A
Certificateholders to receive all payments of principal on the Class
A Certificates. See "Summary -- Subordination of Class B
Certificates."
The Transferor will own the remaining interest in the Trust not represented by
the Certificates or the certificates of any other Series or any Purchased
Interest issued by the Trust (the "Transferor Interest"). Interest with
respect to the Certificates will accrue from the Closing Date, and is
payable monthly on or about the twenty-fifth day of each month,
commencing in May 1996, and on the related maturity date. The
principal of the Class A Certificates is scheduled to be paid on the
October 1999 Distribution Date, and the principal of the Class B
Certificates will be paid after all required payments of
principal to the Class A Certificateholders have been paid.
The Transferor Interest will be subordinated to the rights of the
Certificateholders to the limited extent of the Available Subordinated Amount as
described herein.
There is currently no secondary market for the Certificates, and there is no
assurance that one will develop. The Underwriter expects, but is not
obligated, to make a market in the Certificates. There is no
assurance that any such market, if one
develops, will continue.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Transferor has filed a Registration Statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Certificates offered pursuant to this Prospectus. This
Prospectus, which forms part of the Registration Statement, does not contain all
of the information contained in the Registration Statement and the exhibits
thereto. For further information, reference is made to the Registration
Statement and amendments thereof and exhibits thereto, which are available for
inspection without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the
Registration Statement and amendments thereof and exhibits thereto may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
------------------------
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports, containing information
concerning the Trust and prepared by the Servicer, will be sent on behalf of the
Trust to Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC")
and registered holder of the Certificates, pursuant to the Pooling and Servicing
Agreement. Such reports may be available to beneficial owners of Certificates
("Certificate Owners") in accordance with the regulations and procedures of DTC.
See "Description of the Certificates -- Periodic Reports" and " -- Evidence as
to Compliance." The Trust will file with the Securities and Exchange Commission
(the "Commission") such periodic reports with respect to the Trust as are
required under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder.
2
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to the Index of Principal Terms for the location herein of the definitions of
certain capitalized terms used herein.
Title of Securities........ Series 1996-2, Floating Rate Dealer Loan Backed
Certificates, Class A (the "Class A Certificates")
and Class B (the "Class B Certificates").
Issuer..................... World Omni Wholesale Master Trust (the "Trust").
Series..................... The Class A Certificates and the Class B
Certificates (together, the "Certificates") will
comprise a separate Series ("Series 1996-2") of the
Trust. The Class A Certificates and the Class B
Certificates are being offered hereby.
The Trust has previously issued (i) in a registered
public offering, Series 1994-1, Floating Rate
Dealer Loan Backed Certificates (the "Series 1994-1
Certificates"), (ii) in a private placement, Series
1995-1, Floating Rate Dealer Loan Backed
Certificates (the "Series 1995-1 Certificates") and
(iii) in a private placement, Series 1996-1,
Floating Rate Dealer Loan Backed Variable Backed
Certificates (the "Series 1996-1 Certificates").
Transferor................. World Omni Dealer Funding Inc. (the "Transferor" or
"WODFI"), a wholly-owned subsidiary of World Omni
Financial Corp.
Servicer................... World Omni Financial Corp. ("WOFCO," or together
with, as applicable, a successor servicer, the
"Servicer"), a wholly-owned subsidiary of JM Family
Enterprises, Inc. ("JMFE").
Trustee.................... Fleet National Bank (the "Trustee"), as successor
to NationsBank, N.A. (f/k/a NationsBank of
Virginia, N.A.).
The Trust.................. The Trust was formed pursuant to a Pooling and
Servicing Agreement, dated as of October 1, 1994,
among WODFI, as Transferor, WOFCO, as Servicer, and
the Trustee, as supplemented by the Supplements
relating to the Series 1994-1 Certificates, the
Series 1995-1 Certificates and the Series 1996-1
Certificates (as so supplemented, as further
supplemented by the Supplement relating to the
Certificates, and as hereafter supplemented and
amended from time to time, the "Pooling and
Servicing Agreement"). On the Closing Date, the net
proceeds of the Certificates will be paid to the
Transferor, and the Transferor will use such net
proceeds to purchase Receivables from WOFCO, to
make deposits into the Excess Funding Account, and
to purchase interests in the Trust held by the
holders of the Series 1996-1 Certificates. The
assets of the Trust include (a) all Receivables
existing under certain Accounts on the Initial
Closing Date, all Receivables generated under the
Accounts from time to time thereafter during the
term of the Trust as well as all Receivables
generated under any Accounts the Receivables in
which are added to the Trust from time to time
(less Receivables paid or charged off and excluding
Receivables generated in any Accounts the
Receivables in which are removed from the Trust
from time to time after the Closing Date), (b) all
funds collected or to be collected in respect of
such Receivables, (c) all funds on deposit in
certain accounts of the Trust, including funds on
deposit in the Excess Funding Account, the
Principal Funding Account and the Reserve Fund, (d)
any Enhancement issued
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<PAGE> 4
with respect to any other Series and (e) security
interests in new and used automobiles, light duty
trucks and other motor vehicles (the "Vehicles"),
security interests in certain parts inventory,
equipment, fixtures, accounts and/or rights under
personal guaranties, intercreditor agreements and
subordination agreements (collectively, the
"Collateral Security") securing or guaranteeing the
Receivables. The term "Enhancement" shall mean,
with respect to any Series or Purchased Interest,
any letter of credit, surety bond, cash collateral
account, guaranteed rate agreement, maturity
liquidity facility, tax protection agreement,
interest rate swap agreement or other similar
arrangement for the benefit of certificateholders
of such Series or Purchased Interest.
The Accounts............... The Accounts pursuant to which the Receivables have
been, or will be, generated primarily consist of
revolving financing arrangements entered into by
WOFCO with motor vehicle dealers to purchase or
finance Vehicle inventory and to purchase or
finance used automobiles at certain car auctions.
The Accounts are selected from all such revolving
credit arrangements of WOFCO which meet the
criteria provided in the Pooling and Servicing
Agreement (the "Eligible Accounts"). Under certain
circumstances, additional Accounts may be
designated by the Transferor the Receivables in
which are added to, or removed from, the Trust. See
"The Accounts," "Description of the
Certificates -- Addition of Accounts" and "--
Removal of Accounts."
The Receivables............ The Receivables have arisen, or will arise, in the
Accounts. The Receivables consist primarily of
wholesale floor planning advances made directly or
indirectly by WOFCO to (i) dealers located in the
United States franchised by Southeast Toyota
Distributors, Inc. ("SET"), a wholly-owned
subsidiary of JMFE, which franchisees are approved
by Toyota Motor Sales U.S.A., Inc. ("Toyota
U.S.A."), a wholly-owned subsidiary of Toyota Motor
Corporation of Toyota City, Japan ("Toyota") or
franchised by other manufacturers or distributors
and (ii) independent dealers located in the United
States (such dealers, the "Dealers"). Some Dealers
are affiliates of JMFE.
The advances made by WOFCO are used by the Dealers
to finance the purchase of Vehicles. Purchases by a
Dealer may be made from the manufacturer or
distributor of a Vehicle, from an auction or
directly from Vehicle owners. Generally, the
principal amount of an advance in respect of a new
Vehicle is equal to the wholesale purchase price of
the Vehicle and, subject to certain limited
exceptions, is due shortly after the retail sale of
the Vehicle. See "The Dealer Floor Plan Financing
Business -- Creation of Receivables" and
" -- Payment Terms."
Collections of principal under the Receivables are
herein referred to as "Principal Collections," and
collections of interest and other nonprincipal
charges (including insurance service fees, amounts
recovered with respect to Defaulted Receivables and
insurance proceeds) are referred to herein as
"Interest Collections." Each Receivable bears
interest at an adjustable rate described herein.
See "The Dealer Floor Plan Financing
Business -- Payment Terms."
WODFI has entered into a Receivables Purchase
Agreement, dated as of the date of the Pooling and
Servicing Agreement, between WODFI, as purchaser,
and WOFCO, as seller (the "Receivables Purchase
Agree-
4
<PAGE> 5
ment"). Pursuant to the Receivables Purchase
Agreement, WOFCO sells from time to time to the
Transferor all of its right, title and interest in,
to and under certain Receivables, and assigns its
interests in the related Vehicles and the
Collateral Security to the Transferor. Pursuant to
the Pooling and Servicing Agreement, the
Transferor, in turn, transfers to the Trust those
Receivables, as well as its interests in the
Vehicles and the related Collateral Security. All
Receivables sold by WOFCO to the Transferor meet
certain eligibility criteria contained in the
Receivables Purchase Agreement ("Eligible
Receivables"), except that, for administrative
convenience, certain Ineligible Receivables arising
in an Eligible Account may be transferred to the
Trust from time to time and, upon such transfer,
will become a part of the Transferor Interest
through an increase in the Incremental Subordinated
Amount. The Transferor has also assigned to the
Trust its rights with respect to the Receivables
under the Receivables Purchase Agreement. See
"Description of the Receivables Purchase
Agreement."
During the term of the Trust, all new Receivables
arising from time to time in Accounts and sold by
WOFCO to the Transferor will be transferred by the
Transferor to the Trust. Accordingly, the aggregate
amount of Receivables in the Trust will fluctuate
from day to day as new Receivables are generated
and as existing Receivables are collected, charged
off as uncollectible or otherwise adjusted.
The Certificates........... The Trust's assets will be allocated in part to
make payments required to be made to (i) the Class
A Certificateholders and the Class B
Certificateholders (together, the
"Certificateholders' Interest"), (ii) to the
certificateholders of any other outstanding Series
(such other certificateholders, together with the
Certificateholders, are referred to as
"certificateholders") and (iii) the purchaser of
any Purchased Interest in the Trust (each such
purchaser, a "Purchaser"), with the remainder
allocated to the Transferor (the "Transferor
Interest"). A portion of the Transferor Interest
will be subordinated to the Certificateholders'
Interest, as described below. The principal amount
of the Transferor Interest may fluctuate as the
aggregate amount of the Receivables balance changes
from time to time and as new Series are issued or
Purchased Interests are sold. The Certificates will
evidence an undivided beneficial interest in assets
of the Trust allocated to the Certificateholders'
Interest and will represent the right to receive
from such assets funds up to (but not in excess of)
the amounts required to make monthly payments of
interest on the Certificates and to make the
payment of principal on the Expected Final Payment
Date or earlier or later under certain limited
circumstances in an amount up to the outstanding
principal amount of the Certificates. Except in
certain limited circumstances as described herein
under "Description of the
Certificates -- Definitive Certificates," the
Certificates will only be available in book-entry
form.
The Certificates will represent beneficial
interests in the Trust only and will not represent
interests in or recourse obligations of WOFCO,
WODFI or any affiliate thereof. Neither the
Certificates nor the Receivables are insured or
guaranteed by WOFCO, WODFI or any affiliate thereof
or by any governmental agency.
On the date of the initial issuance of the
Certificates (the "Closing Date"), the Invested
Amount will equal the sum of the Class A Initial
5
<PAGE> 6
Principal Amount and the Class B Initial Principal
Amount minus amounts deposited in the Excess
Funding Account on the Closing Date and will
represent the principal amount of Certificates
invested in Receivables as of the Closing Date (the
"Initial Invested Amount"). On any date following
the Closing Date, the Invested Amount will equal
the Initial Invested Amount minus the sum of (i)
the amount deposited in the Excess Funding Account
and available for Series 1996-2 in connection with
a reduction in Principal Receivables, (ii) the
amount of principal payments (except principal
payments made from the
Series 1996-2 portion of the Excess Funding Account
and transfers made from the Series 1996-2 portion
of the Excess Funding Account to the Principal
Funding Account) made to Certificateholders or
deposited in the Principal Funding Account prior to
such date of determination and (iii) the aggregate
amount of unreimbursed Class A Investor Charge-Offs
and Class B Investor Charge-Offs for all previous
Distribution Dates and plus the amount of any
withdrawals from the Excess Funding Account
allocable to Series 1996-2 in connection with an
increase in Principal Receivables. In no event will
the Invested Amount be less than zero.
The Class A Certificates... The Class A Certificates will be issued in the
aggregate initial principal amount of $167,500,000
(the "Class A Initial Principal Amount"), in
minimum denominations of $1,000 and in integral
multiples thereof. The principal amount of the
Class A Certificates (the "Class A Principal
Amount") will be reduced from time to time by (i)
the amount of principal payments made to Class A
Certificateholders and (ii) the aggregate amount of
unreimbursed Class A Investor Charge-Offs (which
will not occur unless and until the Class B
Principal Amount is reduced to zero as a result of
Class B Investor Charge-Offs). In no event will the
Class A Principal Amount be less than zero.
The Class B Certificates... The Class B Certificates will be issued in the
aggregate initial principal amount of $7,500,000
(the "Class B Initial Principal Amount" and,
together with the Class A Initial Principal Amount,
the "Initial Principal Amount"), in minimum
denominations of $1,000 and in integral multiples
thereof. The principal amount of the Class B
Certificates (the "Class B Principal Amount") will
be reduced from time to time by (i) the amount of
principal payments made to Class B
Certificateholders (which will not be made until
the Class A Principal Amount has been repaid in
full) and (ii) the aggregate amount of unreimbursed
Class B Investor Charge-Offs. In no event will the
Class B Principal Amount be less than zero.
Subordination of Class B
Certificates............. If the Interest Collections, Investment Proceeds,
certain amounts in the Reserve Fund, certain
portions of the Transferor's Interest and certain
other amounts allocable to the Certificateholders'
Interest are insufficient to cover in full the
Investor Default Amount for any Collection Period
as described herein, then the Class B
Certificateholders will bear directly the credit
and other risks associated with their undivided
interests in the Trust, and the Class B Principal
Amount will be reduced by an amount equal to such
insufficiency but not in excess of the Investor
Default Amount and the unreimbursed Monthly
Dilution Amount for such Collection Period. If the
Class B Principal Amount is reduced to zero,
6
<PAGE> 7
any further insufficiency will reduce the Class A
Principal Amount, but not in excess of the Investor
Default Amount for such Collection Period, and the
Class A Certificateholders will bear directly the
credit and other risks associated with their
undivided interests in the Trust. See "Description
of the Certificates -- Allocation Percentages."
Principal payments with respect to the Class B
Certificates will not be made until the final
principal payment with respect to the Class A
Certificateholders has been made, nor will interest
payments with respect to the Class B Certificates
for any Interest Period be made until the interest
accrued on the Class A Certificates with respect to
such Interest Period has been paid in full.
Registration of the
Certificates............... Each Class of Certificates will initially be
represented by one or more Certificates of such
Class registered in the name of Cede & Co., as the
nominee of DTC. No person acquiring an interest in
the Certificates will be entitled to receive a
definitive certificate representing such person's
interest except in the event that Definitive
Certificates are issued under the limited
circumstances described herein. As used herein, the
term "Class A Certificateholders" refers to
registered holders of the Class A Certificates, the
term "Class B Certificateholders" refers to
registered holders of the Class B Certificates, and
the term "Certificateholders" refers to the Class A
Certificateholders and the Class B
Certificateholders, collectively. See "Description
of the Certificates -- Book-Entry Registration" and
" -- Definitive Certificates."
Issuance of New Series,
Sales of Purchased
Interests................ The Pooling and Servicing Agreement provides that,
pursuant to any one or more supplements thereto
(each, a "Supplement") or Purchase Agreements, the
Transferor may cause the Trustee to issue one or
more new Series of certificates or to sell a
Purchased Interest (the issuance of a new Series or
the sale of a Purchased Interest, a "New
Issuance"). However, at all times, the interest in
the principal balances of Receivables ("Principal
Receivables") represented by the Transferor
Interest must equal or exceed a specified amount.
The Pooling and Servicing Agreement also provides
that the Transferor may specify, with respect to
any Series or Purchased Interest, the Principal
Terms of the Series or Purchased Interest. The
Transferor may offer any Series or Purchased
Interest to the public or to other investors under
a prospectus or other disclosure document in
transactions either registered under the Securities
Act or exempt from registration thereunder,
directly or through the Underwriter or one or more
other underwriters or placement agents.
Under the Pooling and Servicing Agreement, a New
Issuance may only occur upon delivery to the
Trustee of the following: (a) a Supplement
specifying the Principal Terms of such Series or a
purchase agreement (each, a "Purchase Agreement")
specifying the terms of a Purchased Interest, as
applicable, (b) opinions of counsel to the effect
that, for United States Federal, Florida or
Connecticut income tax purposes (i) such issuance
will not adversely affect the applicable income tax
characterization of the certificates of any
outstanding Series or class or any outstanding
Purchased Interest, (ii) such issuance will not
cause a taxable event to any certificateholders or
to any Purchaser, (iii) such issuance will not
cause the Trust to be treated as an association (or
publicly traded partnership) taxable as a
corporation for Federal income
7
<PAGE> 8
tax purposes or as a taxable entity for Florida and
Connecticut tax purposes and (iv) such new Series
or Purchased Interest will be characterized as debt
or an interest in a partnership and (c) letters
from the Rating Agencies confirming that the
issuance of the new Series or Purchased Interest
will not result in the reduction or withdrawal of
the rating of either Class of Certificates or the
rating of any other Series or class of certificates
or any Purchased Interest then outstanding. See
"Description of the Certificates -- New Issuances."
Allocations................ The Certificateholders' Interest will include the
right to receive (but only to the extent needed to
make required payments under the Pooling and
Servicing Agreement) varying percentages of
Interest Collections and Principal Collections
collected during each calendar month (a "Collection
Period") that are allocable to the portion of each
Dealer's aggregate Principal Receivables that does
not represent Concentration Amounts (the "Regular
Pool"). Interest Collections, Principal Collections
and Defaulted Receivables for any Collection Period
will be allocated to the Certificateholders'
Interest from the Regular Pool as described below
and as more fully described under "Description of
the Certificates -- Allocation Percentages."
Interest Collections, Principal Collections and
Defaulted Receivables not allocated to Series
1996-2 will be allocated to the Transferor
Interest, to the certificateholders' interests in
other Series and to the interests of the Purchasers
of Purchased Interests. From time to time, the
Trust may issue additional Series or Purchased
Interests representing interests in that portion of
each Dealer's aggregate Principal Receivables that
constitutes a Concentration Amount (the
"Concentration Pool") (any such series or purchase
interest, a "Concentration Series"). The
"Concentration Amount" with respect to any Account
on any day will equal the aggregate amount of
Receivables in such Account (excluding Ineligible
Receivables) on such day minus the product of (i)
the Concentration Limit (as defined herein) and
(ii) the aggregate amount of Principal Receivables
included in the Trust on such day, except as
otherwise described in "Description of the
Certificates -- Allocation Percentages."
Interest Collections and Defaulted Receivables
allocated to the Regular Pool will be allocated at
all times to the Certificateholders' Interest based
on the Floating Allocation Percentage applicable
during the related Collection Period. The Floating
Allocation Percentage for any Collection Period is
the percentage obtained by dividing (i) the
Invested Amount on the last day of the immediately
preceding Collection Period by (ii) the excess of
the aggregate amount of Principal Receivables
(other than Ineligible Receivables and certain
excess receivables) held by the Trust (the "Pool
Balance") over the aggregate amount of the
Concentration Amounts in all Accounts (such excess
being the "Regular Pool Balance") on such last day.
The Floating Allocation Percentage for the first
Collection Period will be the percentage obtained
by dividing the Invested Amount of the Certificates
by the Regular Pool Balance on the Closing Date;
provided that the Floating Allocation Percentage on
the Closing Date and until the second Determination
Date will not exceed the Transferor Percentage at
such time minus 2%.
During the Revolving Period, subject to certain
limitations, Principal Collections allocable to the
Regular Pool that are allocable to the
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<PAGE> 9
Certificateholders' Interest from the Regular Pool
will be allocated and paid to the Transferor or
allocated to any other Series or any Purchased
Interest. During the Accumulation Period and any
Early Amortization Period, Principal Collections
allocated to the Regular Pool will be allocated to
the Certificateholders' Interest based on the
Principal Allocation Percentage. The Principal
Allocation Percentage for a Collection Period
during the Accumulation Period and any Early
Amortization Period is the percentage equivalent of
a fraction, the numerator of which is the Invested
Amount on the last day of the Revolving Period and
the denominator of which is the greater of (x) the
Regular Pool Balance on the last day of the
immediately preceding Collection Period and (y) the
sum of the numerators used to calculate the
floating allocation percentage or the principal
allocation percentage, as the case may be, with
respect to each outstanding Series or Purchased
Interest (other than any Concentration Series).
Unless an Early Amortization Event shall have
occurred, monthly deposits of principal to the
Principal Funding Account with respect to the
Certificates will not exceed the Controlled
Distribution Amount and, subject to certain
limitations, any Principal Collections allocated to
but not paid to the Principal Funding Account will
be first treated as Shared Principal Collections to
the extent necessary and then paid to the
Transferor. See "Description of the
Certificates -- Allocation Percentages" and
" -- Distributions from the Collection Account;
Reserve Fund -- Principal Collections."
Interest................... Interest on the principal balance of the Class A
Certificates will accrue and be payable monthly at
a per annum rate (the "Class A Certificate Rate")
equal to One-Month LIBOR (calculated as provided
herein) plus 14 basis points (0.14%) (the "Class A
LIBOR Rate") and interest on the principal balance
of the Class B Certificates will accrue and be
payable monthly at a per annum rate (the "Class B
Certificate Rate") equal to One-Month LIBOR
(calculated as provided herein) plus 27 basis
points (0.27%) (the "Class B LIBOR Rate," and
together with the Class A LIBOR Rate, a "LIBOR
Rate"); provided that, if the weighted average of
the Class A LIBOR Rate and the Class B LIBOR Rate
for any Distribution Date is greater than the Asset
Receivables Rate, then the Class A Certificate Rate
and the Class B Certificate Rate for such
Distribution Date will be the Asset Receivables
Rate. In the event that the Class A and Class B
Certificate Rates for any Interest Period are
limited to the Asset Receivables Rate, the excess
of the interest calculated at the applicable LIBOR
Rate over the Asset Receivables Rate will
constitute a Class A or Class B shortfall amount
(each, a "Shortfall Amount") which will be payable,
together with interest thereon, in the manner
provided herein. The ratings of the Certificates do
not address the likelihood of the payment of any
Shortfall Amount.
Interest at the applicable Certificate Rate will be
payable monthly to Certificateholders on each
Distribution Date, commencing in May 1996.
"Distribution Date" shall mean the twenty-fifth day
of each month (or, if such date is not a business
day, the next succeeding business day). Interest
payable on a Distribution Date will accrue from and
including the preceding Distribution Date (or, in
the case of the first Distribution Date, from and
including the Closing Date) to but excluding such
Distribution Date. Interest for any Distribution
Date will be calculated
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<PAGE> 10
on the basis of the actual number of days elapsed
during the related Interest Period and a year
assumed to consist of 360 days, and interest due
but not paid on any Distribution Date will be due
on the next Distribution Date, together with, to
the extent lawfully payable, interest on such
amount at the Class A Certificate Rate or Class B
Certificate Rate, as applicable, plus 200 basis
points (2%). Interest payments at the applicable
Certificate Rate on the Certificates will be
derived from Certificateholder Interest Collections
for the related Collection Period, withdrawals, if
any, from the Reserve Fund, Investment Proceeds, if
any, and, under certain circumstances, Available
Transferor Collections to the extent of the
Available Subordinated Amount. Interest payable to
Class B Certificateholders will be subordinated in
right of payment and priority to interest payable
to Class A Certificateholders, as described herein.
The "Asset Receivables Rate" for any Interest
Period shall equal the product of (a) the quotient
obtained by dividing (i) 360 by (ii) the actual
number of days elapsed in such Interest Period and
(b) a percentage, expressed as a fraction, (i) the
numerator of which is the sum of (A) the Floating
Allocation Percentage of Interest Collections
allocable to the Regular Pool for the latest
Collection Period ending prior to the last day of
such Interest Period (which for this purpose only
is based on interest amounts billed to the Dealers
which are due during such Collection Period) less,
unless waived by the Servicer, the Monthly
Servicing Fee with respect to such immediately
preceding Collection Period and (B) the Investment
Proceeds to be applied on the Distribution Date
related to such Interest Period and (ii) the
denominator of which is the sum of (A) the product
of the Floating Allocation Percentage and the
average Regular Pool Balance (after giving effect
to any Investor Charge-Offs, and including
Ineligible Receivables and certain excess
receivables) for such immediately preceding
Collection Period and (B) the Series 1996-2 portion
of the average principal balance of funds on
deposit in the Excess Funding Account for such
Collection Period.
If, for any Interest Period, the weighted average
of the Class A LIBOR Rate and the Class B LIBOR
Rate exceeds the Asset Receivables Rate, funds
available as provided herein after making all
required distributions and deposits with respect to
each Class of Certificates, including payments with
respect to principal (including payments to the
Excess Funding Account), Class A Monthly Interest
and Class B Monthly Interest, the Monthly Servicing
Fee, the Reserve Fund Deposit Amount, the Investor
Default Amount and the unreimbursed Monthly
Dilution Amount, will be used to pay the Shortfall
Amount. If the Servicer determines that such
amounts will not be sufficient to pay the Shortfall
Amount on the related Distribution Date, the
Servicer shall notify the Transferor and the
Transferor will be obligated to deposit an amount
sufficient to pay such Shortfall Amount in the
Collection Account on the day preceding the related
Distribution Date for payment to
Certificateholders. Under certain circumstances
specified in the Pooling and Servicing Agreement,
failure by the Transferor to pay any Shortfall
Amount or any Carry-Over Amount may result in an
Early Amortization Event. See "Description of the
Certificates -- Early Amortization Events."
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<PAGE> 11
In the event that the Transferor fails to pay a
Shortfall Amount on any Distribution Date, interest
shall accrue on such Shortfall Amount and shall be
payable, together with interest thereon at the
applicable Certificate Rate plus 2% (such Shortfall
Amount plus such interest thereon, a "Carry-Over
Amount"), on the next succeeding Distribution Date
in the same manner as a Shortfall Amount. At such
time as (i) the Invested Amount of the Certificates
is reduced to zero and all interest at the
applicable Certificate Rate due and owing on the
Certificates has been paid in full and (ii) any
accrued and unpaid applicable Carry-Over Amount
exists at such time, then, in such event, Available
Transferor Collections will be applied by the
Servicer to pay any such accrued and unpaid
Carry-Over Amount up to an amount equal to the
Available Subordinated Amount.
The ratings of the Certificates do not address the
likelihood of the payment of any Carry-Over Amount.
In addition, Certificates may be issued with
original issue discount. See "Certain Tax Matters"
for additional information concerning the
application of United States Federal and state tax
laws.
Principal.................. It is expected that the final principal payment
with respect to the Certificates will be made on
the October 1999 Distribution Date (the "Expected
Final Payment Date"). Principal payments with
respect to the Certificates may be made earlier
than the applicable Expected Final Payment Date if
an Early Amortization Event or an Asset Composition
Event occurs, or later under certain circumstances
described herein. Principal payments on the Class B
Certificates will be made only after all required
payments of principal to the Class A
Certificateholders have been made. In the event
that any Carry-Over Amount exists following payment
of all principal of, and interest accrued on, the
Certificates at the applicable Certificate Rate,
the Series will remain outstanding and Available
Transferor Collections up to an amount equal to the
Available Subordinated Amount will be applied on
subsequent Distribution Dates to pay such
Carry-Over Amounts and interest accrued thereon as
provided herein.
Revolving Period........... During the Revolving Period, Principal Collections
allocable to the Certificateholders' Interest
generally will be paid to the Transferor, deposited
to the Excess Funding Account and allocated to
Series 1996-2 or allocated to another Series or to
a Purchased Interest in order to maintain the sum
of the Invested Amount and the amount, if any, on
deposit in the Excess Funding Account at a constant
level. The "Revolving Period" will be the period
beginning on the Closing Date and ending on the
earlier of (x) the day immediately preceding the
Accumulation Period Commencement Date and (y) the
business day immediately preceding the day on which
an Early Amortization Event occurs. See
"Description of the Certificates -- Early
Amortization Events" and " -- Asset Composition
Event" for a discussion of certain events which
might lead to (i) the early termination of the
Revolving Period and, in certain limited
circumstances, the recommencement of the Revolving
Period and (ii) prepayment of a portion of the
principal balance of the Certificates,
respectively.
Accumulation Period........ Unless an Early Amortization Period commences, the
Certificates will have an accumulation period (the
"Accumulation Period"), which will
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<PAGE> 12
commence on the Accumulation Period Commencement
Date and continue until the earlier of (a) the
commencement of an Early Amortization Period and
(b) the Expected Final Payment Date. Unless an
Early Amortization Event shall have occurred, the
Accumulation Period will be one, two or three
month(s) long as described in the following
paragraph. During the Accumulation Period,
Certificateholders' Principal Collections (to the
extent of the Controlled Distribution Amount) and
certain other amounts allocable to the
Certificateholders' Interest will be deposited on
each Distribution Date in a trust account (the
"Principal Funding Account") and, together with any
amounts in the Excess Funding Account allocable to
the Certificates, used to make principal
distributions first to Class A Certificateholders
and then, after payment in full to the Class A
Certificateholders, to Class B Certificateholders
when due. See "Description of the
Certificates -- Distributions from the Collection
Account; Reserve Fund -- Principal Collections."
On the June 1999 Distribution Date, the Servicer
shall determine the Accumulation Period Length. The
"Accumulation Period Length" will be one, two or
three month(s) and will be calculated as the
product, rounded upwards to the nearest integer, of
(a) 3 and (b) a fraction, the numerator of which is
the Invested Amount as of the June 1999
Distribution Date (after giving effect to all
changes therein on such date) and the denominator
of which is the sum of such Invested Amount and the
invested amounts as of the June 1999 Distribution
Date (after giving effect to all changes therein on
such date) of all other outstanding Series and
Purchased Interests (other than any Concentration
Series) whose respective revolving periods are not
scheduled to end before the last day of the
September 1999 Collection Period. If the
Accumulation Period Length is one month, two months
or three months, the "Accumulation Period
Commencement Date" shall be the first day of the
September 1999 Collection Period, the August 1999
Collection Period, or the July 1999 Collection
Period, respectively. Notwithstanding the
foregoing, the Accumulation Period Commencement
Date shall be July 1, 1999, if, prior to such date,
any other outstanding Series or Purchased Interest
shall have entered into an early amortization
period. In addition, if the Accumulation Period
Length shall have been determined to be less than
three months and, thereafter, any outstanding
Series or Purchased Interest shall enter into an
early amortization period, the Accumulation Period
Commencement Date shall be the earlier of (i) the
date that such outstanding Series or Purchased
Interest shall have entered into its early
amortization period and (ii) the Accumulation
Period Commencement Date as previously determined.
Other Series issued or Purchased Interests sold by
the Trust may have either an accumulation period or
an amortization period. Such accumulation periods
or amortization periods may have different lengths
and begin on different dates. Thus, certain Series
or Purchased Interests may be in their early
amortization periods or accumulation periods, while
other Series or Purchased Interests are not.
Early Amortization
Period..................... During the period beginning on the day on which an
Early Amortization Event has occurred and, except
as described below, ending on the earlier of the
payment in full of both the Class A Principal and
the Class B
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<PAGE> 13
Principal and the Termination Date (the "Early
Amortization Period"), the Revolving Period or the
Accumulation Period, as the case may be, will
terminate, and Principal Collections and certain
other amounts allocable to the Certificateholders'
Interest will no longer be paid to the Transferor
or the holders of any other outstanding Series or
Purchased Interest as described above, but instead
will be distributed first to the Class A
Certificateholders and then, after payment in full
to the Class A Certificateholders, to the Class B
Certificateholders monthly on each Distribution
Date (each, a "Special Payment Date") beginning
with the Distribution Date following the Collection
Period in which an Early Amortization Period
commences. See "Description of the Certificates --
Early Amortization Events" for a description of
events that might result in the commencement of any
Early Amortization Period. During an Early
Amortization Period, distributions of principal on
the Certificates will not be limited by the
Controlled Distribution Amount. See "Description of
the Certificates -- Distributions from the
Collection Account; Reserve Fund -- Principal
Collections." In addition, on the first Special
Payment Date any amounts on deposit in the Excess
Funding Account (to the extent allocable to Series
1996-2) and the Principal Funding Account will be
paid first to the Class A Certificateholders up to
the Class A Principal Amount and then to the Class
B Certificateholders up to the Class B Principal
Amount. See "Description of the
Certificates -- Distributions."
The Transferor is required to add Receivables to
the Trust under certain circumstances described
under "Description of the Certificates -- Addition
of Accounts." The failure of the Transferor to add
Receivables when required will result in the
occurrence of an Early Amortization Event. However,
if no other Early Amortization Event has occurred,
the Early Amortization Period resulting from such
failure will terminate and the Revolving Period
will recommence when the Transferor would no longer
be required to add Receivables to the Trust, so
long as the scheduled termination date of the
Revolving Period has not occurred, and provided
that the Revolving Period for such Series shall not
previously have terminated and recommenced.
Asset Composition Event.... An "Asset Composition Event" will occur if, during
the Revolving Period, (a) the sum of all Eligible
Investments and amounts on deposit in the Excess
Funding Account represents more than 25% of the
total assets of the Trust on each of twelve or more
consecutive Determination Dates, after giving
effect to all payments made or to be made on the
Distribution Date next succeeding each such
respective Determination Date; or (b) on any two
consecutive Determination Dates, the sum of all
Eligible Investments and amounts on deposit in the
Excess Funding Account represents more than 50% of
the total assets of the Trust, after giving effect
to all payments to be made on the next succeeding
Distribution Date.
Upon the occurrence of an Asset Composition Event,
the Servicer will calculate the "Asset Correction
Amount," which equals the amount that would be
necessary to be paid out of the Series 1996-2
portion of the Excess Funding Account and the
portions of the Excess Funding Account allocable to
other Series and Purchased Interests (other than
Concentration Series) on the next Distribution Date
to achieve compli-
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<PAGE> 14
ance with the tests specified above, after giving
effect to such payment and to all payments that
otherwise would have been made on such Distribution
Date, and the Servicer shall deposit such amount
into the Collection Account on or prior to the next
succeeding Distribution Date. The Class A Principal
Amount and, after the Class A Principal Amount has
been paid in full, the Class B Principal Amount,
will become payable on such Distribution Date to
the extent of the Series 1996-2 Allocation
Percentage of the Asset Correction Amount.
Subordination of the
Transferor Interest........ If the Interest Collections, Investment Proceeds,
certain amounts in the Reserve Fund and certain
other amounts allocable to the Certificateholders
for any Collection Period are not sufficient to
cover the interest payable on the Certificates on
the next Distribution Date (plus any overdue
interest and interest thereon as set forth above to
the extent permitted by law), the Monthly Servicing
Fee for such Distribution Date, any Investor
Default Amount for such Distribution Date, and
certain other amounts, a portion of the Transferor
Interest will be applied to make up such
deficiency. Generally, the amount of the Transferor
Interest subject to such subordination is the
Available Subordinated Amount. The "Required
Subordinated Amount" shall mean, as of any date of
determination, either (A) if the amount on deposit
in the Series 1996-2 portion of the Excess Funding
Account equals zero, the sum of (i) the product of
the Subordinated Percentage and the sum of the
Class A Principal Amount and the Class B Principal
Amount on such day plus (ii) the Incremental
Subordinated Amount or (B) if the amount on deposit
in the Series 1996-2 portion of the Excess Funding
Account is greater than zero, the sum of (i) the
Incremental Subordinated Amount and (ii) the
product of 4% multiplied by the Regular Pool
Balance multiplied by the Series 1996-2 Allocation
Percentage multiplied by 98%; provided, however,
that for any Determination Date following the end
of the Revolving Period, or on any Determination
Date on which a Carry-Over Amount exists, the
Required Subordinated Amount shall in no event be
less than an amount equal to the Subordinated
Percentage of the sum of the Class A Initial
Principal Amount plus the Class B Initial Principal
Amount of the Certificates. The Available
Subordinated Amount for subsequent Distribution
Dates will be determined pursuant to the
calculation described under "Description of the
Certificates -- Allocation of Collections; Deposits
in Collection Accounts; Limited Subordination of
Transferor Interest." The "Subordinated Percentage"
will equal the percentage equivalent of a fraction,
the numerator of which is 4% and the denominator of
which will be the excess of 100% over 4%.
The Available Subordinated Amount will fluctuate
based on the increase and decrease, if any, in the
Invested Amount and the corresponding decrease and
increase in the amount, if any, in the Excess
Funding Account and the additions and subtractions
specified in the calculation referred to above. The
Transferor may, but is not obligated to, increase
at any time the Available Subordinated Amount so
long as the cumulative amount of all such increases
does not exceed the lesser of (i) $1,925,000 or
(ii) 1.1% of the Invested Amount on such date. Any
such increase may have the effect of avoiding an
Early Amortization Event. The Available
Subordinated Amount, to the extent it was reduced
because of
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<PAGE> 15
any application of the Transferor Interest to cover
a deficiency, will be reinstated by the amount, if
any, for each Distribution Date of Excess Interest
allocated and available to be paid to the
Transferor as described under "Description of the
Certificates -- Distributions from the Collection
Account; Reserve Fund -- Excess Interest."
Servicing.................. The Servicer (initially, WOFCO) is responsible for
servicing, managing and making collections on the
Receivables and will generally deposit such
collections in the Collection Account within two
business days following the receipt thereof,
generally up to the amount of such collections
required to be distributed to Certificateholders
with respect to the related Collection Period.
During the Revolving Period, Principal Collections
allocable to Series 1996-2 will be used by the
Servicer to finance the purchase of new Receivables
as described herein. In addition, under certain
circumstances not currently applicable, the
Servicer will be permitted to use for its own
benefit and not segregate collections on the
Receivables received by it during each Collection
Period until no later than the business day prior
to the related Distribution Date. See "Description
of the Certificates -- Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Transferor Interest."
On the second business day preceding each
Distribution Date (each a "Determination Date"),
the Servicer will calculate the amounts described
herein in respect of collections on Receivables
received with respect to the related Collection
Period which are to be allocated to the
Certificateholders, to the holders of other
outstanding Series or to the Transferor as
described herein. See "Description of the
Certificates -- Allocation of Collections; Deposits
in Collection Account; Limited Subordination of
Transferor Interest," "Risk Factors" and "Certain
Legal Aspects of the Receivables."
In certain limited circumstances, WOFCO may resign
or be removed as Servicer, in which event either
the Trustee, or, so long as its meets certain
eligibility standards set forth in the Pooling and
Servicing Agreement, a third-party servicer, may be
appointed as successor servicer. WOFCO is permitted
to delegate any of its duties as Servicer to any of
its affiliates, but any such delegation (other than
any Annual Servicing Transfer) will not relieve the
Servicer of its obligations under the Pooling and
Servicing Agreement. The Servicer will receive a
monthly servicing fee and certain other amounts as
described herein as servicing compensation from the
Trust. See "Description of the
Certificates -- Servicing Compensation and Payment
of Expenses."
Mandatory Reassignment and
Transfer of Certain
Receivables.............. The Transferor will make certain representations
and warranties in the Pooling and Servicing
Agreement with respect to the Receivables in its
capacity as Transferor, and WOFCO will make certain
representations and warranties in the Pooling and
Servicing Agreement in its capacity as Servicer. If
the Transferor breaches certain of its
representations and warranties with respect to any
Receivables and such breach remains uncured for a
specified period and has a materially adverse
effect on the Certificateholders' Interest or the
interests of the holders of other outstanding
Series therein or the interests of the Purchasers
of any Purchased Interests, the Certificateholders'
Interest and such other
15
<PAGE> 16
certificateholders' and Purchasers' interests in
such Receivables will, subject to certain
conditions specified herein, be reassigned to the
Transferor. If WOFCO, as Servicer, fails to comply
in any material respect with certain covenants or
warranties with respect to any Receivables and such
noncompliance is not cured within a specified
period after WOFCO becomes aware or receives notice
thereof from the Trustee and such noncompliance has
a materially adverse effect on the
Certificateholders' Interest or such other
certificateholders' or Purchasers' interest
therein, all Receivables affected will be purchased
by WOFCO. In the event of a transfer of servicing
obligations to a successor Servicer, such successor
Servicer, rather than WOFCO, would be responsible
for any failure to comply with the Servicer's
covenants and warranties arising thereafter.
Tax Matters................ Skadden, Arps, Slate, Meagher & Flom, special tax
counsel for the Transferor and the Trust, will
render its opinion, as more fully described under
"Certain Tax Matters" herein, that the Certificates
will be characterized as debt for United States
Federal income tax purposes. Each
Certificateholder, by the acceptance of a
Certificate, will agree to treat the Certificates
as debt for United States Federal, state and local
income tax purposes. The Certificates may be issued
with original issue discount. See "Certain Tax
Matters" for additional information concerning the
application of United States Federal and state tax
laws.
ERISA Considerations....... Employee benefit plans, insurance company general
accounts, individual retirement accounts and other
plans and entities ("Benefit Plans") subject to the
fiduciary responsibility provisions (the "Fiduciary
Responsibility Provisions") of Section 406 of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4975 of the Internal
Revenue Code of 1986, as amended, should consult
with counsel before making a purchase of
Certificates, and such counsel should consider,
among other things, the potential applicability of
the Publicly-Offered Securities Exception (as
defined below) to the Certificates. See "ERISA
Considerations."
If, upon completion of the public offering made
hereby, the Class A Certificates are held by at
least 100 investors who are independent of the
Transferor and each other, an exception (the
"Publicly-Offered Securities Exception") to the
Fiduciary Responsibility Provisions should apply
with respect to the purchase of the Class A
Certificates by Benefit Plans. The Underwriter will
notify the Trustee as to whether or not the Class A
Certificates will be expected to be held by at
least 100 independent investors upon completion of
the offering. If the Publicly-Offered Securities
Exception does not apply, the acquisition and
holding of the Class A Certificates by Benefit
Plans could result in violations of, and liability
under, the Fiduciary Responsibility Provisions.
The Class B Certificates may not be purchased by
any Benefit Plan, including, without limitation,
any insurance company general account.
Certificate Ratings........ It is a condition to the issuance of the Class A
Certificates that they be rated in the highest
long-term rating category by at least one
nationally recognized rating agency (each, a
"Rating Agency"). It is a condition to the issuance
of the Class B Certificates that they be rated at
least "A" or the equivalent by at least one Rating
Agency. The rating of each Class of
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<PAGE> 17
Certificates addresses the likelihood of the
ultimate payment of the principal and interest on
the Certificates. The Transferor expects the
Certificates to be rated on the Closing Date by
Standard & Poor's Ratings Services and Moody's
Investors Service, Inc. However, a Rating Agency
does not evaluate, and the rating of a Class of
Certificates will not address the likelihood of
payment of the outstanding principal of the
Certificates by the Expected Final Payment Date or
the payment of any Carry-Over Amount or Shortfall
Amount. A security rating is not a recommendation
to buy, sell or hold securities and is subject to
revisions or withdrawal in the future by the
assigning rating agency.
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<PAGE> 18
RISK FACTORS
Limited Liquidity. There is currently no market for the Certificates. CS
First Boston Corporation currently intends to make a market in the Certificates,
but is under no obligation to do so. There can be no assurance that a secondary
market will develop or, if a secondary market does develop, that it will provide
the Certificateholders with liquidity of investment or that it will continue for
the life of the Certificates.
Sale and Transfer of Receivables; Security Interest and Insolvency
Considerations. There are certain limited circumstances under the Uniform
Commercial Code (the "UCC") and applicable Federal law in which prior or
subsequent transferees of Receivables could have an interest in such Receivables
with priority over the Trust's interest. See "Certain Legal Aspects of the
Receivables -- Transfer of Receivables." Under the Receivables Purchase
Agreement, WOFCO has warranted to the Transferor and, under the Pooling and
Servicing Agreement, the Transferor has warranted to the Trust, that the
Receivables have been or will be transferred free and clear of the lien of any
third party. Each of WOFCO and the Transferor have also covenanted that it will
not sell, pledge, assign, transfer or grant any lien on any Receivable or,
except as described under "Description of the Certificates" and "Certain Tax
Matters -- State and Local Taxation," the Transferor Certificate (or any
interest therein) other than to the Trust.
WOFCO has warranted to the Transferor in the Receivables Purchase Agreement
that the sale of the Receivables by it to the Transferor is a valid sale of the
Receivables to the Transferor. In addition, WOFCO and the Transferor have and
will continue to treat the transactions described herein as a sale of the
Receivables to the Transferor. In addition, in the event such transactions are
not treated as a sale, WOFCO has taken and will take all actions that are
required under Florida law to perfect the Transferor's security interest in the
Receivables. See "Certain Legal Aspects of the Receivables -- Transfer of
Receivables." Notwithstanding the foregoing, if WOFCO were to become a debtor in
a bankruptcy case, and a creditor or trustee-in-bankruptcy of such debtor or
such debtor itself were to take the position that the sale of Receivables to the
Transferor should be characterized as a pledge of such Receivables to secure a
borrowing of such debtor, then delays in payments of collections of Receivables
to the Transferor could occur or (should the court rule in favor of any such
trustee, debtor or creditor) reductions in the amount of such payments could
result. If the transfer of Receivables to the Transferor is recharacterized as a
pledge, a tax or government lien on the property of WOFCO arising before any
Receivables come into existence may have priority over the Transferor's interest
in such Receivables. See "Certain Legal Aspects of the Receivables -- Certain
Matters Relating to Bankruptcy." If the transactions contemplated herein are
treated as a sale, the Receivables would not be part of WOFCO's bankruptcy
estate and would not be available to WOFCO's creditors. However, in a recent
decision, Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
the United States Court of Appeals for the Tenth Circuit suggested that, even
where a transfer of accounts from a seller to a buyer constitutes a "true sale,"
the accounts would nevertheless constitute property of the seller's bankruptcy
estate in a bankruptcy of the seller. The Transferor has been advised by counsel
that the reasoning of the Octagon court appears to be inconsistent with
established precedent and the UCC. In addition, the Permanent Editorial Board of
the UCC has issued an official commentary (P&B Commentary No. 14) which
characterizes the Octagon court's interpretation of Article 9 of the UCC to be
erroneous. Such commentary states that nothing in Article 9 is intended to
prevent the transfer of ownership of accounts or chattel paper. See "Certain
Legal Aspects of the Receivables -- Certain Matters Relating to Bankruptcy."
In addition, if WOFCO were to become a debtor in a bankruptcy case, and a
creditor or trustee-in-bankruptcy of such debtor or such debtor itself were to
request a bankruptcy court to order that WOFCO be substantively consolidated
with the Transferor, delays in and reductions in the amount of distributions on
the Certificates could occur. Application of Federal and state bankruptcy and
debtor relief laws could substantially affect the interests of the
Certificateholders in the Receivables if such laws result in any Receivables
being written off as uncollectible or result in delays in payments due on such
Receivables. See "Description of the Certificates -- Defaulted Receivables and
Recoveries."
The Transferor has warranted in the Pooling and Servicing Agreement that
the transfer of the Receivables to the Trust is either (i) a valid transfer of
the Receivables to the Trust or (ii) the grant of a first priority security
interest in the Receivables. The Transferor has and will continue to take all
actions that are
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required under Florida law to perfect the Trust's interest in the Receivables.
If the transfer of the Receivables to the Trust were deemed to create a security
interest therein under the UCC as in effect in Florida, a tax or statutory lien
on property of WOFCO or the Transferor arising before a Receivable is
transferred to the Trust may have priority over the Trust's interest in such
Receivables.
If certain events relating to the bankruptcy of WOFCO, the Transferor or
Toyota were to occur, then an Early Amortization Event would occur and, pursuant
to the terms of the Pooling and Servicing Agreement, additional Receivables
would not be transferred to the Trust, and distributions of principal on the
Certificates would not be limited by the Controlled Distribution Amount. See
"Certain Legal Aspects of the Receivables -- Transfer of Receivables" and
" -- Certain Matters Relating to Bankruptcy."
On the Initial Closing Date, Skadden, Arps, Slate, Meagher & Flom, special
counsel to WOFCO and the Transferor, rendered 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 WOFCO were to become a debtor in a
case under the Bankruptcy Code, (i) it would not be a proper exercise by a
Federal bankruptcy court of its equitable discretion to disregard the
independent corporate forms of WOFCO and the Transferor so as to substantively
consolidate the assets and liabilities of WOFCO and the Transferor, and (ii) the
transfer of the Receivables from WOFCO to the Transferor pursuant to the
Receivables Purchase Agreement would properly be characterized as a sale of the
Receivables by WOFCO to the Transferor and would not properly be characterized
as a pledge of the Receivables by WOFCO.
Adjustment Payments and payments made in respect of repurchases of
Receivables by WOFCO or the Transferor pursuant to the Pooling and Servicing
Agreement may be recoverable by WOFCO or the Transferor as debtor-in-possession
or by a creditor or a trustee-in-bankruptcy of WOFCO or the Transferor as a
preferential transfer from WOFCO or the Transferor if such payments are made
within one year prior to the filing of a bankruptcy case in respect of WOFCO or
the Transferor.
The Transferor has represented and warranted in the Pooling and Servicing
Agreement that each Receivable is at the time of creation secured by a first
priority security interest in the related Dealer's Vehicles. Generally, under
applicable state laws, a security interest in an automobile or light duty truck
which secures wholesale financing obligations may be perfected by the filing of
UCC financing statements, and WOFCO will take all actions necessary under
applicable state laws to perfect WOFCO's security interest in the Vehicles.
However, at the time a Vehicle is sold, WOFCO's security interest in the Vehicle
will terminate. Therefore, if a Dealer fails to remit to WOFCO amounts owed with
respect to Vehicles that have been sold, the related Receivables will no longer
be secured by Vehicles.
Payments; Delays. Receivables are generally payable by Dealers upon retail
sale of the underlying Vehicle. The timing of such sales is uncertain. In
addition, there is no assurance that there will be additional Receivables
created under the Accounts or that any particular pattern of Dealer repayments
will occur. The payment of principal on the Certificates is dependent on Dealer
repayments, which are generally due not later than 48 hours following the retail
sale by the Dealer of the Vehicle. Depending upon the level of generation of
Receivables and of such repayments, the Certificates may not be fully amortized
in three payments (assuming the maximum permissible Accumulation Period of three
months) following the commencement of the Accumulation Period. In addition, a
significant decline in the amount of Receivables generated could cause an Early
Amortization Event or an Asset Composition Event. Initially, a decline in the
amount of Receivables generated would be absorbed by an increase in the Excess
Funding Account. However, a decline in the rate of Receivables generation during
the Accumulation Period or an Early Amortization Period could also extend the
maturity of the Certificates, which would lengthen the period during which the
Certificateholders would be potentially exposed to Dealer defaults.
The Receivables Purchase Agreement provides that WOFCO will be required to
designate additional Accounts, the Receivables of which will be sold to the
Transferor, and the Pooling and Servicing Agreement will provide that the
Transferor will be required to transfer such Receivables to the Trust in the
event that the amount of the Pool Balance is not maintained at a certain minimum
level. See " -- Existing Credit Arrangements" below. If additional Accounts are
not designated by WOFCO when required, an Early
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Amortization Event will occur and result in the commencement of an Early
Amortization Period, although in certain circumstances the resulting Early
Amortization Period may terminate and the Revolving Period recommence. In
addition, upon the occurrence of an Early Amortization Event, no assurance can
be given that WOFCO will continue to generate Receivables sufficient to pay on a
timely basis the principal amount of and accrued interest due and owing on the
Certificates. If an insolvency event relating to WOFCO, the Transferor or Toyota
were to occur, then an Early Amortization Event would occur, additional
Receivables would not be transferred to the Trust and distributions of principal
on the Certificates would not be limited by the Controlled Distribution Amount.
In addition, if an event of bankruptcy relating to the Transferor occurs, the
Transferor will immediately cease to transfer Receivables to the Trust, and the
Trustee will liquidate all Receivables then in the Trust unless
Certificateholders and Purchasers holding Certificates and Purchased Interests
evidencing more than 50% of the aggregate unpaid principal amount of each Series
(and, in the case of a Series having more than one class, each class of such
Series), each Purchased Interest as well as any holder of a Supplemental
Certificate and any other transferee of an interest in the Transferor Interest,
instruct the Trustee not to liquidate the Receivables. However, in a bankruptcy
proceeding, the Trustee may not be permitted to suspend transfers of Receivables
to the Trust, and the instructions to liquidate or not to liquidate the
Receivables may not be given effect. See "Certain Legal Aspects of the
Receivables -- Certain Matters Relating to Bankruptcy." The proceeds from the
liquidation of the Receivables will be treated as Collections on the Receivables
and allocated accordingly among holders of Certificates of each Series,
Purchasers of Purchased Interests and the Transferor. If the portion of such
proceeds allocable to pay principal in respect of the Certificates is
insufficient to pay the entire Invested Amount, the holders of the Certificates
will suffer a loss. See "The Dealer Floorplan Financing Business" and "Maturity
and Principal Payment Considerations" and see also "Description of the
Certificates -- Early Amortization Events" for a discussion of other events
which might lead to the commencement of an Early Amortization Period.
Social, Economic and Other Factors. Payment of the Receivables is largely
dependent upon the retail sale of the related Vehicles. The level of retail
sales of cars and light duty trucks may change as the result of a variety of
social and economic factors. Economic factors include interest rates,
unemployment levels, the rate of inflation and consumer perception of economic
conditions generally. Because a significant portion of the Receivables relate to
Dealers in the Five State Area, payment of the Receivables could be particularly
affected by social and economic factors affecting the southeastern United
States. The use of incentive programs (e.g., manufacturers' rebate programs) may
affect retail sales. However, the Transferor is unable to determine and has no
basis to predict whether or to what extent economic or social factors will
affect the level of Vehicle sales.
Trust's Relationship to WOFCO, SET and other Affiliates. WOFCO will not be
obligated to make any payments in respect of the Certificates or the Receivables
(other than the obligation of WOFCO to acquire certain Receivables from the
Trust due to the failure to comply with certain covenants, as described under
"Description of the Certificates -- Servicer Covenants"). However, the Trust
will be completely dependent upon WOFCO for the generation of new Receivables.
The ability of WOFCO to supply new Receivables to the Trust is, in turn,
primarily dependent on the ability of various manufacturers and distributors to
sell Vehicles to Dealers financed by WOFCO and is subject to certain limitations
under WOFCO's existing credit arrangements (described below). In particular, as
of March 31, 1996, approximately 51.8% of the Receivables held by WOFCO were
related to Vehicles sold to Dealers by SET. Accordingly, the ability of WOFCO to
supply new Receivables to the Trust will be particularly dependent upon the
ability of SET to sell Vehicles manufactured by Toyota to Dealers primarily
located in the Five State Area. There is, however, no assurance that SET and the
other relevant distributors and manufacturers will continue to sell Vehicles at
the same rate as in prior years. A significant decline in the sales of Vehicles
would cause a decline in the number of Receivables. There can be no assurance
that WOFCO will continue to generate Receivables at the same rate as in prior
years. In addition, if WOFCO were to cease acting as Servicer, delays in
processing payments on the Receivables and information in respect thereof could
occur and result in delays in payment to the Certificateholders.
In connection with the sale of Receivables by WOFCO to the Transferor, and
the transfer of such Receivables by the Transferor to the Trust, each of WOFCO
and the Transferor will make representations and
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warranties with respect to the characteristics of such Receivables. WOFCO and
the Transferor are required to accept reassignment of Receivables with respect
to which such representations and warranties have been breached, have not been
cured and have a materially adverse effect on the interest of the
Certificateholders or certificateholders of other Series. See "Description of
the Certificates -- Representations and Warranties." In addition, subject to
certain limitations, WOFCO has the ability to change the terms on the Accounts
including the sale and the credit line, as well as underwriting procedures.
SET has, from time to time in certain instances, provided certain financial
assistance to SET-franchised dealers and is obligated to repurchase certain
Vehicles upon termination or expiration of the related dealership agreements. If
SET is unable to provide any such financial assistance to Dealers, losses with
respect to the Receivables may increase. See "The Dealer Floorplan Financing
Business -- Relationship with SET and other Affiliates." In addition, because a
substantial number of the Vehicles to be sold by the Dealers are manufactured
and/or distributed by Toyota, if Toyota were temporarily or permanently no
longer in such business, the rate of sales of Toyota-manufactured Vehicles owned
by the Dealers would decrease, adversely affecting payment rates with respect to
the Receivables. Moreover, if Toyota were temporarily or permanently no longer
manufacturing or distributing Vehicles, the loss experience with respect to the
Receivables will be adversely affected. See "The Dealer Floorplan Financing
Business."
Release of Lien under Existing Credit Arrangements. Under existing credit
relationships between WOFCO and various banks and other lending institutions
(collectively, the "Bank Group") providing financing for WOFCO from time to
time, Receivables which are not sold to the Transferor pursuant to the
Receivables Purchase Agreement are pledged by WOFCO to the Bank Group. Provided
that certain conditions are satisfied, WOFCO may obtain the release of
Receivables from such lien. However, in the event WOFCO is required under the
Receivables Purchase Agreement to sell Receivables to the Transferor, WOFCO will
be able to satisfy such obligation to the Transferor with Receivables previously
pledged to the Bank Group only to the extent that WOFCO is in compliance with
such conditions to the release of the pledged Receivables.
Concentration of Dealers; Affiliated Dealers. As of March 31, 1996, WOFCO
provided wholesale and/or used car floor plan financing for approximately 235
Accounts (including approximately 55 small, unaffiliated auction floorplanning
Accounts). Although no Dealer (including Dealer groups) accounted for in excess
of 10% of the total Receivables portfolio, approximately 33% of the Receivables
outstanding as of March 31, 1996 arose among the nine largest Dealer groups. In
addition, as of March 31, 1996, approximately $18.7 million of Receivables were
generated by Dealers affiliated with JMFE. Notwithstanding this level of Dealer
concentration, the financial failure of any single Dealer generally should not
cause the Certificateholders to suffer a loss because Collections on a portion
of the Receivables generated by Dealers (or Dealer groups) that account for more
than 2% (or 3% for the largest 15 Dealers) of the total Receivables portfolio
(which portion comprises the Concentration Pool) are not allocable to the
Certificateholders, as more fully described under "Description of
Certificates -- Allocation Percentages." See "The Accounts -- Dealer
Concentration."
Credit Enhancement. Credit enhancement of the Certificates will be
provided by the subordination of the Transferor Interest to the extent of the
Available Subordinated Amount as described herein and by amounts in the Reserve
Fund. The Class A Certificates will also benefit from the subordination of the
Class B Certificates as described herein. The aggregate amount of such credit
enhancement is limited and will be reduced from time to time as described
herein. See "Description of the Certificates -- Allocation of Collections;
Deposits in Collection Account; Limited Subordination of Transferor Interest."
Litigation. WOFCO is a party to, and is vigorously defending, numerous
legal proceedings, all of which (except as described below) it believes
constitute ordinary routine litigation incidental to the business and activities
conducted by WOFCO. As of the date of this Prospectus, WOFCO, SET, various other
JMFE-related entities and various officers and employees thereof also are
defendants in a lawsuit brought by former Dealers located in the Five State
Area. In a second such case, WOFCO and its affiliated defendants obtained
summary judgment in their favor dismissing all of plaintiffs' claims and
awarding attorneys' fees to WOFCO. Plaintiffs have appealed this summary
judgment. These cases focus generally on or arise from alleged vehicle
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allocation, sales reporting, marketing and freight charge practices, principally
by SET. While there are uncertainties as to the final disposition of these
cases, management of WOFCO believes that, although an adverse final judgment in
these cases could have a material adverse effect on its operations and financial
condition, such a result will not cause any material impairment of the ability
of WOFCO to perform its obligations and its duties under the Pooling and
Servicing Agreement. However, there can be no assurance of this result.
Control by Specified Percentage of Holders. Under certain circumstances,
the consent or approval of the holders of a specified percentage of the
aggregate unpaid principal amount of all outstanding investor certificates of
all outstanding Series and Purchased Interests will be required to direct
certain actions, including amending the Pooling and Servicing Agreement in
certain circumstances and directing a reassignment of the entire portfolio of
Receivables. In addition, following the occurrence of an insolvency event with
respect to the Transferor, the Receivables will be sold by the Trustee unless
the holders of investor certificates or Purchased Interests evidencing more than
50% of the aggregate unpaid principal amount of each Series (and, in the case of
a Series having more than one class, each class of such Series), each Purchased
Interest, as well as any holder of a Supplemental Certificate and any other
transferee of an interest in the Transferor Interest direct the Trustee not to
sell or otherwise liquidate the Receivables.
In most cases in which consent of holders of investor certificates might be
sought, the Class A Certificateholders and Class B Certificateholders will vote
together as a single Series. In such circumstances, the Class A
Certificateholders (whose interests might vary from the interests of the Class B
Certificateholders) would generally be able to control the vote of Series
1996-2, since the Class A Principal Amount is significantly greater than the
Class B Principal Amount.
Basis Risk. The Receivables generally bear interest at prime rates
announced by certain banks with a margin generally ranging from 0.75% under
prime to 2.25% over prime. The Class A Certificate Rate and the Class B
Certificate Rate generally will be based on One-Month LIBOR. If, in respect of
any Distribution Date, there does not exist a positive spread between (a) the
Asset Receivables Rate and (b) the weighted average of the Class A LIBOR Rate
and the Class B LIBOR Rate, the Class A Certificate Rate and the Class B
Certificate Rate for such Distribution Date will be the Asset Receivables Rate.
The weighted average of the Class A LIBOR Rate and the Class B LIBOR Rate may
exceed the Asset Receivables Rate as a result of (i) One-Month LIBOR exceeding
the weighted average prime rates on the Receivables, (ii) if amounts are
deposited in the Excess Funding Account, One-Month LIBOR exceeding the amount of
Investment Proceeds on deposit therein allocable to Series 1996-2, or (iii)
changes in the margin over the prime rate charged to Dealers on the Receivables.
On each Distribution Date, any Shortfall Amount arising as a result of the
Certificate Rates being set at the Asset Receivables Rate will be paid from the
amounts, if any, available after all required distributions or deposits or
payments by the Transferor have been made. To the extent that such amounts are
not sufficient to pay any Shortfall Amount or Carry-Over Amount, the Transferor
will be required to pay such amount to the Trust for distribution to
Certificateholders. Under certain circumstances specified in the Pooling and
Servicing Agreement, failure by the Transferor to pay any Shortfall Amount or
any Carry-Over Amount may result in an Early Amortization Event. Following
payment of all principal and interest at the applicable Certificate Rate owed to
Certificateholders, any accrued and unpaid Carry-Over Amounts will be paid to
Certificateholders from Available Transferor Collections up to the Available
Subordinated Amount. See "Description of the Certificates -- Interest" and
" -- Distributions from the Collection Account; Reserve Fund."
Limited Restrictions on Issuance of Additional Series. The Trust, as a
master trust, may issue additional Series (which may be represented by different
classes within a Series) or may sell Purchased Interests from time to time. A
Supplement or Purchase Agreement delivered in connection with the issuance of
other Series or a Purchased Interest will specify certain Principal Terms
applicable to such Series or Purchased Interest. Such Principal Terms may
include methods for determining applicable allocation percentages and allocating
collections, provisions creating different or additional security or other
credit enhancement, different classes of certificates (including subordinated
classes of certificates) and any other amendment or supplement to the Pooling
and Servicing Agreement which is made applicable only to such Series or
Purchased Interest.
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No Supplement or Purchase Agreement, however, may change the terms of the
Certificates or the terms of the Pooling and Servicing Agreement as applied to
the Certificates. See "Description of the Certificates -- New Issuances." As
long as the Certificates are outstanding, a condition to the execution of any
Supplement or Purchase Agreement will be that the Rating Agency shall have
advised the Trustee that the issuance or sale of such Series or Purchased
Interest will not result in the reduction or withdrawal of their rating of the
Certificates. There can be no assurance, however, that the terms of any other
Series or Purchased Interest might not have an impact on the timing or amount of
payments received by a Certificateholder. The issuance of an additional Series
or Purchased Interest does not require the consent of any Class of
Certificateholders. Prior to the Closing Date, the Trust will have issued the
Series 1994-1 Certificates, the Series 1995-1 Certificates, and the Series
1996-1 Certificates.
Book-Entry Registration. The Certificates of each Class will be initially
represented by one or more certificates registered in the name of Cede, the
nominee for DTC, and will not be registered in the names of the
Certificateholders of each Class or their nominees. Because of this, unless and
until Definitive Certificates are issued, Class A Certificateholders will not be
recognized by the Trustee as "Class A Certificateholders," and Class B
Certificateholders will not be recognized by the Trustee as "Class B
Certificateholders" (as such terms are used in the Pooling and Servicing
Agreement). Consequently, until such time beneficial owners of the Class A
Certificates ("Class A Certificate Owners") and the Class B Certificates ("Class
B Certificate Owners," and together with the Class A Certificate Owners, the
"Certificate Owners") will only be able to exercise the rights of
Certificateholders indirectly through DTC and its participating organizations.
See "Description of the Certificates -- Book-Entry Registration" and
" -- Definitive Certificates."
WORLD OMNI DEALER FUNDING INC. AND THE TRUST
WORLD OMNI DEALER FUNDING INC.
The Transferor, a wholly-owned subsidiary of WOFCO, was incorporated in the
State of Florida on November 22, 1991. The Transferor was organized for limited
purposes, which include purchasing Receivables from WOFCO and transferring such
Receivables to third parties and any activities incidental to and necessary or
convenient for the accomplishment of such purposes. The principal executive
offices of the Transferor are located at 120 N.W. 12th Avenue, Deerfield Beach,
Florida 33442. The telephone number of such offices is (954) 429-2200.
The Transferor has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by WOFCO under the United States Bankruptcy Code or similar
applicable state laws ("Insolvency Laws") will not result in consolidation of
the assets and liabilities of the Transferor with those of WOFCO. These steps
include the creation of the Transferor as a separate, limited purpose subsidiary
pursuant to a certificate of incorporation containing certain limitations
(including restrictions on the nature of the Transferor's business and a
restriction on the Transferor's ability to commence a voluntary case or
proceeding under any Insolvency Law without the unanimous affirmative vote of
all of its directors). The Transferor's Articles of Incorporation includes a
provision that requires the Transferor to have two directors who qualify under
the Articles of Incorporation as "Independent Directors." No assurance can be
given, however, that such a consolidation will not occur. See "Risk
Factors -- Certain Legal Aspects."
THE TRUST
The Trust was formed in accordance with the laws of the State of New York
pursuant to the Pooling and Servicing Agreement. On October 25, 1994 (the
"Initial Closing Date"), the Transferor conveyed to the Trust, without recourse,
the Receivables arising under the Accounts. The property of the Trust consists
of the Receivables existing in certain Accounts on the Initial Closing Date, all
Receivables generated in the Accounts from time to time thereafter during the
term of the Trust as well as Receivables generated in any Accounts the
Receivables in which are added to the Trust from time to time (less Receivables
paid or charged off and excluding Receivables in any Accounts that are removed
from the Trust from time to time after the
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Initial Closing Date), an assignment of all the Transferor's rights and remedies
under the Receivables Purchase Agreement, all funds collected or to be collected
in respect of the Receivables, all funds on deposit in certain accounts of the
Trust (including funds on deposit in the Excess Funding Account, the Principal
Funding Account and the Reserve Fund), and any Enhancement issued with respect
to any other Series or Purchased Interest, a security interest in the Vehicles
and any other Collateral Security. See "Description of the
Certificates -- Addition of Accounts." See "Description of the Receivables
Purchase Agreement" for a summary of certain terms of the Receivables Purchase
Agreement.
The property of the Trust may from time to time include Enhancements for
the benefit of certificateholders of other Series or for the benefit of
Purchasers of Purchased Interests. The Certificateholders will not have any
interest in any Enhancements provided for the benefit of the certificateholders
of other Series or for Purchased Interests. Pursuant to the Pooling and
Servicing Agreement, the Transferor is allowed (subject to certain limitations
and conditions), and in some circumstances is obligated, to designate from time
to time Additional Accounts to be included as Accounts and to convey to the
Trust the Receivables of such Additional Accounts, and to designate from time to
time certain Accounts to be removed and to require the Trustee to convey
receivables in such Removed Accounts to the Transferor.
The Trust was formed for this and like transactions pursuant to the Pooling
and Servicing Agreement and prior to formation had no assets or obligations. The
Trust has not and will not engage in any business activity other than acquiring
and holding the Receivables and the other assets of the Trust and proceeds
therefrom, issuing the Certificates and the Transferor Certificate (and any
Supplemental Certificates), issuing additional Series and making payments
thereon, selling Purchased Interests and making payments thereon and related
activities. As a consequence, the Trust is not expected to have any need for, or
source of, capital resources other than the assets of the Trust.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Transferor. The Transferor will use such proceeds to purchase Receivables from
WOFCO and, if necessary, to make deposits into the Excess Funding Account. A
portion of the proceeds may be used by the Transferor to purchase the interests
in the Trust held by the holders of the Series 1996-1 Certificates.
THE DEALER FLOORPLAN FINANCING BUSINESS
The Receivables to be conveyed to the Trust by the Transferor result from
extensions of credit by WOFCO to Dealers, which extensions of credit are made by
WOFCO from time to time in the ordinary course of business pursuant to the
related Dealer Agreements to finance the purchase by the Dealers of new Toyotas
distributed by SET, new Vehicles from other manufacturers or used Vehicles. Used
Vehicles may be purchased by Dealers at auctions, from other dealers or directly
from vehicle owners.
WOFCO is the major wholesale financing source for Dealers in the SET
distribution network. Since 1981, WOFCO has increased its floor plan finance
penetration of such Dealers to approximately 53%. WOFCO services the Dealers
from its head office located in Deerfield Beach, Florida.
CREATION OF RECEIVABLES
WOFCO finances 100% of the wholesale price of new Vehicles. A Receivable is
created upon shipment from the SET port facility at Jacksonville, Florida or
from the facility located at Commerce, Georgia (both in the case of Toyotas) or
upon shipment to the Dealer (for other Vehicles). Generally, WOFCO finances 80%
of the then current NADA Value for used Vehicles (which must be under four years
old), except that, with respect to used Vehicles purchased by Dealers at
auctions approved by WOFCO or at Program Sales, WOFCO finances 100% of the
auction price of the Vehicle plus miscellaneous fees and expenses. "Program
Sales" are sales of Vehicles at auctions of certain current year rental cars
bought back by manufacturers. In addition, used Vehicles that come off-lease and
are refurbished by WOFCO under its new "Toyota Renewed" program will generally
be financed at 100% of the sale price from WOFCO to the Dealers. Used Vehicles
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represented approximately 15.5%, 13.5%, 8.7% and 6.3% of the aggregate dollar
amount of Receivables outstanding as of March 31, 1996 and December 31, 1995,
1994 and 1993, respectively.
CREDIT APPROVAL AND CREDIT GUIDELINES
WOFCO's wholesale floor plan and used car floor plan programs are
administered by its Commercial Operations Department. Prior to August 1991, the
Commercial Operations Department operated from the head office in Deerfield
Beach, Florida and WOFCO's nine branch offices. In an effort to improve customer
service and overall profitability, WOFCO consolidated the Commercial Operations
Department in Deerfield Beach, and, since August 1991, all administration of the
wholesale and used car floor plan programs has been performed there.
WOFCO provides floor plan financing to Dealers pursuant to pre-established
credit guidelines. WOFCO must approve each prospective Dealer before such Dealer
signs a set of floor plan financing agreements with WOFCO (each, a "Dealer
Agreement"). Each Dealer Agreement generally includes a security agreement, a
personal guaranty by the principal owner of the Dealer and, when necessary, an
intercreditor agreement (described below). The collateral subject to the
security agreement generally consists of the Vehicles; all inventory, equipment
and other property of the Dealer, including parts inventory, furniture, fixtures
and tools; all additions, accessories and accessions; all intangibles,
instruments, chattel paper and accounts arising out of the sale or lease of the
foregoing; all substitutions, returned and repossessed items; and all proceeds
thereof (including insurance proceeds).
The Commercial Operations Department performs an analytical and
investigative review to evaluate the character and credit of the principal
owners of a prospective Dealer and to determine whether such Dealer's capital
structure is adequate to support the business. In conducting such a review,
representatives of the Commercial Operations Department will conduct interviews
with Dealer principals, check credit references, obtain dealership and personal
financial statements and review the business history of dealership management
and existing business plans.
The key process in approving a floor plan financing request is the
completion of a financial statement review of the prospective borrower. In many
cases, this review will be based on pro forma statements completed by the
prospective Dealer.
Because the financial data are generally comprised primarily of
projections, the review centers mainly on the financial strength and integrity
of the guarantors and their past history. In addition, the location of the
particular dealership is analyzed. The main thrust of this analysis relates to
the market area and the potential for Vehicle sales. A "Dealer Market Analysis
Report" is employed to determine the potential for sales within the particular
marketplace. State vehicle registration data is used in the analysis of a
Dealer's primary market area to help determine the retail penetration ability of
a new Dealer. Dealers who sell Toyotas generally sign a release letter which
enables SET to provide WOFCO access to its files on such Dealers and financial
database. The database provides a wide array of financial information and trend
analysis. Subsequently, a "Forecast of Operations" is completed to verify the
pro forma statement and project the Dealer's profitability during the first year
of operation.
When a Dealer requests a floor plan financing program, WOFCO conducts a
search of the appropriate records of the filing office or offices to determine
if there are other creditors of the Dealer with current UCC filings. Prior
filings are given particular attention by WOFCO management, especially if they
relate to Vehicles or if the wording is broad enough to indicate a possible
conflict with WOFCO's security interest. In such instances, WOFCO works together
with the particular Dealer to eliminate any such conflicts, including executing
an intercreditor agreement with any such other creditor and/or arranging for the
filing of amendments to any prior financing statements. WOFCO may approve such
Dealer's request for a floor plan financing program but will not advance any
funds to the Dealer until all conflicts are resolved.
If a prospective Dealer is approved by WOFCO, the Dealer and WOFCO enter
into a Dealer Agreement. The principal owner of the dealership is generally
required to guarantee the Dealer's obligations to WOFCO and to subordinate any
loans by such principal to the dealership to the Dealer's indebtedness to WOFCO.
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Pursuant to the Dealer Agreement, in order to secure all indebtedness of the
Dealer to WOFCO, the Dealer grants to WOFCO a first priority security interest
in its inventory of Vehicles and, in many cases, to other inventory (such as
parts and equipment) as well.
WOFCO is, in most cases, the exclusive source of floor plan financing for a
Dealer. When a Dealer has an additional source of such financing, the other
floor plan financier generally takes a security interest in collateral which
overlaps with WOFCO's. In such situations, WOFCO, will not advance funds until
it has entered into an intercreditor agreement with the other floor plan
financier in which each of WOFCO and such other financier subordinates its lien
on any Vehicle financed by the other party (and the proceeds thereof) to the
lien of the financing party.
Each Dealer is required by its Dealer Agreement to obtain physical damage
insurance covering all Vehicles, with the Servicer being named as an additional
loss payee. WOFCO arranges such insurance for some Dealers through a master
policy issued by St. Paul Fire and Marine Insurance Company ("St. Paul"). (St.
Paul is currently rated "A+XIV" by A.M. Best Company, Inc., a nationally
recognized insurance rating agency.) An affiliate of WOFCO handles claims
adjustments under these policies. As to Dealers who elect to make other coverage
arrangements, WOFCO's affiliate maintains a follow-up system, which includes
coverage verification, tracking of policy expiration dates, renewal follow-up
and verification that WOFCO is properly identified as a loss payee. As a matter
of practice, WOFCO does not, however, require that payments received under these
policies be paid to it so long as a Dealer is not "out of trust"; that is, the
Dealer sells a Vehicle and WOFCO determines that the Dealer has used the sale
proceeds thereof for its own separate purposes.
During the initial 90-day period after the signing of a Dealer Agreement,
WOFCO conducts monthly floor plan audits, verifying all Vehicles. At the end of
90 days, a complete "Financial Statement Review" is completed, and all Dealers
(other than Dealers with small, unaffiliated auction floorplanning Accounts) are
assigned to a risk classification based on four classes of risk. This risk
classification determines the floor plan audit frequency and is important in
setting the Dealer's credit limit. However, WOFCO does not adjust the interest
rates charged to Dealers on the basis of risk classification.
"Class I Dealers" are Dealers which are determined to be low risk due to
their stability and exceptional working capital, net worth, profits and good
audit results. "Class II Dealers" are Dealers which are determined to be of
moderate risk but which are not as stable as Class I Dealers, although they have
adequate working capital, net worth, profits and wholesale experience. "Class
III Dealers" are Dealers which are determined to have marginal working capital,
net worth and profits, and which may have experienced more than a normal amount
of audit violations. As of March 31, 1996, the number of Accounts designated by
WOFCO as Class I Dealers, Class II Dealers and Class III Dealers was 111, 40 and
8, respectively (47.6%, 17.2% and 3.4%, respectively, of the total number of
Dealers in the Wholesale Portfolio as of such date). As of March 31, 1996, the
percentage of Receivables in the Wholesale Portfolio arising in Accounts with
Class I Dealers, Class II Dealers and Class III Dealers was approximately 58.6%,
25.7% and 4.4%, respectively. Small Accounts and some affiliated Accounts are
not rated. The percentage of Receivables in the Wholesale Portfolio arising in
these 59 unrated Accounts was approximately 1.2%.
Dealers that are classified as being high-risk are designated by WOFCO as
"Class IV Dealers." Class IV Dealers generally include those Dealers with poor
audit histories, with used car credit lines and/or capital loans outstanding and
that have inadequate or negative working capital, net worth and profits. Class
IV Dealers also include those Dealers with respect to which a check has been
returned within the previous twelve months for reason of insufficient funds or
who have sold Vehicles out of trust, and are generally considered by WOFCO to be
problem Dealers, normally subject to a minimum of three dealer reviews by WOFCO
per year. As of March 31, 1996, the number of Accounts designated by WOFCO as
"Class IV Dealers" was 15 (approximately 6.4% of the total number of Dealers in
the Wholesale Portfolio as of such date). As of March 31, 1996, the percentage
of Receivables in the Wholesale Portfolio arising in Accounts with Class IV
Dealers was approximately 10.1%.
WOFCO establishes a base inventory guideline to provide floor plan
financing adequate for Dealer's normal Vehicle sales. Typically Dealers are
granted credit lines based on a 60-day sales rate for new Vehicles
26
<PAGE> 27
and a 30-day sales rate for used Vehicles. These credit lines are monitored on a
daily basis and adjustments are made upon appropriate credit approval.
If WOFCO determines that a specific Dealer's inventory is excessive, the
Dealer may be placed on "finance hold" status. In addition, a Dealer may be
placed on finance hold if the Dealer Agreement is violated, a check is returned
unpaid or a Dealer requests controlled Vehicle releases. In such circumstances,
WOFCO assumes control of Vehicle releases to the Dealer and specifically
approves such releases on a per unit basis. Dealers are also placed on finance
hold status if WOFCO determines that the Dealer has sold out of trust. Finance
hold status on a particular Dealer will remain until WOFCO deems such
circumstances to be remedied.
PAYMENT TERMS
Receivables related to new Vehicles are due on demand, but generally must
be paid upon the earlier of (a) generally one to ten days (averaging four days)
following the sale or other disposition of the Vehicle and (b) a fixed period
after the Vehicle's initial acquisition by the Dealer. Although Dealer
Agreements may vary as to the precise measurement of such fixed period,
generally the principal balance of the Receivable must be paid down 10% per
month beginning April 1 of the year following the model year of the underlying
Vehicle, and must be paid in full by the next October (unless the Vehicle is
refloored as a used Vehicle). Receivables in fleet sales with respect to certain
dealers who have a delayed payment privilege must generally be paid in full on
the earlier of (i) the 20th day after delivery to the end user or (ii) receipt
of payment from the end user.
Receivables relating to used Vehicles and Vehicles purchased at Program
Sales and under its Toyota Renewed program are generally stated to be due on
demand or on the earlier of the sale of the Vehicle or 90 days. WOFCO, in its
sole discretion, may generally grant one extension for a period of 30 days,
provided a principal payment of 10% of the unpaid principal balance is made by
the Dealer prior to such extension.
WOFCO charges interest monthly on Receivables secured by new Vehicles and
Vehicles purchased at Program Sales and under the Toyota Renewed program at an
annual rate generally ranging from the prime rate (as set by a designated bank)
to 1.75% over prime; Receivables secured by used Vehicles accrue interest at an
annual rate generally ranging from 0.75% under the designated bank's prime rate
to 2.25% over prime. Upon agreement with the Dealers, WOFCO may change the prime
rate mechanism or the applicable spread(s) in any manner.
From time to time, certain Dealers maintain funds with WOFCO under an
inventory cash escrow agreement, pursuant to which funds are held for cash
management, liquidity and working capital purposes. The Dealers can withdraw
these funds so long as the Dealer has not defaulted under its floorplan
agreements with WOFCO. Interest on the prepaid funds is offset against interest
due from the Dealer on the floorplan line. Funds deposited by Dealers with WOFCO
will be treated by WOFCO as Principal Collections of Receivables, and
withdrawals by Dealers will be treated by WOFCO as creating new Receivables.
BILLING AND COLLECTION PROCEDURES
A statement setting forth interest and other billing and account
information is prepared by WOFCO and distributed on a monthly basis to each
Dealer. Each Dealer's bills are generated on approximately the first or second
business day of the month, and payments are due on the tenth day of the month in
which they are billed. Interest is billed in arrears and Dealers remit payments
by check or electronic funds transfer.
The monthly statement itemizes each outstanding Receivable and details all
credits and debits applied to each Receivable during the period. Dealers are
required to remit principal payments on Receivables when due by check or
electronic funds transfer.
DEALER MONITORING
WOFCO produces a daily accounting of the balance outstanding under each
credit line, with all exposures above established credit lines requiring
approval by WOFCO's Commercial Operations Department
27
<PAGE> 28
on a daily basis. A monthly "Progress Report" is provided to WOFCO senior
management. This report is an all-inclusive summary of the monthly and ongoing
developments relating to Dealer credits. A review of all existing credit lines,
the "Financial Statement Review," is completed at least once a year and is not
limited to financial statement and ratio analysis, but is designed to provide a
composite of the entire operation as it relates to WOFCO. A UCC search is
conducted on an annual basis in conjunction with the formal review of the Dealer
to ensure that there are no conflicts with WOFCO's security interests.
During 1991, the Commercial Operations Department instituted a procedure
(the "Book Review") for verifying the validity of new Dealer financial
statements. It is WOFCO's intention to complete a Book Review with most new
Dealers. The process mirrors the Financial Statement Review, but includes an
actual review and verification of the Dealer's records. Upon completion, the
results are discussed with the Dealer principals and guarantors. Any
deficiencies are addressed and action plans implemented with a timetable for
resolution.
Wholesale floor plan audits are completed at least once per quarter at all
Dealers and in most cases monthly, based on the Dealer risk profile and the
prior audit experience of the Dealer. The audit includes a physical verification
of every floor planned Vehicle and, if a Vehicle cannot be located, the related
manufacturer's statement of origin or title.
WOFCO's extensive Dealer monitoring process is designed to detect the
earliest possible indication of a problem. The daily reporting of Dealer
exposures and Dealer remittances is intended to provide the Commercial
Operations Department with early warning signs of potential problems.
If the results of the Dealer monitoring process show that a particular
Dealer is suffering financial difficulties, WOFCO's Commercial Operations
Department will closely monitor the Dealer while working with the Dealer to
improve its financial condition. Floor plan audit frequency may be increased and
a Book Review may be performed with the results being discussed with the Dealer
and principals or guarantors. All operating trends will be reviewed including
the Dealer's cash and net working capital position. Finally, a meeting may be
held between WOFCO and the Dealer resulting in the implementation of a plan of
action and a corresponding timetable in which the plan is to be completed. These
risk management procedures could also be activated in the event a routine audit
reveals a shortage in a Dealer's Vehicle inventory, a Dealer check is returned
for which there are insufficient funds or a Dealer specifically requests
assistance. Dealers who demonstrate these or other problems may be placed on
finance hold, which would result in approval on a per unit basis or
cash-on-delivery terms. WOFCO also works to protect the dealership by providing
auditing advice, cash flow management and credit relationship assistance in
order to maintain the value of the dealership as an ongoing entity. However,
further deterioration may result in the transfer of Vehicle inventory to the
distributor or foreclosure. The Wholesale Portfolio (and those Receivables
arising therein which are transferred to the Trust) may from time to time
include Receivables arising in Accounts with Dealers which were previously
placed by WOFCO on finance hold or which were otherwise non-performing for a
period of time.
If WOFCO's review reveals that a Dealer has diverted proceeds from Vehicle
sales due to WOFCO to other uses, the Commercial Operations Department suspends
the Dealer's credit lines and sends a demand for payment of the delinquent
obligation. SET and the Dealer's non-Toyota manufacturers will be informed by
WOFCO of the change in status. Cash-on-delivery terms may be approved depending
on the severity of the situation. At this point a demand may also be made on the
guarantor(s).
If after exhausting all possible options, the Dealer is unable to pay
amounts owed to WOFCO, WOFCO may terminate the Dealer Agreement in accordance
with its terms and applicable state law. Generally, in such circumstances the
Dealer's new Vehicle inventory will be resold to SET or to the manufacturer,
which generally pays the repurchase price to WOFCO for credit against the
aggregate amount of outstanding Receivables owed by the Dealer to WOFCO. If the
Dealer resists termination, WOFCO will declare the Dealer in default of its
obligations, demand payment in full of its Dealer Note and all Receivables
created thereunder and foreclose on its collateral by taking possession of the
Dealer's Vehicle inventory (and any other Collateral Security) or, if necessary,
obtaining a court order requiring foreclosure. Used Vehicles are auctioned off
to the highest bidder. All proceeds are applied against the relevant Dealer
liabilities. WOFCO will generally pursue any remaining shortfalls from the
Dealer's guarantors. Once WOFCO has commenced
28
<PAGE> 29
liquidation, it writes off any amounts it determines are uncollectible. During
the course of a liquidation, WOFCO may recognize additional losses or
recoveries.
INTERCREDITOR AGREEMENT IN RESPECT OF SECURITY INTERESTS IN VEHICLES AND
NON-VEHICLE COLLATERAL SECURITY
As stated above, the agreements constituting the financing arrangements,
including the Accounts, provide for a security interest in the Vehicles in favor
of WOFCO, which security interest WOFCO represents is a first priority security
interest. The security interests in the Vehicles in favor of WOFCO have been
assigned by WOFCO to the Transferor pursuant to the Receivables Purchase
Agreement and then by the Transferor to the Trust pursuant to the Pooling and
Servicing Agreement. In its other lending activities, WOFCO may have made
capital loans, real estate loans or other advances to Dealers that are also
secured by a security interest in the Vehicles. In such instances, WOFCO has
agreed in the Receivables Purchase Agreement not to assert any such security
interest in any Vehicle until the Trust shall have been paid in full in respect
of the Receivables secured by the Trust's security interest in such Vehicle. In
addition, in connection with such other loans or advances made by WOFCO to a
Dealer, WOFCO may also have a security interest in Collateral Security other
than a Vehicle, such as personal guarantees ("Non-Vehicle Collateral Security"),
if any, securing the Receivables of such Dealer. In such cases, WOFCO, in its
sole discretion, may realize on the Non-Vehicle Collateral Security for its own
benefit in respect of such loans or advances before the Trust is permitted to
realize upon such Non-Vehicle Collateral Security. Because of the subordinate
position of the Trust in respect of Non-Vehicle Collateral Security, there is no
assurance that the Trust will realize any proceeds in respect of any Non-Vehicle
Collateral Security.
RELATIONSHIP WITH SET AND OTHER AFFILIATES
Under an agreement between SET and each SET-franchised dealer, SET commits
to repurchase unsold new Vehicles in inventory upon expiration or termination of
a dealership agreement (other than approved sales of businesses), at such
Vehicles' wholesale prices less prior refunds and allowances. SET only
repurchases current year Toyota models that are new, undamaged and unused. SET
also agrees to repurchase from dealers, at the same time, parts inventory at
comparable invoice prices. All of such assistance, however, is provided by SET
for the benefit of its dealers, and does not relieve such dealers of any of
their obligations to WOFCO. Toyota U.S.A. also agrees with each dealer
franchised by SET that, in the event that SET is no longer a distributor for
Toyota U.S.A., the dealer will be franchised by Toyota U.S.A. or its designee
for any additional period in accordance with Toyota U.S.A.'s then-current dealer
agreements.
If SET is unable to provide such assistance, the loss experience of WOFCO
in respect of the Receivables may be adversely affected. In addition, because a
substantial number of the Vehicles sold by the Dealers are manufactured by
Toyota and distributed by SET, if Toyota were temporarily or permanently no
longer in the manufacturing business or were no longer distributing the Vehicles
in the United States, the rate of sales of Toyota-manufactured Vehicles would
decrease, adversely affecting payment rates and the loss experience of the
Receivables. See also "Risk Factors -- Trust's Relationship to WOFCO, SET and
other Affiliates."
In July 1995, WOFCO and its insurance and warranty affiliates instituted a
"SuperWRAPSM" program (the "SuperWRAP Program") to encourage Dealers who
floorplan vehicles with WOFCO to purchase other financial products sold by WOFCO
and those affiliates, and to remain competitive with other automotive finance
companies. Under the SuperWRAP Program, WOFCO and its affiliates pay
participating Dealers certain amounts based on a pricing matrix, which payments
are automatically assigned by the Dealers to WOFCO and applied by WOFCO to
reduce interest payments on the Receivables. The Dealers remain obligated to pay
the full interest payments on the Receivable in the event WOFCO or its
affiliates fail to make the SuperWRAP Program payments to the Dealers. All SET
Dealers who have floorplan accounts with WOFCO are eligible to participate under
the SuperWRAP Program. On average, approximately $203,917 and $211,604 in
payments were made by WOFCO and its affiliates to Dealers under the SuperWRAP
Program per month for the five months ended December 31, 1995 and the three
months ended March 31, 1996, respectively.
29
<PAGE> 30
THE ACCOUNTS
GENERAL
The Receivables arise in the Accounts. The Accounts have been selected from
all the accounts in WOFCO's portfolio or which have been previously sold by
WOFCO to WODFI and subsequently transferred by WODFI to the WODFI Dealer Note
Master Trust 1991 (which was terminated in 1994) that were Eligible Accounts at
the time of such selection (the "Wholesale Portfolio"). Commercial finance
receivables similar to the current Accounts which meet certain criteria set
forth in the Pooling and Servicing Agreement may be added to the Trust in the
future (the existing Accounts and such additional accounts, the "Eligible
Portfolio"). In order to be included in the Eligible Portfolio, each Account
must be an account established by WOFCO in the ordinary course of business and
meet certain other criteria provided in the Pooling and Servicing Agreement. See
"Description of the Certificates -- Representations and Warranties." Under
certain conditions primarily dependent upon changing market circumstances, WOFCO
may elect to modify the rates being charged Dealers under the floor plan
financing agreements. Although WOFCO has not materially changed other terms with
the Dealers, it may nonetheless make such changes that do not materially affect
Certificateholders to the extent that it determines such changes to be required
under prevailing market conditions.
Under the Pooling and Servicing Agreement, the Transferor has the right
and, in some circumstances, is obligated (subject to certain limitations and
conditions described above in "Risk Factors -- Existing Credit Arrangements") to
designate from time to time additional qualifying Accounts to be included as
Accounts and to sell to the Transferor (in the case of WOFCO) and to convey to
the Trust (in the case of the Transferor) the Receivables of such Additional
Accounts, including Receivables thereafter created. These accounts must meet the
eligibility criteria set forth above as of the date such accounts are designated
as Additional Accounts. WOFCO will sell the Receivables then existing, with
certain exceptions, or thereafter created under such Additional Accounts to the
Transferor, which will in turn convey them to the Trust. See "Description of the
Certificates -- Addition of Accounts." In addition, as of any Additional Cut-Off
Date in respect of Additional Accounts and the date any new Receivables are
generated, WOFCO will represent and warrant to the Transferor, and the
Transferor will represent and warrant to the Trust, that the Receivables meet
the eligibility requirements set forth in the Pooling and Servicing Agreement.
See "Description of the Certificates -- Conveyance of Receivables." Under
certain circumstances specified in the Pooling and Servicing Agreement, the
Transferor has the right to remove Accounts, and the Receivables arising
therefrom, from the Trust. See "Description of the Certificates -- Removal of
Accounts." Throughout the term of the Trust, the Accounts from which the
Receivables arise will be the same Accounts transferred by the Transferor on the
Closing Date plus any Additional Accounts, minus any Accounts removed from the
Trust.
As of March 31, 1996, with respect to the Accounts included in the
Wholesale Portfolio: (a) there were 89 active SET Dealer Accounts, 90 active
non-SET Dealer Accounts, and 54 active small, unaffiliated auction floorplanning
Accounts, with an aggregate Principal Receivables balance of approximately
$450.5 million; (b) the average credit line per Account was $3.31 million; (c)
the average balance of Principal Receivables per Account was $1.93 million; (d)
the aggregate total Principal Receivables balance as a percentage of the
aggregate total credit line was approximately 58%; and (e) the weighted average
spread over the prime rate charged to Dealers was 0.38%. There can be no
assurance that the experience of the Accounts set forth in the tables below
under " -- Loss Experience," " -- Aging Experience," " -- Geographic
Distribution" and " -- Dealer Concentration" in the future will be similar to
the historical experience set forth below.
Because the Accounts from which Receivables have been transferred to the
Trust on and after the Initial Closing Date are only a portion of the Wholesale
Portfolio, actual experience with respect to such Accounts may have been
different from that of the Wholesale Portfolio. Because such Accounts have been
selected from the Wholesale Portfolio in a manner not adverse to
Certificateholders and represent a sizeable portion of the Wholesale Portfolio,
the Transferor believes that the performance of the Wholesale Portfolio
reflected in the following tables is indicative of the historical performance of
the Accounts which have been transferred to the Trust. Historical loss
experience, aging experience and geographic distribution with respect to the
Accounts being transferred to the Trust may be different from that of the
Wholesale Portfolio in the future.
30
<PAGE> 31
LOSS EXPERIENCE
The following tables set forth WOFCO's average principal receivables
balance and loss experience for each of the periods shown with respect to the
Wholesale Portfolio. Losses occur on Receivables when a Dealer has been
terminated under circumstances in which the Dealer has sold one or more Vehicles
to a retail customer and has failed to remit the appropriate proceeds of such
sale to WOFCO. Losses also occur when used Vehicles financed at wholesale and
repossessed by WOFCO from a terminated Dealer cannot be sold for the balance due
on the related Receivables. By contrast, losses generally have not occurred when
new Vehicles financed by WOFCO are repossessed from terminated Dealers, because
such new Vehicles will generally be returned to SET or other manufacturers or
distributors for a purchase price which generally covers the balance due on the
related Receivables. WOFCO recognizes losses on Receivables at the time it deems
such Receivables to be uncollectible (which is generally at the time it has
exhausted all non-legal remedies). Because the Eligible Accounts may be only a
portion of the entire portfolio, actual loss experience with respect to the
Eligible Accounts may be different.
As shown in the table below, WOFCO's loss experience has been generally low
during the past five years. Losses were slightly higher in 1991 due primarily to
a general weakening of the economy in the late 1980's and a general delay
between the time a loss originally occurs and the time legal and economic issues
surrounding a Dealer charge-off are resolved. Since 1991, management has
centralized monitoring of the receivables and instituted tighter controls,
resulting in an improvement in the quality of the overall portfolio. There have
been no losses to the portfolio since October 1, 1993.
There can be no assurance that the loss experience for the Receivables in
the future will be similar to the historical experience set forth below with
respect to the Wholesale Portfolio. In addition, a significant portion of the
Receivables are from SET-franchised dealers. The historical experience set forth
below reflects financial assistance provided by SET in certain limited
instances, to SET-franchised dealers as described above under "The Dealer
Floorplan Financing Business -- Relationship with SET and other Affiliates." If
SET is not able to provide such assistance in the future, the loss experience in
respect of the receivable portfolio may be adversely affected. See "Risk
Factors -- Trust's Relationship to WOFCO, SET and other Affiliates."
LOSS EXPERIENCE FOR THE WHOLESALE PORTFOLIO(1)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- ----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Principal Receivables
Balance(2)..................... $409.7 $367.1 $391.9 $339.4 $271.9 $170.9 $161.4
Net Losses (Recoveries)(3)....... $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.3 $ 0.1 $ 0.7
Net Losses/Average Principal
Receivables Balance(4)......... 0.00% 0.00% 0.00% 0.00% 0.11% 0.06% 0.43%
</TABLE>
- ---------------
(1) Figures include approximately $5.7 million in Receivables as of March 31,
1996 that were not transferred to the Trust on the Initial Closing Date or
thereafter. WOFCO has no reason to believe that the performance of the
Receivables included in the Accounts transferred to the Trust on and after
the Initial Closing Date is materially different from the performance of the
Receivables in the Wholesale Portfolio for the periods presented in the
table.
(2) Average Principal Receivables Balance is the average of the monthly average
principal balances (based on beginning and ending month balances) for the
twelve months ending on the last day of the period, except for the periods
ended March 31, 1996 and March 31, 1995, each of which is based on a three
month average.
(3) Net losses in any period are gross losses less recoveries for such period.
Recoveries include recoveries from Collateral Security in addition to the
Vehicle. Losses do not include losses with respect to certain Accounts
guaranteed by SET.
(4) Percentages for the three month periods ended March 31, 1996 and March 31,
1995 are expressed on an annualized basis.
31
<PAGE> 32
AGING EXPERIENCE
The following table provides the age distribution of Vehicle inventory for
all Dealers in the Wholesale Portfolio, as a percentage of total principal
outstanding at the date indicated. Because the Eligible Accounts may only be a
portion of the entire Wholesale Portfolio, actual age distribution with respect
to the Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE WHOLESALE PORTFOLIO(1)
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL PRINCIPAL
OUTSTANDING AS OF MARCH 31,
DAYS 1996
---------------------------------------------- -----------------------------
<S> <C>
1-120......................................... 88.41%
121-180....................................... 7.39
181-270....................................... 2.83
Over 270...................................... 1.37
-------
100.00%
-------
</TABLE>
- ---------------
(1) Measured from the date of advance. Excludes approximately $5.7 million of
Receivables that were not transferred to the Trust on the Initial Closing
Date or thereafter.
The average payoff rate in the Wholesale Portfolio is described under
"Maturity and Principal Payment Considerations."
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the Vehicle
inventory for all Dealers in the Trust on the basis of receivables outstanding
and the number of Dealers generating such portfolio. As of March 31, 1996,
approximately 40.73% of Receivables in the Wholesale Portfolio arose in the
State of Florida. For the past several years, the State of Florida has
experienced a significant growth in population and of segments of the population
that are inclined toward purchasing new and used automobiles such as the
Vehicles. No assurance can be given, however, that such economic growth will
continue at such a rate in the future, or that the percentage of Receivables
arising in Florida will remain the same, and the Transferor is unable to
determine and has no basis to predict whether or to what extent economic factors
will affect Vehicle sales in Florida.
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE WHOLESALE PORTFOLIO
AS OF MARCH 31, 1996(1)
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES RECEIVABLES NUMBER OF PERCENTAGE OF
OUTSTANDING OUTSTANDING VEHICLES TOTAL VEHICLES
------------ ------------- --------- --------------
<S> <C> <C> <C> <C>
Florida.......................... $183,475,113 40.73% 10,784 41.81%
North Carolina................... 65,667,112 14.57 3,893 15.10
Georgia.......................... 64,078,638 14.22 3,648 14.15
Virginia......................... 34,412,048 7.64 1,848 7.17
Alabama.......................... 23,750,461 5.27 1,353 5.25
South Carolina................... 21,628,402 4.80 1,094 4.24
New York......................... 14,633,237 3.25 589 2.28
California....................... 13,538,986 3.01 759 2.94
Maryland......................... 11,838,281 2.63 635 2.46
Illinois......................... 10,577,607 2.35 535 2.07
Other............................ 6,899,259 1.53 652 2.53
------------ ------------- --------- -------
Total....................... $450,499,144 100.00% 25,790 100.00%
</TABLE>
- ---------------
(1) Includes approximately $4.7 million of Receivables located in Florida and
$1.0 million of Receivables located in New York that were not transferred to
the Trust on the Initial Closing Date or thereafter.
32
<PAGE> 33
DEALER CONCENTRATION
The following table provides information with respect to the concentration
of Receivables relating to certain Dealers as of March 31, 1996. The Accounts
described below (identified by Dealer group code, which includes each Dealer and
its affiliates under common ownership and control) constitute all Accounts with
at least 2% or more of the outstanding Wholesale Portfolio as of March 31, 1996.
DEALER CONCENTRATION FOR THE WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
------------------------------------
RECEIVABLES PERCENTAGE OF TOTAL
DEALER GROUP CODE(1) OUTSTANDING RECEIVABLES(2)
----------------------------------------- ----------- --------------------
<S> <C> <C>
01....................................... $43,274,627 9.73%
12....................................... 18,729,772 4.21
33....................................... 14,936,205 3.36
86....................................... 11,493,015 2.58
28....................................... 11,282,005 2.54
29....................................... 11,208,763 2.52
85....................................... 10,365,662 2.33
63....................................... 10,021,490 2.25
17....................................... 9,869,657 2.22
82....................................... 9,493,142 2.13
</TABLE>
- ---------------
(1) Combines affiliated dealers.
(2) Total Receivables excludes approximately $5.7 million of Receivables that
were not transferred to the Trust on the Initial Closing Date or thereafter.
THE SERVICER
World Omni Financial Corp. ("WOFCO" or the "Servicer"), is a Florida
corporation and a subsidiary of JM Family Enterprises, Inc. ("JMFE"), a Delaware
corporation which is primarily engaged through its subsidiaries in providing
Toyota dealerships in the five-state southeast region of the United States
(Florida, Alabama, Georgia, North Carolina and South Carolina (the "Five-State
Area")) with a full range of distribution and financial services. WOFCO provides
wholesale floorplan financing, capital loans and retail motor vehicle leasing
and installment financing loans, primarily to dealers franchised by Southeast
Toyota Distributors, Inc. ("SET") and their customers. SET is the exclusive
distributor of Toyota cars and light duty trucks, parts and accessories through
approximately 165 dealers in the Five State Area. As of March 31, 1996, WOFCO
serviced approximately $5.5 billion of receivables. The principal executive
offices of WOFCO are located at 120 N.W. 12th Avenue, Deerfield Beach, Florida
33442 and its telephone number is (954) 429-2200.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal with respect to the Certificates will not be payable until the
October 1999 Distribution Date (the "Expected Final Payment Date"), unless an
Early Amortization Event or an Asset Composition Event has occurred. Upon the
occurrence of an Early Amortization Event, no assurance can be given that WOFCO
will continue to generate Receivables in an amount sufficient to pay on a timely
basis the principal amount of and accrued interest due and owing on the
Certificates. Full amortization of the Certificates by the Expected Final
Payment Date will depend primarily upon repayment by Dealers of the Receivables
and may not occur if Dealer payments are insufficient therefor. Because the
Receivables generally are paid upon retail sale of the
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<PAGE> 34
underlying Vehicle, the timing of such payments is uncertain. In addition, there
is no assurance that WOFCO will generate additional Receivables under the
Accounts or that any particular pattern of Dealer payments will occur. See
"Description of the Certificates -- Interest and Principal" and "The Dealer
Floorplan Financing Business."
The amount of new Receivables generated in any month and monthly payment
rates on the Receivables may vary because of seasonal variations in Vehicle
sales and inventory levels, retail incentive programs provided by Vehicle
manufacturers and various economic factors affecting Vehicle sales generally.
The following table sets forth the highest and lowest monthly payment rates for
the Wholesale Portfolio during any month in the periods shown and the average of
the monthly payment rates for all months during the periods shown, in each case
calculated as the percentage equivalent of a fraction, the numerator of which is
the aggregate of all collections of principal during the period and the
denominator of which is the average aggregate principal balance for such period.
Monthly payment rates have been high over the past few years, showing the
general seasonal variation due to manufacturing model year changeovers and model
introductions. Payment rates in 1992 were slightly higher than in other years
due to an unusually low inventory caused in part by delays in the expansion of
manufacturing capacity.
There can be no assurance that the rate of Principal Collections will be
similar to the historical experience set forth below. No assurance can be given
that the payment rates with respect to the Eligible Accounts will be similar to
the historical experience set forth below.
MONTHLY PAYMENT RATES FOR THE WHOLESALE PORTFOLIO RECEIVABLES(1)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ---------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month..................... 65.90% 60.29% 61.60% 70.81% 79.19% 77.73% 77.34%
Lowest Month...................... 56.16 49.03 45.85 46.28 48.80 55.78 40.50
Average of the Months in the
Period.......................... 60.36 54.91 54.82 58.76 59.09 66.59 59.49
</TABLE>
- ---------------
(1) Figures include approximately $5.7 million in Receivables that were not
transferred to the Trust on the Initial Closing Date or thereafter. WOFCO
has no reason to believe that the monthly payment rates of Receivables
included in the Accounts which have been transferred to the Trust on or
after the Initial Closing Date are materially different from the monthly
payment rates of the Receivables in the Wholesale Portfolio for the periods
presented in the table.
Because an Early Amortization Event (which would initiate an Early
Amortization Period) or an Asset Composition Event may occur, the principal of
the Certificates may be paid in full or in part prior to the scheduled
termination of the Revolving Period or prior to the Expected Final Payment Date.
See "Description of the Certificates -- Early Amortization Events" and
" -- Asset Composition Event."
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to a Master Pooling and Servicing
Agreement, dated as of October 1, 1994, as supplemented by the Supplement
relating to the Certificates (as so supplemented or amended from time to time,
the "Pooling and Servicing Agreement"), among WODFI, as Transferor of the
Receivables, WOFCO, as Servicer of the Receivables, and the Trustee,
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Trustee will make available for inspection
a copy of the Pooling and Servicing Agreement (without exhibits or schedules) to
Certificateholders on written request. The following summary describes certain
terms of the Pooling and Servicing Agreement, does not purport to be complete
and is qualified in its entirety by reference to the Pooling and Servicing
Agreement.
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<PAGE> 35
The Certificates will evidence undivided beneficial interests in the assets
of the Trust representing the right to receive from the portion of such Trust
assets allocated to the Certificateholders' Interest funds up to (but not in
excess of) the amounts required to make payments of interest on and principal of
the Certificates pursuant to the Pooling and Servicing Agreement.
Each Class of Certificates will initially be represented by one or more
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the Transferor, the "Depository"), except as
set forth below. Each Class of Certificates will be available for purchase in
minimum denominations of $1,000 and integral multiples thereof in book-entry
form. Each $1,000 principal amount of the Class A Certificates and the Class B
Certificates will represent 1/167,500 and 1/7,500, respectively, of the
Certificateholders' Interest. The Transferor has been informed by DTC that DTC's
nominee will be Cede & Co. ("Cede"). Accordingly, Cede is expected to be the
holder of record of the Certificates. No Certificate Owner will be entitled to
receive a certificate representing such person's beneficial interest in its
Class of Certificates, except in the event Definitive Certificates are issued
under the limited circumstances described herein. Unless and until Definitive
Certificates are issued, all references herein to actions by Certificateholders
shall refer to actions taken by DTC upon instructions from its Direct
Participants (as defined below), and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, reports and statements to DTC or Cede, as the registered holder
of the Certificates. See "-- Book-Entry Registration" and "-- Definitive
Certificates."
INTEREST
Interest on the principal balance of the Class A Certificates will accrue
at a per annum rate (the "Class A Certificate Rate") equal to One-Month LIBOR
plus 14 basis points (0.14%) (the "Class A LIBOR Rate"), and interest on the
principal balance of the Class B Certificates will accrue at a per annum rate
(the "Class B Certificate Rate") equal to One-Month LIBOR plus 27 basis points
(0.27%) (the "Class B LIBOR Rate"); provided that, on any Distribution Date, if
the weighted average of the Class A LIBOR Rate and the Class B LIBOR Rate is
greater than the Asset Receivables Rate, then the Class A Certificate Rate and
the Class B Certificate Rate for such Distribution Date will be the Asset
Receivables Rate.
Interest at the Certificate Rate will be payable to the Certificateholders
on each Distribution Date, commencing in May 1996. Interest due on a
Distribution Date will accrue from and including the preceding Distribution Date
(or, in the case of the first Distribution Date, from and including the Closing
Date) to but excluding such Distribution Date. Interest due for any Distribution
Date will be calculated on the basis of the actual number of days elapsed during
the related Interest Period and a year assumed to consist of 360 days and
interest due but not paid on any Distribution Date will be due on the next
Distribution Date, together with, to the extent lawfully payable, interest on
such amount at the Class A Certificate Rate or the Class B Certificate Rate, as
applicable, plus 200 basis points (2.00%). Interest payments on the Certificates
at the Certificate Rate will be derived from Certificateholder Interest
Collections for a Collection Period, withdrawals, if any, from the Reserve Fund,
Investment Proceeds, if any, and, under certain circumstances, Available
Transferor Collections to the extent of the Available Subordinated Amount.
The "Asset Receivables Rate" for any Interest Period shall equal the
product of (a) the quotient obtained by dividing (i) 360 by (ii) the actual
number of days elapsed in such Interest Period and (b) a percentage, expressed
as a fraction, (i) the numerator of which is the sum of (A) the Floating
Allocation Percentage of Interest Collections allocable to the Regular Pool for
the latest Collection Period ending prior to the last day of such Interest
Period (which for their purpose only is based on interest amounts billed to the
Dealers which are due during such Collection Period) less, unless waived by the
Servicer, the Monthly Servicing Fee with respect to such immediately preceding
Collection Period and (B) the Investment Proceeds to be applied on the
Distribution Date related to such Interest Period and (ii) the denominator of
which is the sum of (A) the product of the Floating Allocation Percentage and
the average Regular Pool Balance (after giving effect to any Investor
Charge-Offs, and including Ineligible Receivables and certain excess
receivables) for such immediately preceding Collection Period and (B) the Series
1996-2 portion of the average principal balance of funds on deposit in the
Excess Funding Account for such Collection Period. If for any Interest Period,
the weighted average of the Class A LIBOR Rate and the Class B LIBOR Rate
exceeds the Asset
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<PAGE> 36
Receivables Rate, funds available as provided herein after making all required
distributions and deposits with respect to each Class of Certificates, including
payments with respect to principal (including payments to the Excess Funding
Account), Class A Monthly Interest and Class B Monthly Interest, the Monthly
Servicing Fee, the Reserve Fund Deposit Amount, the Investor Default Amount and
the unreimbursed Monthly Dilution Amount, will be used to pay the Shortfall
Amount. If the Servicer determines that such amounts will not be sufficient to
pay the Shortfall Amount on the related Distribution Date, the Servicer shall
notify the Transferor, and the Transferor will be obligated to deposit an amount
sufficient to pay such Shortfall Amount in the Collection Account on the day
preceding the related Distribution Date for payment to Certificateholders. Under
certain circumstances specified in the Pooling and Servicing Agreement, failure
by the Transferor to pay any Shortfall Amount or any Carry-Over Amount may
result in an Early Amortization Event.
In the event that the Transferor fails to pay a Shortfall Amount on any
Distribution Date, interest shall accrue on such Shortfall Amount and shall be
payable, together with interest thereon at the applicable Certificate Rate plus
2% (such Shortfall Amount plus such interest thereon, a "Carry-Over Amount"), on
the next succeeding Distribution Date in the same manner as a Shortfall Amount.
At such time as (i) the Invested Amount of the Certificates is zero and all
interest due and owing on the Certificates has been paid in full and (ii) any
accrued and unpaid Carry-Over Amount exists at such time, then, in such event,
Available Transferor Collections will be applied by the Servicer to the extent
of the Available Subordinated Amount to pay any such accrued and unpaid
Carry-Over Amount.
"Interest Period" shall mean with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
One-Month LIBOR will be calculated on each Interest Determination Date in
the following manner. Two London Business Days (as defined below) preceding the
first day of an Interest Period (or two business days preceding the Closing
Date, in the case of the first Interest Period) (each, an "Interest
Determination Date"), WOFCO, as Servicer, will ascertain the One-Month LIBOR
Rate, which rate will be confirmed by Fleet National Bank (the "Reference
Agent"), as agent for the Trust. The One-Month LIBOR Rate shall be the rate for
deposits in U.S. dollars having a one-month maturity which appears on the
Telerate Page 3750 as of 11:00 A.M., London time, on such Interest Determination
Date. "Telerate Page 3750" means the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service or
such other service or services as may be nominated by the British Banker's
Association for the purpose of displaying London interbank offered rates for
U.S. dollar deposits).
With respect to an Interest Determination Date for which the One-Month
LIBOR Rate does not appear on the Telerate Page 3750, the One-Month LIBOR Rate
will be determined on the basis of the rates at which deposits in U.S. dollars
are offered by four major banks in the London interbank market selected by the
Reference Agent (the "Reference Banks") at approximately 11:00 A.M., London
time, on such Interest Determination Date to prime banks in the London interbank
market, commencing on the second London Business Day immediately following such
Interest Determination Date and having a one-month maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time. "London
Business Day" shall mean any business day on which dealings in deposits in
United States dollars are transacted in the London interbank market. The
Reference Agent will request the principal London office of each such Reference
Bank to provide a quotation of its rate, and the Reference Agent will confirm
each such rate quoted by the Reference Banks. If at least two such quotations
are provided, the One-Month LIBOR Rate on such Interest Determination Date will
be the arithmetic mean (rounded upward, if necessary, to the nearest five
decimal points) of such quotations. If fewer than two quotations are provided,
the One-Month LIBOR Rate on such Interest Determination Date will be the
arithmetic mean (rounded upward, if necessary, to the nearest five decimal
points) of the rates quoted by three major banks in New York City selected by
the Reference Agent at approximately 11:00 A.M., New York City time, on such
Interest Determination Date for loans in U.S. dollars to leading European banks,
commencing on the second London Business Day immediately following such Interest
Determination Date and having a one-month maturity and in a principal amount
equal to an amount of not less than U.S.
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<PAGE> 37
$1,000,000 that is representative for a single transaction in such market at
such time; provided, however, that if the banks in New York City selected as
aforesaid by the Reference Agent are not quoting as mentioned in this sentence,
the Class A Certificate Rate and the Class B Certificate Rate will be the Class
A Certificate Rate and the Class B Certificate Rate in effect on the day
immediately preceding such Interest Determination Date.
The establishment of One-Month LIBOR on each Interest Determination Date by
the Reference Agent and its calculation of the applicable rate of interest for
the Certificates for the related Interest Period shall (in the absence of
manifest error) be final and binding.
PRINCIPAL
In general, no principal payments will be made to the Certificateholders
until the Expected Final Payment Date or, upon the occurrence of an Early
Amortization Event, as described herein, until the first Distribution Date
following such event or as necessary upon the occurrence of an Asset Composition
Event. No principal payments will be made to the Class B Certificateholders
until the final principal payment with respect to the Class A Certificateholders
has been made. During the Revolving Period, collections of Principal Receivables
allocable to the Certificateholders' Interest, subject to certain limitations,
will either be (a) to the extent not retained by the Transferor, allocated to
the Excess Funding Account as described herein, (b) allocated to one or more
Series or Purchased Interests which are in amortization, early amortization or
accumulation periods to cover principal payments due to the investor
certificateholders or Purchasers of any such Series or Purchased Interest or
which provide for excess funding accounts or similar arrangements or (c) if no
such Series or Purchased Interest is then amortizing or accumulating principal
or otherwise does not provide for excess funding accounts or similar
arrangements, paid to the Transferor or held as Unallocated Principal
Collections. See "-- Allocation Percentages -- Principal Collections" and
"-- Distributions from the Collection Account; Reserve Fund -- Principal
Collections."
Unless and until an Early Amortization Event shall have occurred and until
the outstanding principal balance of the Certificates is paid in full, on each
Distribution Date with respect to the Accumulation Period, collections of
Principal Receivables allocable to the Certificateholders' Interest plus certain
other amounts comprising Monthly Principal will no longer be applied entirely
for the benefit of another Series or Purchased Interest or to the Transferor as
described above but instead an amount thereof up to the Controlled Distribution
Amount for each such Distribution Date will be deposited in the Principal
Funding Account. The funds on deposit in the Principal Funding Account
(including any amounts deposited therein from the Excess Funding Account) will
be used to pay first the Class A Principal Amount on the Expected Final Payment
Date and then, to the extent funds are available, the outstanding balance of the
Class B Certificates. If, on the Expected Final Payment Date, the amount in the
Principal Funding Account is less than the outstanding principal balance of the
Certificates, the amounts in such accounts will nevertheless be distributed on
such date first to Class A Certificateholders and then, to the extent funds are
available after Class A Certificateholders are paid, the Class B
Certificateholders, the Early Amortization Period will commence and, on each
Special Payment Date thereafter, the Class A Certificateholders will receive
distributions of Class A Monthly Principal and Class A Monthly Interest until
the Class A Principal Amount has been paid in full or the Termination Date has
occurred. Following payment in full of all Class A Monthly Principal and Class A
Monthly Interest, respectively, the Class B Certificateholders will receive
distributions of Class B Monthly Principal and Class B Monthly Interest,
respectively, until the Class B Principal Amount has been paid in full or the
Termination Date has occurred.
It is expected that the final principal payment with respect to the
Certificates will be made on the Expected Final Payment Date, but the principal
of the Certificates may be paid earlier or, depending on the actual payment rate
on the Receivables, later, as described under "Risk Factors -- Payments;
Delays." If the Receivables are sold or reassigned to the Transferor as
described below, principal payments on the Certificates will be made on the
Distribution Date following such sale or repurchase. See "-- Allocation
Percentages -- Principal Collections" and "-- Distributions from the Collection
Account; Reserve Fund -- Principal Collections."
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<PAGE> 38
Distributions on the Certificates will be made on each Distribution Date to
the holders of Certificates in whose names the Certificates were registered
(expected to be Cede, as nominee of DTC) at the close of business on the day
preceding such Distribution Date (or, if Definitive Certificates are issued, on
the last day of the preceding calendar month) (each a "Record Date"). However,
the final distribution on the Certificates will be made only upon presentation
and surrender of the Certificates. Distributions will be made to DTC in
immediately available funds.
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Direct Participants")
and facilitate the clearance and settlement of securities transactions between
Direct Participants through electronic book-entry changes in their accounts,
thereby eliminating the need for physical movements of certificates. Direct
Participants include the Underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants").
Certificateholders that are not Direct Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Certificates may do so only through Direct Participants and
Indirect Participants. In addition, Certificateholders will receive all
distributions of principal of and interest on the Certificates from the Trustee
through DTC and its Direct Participants and Indirect Participants. Under a
book-entry format, Certificateholders will receive payments after the related
Distribution Date because, while payments are required to be forwarded to Cede,
as nominee for DTC, on each such date, DTC will forward such payments to its
Direct Participants which thereafter will be required to forward them to
Indirect Participants or Certificateholders. It is anticipated that the only
Class A Certificateholder or Class B Certificateholder (as such term is used in
the Pooling and Servicing Agreement) will be Cede, as nominee of DTC, and that
Certificate Owners will not be recognized by the Trustee as Certificateholders
under the Pooling and Servicing Agreement. Certificate Owners will only be
permitted to exercise the rights of a Certificateholder under the Pooling and
Servicing Agreement indirectly through DTC and its Direct Participants (who in
turn will exercise their rights through DTC).
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Certificateholders will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Direct
Participants on whose behalf it acts with respect to the Certificates and is
required to receive and transmit distributions of principal of, and interest on,
the Certificates. Direct Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Certificates similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Certificate Owners.
Because DTC can only act on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Certificates, may be limited due to the lack of a physical certificate for such
Class of Certificates.
Neither DTC or Cede will comment or vote with respect to the Certificates.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Certificateholder under the Pooling and Servicing Agreement only at
the direction of one or more Direct Participants to whose accounts with DTC the
Certificates are credited. Additionally, DTC has advised the Transferor that to
the extent that the Pooling and Servicing Agreement requires that any action may
be taken only by holders of Certificates representing a
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<PAGE> 39
specified percentage of the aggregate outstanding principal amount thereof, DTC
will take such action only at the direction of and on behalf of Direct
Participants whose holdings include undivided interests that satisfy such
specified percentage. Under its usual procedures, DTC will mail an "Omnibus
Proxy" to the Trustee as soon as possible after any applicable record date with
respect to a consent or vote. The Omnibus Proxy will assign Cede's consenting or
voting rights to those Direct Participants to whose accounts the Certificates
will be credited on that record date (identified on a listing attached to the
Omnibus Proxy).
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of Certificates among participants of DTC, it is under no obligation
to perform or continue to perform such procedures and such procedures may be
discontinued at any time.
DEFINITIVE CERTIFICATES
The Class A Certificates and Class B Certificates will be issued in fully
registered, certificated form to Class A Certificate Owners and Class B
Certificate Owners, respectively, or their nominees ("Definitive Certificates"),
rather than to DTC or its nominee, only if (i) the Transferor advises the
Trustee in writing that DTC is no longer willing or able to discharge its
responsibilities as Depository with respect to a Class of Certificates properly
and the Transferor is unable to locate a qualified successor, (ii) the
Transferor, at its option, elects to terminate the book-entry system through
DTC, or (iii) after the occurrence of a Servicer Default, Certificateholders of
a Class representing not less than 51% of the aggregate unpaid principal amount
of the Certificates of such Class advise the Trustee and DTC through Direct
Participants in writing that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the best interests of such
Certificateholders.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Direct Participants of the
availability through DTC of Definitive Certificates for the Certificates. Upon
surrender by DTC of the certificate or certificates representing such
Certificates and instructions for re-registration, the Trustee will issue such
Certificates in the form of Definitive Certificates, and thereafter the Trustee
will recognize the holders of such Definitive Certificates as Certificateholders
under the Pooling and Servicing Agreement ("Holders"). In the event that
Definitive Certificates are issued or DTC ceases to be the clearing agency for
either Class of Certificates, the Pooling and Servicing Agreement provides that
the Certificateholders will be notified of such event.
Distributions of principal of, and interest on, the Certificates will be
made by the Trustee directly to Holders in accordance with the procedures set
forth herein and in the Pooling and Servicing Agreement. Distributions on each
Distribution Date will be made to Holders in whose names the Definitive
Certificates were registered at the close of business on the related Record
Date. Distributions will be made by check mailed to the address of such Holder
as it appears on the register maintained by the Trustee. The final distribution
on any Certificate (whether Definitive Certificates or the certificate or
certificates registered in the name of Cede representing the Certificates),
however, will be made only upon presentation and surrender of such Certificate
on the final payment date at such office or agency as is specified in the notice
of final distribution to Certificateholders. The Trustee will provide such
notice to registered Class A Certificateholders not later than the first day of
the month of the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee, which shall initially be Fleet National Bank. No service
charge will be imposed for any registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
SUPPLEMENTAL CERTIFICATES
The Pooling and Servicing Agreement provides that the Transferor may
exchange a portion of the certificate evidencing the Transferor Interest (the
"Transferor Certificate") for another certificate (a "Supplemental Certificate")
for transfer or assignment to a person designated by the Transferor upon the
execution and delivery of a supplement to the Pooling and Servicing Agreement
(which supplement shall be subject to the amendment section of the Pooling and
Servicing Agreement to the extent that it amends any of
39
<PAGE> 40
the terms of the Pooling and Servicing Agreement); provided that (a) the
Transferor shall, after giving effect thereto, have an interest in the Pool
Balance of not less than 2% of the Pool Balance, (b) the Transferor shall have
delivered to the Trustee, the Rating Agencies and any Enhancement Provider
certain opinions of counsel with respect to such exchange and (c) the Transferor
shall have delivered to the Trustee written confirmation from the Rating
Agencies that such exchange will not result in a reduction or withdrawal of the
rating of each Class of Certificates or any other outstanding Series or class of
certificates or any Purchased Interest. Any subsequent transfer or assignment of
a Supplemental Certificate is also subject to the conditions described in
clauses (a), (b) and (c) in the preceding sentence.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that the Trust will issue or
sell three types of certificates or interests: (i) one or more Series, including
Concentration Series, of investor certificates (including the Certificates)
which are transferable and have the characteristics described below, (ii) one or
more Purchased Interests which are transferable and have the characteristics
described below, and (iii) the Transferor Certificate (and any Supplemental
Certificate) which will evidence the Transferor Interest and will be
transferable only upon the satisfaction of certain conditions described under
"Supplemental Certificates." The Pooling and Servicing Agreement also provides
that, pursuant to one or more Supplements or Purchase Agreements, the Transferor
may cause the Trustee to issue one or more new Series or sell one or more
Purchased Interests. Under the Pooling and Servicing Agreement, the Transferor
may specify, among other things, with respect to any Series or Purchased
Interest: (a) its name or designation, (b) its initial principal amount, (c) its
certificate rate or interest rate (or the method for determining its certificate
or interest rate), (d) a date on which it will begin its accumulation period,
amortization period or controlled amortization period, if any, (e) the method
for allocating principal and interest to certificateholders or Purchasers, (f)
the percentage used to calculate monthly servicing fees, (g) the issuer and
terms of any Enhancement with respect thereto or the level of subordination
provided by the Transferor Interest, (h) the terms on which the certificates of
such Series or the Purchased Interest may be exchanged for certificates of
another Series or for another Purchased Interest, be subject to repurchase,
optional redemption or mandatory redemption by the Transferor or be remarketed
by any remarketing agent, (i) the applicable termination date, (j) whether such
Series or Purchased Interest will be a part of a group or subject to being
paired with any other prefunded Series, (k) whether such Series is a Regular
Series or a Concentration Series, and (l) any other terms permitted by the
Pooling and Servicing Agreement (all such terms, the "Principal Terms" of such
Series or Purchased Interest). The Transferor may offer any Series or Purchased
Interest under a prospectus or other disclosure document in transactions either
registered under the Securities Act or exempt from registration thereunder,
directly or through the Underwriter or one or more other underwriters or
placement agents. There is no limit to the number of Series that may be issued
or Purchased Interests that may be sold under the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement provides that the Transferor may
specify Principal Terms of a new Series or Purchased Interest such that each
Series or Purchased Interest has an amortization period or accumulation period
which may have a different length and begin on a different date than the
amortization period or accumulation period for any other Series or Purchased
Interest. Further, one or more Series or Purchased Interests may be in their
early amortization periods or accumulation periods while other Series or
Purchased Interests are not. Thus, certain Series or Purchased Interests may be
amortizing or accumulating principal, while other Series or Purchased Interests
are not amortizing or accumulating principal. Moreover, different Series or
Purchased Interests may have the benefits of different forms of Enhancement
issued by different entities. Under the Pooling and Servicing Agreement, the
Trustee will hold each form of Enhancement only on behalf of the Series (or a
particular class within a Series) or the Purchased Interest to which it relates.
The Pooling and Servicing Agreement also provides that the Transferor may
specify different certificate or interest rates and monthly servicing fees with
respect to each Series (or a particular class within a Series) or Purchased
Interest. In addition, the Transferor will have the option under the Pooling and
Servicing Agreement to vary between Series (or classes within a Series) or
Purchased Interests the terms upon which a Series (or classes with a Series) or
Purchased Interest may be repurchased by the Transferor.
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<PAGE> 41
Under the Pooling and Servicing Agreement and pursuant to a Supplement, a
new Series or Purchased Interest may be issued or sold only upon the
satisfaction of certain specified conditions. The Transferor may cause the
issuance of a new Series or Purchased Interest by notifying the Trustee, the
Servicer, each Rating Agency, any Agent or any Enhancement Provider at least
five business days in advance of the applicable date of New Issuance. The notice
shall state the designation of any Series (and classes with a Series, if any) or
Purchased Interest and with respect to such Series or Purchased Interest: (a)
its initial principal amount, (b) its certificate or interest rate and (c) the
issuer of any Enhancement with respect to such Series (or classes with a Series)
or Purchased Interest. The Pooling and Servicing Agreement will provide that the
Trustee will issue any such Series or Purchased Interest only upon delivery to
it of the following (i) a Supplement in form satisfactory to the Trustee signed
by the Transferor and the Servicer and specifying the Principal Terms of such
Series or Purchased Interest, (ii) the form of any Enhancement and any related
agreement, (iii) an opinion of counsel to the effect that, for certain income
tax purposes, (w) such issuance will not adversely affect the characterization
of the certificates (including the Certificates) of any outstanding Series or
class or Purchased Interest, (x) such issuance will not cause the Trust to be
classified as an association (or publicly traded partnership) taxable as a
corporation for Federal income tax purposes or taxable at the entity level for
Florida or Connecticut tax purposes and (y) such new Series or Purchased
Interest will be characterized as debt or a partnership interest and (iv)
written confirmation from the Rating Agencies that such issuance will not result
in a reduction or withdrawal of the rating of the Certificates or any other
outstanding Series or class of certificates or any Purchased Interest. Such
issuance is also subject to the conditions that (a) the Transferor shall have
represented and warranted that such issuance shall not, in the reasonable belief
of the Transferor, cause an Early Amortization Event to occur and (b) after
giving effect to such issuance, (i) the Transferor Amount shall not be less than
2% of the Pool Balance and (ii) the Regular Transferor Amount shall not be less
than 2% of the Regular Pool Balance. Upon satisfaction of all such conditions,
the Trustee will issue such Series.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
On the Initial Closing Date, WODFI transferred and assigned to the Trust
all of its right, title and interest in and to the Receivables and the related
Collateral Security as of the Initial Closing Date, all receivables thereafter
created in the Accounts and its interests in the related Collateral Security and
the Receivables Purchase Agreement, and the proceeds of all of the foregoing.
See "World Omni Dealer Funding Inc. and the Trust."
In connection with the sale of Receivables to the Transferor by WOFCO and
the transfer of such Receivables by the Transferor to the Trust, WOFCO has
delivered and will continue to deliver to the Trustee all instruments, if any
(as defined under the UCC) relating to the Receivables and, as a precautionary
measure, WOFCO has indicated and will continue to indicate in its computer
records that the Receivables in the Accounts and the related Collateral Security
have been conveyed to the Trust. To the extent the Receivables constitute
"accounts," "chattel paper" or "general intangibles (each as defined under the
UCC), the Transferor has filed one or more financing statements and has taken
other actions necessary in accordance with applicable state law to perfect the
Trust's interest in the Receivables, the Collateral Security, the Receivables
Purchase Agreement and the proceeds thereof. In addition, on the Initial Closing
Date the Transferor provided to the Trustee a computer file or microfiche or
written list containing a true and complete list showing for each Account (which
list has been updated by the Transferor and the Trustee since such date), as of
the Initial Closing Date, (i) its account number and (ii) the outstanding
balance of Principal Receivables in such Account. See "Risk Factors -- Sale and
Transfer of Receivables; Security Interest and Insolvency Considerations" and
"Certain Legal Aspects of the Receivables."
As described below under "Addition of Accounts," the Transferor has the
right and in some circumstances is obligated (subject to certain limitations and
conditions) to designate from time to time additional accounts to be included as
Additional Accounts, to purchase from WOFCO (subject to certain limitations and
conditions regarding WOFCO described above in "Risk Factors -- Release of Liens
under Existing Credit Arrangements") the Receivables then existing or thereafter
created in such Additional Accounts and to convey such Receivables to the Trust.
Each such Additional Account must be an Eligible Account. In respect of any
conveyance of Receivables in Additional Accounts, the Transferor will follow the
procedures set forth
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in the preceding paragraph, except the list will show information for Additional
Accounts as of the date such Additional Accounts are identified and selected
(the "Additional Cut-Off Date").
REPRESENTATIONS AND WARRANTIES
The Transferor has made and will make representations and warranties to the
Trust relating to the Accounts, the Receivables and the Collateral Security to
the effect, among other things, that (a) as of the Initial Closing Date and the
date of issuance of any other Series or Purchased Interest (a "Series Issuance
Date") (or, in the case of an Additional Account, as of the Additional Cut-Off
Date and the date the related Receivables are transferred to the Trust (an
"Addition Date")), each Account or Additional Account is an Eligible Account or,
if it is an Account not constituting an Eligible Account (an "Ineligible
Account") on such date, such Account is being removed from the Trust in
accordance with the requirements of the Pooling and Servicing Agreement, (b) as
of the Initial Closing Date (or as of the Additional Cut-Off Date, in the case
of any Additional Accounts) or as of the date any future Receivable is generated
(a "Transfer Date"), each Receivable is an Eligible Receivable or, if such
Receivable is not an Eligible Receivable, such Receivable is conveyed to the
Trust as described below under "Ineligible Receivables," (c) each Receivable and
all Collateral Security conveyed to the Trust on the Initial Closing Date and on
each Transfer Date or, in the case of Additional Accounts, on the Addition Date,
and all of the Transferor's right, title and interest in the Receivables
Purchase Agreement, have been conveyed to the Trust free and clear of any liens,
and (d) all appropriate consents and governmental authorizations required to be
obtained by the Transferor in connection with the conveyance of each such
Receivable or Collateral Security have been duly obtained. If the Transferor
breaches any representation and warranty described in this paragraph and such
breach remains uncured for 30 days or such longer period as may be agreed to by
the Trustee, after the earlier to occur of the discovery of such breach by the
Transferor or the Servicer or receipt of written notice from the Trustee or any
Purchaser of such breach by the Transferor or the Servicer, and such breach has
a materially adverse effect on the Certificateholders' Interest or the interests
of the holder of other outstanding Series or Purchased Interest in any
Receivable or Account, the Certificateholders' Interest and such other
certificateholders' or Purchaser's interests in such Receivable or, in the case
of a breach relating to an Account, all Receivables in the related Account will
be reassigned to the Transferor on the terms and conditions set forth below and
such Account shall no longer be included as an Account.
Each such Receivable shall be reassigned to the Transferor on or before the
end of the Collection Period in which such reassignment obligation arises by the
Transferor directing the Servicer to deduct the principal balance of such
Receivable from the Pool Balance. In the event that such deduction would cause
the Transferor Amount or the Regular Transferor Amount, respectively, to be less
than the sum of the Trust Available Subordinated Amount and the Minimum
Transferor Amount and the sum of the Regular Trust Available Subordinated Amount
and the Regular Minimum Transferor Amount, respectively, on the preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Distribution Date), on the date on
which such reassignment is to occur, the Transferor will be obligated to make a
deposit into the Collection Account in immediately available funds in an amount
equal to the greater of the amount by which the Transferor Amount and the
Regular Transferor Amount, respectively, would be less than the sum of the Trust
Available Subordinated Amount and the Minimum Transferor Amount and the sum of
the Regular Trust Available Subordinated Amount and the Regular Minimum
Transferor Amount, respectively (the amount of such deposit being referred to
herein as a "Transfer Deposit Amount"), provided that if the Transfer Deposit
Amount is not so deposited, the principal balance of the related Receivables
will be deducted from each of the Pool Balance and the Regular Pool Balance only
to the extent (i) the Transferor Amount is not reduced below the sum of the
Trust Available Subordinated Amount and the Minimum Transferor Amount and (ii)
the Regular Transferor Amount is not reduced below the sum of Regular Trust
Available Subordinated Amount and the Regular Minimum Transferor Amount, and any
principal balance not so deducted will not be reassigned and will remain part of
the Trust. The reassignment of any such Receivable to the Transferor and the
payment of any related Transfer Deposit Amount will be the sole remedy
respecting any breach of the representations and warranties described in the
preceding paragraph with respect to such Receivable available to
Certificateholders or the Trustee on behalf of Certificateholders.
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The Transferor has made and will make representations and warranties to the
Trust to the effect, among other things, that as of the Initial Closing Date and
each Series Issuance Date (a) it is duly incorporated and in good standing, it
has the authority to consummate the transactions contemplated by the Pooling and
Servicing Agreement and the Pooling and Servicing Agreement constitutes a valid,
binding and enforceable agreement of the Transferor and (b) the Pooling and
Servicing Agreement constitutes either a valid transfer and assignment to the
Trust of, or the grant of a valid security interest in, of all right, title and
interest of the Transferor in, to and under the Receivables and the related
Collateral Security, whether then existing or thereafter created, the
Receivables Purchase Agreement, and the proceeds thereof (including proceeds in
any of the accounts established for the benefit of the certificateholders),
under the UCC or other applicable law which is effective as to each Receivable
existing on the Closing Date (or as of the Addition Date, if applicable) or, as
to each Receivable arising thereafter, upon the creation thereof and until
termination of the Trust. In the event that the breach of any of the
representations and warranties described in this paragraph has a materially
adverse effect on the Certificateholders' Interest or the interests of the
holders of all other outstanding Series or Purchased Interests in the
Receivables, either the Trustee or the holders of certificates of all
outstanding Series (including the Certificates) and Purchased Interests
evidencing not less than 51% of the aggregate unpaid principal amount of all
outstanding Series and Purchased Interests, by written notice to the Transferor
(and to the Trustee, the Servicer and the issuer or provider of any Enhancement
(an "Enhancement Provider") if given by certificateholders and Purchasers), may
direct the Transferor to accept the reassignment of the Certificateholders'
Interest and the certificateholders' interests of other Series and the
Purchasers' Interests within 60 days of such notice, or within such longer
period specified in such notice. The Transferor will be obligated to accept the
reassignment of the Certificateholders' Interest and such other
certificateholders' interests and the Purchasers' interests on a Distribution
Date occurring within such 60-day period. Such reassignment will not be required
to be made, however, if at the end of such applicable period, the
representations and warranties shall then be true and correct in all material
respects and any materially adverse effect caused by such breach shall have been
cured. The portion of the price for such reassignment in respect of the
Certificates will be equal to the sum of (i) the Invested Amount of the
Certificates on the Determination Date preceding the Distribution Date on which
the purchase is scheduled to be made and (ii) accrued and unpaid interest on the
unpaid principal amount of the Certificates at the applicable Certificate Rate
(together with interest on overdue interest at the applicable Certificate Rate
plus 200 basis points (2%), to the extent lawfully payable). The payment of the
reassignment price for all outstanding Series and Purchased Interests, in
immediately available funds, will be considered a payment in full of the
Certificateholders' Interest and such other certificateholders' interests and
Purchasers' interests. The portion of such funds allocable to the
Certificateholders' Interest will be distributed upon presentation and surrender
of the Certificates. If the Trustee or the certificateholders or the Purchasers
give a notice as provided above, the obligation of the Transferor to make any
such deposit will constitute the sole remedy respecting a breach of the
representations and warranties available to certificateholders or the Trustee on
behalf of the certificateholders and Purchasers.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An "Eligible Account" is defined to mean each wholesale financing line of
credit extended by WOFCO to a Dealer, which line of credit, as of the date of
determination thereof (a) is established by WOFCO in the ordinary course of
business pursuant to a floorplan financing agreement, (b) is in favor of a
Dealer which is an eligible dealer (which excludes dealers subject to voluntary
or involuntary bankruptcy proceedings or voluntary or involuntary liquidation),
(c) is in existence and maintained and serviced by WOFCO (or a successor
Servicer) and (d) in respect of which no amounts have been charged off as
uncollectible.
An "Eligible Receivable" is defined to mean each Receivable: (a) which was
originated or acquired by WOFCO in the ordinary course of business, (b) which
arose under an Account that at such time was an Eligible Account, (c) which is
owned by WOFCO at the time of sale by WOFCO to the Transferor, (d) which
represents the obligation of a Dealer to repay an advance made to or on behalf
of such Dealer to finance Vehicles, (e) which, at the time of creation and at
the time of transfer to the Trust (except, on the Initial Closing Date, with
respect to Receivables relating to Vehicles that have already been sold), is
secured by a perfected first priority security interest in the Vehicle relating
thereto, (f) which was created in
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compliance in all respects with all requirements of law applicable thereto and
pursuant to a Dealer Agreement which complies in all respects with all
requirements of law applicable to any party thereto, (g) with respect to which
all consents and governmental authorizations required to be obtained by WOFCO or
the Transferor in connection with the creation of such Receivable or the
transfer thereof to the Trust or the performance by WOFCO of the Dealer
Agreement pursuant to which such Receivable was created, have been duly
obtained, (h) as to which at all times following the transfer of such Receivable
to the Trust, the Trust will have good and marketable title thereto free and
clear of all liens arising prior to the transfer or arising at any time, other
than liens permitted pursuant to the Pooling and Servicing Agreement, (i) which
has been the subject of a valid transfer and assignment from the Transferor to
the Trust of all the Transferor's interest therein (including any proceeds
thereof), (j) which will at all times be the legal and assignable payment
obligation of the Dealer relating thereto, enforceable against such Dealer in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy or other similar laws, (k) which at the time of transfer
to the Trust is not subject to any right of rescission, setoff, or any other
defense (including defenses arising out of violations of usury laws) of the
Dealer, (l) as to which, at the time of transfer of such Receivable to the
Trust, WOFCO and the Transferor have satisfied all their respective obligations
with respect to such Receivable required to be satisfied at such time, (m) as to
which, at the time of transfer of such Receivable to the Trust, neither WOFCO
nor the Transferor has taken or failed to take any action which would impair the
rights of the Trust or the certificateholders or Purchasers therein, (n) which
constitutes an "instrument," "account," "chattel paper" or a "general
intangible" as defined in Article 9 of the UCC as then in effect in the State of
Florida and (o) which was transferred to the Trust with all applicable
governmental authorization.
It is not required or anticipated that the Trustee will make any initial or
periodic general examination of the Receivables or any records relating to the
Receivables for the purpose of establishing the presence or absence of defects,
compliance with representations and warranties of the Transferor or for any
other purpose. In addition, it is not anticipated or required that the Trustee
will make any initial or periodic general examination of the Servicer for the
purpose of establishing the compliance by the Servicer with its representations
or warranties, the observation of its obligations under the Pooling and
Servicing Agreement or for any other purpose.
INELIGIBLE RECEIVABLES AND EXCESS RECEIVABLES
For the purpose of facilitating the administration and reporting
requirements of the Servicer under the Pooling and Servicing Agreement, all
Receivables that are not Eligible Receivables ("Ineligible Receivables") arising
in an Eligible Account shall be transferred to the Trust, provided that the
Incremental Subordinated Amount is adjusted by the portion of the aggregate
principal amount of Ineligible Receivables included therein allocable to the
Certificateholders' Interest. The Incremental Subordinated Amount also will be
increased by the portion of the aggregate principal amount allocable to the
Certificateholders' Interest of all Receivables arising in Eligible Accounts
which are no longer Eligible Accounts. See "Allocation of Collections; Deposits
in Collection Account; Limited Subordination of Transferor Interest -- Available
Subordinated Amount."
In addition, a portion of Principal Receivables during any Collection
Period, equal to the product of (i) without duplication, the sum of (A) the
aggregate amount by which Principal Receivables relating to used Vehicles
exceeds 25% (or, in the case of the Collection Period ending August 31,
September 30 or October 31 of each year, 35%) of the aggregate amount of
Principal Receivables included in the Trust, calculated as of the last day of
the preceding Collection Period, (B) the aggregate amount of Principal
Receivables in Eligible Accounts that have been placed on finance hold, (C) the
aggregate amount by which Principal Receivables arising in Eligible Accounts
relating to WOFCO's "Auction Advantage Program" exceeds 5% of the aggregate
amount of Principal Receivables included in the Trust or, without duplication,
the aggregate amount by which Principal Receivables in any such Eligible Account
exceeds $250,000, (D) the aggregate amount by which Principal Receivables
arising under Eligible Accounts under WOFCO's delayed payment privilege program
exceeds 2%, and (E) the aggregate amount of interest payments on Receivables
under certain inventory financing agreements with Dealers exceeds $500,000 per
month, times (ii) a fraction the numerator of which is the Adjusted Invested
Amount and the denominator of which is the aggregate adjusted invested amounts
of
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all outstanding Series and Purchased Interests (including adjusted invested
amounts relating to the Concentration Pool), in each case determined as of the
related Determination Date (such product, the "Excess Receivables") shall also
be added to the Incremental Subordinated Amount, together with certain other
Receivables exceeding percentage limits as specified in the Pooling and
Servicing Agreement. These percentages and dollar limits may be increased from
time to time subject to each Rating Agency confirming that such increase will
not result in a downgrade or withdrawal of its ratings assigned to the
Certificates.
"Adjusted Invested Amount" means, with respect to Series 1996-2 on any
date of determination, the amount necessary so that the Series 1996-2
Allocation Percentage (calculated in accordance with the definition
thereof) will equal the Target 1996-2 Allocation Percentage (calculated as
of the last day of the Collection Period immediately preceding such date of
determination). Using an iterative process to derive the appropriate
numbers, the Servicer will calculate the Adjusted Invested Amount by
reference to the Target 1996-2 Allocation Percentage, the Target 1996-2
Adjusted Invested Amount and the Target Adjusted Invested Amount.
"Target 1996-2 Adjusted Invested Amount" means, on any date of
determination, an amount equal to (a) (i) during the Revolving Period, the
Invested Amount as of the last day of the Collection Period immediately
preceding such day or (ii) during the Accumulation Period or an Early
Amortization Period, the Invested Amount as of the last day of the
Revolving Period minus (b) the amount of all unreimbursed Investor
Charge-Offs on such day plus (c) the Available Subordinated Amount (after
giving effect to the allocations, distributions, withdrawals and deposits
to be made on such day).
"Target 1996-2 Allocation Percentage" means, on any date of
determination, the percentage equivalent of a fraction, the numerator of
which is the Target 1996-2 Adjusted Invested Amount and the denominator of
which is the sum of (i) the Target 1996-2 Adjusted Invested Amount and the
Target Adjusted Invested Amounts for each other Series which is not a
Concentration Series.
"Target Adjusted Invested Amount" means, on any date of determination
for each Series which is outstanding (other than Series 1996-2), an amount
with respect to such Series which is equal to (a) (i) during its revolving
period, the invested amount as of the last day of the Collection Period
immediately preceding such day or (ii) during its accumulation period or
any early amortization period, the invested amount of such Series as of the
last day of its revolving period minus (b) the amount of all unreimbursed
Investor Charge-Offs on such day with respect to such Series plus (c) the
available subordinated amount for such Series (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on such
day).
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Transferor has the right to
designate from time to time additional accounts to be included as Accounts (the
"Additional Accounts"). In addition, the Transferor is required to add the
Receivables of Additional Accounts if either (i) the Pool Balance or the Regular
Pool Balance, respectively, on the last day of any Collection Period is less
than the Minimum Receivables Amount or the Regular Minimum Receivables Amount,
respectively, as of the following Distribution Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on such
Distribution Date) or (ii) the Regular Transferor Amount is less than 2% of the
Regular Pool Balance on such last day. In either case, unless certain insolvency
events have occurred with respect to the Transferor or WOFCO, WOFCO under the
Receivables Purchase Agreement will be required (subject to certain limitations
and conditions regarding WOFCO described above in "Risk Factors -- Release of
Liens Under Existing Credit Arrangements") to sell to the Transferor, and the
Transferor under the Pooling and Servicing Agreement will be required to
transfer and assign to the Trust, within 15 business days after the end of such
Collection Period, interests in all Receivables arising in such Additional
Accounts, whether such Receivables are then existing or thereafter created. Any
designation of Additional Accounts is subject to the following conditions, among
others: (i) each such Additional Account must be an Eligible Account; (ii) the
Transferor shall represent and warrant that the addition of such Additional
Accounts shall not, in the reasonable belief of the Transferor, cause an Early
Amortization Event to occur, (iii) the Transferor shall not select such
Additional Accounts in a manner that it believes is adverse to the interests of
the certificateholders, the Purchasers or any
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Enhancement Provider, and (iv) solely in the event that, (A) unless certain
Rating Agency conditions are met, if in any twelve-month period, the percentage
derived by dividing the aggregate balance of all Receivables arising in
Additional Accounts added during that twelve-month period, as of the date of
such designation, by the Pool Balance at the beginning of such twelve-month
period exceeds 20% at any time, or (B) if, during any fiscal quarter the
percentage derived by dividing the aggregate balance of Receivables arising in
Additional Accounts added during that quarter, as of the date of such
designation, by the Pool Balance at the beginning of such fiscal quarter,
exceeds 10% at any time, then in either case the applicable Rating Agencies
shall have provided written confirmation that such addition will not result in a
reduction or withdrawal of the rating of the Certificates or any other
outstanding Series or class of certificates or Purchased Interest.
Each Additional Account must be an Eligible Account at the time of its
addition. However, because Additional Accounts may not have been a part of the
initial portfolio of WOFCO, they may not be of the same credit quality as the
initial Accounts. As a result of changing market conditions over time,
Additional Accounts may have been originated by WOFCO at a later date using
credit criteria different from those which were applied to the initial Accounts.
However, WOFCO will covenant in the Receivables Purchase Agreement not to make
any change in its credit criteria with respect to the Accounts if such change
would have a material adverse effect on the Certificateholders.
"Minimum Receivables Amount" for any date will mean an amount equal to
the sum of (a) for each Series or Purchased Interest, the initial invested
amount of such Series or Purchased Interest minus the amount of any
deposits into its portion of the Excess Funding Account in connection with
a reduction in the Pool Balance plus the amount of any withdrawals from its
portion of the Excess Funding Account in connection with an increase in the
Pool Balance plus (b) the Trust Available Subordinated Amount on the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date) plus (c) the Minimum
Transferor Amount.
"Regular Minimum Receivables Amount" for any date will mean an amount
equal to the sum of (a) for each Series or Purchased Interest (excluding
any Concentration Series), the initial invested amount of such Series or
Purchased Interest minus the amount of any deposits into its portion of the
Excess Funding Account in connection with a reduction in the Regular Pool
Balance plus the amount of any withdrawals from its portion of the Excess
Funding Account in connection with an increase in the Regular Pool Balance
plus (b) the Regular Trust Available Subordinated Amount on the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
following such Determination Date) plus (c) the Regular Minimum Transferor
Amount.
REMOVAL OF ACCOUNTS
The Transferor shall have the right at any time to require the removal from
the Trust of Eligible Accounts, including all amounts then held by the Trust or
thereafter received by the Trust in respect of the Eligible Accounts to be
removed. To remove any Eligible Account and such amounts, the Transferor (or the
Servicer on its behalf) shall, among other things, (a) on or before the fifth
business day prior to the date of removal (the "Removal Date"), furnish to the
Trustee, any Enhancement Provider and the Rating Agencies a written notice (the
"Removal Notice") specifying the Removal Date; (b) on or before the fifth
business day after the Removal Date, the Transferor shall have furnished to the
Trustee a computer file, microfiche list or other list of the Accounts (the
"Removed Accounts") that were removed on the Removal Date, specifying for each
Removed Account as of the date of the Removal Notice its number and the
aggregate amount of Principal Receivables therein; (c) represent and warrant
that the removal of any such Eligible Account on the Removal Date will not, in
the reasonable belief of the Transferor, cause an Early Amortization Event to
occur or cause either (i) the Pool Balance to be less than the Minimum
Receivables Amount or (ii) the Regular Pool Balance to be less than the Regular
Minimum Receivables Amount; (d) represent and warrant that no selection
procedures believed by the Transferor to be adverse to the interest of the
certificateholders or Purchasers were utilized in selecting the Removed
Accounts; (e) represent and warrant that the Rating
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Agencies shall have been advised of such removal and shall not have notified the
Transferor or the Servicer that such removal will result in a reduction or
withdrawal of the rating of the Certificates or any other outstanding Series or
class of certificates or Purchased Interest; and (f) on or before the related
Removal Date, deliver to the Trustee and any Enhancement Provider an officers'
certificate confirming the items set forth in clauses (c), (d) and (e) above.
Upon satisfaction of the above conditions, the Trustee shall execute and
deliver to the Transferor a written reassignment and shall be deemed to reconvey
to the Transferor or its designee, without recourse, representation or warranty,
all the right, title and interest of the Trust in and to the Receivables arising
in the Removed Accounts, all amounts received or to be received with respect
thereto and all proceeds thereof.
COLLECTION ACCOUNT
The Servicer has caused to be established and maintained an Eligible
Deposit Account for the benefit of certificateholders and Purchasers in the name
of the Trustee, on behalf of the Trust (the "Collection Account"). "Eligible
Deposit Account" means either (a) a segregated account with an Eligible
Institution or (b) a segregated trust account with the corporate trust
department of a depository institution or trust company organized under the laws
of the United States or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution or trust company has a credit
rating from each Rating Agency in one of its generic rating categories which
signifies investment grade. "Eligible Institution" means (a) the corporate trust
department of the Trustee or (b) a depository institution or trust company
organized under the laws of the United States or any one of the states thereof
or the District of Columbia (or a domestic branch of a foreign bank) which at
all times (i) has either (x) a long-term unsecured debt rating acceptable to
each Rating Agency or (y) a certificate of deposit rating acceptable to each
Rating Agency and (ii) is a member of the FDIC. Funds in the Collection Account
generally will be invested in (i) direct obligations of, and obligations fully
guaranteed as to the full and timely payment of principal and interest by the
United States or any agency or instrumentality, (ii) demand deposits, time
deposits, bankers' acceptances or certificates of deposit of depository
institutions or trust companies incorporated under the laws of the United States
or any state of the United States (or any domestic branch of a foreign bank) and
insured by the FDIC, (iii) repurchase obligations held by the Trustee with
respect to any security described in clause (i) of this sentence, or any other
security issued or guaranteed by the United States or any agency or
instrumentality thereof, (iv) investments in commercial paper and, following the
Closing Date, money market funds which have the highest rating from, or have
otherwise been approved in writing by, each Rating Agency and (vii) other
investments acceptable to the Rating Agency as being consistent with the
then-current rating of the Certificates (collectively, "Eligible Investments").
Any earnings (net of losses and investment expenses) on funds in the Collection
Account will be credited to the Collection Account. The Servicer will have the
revocable power to instruct the Trustee to make investments and withdrawals and
payments from the Collection Account for the purpose of carrying out its duties
under the Pooling and Servicing Agreement.
EXCESS FUNDING ACCOUNT
The Servicer has caused to be established and maintained an Eligible
Deposit Account for the benefit of certificateholders and Purchasers in the name
of the Trustee, on behalf of the Trust (the "Excess Funding Account"). During
the Revolving Period, Available Certificateholder Principal Collections (to the
extent available therefor as described herein) will be deposited daily in the
Excess Funding Account and allocated to Series 1996-2 in an amount equal to the
excess, if any, of (a) the sum of (i) the Invested Amount, calculated as of the
last day of the previous Collection Period and (ii) the Available Subordinated
Amount (excluding the Incremental Subordinated Amount) on such day over (b) the
product of the Series 1996-2 Allocation Percentage and the Regular Pool Balance
on such date, multiplied by 98%. Funds on deposit in the Excess Funding Account
and allocable to Series 1996-2 will be withdrawn and paid to the Transferor
daily or allocated to one or more Series or Purchased Interests which are in
amortization, early amortization or accumulation periods to the extent of any
increases in the Certificateholders' Interest in the Regular Pool
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Balance as a result of the addition of Receivables to the Trust. The allocation
of additional Receivables to increase the Invested Amount and the invested
amounts of such other Series or Purchased Interests (other than any
Concentration Series) will be based on the general allocation provisions for the
Trust.
Any funds on deposit in the Excess Funding Account allocable to Series
1996-2 at the beginning of the Accumulation Period will be deposited in the
Principal Funding Account. In addition, no funds will be deposited in the Excess
Funding Account and allocated to Series 1996-2 during the Accumulation Period or
any Early Amortization Period, and certain funds on deposit in the Excess
Funding Account will be withdrawn and paid to Certificateholders if an Asset
Composition Event occurs.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Servicer in investments rated in the highest
short-term category of each Rating Agency or in such other investments as are
acceptable to each Rating Agency. Such investments are required to mature by the
next Distribution Date. On each Distribution Date, all net investment income
earned on amounts in the Excess Funding Account since the preceding Distribution
Date will be withdrawn from the Excess Funding Account and applied as described
under "-- Distributions from the Collection Account; Reserve Fund -- Interest
Collections."
ALLOCATION PERCENTAGES
Allocations Among Pools. Pursuant to the Pooling and Servicing Agreement,
during each Collection Period, the Servicer will first allocate Collections and
Defaulted Receivables, between the Concentration Pool Balance and the Regular
Pool Balance. With respect to each Concentrated Account, the product of (i)
Principal Collections from, Miscellaneous Payments relating to, and Defaulted
Receivables in, such Concentrated Account on each day during the Collection
Period, and (ii) the Concentration Percentage applicable on such day for such
Concentrated Account, will be allocated to the Concentration Pool Balance.
Interest Collections received from each Dealer during a Collection Period will
be allocated on the related Determination Date between the Concentration Pool
and the Regular Pool based on such Dealer's average concentration percentage,
calculated as set forth below. The portion of such Interest Collections
allocated to the Concentration Pool will equal the product of (x) such Interest
Collections and (y) a fraction, the numerator of which is the excess, if any, of
(i) the average daily outstanding balance of Receivables in such Account during
the Collection Period preceding such Collection Period over (ii) the product of
2% (or, with respect to each Account which is one of fifteen Accounts with the
largest average principal balances during such preceding Collection Period, 3%)
and the average daily Pool Balance during such preceding Collection Period, and
the denominator of which is the average daily Pool Balance during such preceding
Collection Period.
All Collections not allocated to the Concentration Pool Balance will be
allocated to the Regular Pool Balance.
"Concentrated Account" means, on any date of determination, any
Account with respect to which a Concentration Amount exists.
"Concentration Amount" means, with respect to any Account on any date
of determination, the aggregate amount of Receivables (other than
Ineligible Receivables) in such account on such day minus the product of
(i) the Concentration Limit and (ii) the aggregate amount of Principal
Receivables included in the Trust on such day; provided that if an Early
Amortization Event described in paragraph 11 under "Description of the
Certificates -- Early Amortization Events" occurs, the Concentration Amount
will instead equal the product of (x) the aggregate amount of Principal
Receivables (other than Ineligible Receivables) in such Account multiplied
by (y) the Concentration Percentage as of the last day prior to the day
upon which the condition giving rise to that Early Amortization Event
arose.
"Concentration Limit," with respect to any Account on any day, means
2% (or, with respect to each Account which is one of fifteen Accounts with
the largest average principal balances during such
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preceding Collection Period, 3%). Under the Pooling and Servicing
Agreement, these percentages may be increased if each Rating Agency
confirms that such increase will not lead to a downgrade or withdrawal of
its rating of either Class of the Certificates.
"Concentration Percentage," with respect to each Concentrated Account
on any day, means the percentage obtained by dividing (i) the Concentration
Amount in that Account as of the close of business on the preceding day by
(ii) the aggregate amount of Receivables in such Account on such preceding
day, except (a) in the case of a Concentrated Account which is in "finance
hold" status, in which case the Concentration Percentage at all times will
be equal to the percentage obtained by dividing (i) the Concentration
Amount in such Account as of the close of business on the day preceding the
day the Account was placed on "finance hold" by (ii) the aggregate
principal amount of Receivables in such Account on such day and (b) in the
case of all Concentration Accounts, if an Early Amortization Event
described in paragraph 11 under "Description of the Certificates -- Early
Amortization Events" occurs, in which case the Concentration Percentage for
each Account will be fixed at the Concentration Percentage (which may be
zero) that was in effect for that Account as of the last day prior to the
day upon which the condition giving rise to that Early Amortization Event.
"Concentration Pool" means, collectively, those portions of each
Concentration Account attributable to the Concentration Amounts.
"Concentration Pool Balance" on any day means the aggregate of all
Concentration Amounts.
"Concentration Series" means any Series or Purchased Interest of the
Trust on which payments may be made, in whole or in part, from Collections
allocable to the Concentration Pool.
"Regular Pool Balance," as of any date of determination, means the
Pool Balance minus the Concentration Pool Balance.
Allocation to the Certificateholders' Interest. On each Determination
Date, the Servicer will allocate the portion of Collections and Defaulted
Amounts allocated during the Collection Period to the Regular Pool Balance to
the Certificateholders' Interest for each Collection Period as follows:
(i) Interest Collections and the Defaulted Amount allocated to the
Regular Pool Balance will be allocated to the Certificateholders' Interest
based on the Floating Allocation Percentage;
(ii) during the Revolving Period, Principal Collections allocated to
the Regular Pool Balance will be allocated the Certificateholders' Interest
based on the Floating Allocation Percentage;
(iii) during the Accumulation Period and any Early Amortization
Period, Principal Collections allocated to the Regular Pool Balance will be
allocated to the Certificateholders' Interest based on the Principal
Allocation Percentage; and
(iv) Miscellaneous Payments allocable to Series 1996-2 will at all
times be allocated to Certificateholders.
Amounts not allocated to the Certificateholders as described above will be
allocated to the Transferor.
"Class A Initial Principal Amount" means, on the Closing Date,
$167,500,000.
"Class A Principal Amount" means, as of the last day of the previous
Collection Period, the Class A Initial Principal Amount minus the sum of
(i) the aggregate amount of principal payments made to Class A
Certificateholders and (ii) the aggregate amount of unreimbursed Class A
Investor Charge-Offs (which will not occur unless and until the Class B
Principal Amount is reduced to zero as a result of Class B Investor
Charge-Offs); provided that the Class A Principal Amount will in no event
be less than zero.
"Class B Initial Principal Amount" means, on the Closing Date,
$7,500,000.
"Class B Principal Amount" means, as of the last day of the previous
Collection Period, the Class B Initial Principal Amount minus the sum of
(i) the aggregate amount of principal payments made to
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Class B Certificateholders following payment in full of the Class A
Principal Amount and (ii) the aggregate amount of unreimbursed Class B
Investor Charge-Offs; provided that the Class B Principal Amount will in no
event be less than zero.
"Floating Allocation Percentage" for any Collection Period means the
percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Regular Pool Balance as of such last day; provided, however, that, with
respect to the first Collection Period, the Floating Allocation Percentage
shall mean the percentage equivalent of a fraction, the numerator of which
is the Invested Amount and the denominator of which is the Regular Pool
Balance on the Closing Date; provided further, however, that the Floating
Allocation Percentage on the Closing Date and until the second
Determination Date thereafter will not exceed the Transferor Percentage at
such time minus 2%.
"Initial Invested Amount" means, on the Closing Date, the sum of the
Class A Initial Principal Amount and the Class B Initial Principal Amount
minus amounts deposited in the Excess Funding Account on the Closing Date.
"Invested Amount" means, on any date of determination, the Initial
Invested Amount minus the sum of (i) the amounts deposited in the Excess
Funding Account and available for Series 1996-2 in connection with a
reduction in Principal Receivables, (ii) the amount of principal payments
(except principal payments made from the Series 1996-2 portion of the
Excess Funding Account and transfers made from the Series 1996-2 portion of
the Excess Funding Account to the Principal Funding Account) made to
Certificateholders or deposited in the Principal Funding Account prior to
such date of determination and (iii) the aggregate amount of unreimbursed
Class A Investor Charge-Offs and Class B Investor Charge-Offs for all
previous Distribution Dates and plus the amount of any withdrawals from the
Excess Funding Account allocable to Series 1996-2 in connection with an
increase in Principal Receivables.
"Miscellaneous Payments" for any Collection Period means the sum of
(a) Adjustment Payments and Transfer Deposit Amounts received with respect
to such Collection Period and (b) Unallocated Principal Collections on such
Distribution Date available to be treated as Miscellaneous Payments as
described below under "-- Principal Collections."
"Principal Allocation Percentage" for any Collection Period during the
Accumulation Period and any Early Amortization Period means the percentage
equivalent (which shall never exceed 100%) of a fraction, the numerator of
which is the Invested Amount as of the last day of the Revolving Period and
the denominator of which is the greater of (x) the Regular Pool Balance as
of the last day of the immediately preceding Collection Period and (y) the
sum of the numerators used to calculate (i) for any Series or Purchased
Interest in its revolving period, the floating allocation percentage with
respect to Collections allocable to the Regular Pool Balance, and (ii) for
any Series or Purchased Interest in its accumulation period or an early
amortization period, the principal allocation percentage with respect to
Collections allocable to the Regular Pool Balance.
"Regular Trust Adjusted Invested Amount" means, with respect to any
Collection Period, the sum of the Adjusted Invested Amount and the adjusted
invested amounts for all other outstanding Series and Purchased Interests,
other than any adjusted invested amount relating to the Concentration Pool.
"Regular Trust Available Subordinated Amount" means the sum of the
Available Subordinated Amount and the aggregate available subordinated
amounts for all other outstanding Series and Purchased Interests, other
than any available subordinated amount related to the Concentration Pool.
"Series 1996-2 Allocation Percentage" means, for any Collection
Period, the percentage equivalent of a fraction, the numerator of which is
the Adjusted Invested Amount as of the last day of the immediately
preceding Collection Period and the denominator of which is the Regular
Trust Adjusted Invested Amount as of such last day, in each case excluding
any invested amount relating to the Concentration Pool.
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"Trust Available Subordinated Amount" means the sum of the Available
Subordinated Amount and the aggregate available subordinated amounts for
all other outstanding Series and Purchased Interests.
The Floating Allocation Percentage and the Principal Allocation Percentage
will be adjusted for any Collection Period in which Additional Accounts are
designated to reflect the additional Receivables added to the Trust.
Principal Collections. Principal Collections allocated to the
Certificateholders' Interest for any Collection Period with respect to the
Accumulation Period or any Early Amortization Period, will first be applied to
make required payments of principal to the Principal Funding Account during the
Accumulation Period and to the Certificateholders during the Early Amortization
Period. See "Distributions from the Collection Account; Reserve
Fund -- Principal Collections" and "Distributions." The Servicer will determine
the amount of Available Certificateholder Principal Collections for any
Collection Period remaining after such required payments and the amount of any
similar excess for any other Series or Purchased Interests ("Shared Principal
Collections"). The Servicer will allocate Shared Principal Collections to cover
any principal distributions to certificateholders for any Series or to
Purchasers of Purchased Interests which are either scheduled or permitted and
which have not been covered out of Principal Collections and certain other
amounts allocated to such Series or Purchased Interest ("Principal Shortfalls").
Shared Principal Collections will generally not be used to cover investor charge
offs for any Series or Purchased Interest. If Principal Shortfalls exceed Shared
Principal Collections for any Collection Period, Shared Principal Collections
will be allocated pro rata among the applicable Series and Purchased Interests
based on the relative amounts of Principal Shortfalls. To the extent that Shared
Principal Collections exceed Principal Shortfalls, the balance will be paid to
the Transferor if either the Transferor Amount or the Regular Transferor Amount
(determined after giving effect to any Principal Receivables transferred to the
Trust on such date) exceeds the sum of the Trust Available Subordinated Amount
or the Regular Trust Available Subordinated Amount, respectively, for the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date) and the Minimum
Transferor Amount or the Regular Minimum Transferor Amount, respectively. Any
amount not paid to the Transferor because either (i) the Transferor Amount does
not exceed the sum of the Trust Available Subordinated Amount and the Minimum
Transferor Amount or (ii) the Regular Transferor Amount does not exceed the sum
of the Regular Trust Available Subordinated Amount and the Regular Minimum
Transfer Amount will be held unallocated ("Unallocated Principal Collections")
until either (i) the Transferor Amount exceeds the sum of the Trust Available
Subordinated Amount and the Minimum Transferor Amount or (ii) the Regular
Transferor Amount exceeds the sum of the Regular Trust Available Subordinated
Amount and the Regular Minimum Transferor Amount, as applicable, at which time
such amount will be allocated to the Transferor, unless an early amortization
event occurs or an amortization period commences for any Series, after which
such amount will be treated as a Miscellaneous Payment and allocated among all
outstanding Series and Purchased Interests in accordance with their respective
adjusted invested amounts. As used herein, "Regular Minimum Transferor Amount"
means the product of the Regular Pool Balance and the Series 1996-2 Allocation
Percentage multiplied by 2%. "Minimum Transferor Amount" means the product of
the Pool Balance and the Series 1996-2 Allocation Percentage multiplied by 2%.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT; LIMITED SUBORDINATION
OF TRANSFEROR INTEREST
The Servicer, no later than two business days after the processing date,
will deposit all collections received with respect to the Receivables
(excluding, with certain exceptions, certain portions thereof allocable to the
Transferor) in each Collection Period into the Collection Account.
Notwithstanding the foregoing requirement for daily deposits, for so long as (i)
WOFCO remains the Servicer under the Pooling and Servicing Agreement, (ii) no
Servicer Default has occurred and is continuing and (iii) (x) WOFCO arranges for
and maintains a letter of credit or other form of Enhancement in respect of the
Servicer's obligation to make deposits of collections on the Receivables in the
Collection Account that is acceptable in form and substance to each Rating
Agency or (y) WOFCO otherwise obtains the Rating Agency confirmations described
below, then, subject to any limitations in the confirmations referred to below,
during the Revolving Period WOFCO need not deposit collections constituting
Principal Collections into the Collection Account on
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the day indicated in the preceding sentence but may use such Principal
Collections (other than any amounts required to be deposited in the Excess
Funding Account) until the business day immediately preceding the related
Distribution Date, at which time WOFCO will make such deposits in an amount
equal to the net amount of such deposits and withdrawals which would have been
made had the conditions of this sentence not applied; provided, however, that
prior to ceasing daily deposits as described above the Transferor shall have
delivered to the Trustee written confirmation from the Rating Agencies that the
failure by WOFCO to make daily deposits of Principal Collections will not result
in a reduction or withdrawal of the rating of the Certificates or any other
outstanding Series or class of certificates or Purchased Interest.
In addition, during any Collection Period the Servicer will generally be
required to deposit Interest Collections and Principal Collections into the
Collection Account only to the extent of the distributions required to be made
to certificateholders, the amount required to be deposited into the Excess
Funding Account or any other deposit, trust, reserve or similar account
maintained for the benefit of certificateholders and Purchasers and the amounts
required to be paid to any Enhancement Provider on the Distribution Date
relating to such Collection Period and if, at any time prior to such
Distribution Date, the amount of collections deposited in the Collection Account
exceeds the amount required to be deposited, the Servicer will be permitted to
withdraw such excess from the Collection Account.
On any date on which all collections are deposited in the Collection
Account, the Servicer will distribute directly to the Transferor an amount equal
to (a) the Excess Transferor Percentage for the related Collection Period of
Interest Collections allocable to the Regular Pool for such date and (b) the
Excess Transferor Percentage for the related Collection Period of Principal
Collections allocable to the Regular Pool for such date, if the Regular
Transferor Amount (determined after giving effect to any Principal Receivables
transferred to the Trust on such date) exceeds the sum of the Regular Trust
Available Subordinated Amount for the immediately preceding Determination Date
(after giving effect to the allocations, distributions, withdrawals and deposits
to be made on the Distribution Date immediately following such Determination
Date) and the Regular Minimum Transferor Amount. In addition, during the
Revolving Period, subject to certain limitations, the Servicer will distribute
directly to the Transferor, or as may otherwise be provided in any Supplement
for another Series, on each such date of deposit an amount equal to the
Available Transferor Collections for such date, if the Regular Transferor Amount
(determined after giving effect to any Principal Receivables transferred to the
Trust on such date) exceeds the sum of the Regular Trust Available Subordinated
Amount for the immediately preceding Determination Date and the Regular Minimum
Transferor Amount (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date immediately
following such Determination Date).
"Available Transferor Collections" for any date means the sum of (a)
the Available Transferor Interest Collections for such date and (b) the
Available Transferor Principal Collections for such date; provided,
however, that the Available Transferor Collections will be zero for any
Collection Period with respect to which the Available Subordinated Amount
is zero on the Determination Date immediately following the end of such
Collection Period.
"Available Transferor Interest Collections" for any date means an
amount equal to the result obtained by multiplying (a) the excess of (i)
the Transferor Percentage for the related Collection Period over (ii) the
Excess Transferor Percentage for such Collection Period by (b) Interest
Collections allocable to the Regular Pool Balance for such date.
"Available Transferor Principal Collections" for any date means an
amount equal to the product of (a) the excess of (i) the Transferor
Percentage for the related Collection Period over (ii) the Excess
Transferor Percentage for such Collection Period and (b) Principal
Collections allocable to the Regular Pool Balance for such date.
"Excess Transferor Percentage" for any Collection Period means a
percentage (which percentage shall never be less than 0% nor more than
100%) equal to 100% minus (a) when used with respect to Interest
Collections allocable to the Regular Pool Balance, the sum of (i) the
aggregate of the floating allocation percentages for each Series and
Purchased Interest (other than any floating allocation percentage relating
to the Concentration Pool) with respect to such Collection Period and (ii)
the
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percentage equivalent of a fraction, the numerator of which is the
aggregate of the available subordinated amounts for each outstanding Series
and Purchased Interest (other than any available subordinated amount
relating to the Concentration Pool) as of the Determination Date occurring
in the immediately preceding Collection Period (after giving effect to the
allocation, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date), and the
denominator of which is the Regular Pool Balance as of the last day of such
immediately preceding Collection Period or (b) when used with respect to
Principal Collections allocable to the Regular Pool Balance, the sum of (i)
the aggregate of the principal allocation percentages of each Series and
Purchased Interest (other than any principal allocation percentages
relating to the Concentration Pool) in its amortization, accumulation, or
early amortization period and the aggregate of the floating allocation
percentages for each Series and Purchased Interest (other than any floating
allocation percentage relating to the Concentration Pool) in its revolving
period with respect to such Collection Period and (ii) the percentage
described in clause (a)(ii) above for such Collection Period.
"Regular Transferor Amount" for any date means an amount equal to the
Regular Pool Balance on such date minus the aggregate invested amounts for
all outstanding Series and Purchased Interests (other than any invested
amount relating to Concentration Pool) on such date.
"Transferor Amount" for any date means an amount equal to the Pool
Balance on such date minus the aggregate of invested amounts for all
outstanding Series and Purchased Interests on such date.
"Transferor Percentage" means 100% minus (a) when used with respect to
Interest Collections allocable to the Regular Pool Balance, the aggregate
of the floating allocation percentages for all Series and Purchased
Interests (other than any floating allocation percentage relating to the
Concentration Pool), and (b) when used with respect to Principal
Collections allocable to the Regular Pool Balance, the sum of the aggregate
of the principal allocation percentages of each Series and Purchased
Interest (other than any principal allocation percentages relating to the
Concentration Pool) in its amortization, accumulation, or early
amortization period and the aggregate of the floating allocation
percentages for each Series and Purchased Interest (other than any floating
allocation percentage relating to the Concentration Pool) in its revolving
period with respect to such Collection Period.
Deficiency Amount. On each Determination Date, the Servicer will determine
for the Certificates the amount (the "Deficiency Amount"), if any, by which (a)
the sum of (i) the Class A Monthly Interest and the Class B Monthly Interest for
the following Distribution Date, (ii) the Class A Monthly Interest and the Class
B Monthly Interest accrued but not paid with respect to prior Distribution Dates
(and interest thereon at the rates set forth herein to the extent permitted by
law), (iii) the Monthly Servicing Fee (unless waived) for such Distribution
Date, (iv) the Investor Default Amount for such Distribution Date, and (v) the
amount (the "Monthly Dilution Amount") of any Adjustment Payment allocated to
the Certificates for such Distribution Date that has not been deposited in the
Collection Account as required under the Pooling and Servicing Agreement,
exceeds (b) the sum of (i) Certificateholder Interest Collections and Investment
Proceeds for such Distribution Date and (ii) the amount of funds in the Reserve
Fund on such Distribution Date available to fund the amount by which the amount
in clause (a) exceeds the amount in clause (b)(i) above. See "-- Distributions
from the Collection Account; Reserve Fund -- Interest Collections." If there is
a Deficiency Amount, then the lesser of (x) the Deficiency Amount and (y) the
Available Subordinated Amount is the "Draw Amount." In the event any Shortfall
Amount or Carry-Over Amount remains outstanding at such time as the Invested
Amount is paid in full, then the Draw Amount for such Distribution Date (after
such payment of the Invested Amount) and subsequent Distribution Dates shall
include any Carry-Over Amount, until such Carry-Over Amounts have been paid in
full.
"Class A Monthly Interest" for any Distribution Date shall mean an
amount equal to (a) the actual number of days in the related Interest
Period divided by 360 multiplied by (b) the product of (x) the Class A
Certificate Rate and (y) the outstanding principal balance of the Class A
Certificates as of the close of business on the preceding Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date) after
giving effect to all repayments of principal made to the Class A
Certificateholders on such preceding Distribution Date, if any.
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"Class B Monthly Interest" for any Distribution Date shall mean an
amount equal to (a) the actual number of days in the related Interest
Period divided by 360 multiplied by (b) the product of (x) the Class B
Certificate Rate and (y) the outstanding principal balance of the Class B
Certificates as of the close of business on the preceding Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date) after
giving effect to all repayments of principal made to the Class B
Certificateholders on such preceding Distribution Date, if any.
Required Subordinated Amount. The "Required Subordinated Amount" shall
mean, as of any date of determination, either (A) if the amount on deposit in
the Series 1996-2 portion of the Excess Funding Account equals zero, the sum of
(i) the product of the Subordinated Percentage and the sum of the Class A
Principal Amount and the Class B Principal Amount and (ii) the Incremental
Subordinated Amount or (B) if the amount on deposit in the Series 1996-2 portion
of the Excess Funding Account is greater than zero, the sum of (i) the
Incremental Subordinated Amount plus (ii) the product of 4% multiplied by the
Regular Pool Balance multiplied by the Series 1996-2 Allocation Percentage and
multiplied by 98%; provided, however, that for any Determination Date following
the end of the Revolving Period, or on any Determination Date on which a
Carry-Over Amount exists, the Required Subordinated Amount shall in no event be
less than an amount equal to the Subordinated Percentage of the Initial
Principal Amount of the Certificates. The "Subordinated Percentage" will equal
the percentage equivalent of a fraction, the numerator of which is 4% and the
denominator of which will be the excess of 100% over 4%.
Available Subordinated Amount. The "Available Subordinated Amount" for any
day is equal to the lesser of (a) the Required Subordinated Amount for the
current date and (b) the Available Subordinated Amount for the preceding
Determination Date, minus (i) with certain limitations, the Draw Amount for the
preceding Distribution Date, minus (ii) funds from the Reserve Fund applied to
cover any portion of the Investor Default Amount, minus (iii) the Subordinated
Percentage of funds added or to be added to the Series 1996-2 portion of the
Excess Funding Account in the period from the preceding Distribution Date to the
current Distribution Date, plus (iv) the Subordinated Percentage of funds
withdrawn or to be withdrawn from the Series 1996-2 portion of the Excess
Funding Account in the period from the preceding Distribution Date to the
current Distribution Date and paid to the Transferor or allocated to one or more
Series or Purchased Interests, plus (v) the amount of Excess Interest available
to be paid to the Transferor as described under "-- Distributions from the
Collection Account; Reserve Fund -- Excess Interest," minus (vi) the Incremental
Subordinated Amount for such preceding Determination Date, plus (vii) the
Incremental Subordinated Amount for the current day. The Available Subordinated
Amount for the first Determination Date will be equal to the Required
Subordinated Amount.
The "Incremental Subordinated Amount" on any Determination Date will equal
the sum of (i) the excess of the aggregate amount of Ineligible Receivables on
such date over the aggregate amount of Ineligible Receivables that became
Defaulted Receivables during the preceding Collection Period and are subject to
reassignment from the Trust, unless certain insolvency events relating to the
Transferor or WOFCO have occurred, as further described in the Pooling and
Servicing Agreement and (ii) the Excess Receivables for the Collection Period
related to that Determination Date.
The Transferor may, in its sole discretion, at any time increase the
Available Subordinated Amount for so long as the cumulative amount of such
increases does not exceed the lesser of (i) $1,925,000 or (ii) 1.1% of the
Invested Amount on such date. The Transferor is not under any obligation to
increase the Available Subordinated Amount at any time. If the Available
Subordinated Amount were reduced to less than the Required Subordinated Amount,
an Early Amortization Event would occur. The Transferor could elect to increase
the Available Subordinated Amount at the time such an Early Amortization Event
would otherwise occur, thus preventing or delaying the occurrence of the Early
Amortization Event.
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DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND
Interest Collections. On each Distribution Date, the Trustee will apply
Certificateholder Interest Collections and Investment Proceeds in respect of the
related Collection Period to make the following distributions in the following
order of priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but
not distributed on a prior Distribution Date (plus, but only to the extent
permitted under applicable law, interest at the applicable Class A
Certificate Rate plus 200 basis points (2.0%) on Class A Monthly Interest
previously due but not distributed), shall be paid to Class A
Certificateholders;
(ii) an amount equal to Class B Monthly Interest for such Distribution
Date, plus the amount of any Class B Monthly Interest previously due but
not distributed on a prior Distribution Date (plus, but only to the extent
permitted under applicable law, interest at the applicable Class B
Certificate Rate plus 200 basis points (2.0%) on Class B Monthly Interest
previously due but not distributed), shall be paid to Class B
Certificateholders;
(iii) an amount equal to the Monthly Servicing Fee for such
Distribution Date shall be distributed to the Servicer (unless such amount
has been netted against deposits to the Collection Account as described
above or waived as described below);
(iv) an amount equal to the Reserve Fund Deposit Amount, if any, for
such Distribution Date shall be deposited in the Reserve Fund;
(v) an amount equal to the sum of the Investor Default Amount, if any,
and the Monthly Dilution Amount, if any, for such Distribution Date shall
be treated as a portion of Available Certificateholder Principal
Collections for such Distribution Date;
(vi) an amount equal to the sum of any Shortfall Amount and any
accrued and unpaid Carry-Over Amount shall be paid first to the Class A
Certificateholders and then to the Class B Certificateholders; and
(vii) the balance shall constitute Excess Interest.
If such Certificateholder Interest Collections and Investment Proceeds are
not sufficient to make the entire distributions required by clauses (i), (ii),
(iii) and (v), the Trustee shall withdraw funds from the Reserve Fund and apply
such funds to complete, to the extent available, the distributions pursuant to
such clauses in the numerical order thereof; provided that during an Early
Amortization Period, the application of funds in the Reserve Fund to cover the
amount in clause (v) will be reduced or eliminated to the extent necessary to
maintain the amount in the Reserve Fund at least equal to $1,000,000. If, after
application of Certificateholder Interest Collections pursuant to clause (vi)
above, a Shortfall Amount or a Carry-Over Amount exists, the Transferor will be
obligated to deposit the amount of such Shortfall Amount or Carry-Over Amount in
the Collection Account for distribution to Certificateholders. If, at such time
as the principal amount of the Certificates, and accrued unpaid interest
thereon, has been paid in full, any Carry-Over Amount exists, Series 1996-2
shall not terminate, and on such Distribution Date and subsequent Distribution
Dates, Available Transferor Collections up to the Available Subordinated Amount
shall be applied to pay such Carry-Over Amount.
If there is a Draw Amount for such Distribution Date, the Trustee shall
apply the amount of Available Transferor Collections for the related Collection
Period on deposit in the Collection Account on such Distribution Date, but only
up to the Draw Amount, to make the distributions required by clauses (i), (ii),
(iii) and (v) above that have not been made through the application of funds
from the Reserve Fund as described in the preceding paragraph. If the sum of the
draw amounts (including the Draw Amount) for all Series and Purchased Interests
in respect of a Distribution Date exceeds the Available Transferor Collections
for the related Collection Period, then such Available Transferor Collections
will be allocated among those Series and Purchased Interests with draw amounts
pro rata on the basis of such draw amounts. The Available Subordinated Amount
will be reduced by the amount of Available Transferor Collections so applied in
respect
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of the Certificates. If the Draw Amount exceeds such Available Transferor
Collections, the Available Subordinated Amount will be reduced by the amount of
such excess, but not by more than the sum of the Investor Default Amount and the
Monthly Dilution Amount for such Distribution Date.
The balance of Available Transferor Collections on any Distribution Date
will be distributed to the Transferor on such date, provided that, if the Trust
Available Subordinated Amount for the immediately preceding Determination Date
exceeds the Transferor Amount on such date (after giving effect to any Principal
Receivables transferred to the Trust on such Distribution Date), the balance of
Available Transferor Collections will be deposited into the Reserve Fund to the
extent of such excess.
"Certificateholder Interest Collections" for any Distribution Date
means the portion of Interest Collections allocable to the Regular Pool
Balance for the related Collection Period allocated to the
Certificateholders' Interest as described under "Allocation
Percentages -- Allocation to the Certificateholders' Interest."
"Excess Interest" for any Distribution Date means the amount described
in clause (vi) above.
"Investment Proceeds" for any Distribution Date means an amount equal
to the sum of (a) the investment earnings credited to the Collection
Account on the related Determination Date with respect to funds held in the
Reserve Fund and the Principal Funding Account, (b) investment earnings
allocable to Series 1996-2 credited to the Collection Account on the
related Determination Date with respect to funds held in the Collection
Account and (c) all investment income earned on amounts in the Excess
Funding Account allocable to Series 1996-2 since the preceding Distribution
Date, in each case net of losses and investment expenses.
Reserve Fund. An Eligible Deposit Account will be established and
maintained in the name of the Trustee for the benefit of the Certificateholders
(the "Reserve Fund"). No deposit will be made into the Reserve Fund prior to the
first Distribution Date. The "Reserve Fund Required Amount" means an amount
which upon any Distribution Date will equal 0.50% of the outstanding principal
balance of the Certificates for such Distribution Date (after giving effect to
any change therein on such Distribution Date). If, after giving effect to the
allocations, distributions and deposits in the Reserve Fund described above
under "Interest Collections," the amount in the Reserve Fund is less than the
Reserve Fund Required Amount for the next following Distribution Date, the
Trustee shall deposit any remaining Available Transferor Collections for the
related Collection Period into the Reserve Fund until the amount in the Reserve
Fund is equal to such Reserve Fund Required Amount. The "Reserve Fund Deposit
Amount" is the amount, if any, by which the Reserve Fund Required Amount exceeds
the amount on deposit in the Reserve Fund. Funds in the Reserve Fund will be
invested in the same manner in which funds in the Collection Account may be
invested. On each Determination Date, the Servicer will credit to the Collection
Account any investment earnings (net of losses and investment expenses) with
respect to the Reserve Fund. After payment in full of the outstanding principal
balance of the Certificates and any Carry-Over Amount or Shortfall Amount, any
funds remaining on deposit in the Reserve Fund will be paid to the Transferor.
If, for any Distribution Date with respect to an Early Amortization Period,
after giving effect to the allocations, distributions and deposits described in
the preceding paragraph, the amount in the Reserve Fund is less than the Excess
Reserve Fund Required Amount as of such Distribution Date, the Trustee shall
deposit the remaining Available Transferor Collections for the related
Collection Period into the Reserve Fund until the amount in the Reserve Fund is
equal to such Excess Reserve Fund Required Amount. The "Excess Reserve Fund
Required Amount" for any Distribution Date means an amount equal to the greater
of (a) 5% of the Initial Principal Amount and (b) the excess of (i) the Minimum
Receivables Amount (after giving effect to any changes thereto on such
Determination Date) over (ii) the Pool Balance (after giving effect to changes
thereto on such Determination Date); provided that the Excess Reserve Fund
Required Amount shall in no event exceed the Available Subordinated Amount for
such Determination Date.
In connection with the allocations to the Reserve Fund referred to in the
two preceding paragraphs, if the remaining Available Transferor Collections are
not sufficient to fund the reserve funds for all outstanding Series and
Purchased Interests, then such remaining Available Transferor Collections will
be allocated to such reserve funds pro rata on the basis of the respective
amounts required to be deposited in such reserve funds.
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Excess Interest. On each Distribution Date, the Servicer will allocate the
Excess Interest with respect to the Collection Period immediately preceding such
Distribution Date, in the following order of priority:
(a) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed (after giving effect
to the allocation on such Distribution Date of the Miscellaneous Payments
allocable to Series 1996-2 with respect to such Distribution Date) will be
allocated in the same manner as Available Certificateholder Principal
Collections for such Distribution Date;
(b) an amount equal to the aggregate amount of Class B Investor
Charge-Offs which have not been previously reimbursed (after giving effect
to the allocation on such Distribution Date of the Miscellaneous Payments
allocable to Series 1996-2 with respect to such Distribution Date) will be
allocated in the same manner as Available Certificateholder Principal
Collections for such Distribution Date;
(c) an amount equal to the amount of reductions of the Available
Subordinated Amount on account of Investor Default Amounts that have not
previously been reinstated will be distributed to the Transferor and will
increase the Available Subordinated Amount;
(d) during any Dilution Reserve Period, an amount equal to the excess,
if any, of $1,000,000 over the balance on deposit in the Dilution Reserve
Fund shall be deposited in the Dilution Reserve Fund;
(e) an amount equal to the aggregate outstanding amounts of the
Monthly Servicing Fee which have been previously waived as described under
"-- Servicing Compensation and Payment of Expenses" will be distributed to
the Servicer; and
(f) the balance, if any, shall be distributed to the Transferor.
Principal Collections. On each Distribution Date, the Servicer will
allocate Available Certificateholder Principal Collections as follows:
(a) on each day during the Revolving Period, all Available
Certificateholder Principal Collections will be allocated, first, to make a
deposit to the Excess Funding Account if so required and, second, to Shared
Principal Collections as described under "Allocation
Percentage -- Principal Collections for all Series"; and
(b) for each Distribution Date with respect to the Accumulation Period
or any Early Amortization Period:
(i) an amount equal to Monthly Principal for such Distribution Date
will be deposited to the Principal Funding Account; and
(ii) the balance, if any, will be treated as Shared Principal
Collections.
In the event that the aggregate Invested Amount is greater than zero on the
Termination Date, any funds remaining in the Reserve Fund (after the application
of funds in the Reserve Fund as described above under "Interest Collections")
will be treated as a portion of Available Certificateholder Principal
Collections for the Distribution Date occurring on the Termination Date.
"Available Certificateholder Principal Collections" for any
Distribution Date means the sum of (a) Principal Collections allocated to
the Regular Pool Balance and further allocated to the Certificateholders'
Interest, as described above, for the related Collection Period, (b) the
amount, if any, of Interest Collections, funds in the Reserve Fund and
Available Transferor Collections allocated to cover the Investor Default
Amount or reimburse Investor Charge-Offs, as described above, (c) the
Miscellaneous Payments allocable to Series 1996-2 on deposit in the
Collection Account for such Distribution Date and (d) Shared Principal
Collections, if any, from other Series or Purchased Interests allocated to
Series 1996-2.
"Class A Monthly Principal" with respect to any Distribution Date
relating to the Accumulation Period or any Early Amortization Period will
equal the Available Certificateholder Principal Collections for such
Distribution Date; provided, however, that for each Distribution Date with
respect to the Accumulation Period, Class A Monthly Principal will not
exceed the Controlled Distribution Amount for
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such Distribution Date; and provided, further that Class A Monthly
Principal will not exceed the Class A Invested Amount.
"Class B Monthly Principal" with respect to any Distribution Date
relating to the Accumulation Period or any Early Amortization Period will
equal the Available Certificateholder Principal Collections for such
Distribution Date after the Class A Certificates have been paid or provided
for in full; provided, however, that for each Distribution Date with
respect to the Accumulation Period, Class B Monthly Principal will not
exceed the excess of the Controlled Distribution Amount for such
Distribution Date over Class A Monthly Principal for such Distribution
Date; and provided, further that Class B Monthly Principal will not exceed
the Class B Invested Amount.
"Controlled Amortization Amount" means an amount equal to the
aggregate outstanding principal amount of the Certificates as of the June
1999 Distribution Date (after giving effect to any changes therein on such
date) divided by the number of months comprising the Accumulation Period
Length.
"Controlled Distribution Amount" for a Distribution Date means the
excess, if any, of (i) the product of the Controlled Amortization Amount
and the number of Distribution Dates with respect to the Accumulation
Period through and including such Distribution Date over (ii) the amount on
deposit in the Principal Funding Account (including any amounts deposited
therein from the Series 1996-2 portion of the Excess Funding Account),
before giving effect to any withdrawals from or deposits to such account on
such Distribution Date.
"Monthly Principal" with respect to any Distribution Date relating to
the Accumulation Period or any Early Amortization Period means the sum of
Class A Monthly Principal and Class B Monthly Principal.
DILUTION RESERVE FUND
On any Dilution Reserve Trigger Date, the Servicer will establish and
maintain in the name of the Trustee, on behalf of the Trust, an Eligible Deposit
Account for the benefit of the Certificateholders and the holders of
certificates of each Series (other than a Concentration Series and Series
1994-1) (the "Dilution Reserve Fund"). During any Dilution Reserve Period, so
long as the Trust Available Subordinated Amount for the immediately preceding
Determination Date does not exceed the Transferor Amount on such date (after
giving effect to any Principal Receivables transferred to the Trust on such
Distribution Date), any remaining Available Transferor Interest Collections will
be deposited in the Dilution Reserve Fund until the balance on deposit therein
equals $1,000,000. In addition, during a Dilution Reserve Period, excess
interest will be deposited into the Dilution Reserve Fund as described under
"-- Distributions from the Collection Account; Reserve Fund -- Excess Interest."
If a Dilution Reserve Deposit Date occurs, the Servicer will deposit on
such date into the Dilution Reserve Fund an amount equal to the excess, if any,
of $1,000,000 over the balance on deposit in the Dilution Reserve Fund, and on
each Distribution Date thereafter, the Servicer shall withdraw from the Dilution
Reserve Fund and apply as Available Certificateholder Principal Collections an
amount equal to the excess, if any, of the related Monthly Dilution Amount over
the amounts allocated to cover all Monthly Dilution Amounts; provided that if
any Series which is not a Concentration Series is outstanding (other than Series
1994-1), and if the sum of such excess amount and the similar excess from each
other such Series is greater than funds on deposit in the Dilution Reserve Fund
on such day, then the balance on deposit in the Dilution Reserve Fund will be
shared pro rata among all Series which are not Concentration Series (other than
Series 1994-1) in accordance with the proportion that the series allocation
percentage of each bears to the sum of all such series allocation percentages. A
Dilution Reserve Deposit Date will occur following a Dilution Reserve Trigger
Date and the establishment of the Dilution Reserve Fund.
"Dilution Reserve Deposit Date" means any Business Day on which the
Regular Transferor Amount is less than the Regular Trust Available
Subordinated Amount (after giving effect to any deposits to the Excess
Funding Account on such day).
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"Dilution Reserve Period" means any period commencing on a Dilution
Reserve Trigger Date and ending on the first Business Day thereafter on
which the Regular Transferor Amount is equal to or greater than the sum of
the Regular Trust Available Subordinated Amount plus the Regular Minimum
Transferor Amount.
"Dilution Reserve Trigger Date" means any Business Day on which the
Regular Transferor Amount is less than the sum of the Regular Trust
Available Subordinated Amount plus 1% of the Regular Pool Balance (after
giving effect to any deposits to the Excess Funding Account on such date).
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account for the benefit of the
Certificateholders (the "Principal Funding Account"). On each Distribution Date
with respect to the Accumulation Period, Monthly Principal will be deposited in
the Principal Funding Account as provided above under "Distributions from the
Collection Account; Reserve Fund"; provided that if any Early Amortization Event
occurs during the Accumulation Period (unless, in limited circumstances with
respect to the required addition of Accounts, such Early Amortization Event
shall have been cured), the Principal Funding Account Balance (as defined below)
shall be paid on the first Special Payment Date to the Class A
Certificateholders and, following payment in full of all principal of the Class
A Certificates, the balance to the Class B Certificateholders.
All amounts on deposit in the Principal Funding Account on any Distribution
Date (after giving effect to distributions to be made on such Distribution Date)
(the "Principal Funding Account Balance") will be invested from the date of
their deposit to a date on or prior to the succeeding Distribution Date (or the
next succeeding Special Payment Date if applicable) by the Trustee at the
direction of the Servicer in investments rated in the highest short-term
category of each Rating Agency or in such other investments that are acceptable
to each Rating Agency. On each Distribution Date, the interest and other
investment income on the Principal Funding Account Balance will be deposited in
the Collection Account.
DISTRIBUTIONS
Payment to Certificateholders will be made from the Collection Account, the
Principal Funding Account and the Series 1996-2 portion of the Excess Funding
Account. The Servicer shall instruct the Trustee to apply the funds on deposit
in the Collection Account, the Principal Funding Account and the Series 1996-2
portion of the Excess Funding Account and shall instruct the Trustee or the
applicable paying agent to make, without duplication, the following
distributions:
(a) On each Distribution Date, all amounts on deposit in the
Collection Account that are allocable to Series 1996-2 to the extent
required to pay accrued interest on the Certificates will be distributed
first to Class A Certificateholders to the extent of amounts due and owing
and, second, to Class B Certificateholders to the extent of amounts due and
owing, and payments of Shortfall Amounts and Carry-Over Amounts shall be
made to the extent of amounts available to make such payments;
(b) On each Special Payment Date and on the Expected Final Payment
Date, the Principal Funding Account Balance and the amount on deposit in
the Excess Funding Account allocable to Series 1996-2 shall be distributed
first to Class A Certificateholders up to a maximum amount on any such date
equal to the excess of the outstanding principal amount of the Class A
Certificates over unreimbursed Class A Investor Charge-Offs, each on such
date and second to Class B Certificateholders up to a maximum amount on any
such date equal to the excess of the outstanding principal amount of the
Class B Certificates over unreimbursed Class B Investor Charge-Offs, each
on such date.
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" will be allocated between the Regular Pool Balance
and the Concentration Amount daily, and the sum of the daily amounts allocated
to the Regular Pool Balance and to the Concentration Pool Balance for each
Collection Period will be allocated among Regular Series (including
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Purchased Interests) and Concentration Series, respectively, on a monthly basis.
Defaulted Receivables on any day are (i) all Receivables which were charged off
as uncollectible in respect of such day and (ii) all Receivables which were
Eligible Receivables at the time of transfer to the Trust, which arose in an
Account which became an ineligible Account after the date of transfer of such
Receivables to the Trust and which remained outstanding for six consecutive
Determination Dates thereafter. The "Regular Defaulted Amount" for any
Collection Period will be the sum, for each day in the Collection Period, of an
amount (which shall not be less than zero) equal to (a) the principal amount of
Receivables that became Defaulted Receivables during such Collection Period, to
the extent allocated to the Regular Pool Balance less (b) the full amount of any
Defaulted Receivables, to the extent allocated to the Regular Pool Balance
subject to reassignment to the Transferor for such Collection Period unless
certain events of bankruptcy, insolvency, or receivership have occurred with
respect to the Transferor, in which event the Regular Defaulted Amount will not
be reduced for those Defaulted Receivables. On each day during the Collection
Period, Defaulted Receivables for such day will be allocated between the Regular
Pool Balance and the Concentration Pool Balance based on the Concentration
Percentage that was applicable on the day on which the related Dealer was placed
on "finance hold." Receivables will be charged off as uncollectible in
accordance with the Servicer's customary and usual policies and procedures for
servicing its own comparable revolving dealer wholesale loan accounts.
Generally, Receivables relating to a particular Dealer are charged off by WOFCO
when the outstanding wholesale liabilities of such Dealer are considered
uncollectible because of bankruptcy, insolvency or conversion proceedings with
respect to the Dealer or the Dealer's refusal to pay its obligations to WOFCO
under its Dealer floorplan financing agreement. A portion of the Regular
Defaulted Amount equal to the product of (x) the Regular Defaulted Amount for
such Collection Period and (y) the Floating Allocation Percentage for such
Collection Period will be allocated to the Certificateholders. The portion of
the Regular Defaulted Amount allocated to the Certificateholders is referred to
as the "Investor Default Amount."
If the Servicer adjusts the amount of any Receivable because of a rebate,
billing error or certain other noncash items to a Dealer, or because such
Receivable was created in respect of inventory which was refused or returned by
a Dealer, the principal amount of the Transferor Interest will be reduced by the
amount of the adjustment or charge-off. After any such reduction in the amount
of the Transferor Interest occurs, the amount of such adjustment described above
will be deducted from the Pool Balance. Furthermore, to the extent that the
reduction in the Transferor Interest would reduce the Transferor Amount and the
Regular Transferor Amount, respectively, below the sum of the Trust Available
Subordinated Amount and the Minimum Transferor Amount, or the sum of the Regular
Trust Available Subordinated Amount and the Regular Minimum Transferor Amount,
respectively, for the immediately preceding Determination Date (after giving
effect to the allocations, distributions, withdrawals and deposits to be made on
the Distribution Date immediately following such Determination Date), the
Transferor will be required to deposit a cash amount equal to such deficiency
into the Collection Account in immediately available funds (an "Adjustment
Payment") on the day on which such adjustment occurs.
INVESTOR CHARGE-OFFS
If the Available Subordinated Amount is reduced to zero, and on any
Distribution Date the Deficiency Amount is greater than zero, the Class B
Principal Amount will be reduced by the Deficiency Amount, but not by more than
the Investor Default Amount and the unreimbursed Monthly Dilution Amount for
such Distribution Date (a "Class B Investor Charge-Off"). Any reduction in the
Invested Amount on account of Investor Default Amounts (an "Investor
Charge-Off") and any unreimbursed Monthly Dilution Amount will have the effect
of slowing or reducing the return of principal to the Certificateholders. If the
Invested Amount has been reduced by any Class B Investor Charge-Offs, the
Invested Amount and the Class B Principal Amount will thereafter be increased on
any Distribution Date (but not by an amount in excess of the aggregate Class B
Investor Charge-Offs) by the sum of (a) the Miscellaneous Payments allocable to
Series 1996-2 for such Distribution Date and (b) the amount of Excess Interest
allocated and available for such purpose as described above; provided that the
Class B Principal Amount will not be increased if and to the extent that the
Class A Principal Amount has been reduced by Class A Investor Charge-Offs, and
the Class A Principal Amount has not first been increased by the amount of such
reduction.
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In the event that any such reduction of the Class B Invested Amount would
cause the Class B Principal Amount to be less than zero, the Class B Principal
Amount will be reduced to zero, and the Class A Principal Amount will be reduced
by the amount by which the Class B Principal Amount would have been reduced
below zero, but not more than the Investor Default Amount and the unreimbursed
Monthly Dilution Amount for such Distribution Date (a "Class A Investor
Charge-Off"), which will have the effect of slowing or reducing the return of
principal to the Class A Certificateholders. If the Class A Principal Amount has
been reduced by the amount of any Class A Investor Charge-Offs, it will be
increased on any Distribution Date (but not by an amount in excess of the
aggregate amount of Class A Investor Charge-Offs) by the sum of (a) the
Miscellaneous Payments allocable to Series 1996-2 for such Distribution Date and
(b) the amount of Excess Interest allocated and available for such purpose as
described above. See " -- Allocation Percentages."
OPTIONAL REPURCHASE
On any Distribution Date occurring after the Invested Amount of the
Certificates is reduced to 10% of the initial outstanding principal amount of
the Certificates or less, the Transferor will have the option, subject to
certain conditions, to repurchase the Certificateholders' Interest. The purchase
price at such time will be equal to the sum of the Class A Principal Amount and
the Class B Principal Amount plus accrued and unpaid interest on the
Certificates at the applicable Certificate Rates. The purchase price will be
deposited in the Collection Account in immediately available funds on the
Distribution Date on which the Transferor exercises such option. Following any
such purchase, the Certificateholders will have no further rights with respect
to the Certificateholders' Interest, other than the right to receive the final
distribution on the Certificates. In the event that Transferor fails for any
reason to deposit such purchase price, payments will continue to be made to the
Certificateholders as described under " -- Distribution from the Collection
Account; Reserve Fund."
EARLY AMORTIZATION EVENTS
Commencing on the first Distribution Date following the Collection Period
in which an Early Amortization Event has occurred, Principal Collections will no
longer be paid to the Transferor or allocated to any other Series or Purchased
Interest but instead will be distributed to Certificateholders monthly on each
Distribution Date, except as described below, and the Controlled Distribution
Amount will no longer apply to distributions of principal on the Certificates.
An "Early Amortization Event" for Series 1996-2 refers to any of the following
events:
1. failure on the part of the Transferor, the Servicer or WOFCO, as
applicable, (i) to make any payment or deposit required by the Pooling and
Servicing Agreement or the Receivables Purchase Agreement, including but
not limited to any Transfer Deposit Amount or Adjustment Payment, on or
before the date occurring five business days after the date such payment or
deposit is required to be made therein; or (ii) to deliver a Distribution
Date Statement on the date required under the Pooling and Servicing
Agreement (or within the applicable grace period which will not exceed ten
business days); (iii) to comply with its covenant not to create any lien on
a Receivable; or (iv) to observe or perform any other covenants or
agreements set forth in the Pooling and Servicing Agreement or the
Receivables Purchase Agreement, which failure has a materially adverse
effect on the Certificateholders and which continues unremedied for a
period of 60 days after written notice of such failure, provided that for
so long as Moody's Investors Service, Inc. is providing a rating with
respect to a Series or Purchased Interest at the request of the Transferor,
then the period described in clauses (i) and (ii) above will be reduced to
two and five Business Days, respectively;
2. any representation or warranty made by WOFCO in the Receivables
Purchase Agreement or by the Transferor in the Pooling and Servicing
Agreement or any information required to be given by the Transferor to the
Trustee to identify the Accounts proves to have been incorrect in any
material respect when made and continues to be incorrect in any material
respect for a period of 60 days after written notice and as a result the
interests of the Certificateholders are materially and adversely affected;
provided, however, that an Early Amortization Event shall not be deemed to
occur thereunder if the Transferor has repurchased the related Receivables
or all such Receivables, if applicable, during such period in accordance
with the provisions of the Pooling and Servicing Agreement;
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3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of the Transferor, WOFCO or Toyota;
4. the Trust or the Transferor becomes an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
5. a failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within 15 business days after any day on which it is
or would have been, if not for the limitations described in "Risk
Factors -- Release of Liens under Existing Credit Arrangements," required
to convey such Receivables pursuant to the Pooling and Servicing Agreement;
6. on any Determination Date, the Available Subordinated Amount for
the next Distribution Date will be reduced to an amount less than the
Required Subordinated Amount on such Determination Date after giving effect
to the distributions to be made on the next Distribution Date;
7. any Servicer Default with respect to the Certificates occurs;
8. on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Collection Periods, where the Monthly Payment Rate
for a Collection Period is the percentage obtained by dividing Principal
Collections for such Collection Period by the daily average aggregate
amount of Principal Receivables included in the Trust for such Collection
Period, is less than 30%;
9. the failure to pay the outstanding principal amount of the
Certificates by the Expected Final Payment Date;
10. as of the end of any Collection Period, the Regular Transferor
Amount is less than 2% of the Regular Pool Balance, or the Transferor
Amount for all Series and Purchased Interests, including Concentration
Series, is less than 2% of the Pool Balance, and such condition continues
unremedied for a period of 15 business days;
11. as of the end of any Collection Period, the Regular Pool Balance
is less than the Regular Minimum Receivables Amount, or the Pool Balance is
less than the Minimum Receivables Amount for all Series and Purchased
Interests and such condition continues unremedied for a period of 15
business days; or
12. if, on any date, either (i) any Shortfall Amount arises with
respect to six consecutive Determination Dates, (ii) the amount available
to be drawn by WODFI under a demand note provided by WOFCO falls below the
amounts specified in the Pooling and Servicing Agreement or (iii) payment
is not made by WOFCO or WODFI with respect to the demand note or any
Shortfall Amount or Carry-Over Amount, respectively.
Upon the occurrence of any event described above, an Early Amortization
Event will be deemed to have occurred without any notice or other action on the
part of any other party immediately upon the occurrence of such event. The Early
Amortization Period will commence at the close of business on the business day
immediately preceding the day on which the Early Amortization Event occurs.
Monthly distribution of principal to the Certificateholders will begin on the
first Distribution Date following the Collection Period in which an Early
Amortization Period has commenced and will continue, to the extent described
under
" -- Distributions" (each a "Special Payment Date").
Under certain limited circumstances, an Early Amortization Period which
commences prior to the scheduled end of the Revolving Period may terminate and
the Revolving Period recommence; provided that such recommencement will not
occur more than once with respect to any Series or Purchased Interest. If an
Early Amortization Period results from the failure by the Transferor to convey
Receivables in Additional Accounts to the Trust as described in paragraph 5
above during the Revolving Period and no other Early Amortization Event has
occurred, the Early Amortization Period resulting from such failure will
terminate and the Revolving Period will recommence (unless the scheduled
termination date of the Revolving Period has occurred) as of the end of the
first Collection Period during which the Transferor would no longer be required
to convey Receivables to the Trust. The Transferor may no longer be required to
convey Receivables as described above as a result of a reduction in the Invested
Amount occurring due to principal payments
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made on the Certificates and the certificates of other outstanding Series during
the Early Amortization Period or as a result of the subsequent addition of
Receivables to the Trust.
In addition to the consequences of an Early Amortization Event discussed
above, if an insolvency event occurs with respect to the Transferor as provided
in the Pooling and Servicing Agreement, on the day of such insolvency event, the
Transferor will (subject to the actions of the certificateholders and the
Purchasers) immediately cease to transfer Receivables to the Trust and promptly
give notice to the Trustee of such insolvency event or violation, as applicable.
Under the terms of the Pooling and Servicing Agreement, within 15 days the
Trustee will publish a notice of such insolvency event or violation stating that
the Trustee intends to sell, liquidate or otherwise dispose of the Receivables
in a commercially reasonable manner and on commercially reasonable terms, unless
within a specified period of time holders of Certificates and certificates of
each other outstanding Series and Purchasers representing more than 50% of the
aggregate outstanding principal amount of (i) the certificates of each such
Series (or, with respect to any Series with two or more classes, the
certificates of each such class), (ii) the Purchased Interests, (iii) and each
transferee of an interest in the Transferor Interest and each person holding a
Supplemental Certificate, instruct the Trustee not to sell, liquidate or dispose
of the Receivables and to continue transferring Receivables as before such
insolvency event or violation, as applicable. If the portion of such proceeds
allocated to the Certificateholders' Interest and Available Transferor Principal
Collections, together with the proceeds of any collections on the Receivables in
the Collection Account allocable to the Certificateholders' Interest are not
sufficient to pay the aggregate unpaid balance of the Certificates in full plus
accrued and unpaid interest thereon and any outstanding Carry-Over Amounts,
Certificateholders will incur a loss.
ASSET COMPOSITION EVENT
An "Asset Composition Event" will occur if, during the Revolving Period,
(a) the sum of all Eligible Investments and amounts on deposit in the Excess
Funding Account not allocable to any Concentration Series represents more than
25% of the total assets of the Trust on each of twelve or more consecutive
Determination Dates, after giving effect to all payments made or to be made on
the Distribution Date next succeeding each such respective Determination Date;
or (b) on any two consecutive Determination Dates, the sum of all Eligible
Investments and amounts on deposit in the Excess Funding Account not allocable
to any Concentration Series represents more than 50% of the total assets of the
Trust, after giving effect to all payments to be made on the next succeeding
Distribution Date.
Upon the occurrence of an Asset Composition Event, the Servicer will
calculate the "Asset Correction Amount," which equals the amount that would be
necessary to be paid out of the Series 1996-2 portion of the Excess Funding
Account and the portions of the Excess Funding Account allocable to other Series
and Purchased Interests (other than Concentration Series) on the next
Distribution Date to achieve compliance with the tests specified above, after
giving effect to such payment and to all payments that otherwise would have been
made on such Distribution Date. The Class A Principal Amount and, after the
Class A Principal Amount has been paid in full, the Class B Principal Amount,
will become payable on such Distribution Date to the extent of the Series 1996-2
Allocation Percentage of the Asset Correction Amount.
TERMINATION
The Trust will terminate on the earlier to occur of (a) the day following
the Distribution Date on which the aggregate Invested Amounts for all Series and
Purchased Interests is zero, if the Transferor elects to terminate the Trust at
such time, and (b) December 31, 2024. Upon termination of the Trust, all right,
title and interest in, to and under the Receivables, related Collateral Security
and other funds of the Trust (other than amounts in the Collection Account, the
Principal Funding Account or the Excess Funding Account for the final
distribution of principal and interest to certificateholders) will be conveyed
and transferred to the Transferor.
In any event, the last payment of principal and interest on the
Certificates will be due and payable no later than the October 2001 Distribution
Date (the "Termination Date"). In the event that the Invested Amount is greater
than zero on the Termination Date, the Trustee will sell or cause to be sold
(and apply the
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proceeds to the extent necessary to pay such remaining amounts to all
Certificateholders) an interest in the Receivables or certain Receivables, as
specified in the Pooling and Servicing Agreement, in an amount equal to 110% of
the Invested Amount (after giving effect to deposits and distributions otherwise
to be made on the Termination Date); provided, however, that in no event shall
such amount exceed the Series 1996-2 Allocation Percentage of the Regular Pool
Balance on such Termination Date. The net proceeds of such sale and any
collections on the Receivables will be paid on the Termination Date (i) first,
pro rata to the Class A Certificateholders until the principal amount of the
Class A Certificates has been paid in full, (ii) second, pro rata to the Class B
Certificateholders until the principal amount of the Class B Certificates has
been paid in full and (iii) third, any outstanding Carry-Over Amounts to the
Class A Certificateholders and then, to the extent the Class A
Certificateholders have been paid in full, to the Class B Certificateholders.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and the Trustee from and against any loss, liability,
expense, damage or injury suffered or sustained arising out of any acts or
omissions arising out of activities of the Trust or the Trustee or the Servicer
pursuant to the Pooling and Servicing Agreement; provided that the Trust or the
Trustee will not be so indemnified if such acts or omissions constitute fraud,
gross negligence, breach of fiduciary duty or willful misconduct by the Trustee.
In addition, the Servicer will not indemnify the Trust, the Trustee, the
Certificateholders or the Purchasers for any act taken by the Trustee at the
request of the Certificateholders or the Purchasers or for any tax required to
be paid by the Trust or the Certificateholders.
Under the Pooling and Servicing Agreement, the Transferor agrees to be
liable directly to an injured party for the amount of any loss, liability,
expense, damage or injury suffered or sustained (other than those incurred by a
certificateholder or purchaser in its capacity as an investor in certificates or
purchaser of a purchased interest, respectively, of any Series) arising out of
or based upon the arrangement created by the Pooling and Servicing Agreement (to
the extent that the Trust assets remaining after the certificateholders of all
series have been paid in full are insufficient to pay any such loss, liability,
expense, damage or injury) as though such agreement created a partnership under
the Uniform Partnership Act as in effect in the State of Connecticut in which
the Transferor was a general partner. In addition, the Transferor will indemnify
the Trust for certain intangibles taxes which may be imposed by the State of
Florida. See "Certain Tax Matters -- State and Local Taxation." No assumption of
liability by the Transferor shall be borne by the Servicer.
The Pooling and Servicing Agreement further provides that, except as
described above and with certain other exceptions, neither the Transferor, the
Servicer nor any of their directors, officers, employees or agents will be under
any liability to the Trust, the Trustee, the Certificateholders, the Purchasers
or any other person for taking any action, or for refraining from taking any
action, pursuant to the Pooling and Servicing Agreement. However, neither the
Transferor, the Servicer nor any of their directors, officers, employees or
agents will be protected against any liability which would otherwise be imposed
by reason of willful misfeasance, bad faith or gross negligence of any such
person in the performance of their duties or by reason of reckless disregard of
their obligations and duties thereunder. In the event a successor Servicer is
named under the Pooling and Servicing Agreement, such successor Servicer will
indemnify and hold harmless the Transferor for any loss, liability, expense,
damage or injury as described in this paragraph arising from any act or omission
of such successor Servicer.
In addition, the Pooling and Servicing Agreement provides that the Servicer
is not under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its servicing responsibilities under the Pooling and
Servicing Agreement. The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
certificateholders or Purchasers with respect to the Pooling and Servicing
Agreement and the rights and duties of the parties thereto and the interest of
the certificateholders and the Purchasers thereunder.
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COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer is
responsible for servicing, collecting, enforcing and administering the
Receivables in accordance with customary and usual procedures for servicing its
own revolving credit line dealer wholesale loans, except where the failure to so
act would not materially and adversely affect the rights of the Trust.
The Servicer will only change the terms relating to the Accounts if (i) in
the Servicer's reasonable judgment, no Early Amortization Event will occur as a
result of the change and (ii) the change is made applicable to the comparable
segment of the dealer loan accounts with similar characteristics owned or
serviced by the Servicer and not only to the Accounts.
Servicing activities performed by the Servicer include collecting and
recording payments, communicating with dealers, investigating payment
delinquencies, evaluating the increase of credit limits, and maintaining
internal records with respect to each Account. Managerial and custodial services
performed by the Servicer on behalf of the Trust include providing assistance in
any inspections of the documents and records relating to the Accounts and
Receivables by the Trustee pursuant to the Pooling and Servicing Agreement,
maintaining the agreements, documents and files relating to the Accounts and
Receivables as custodian for the Trust and providing related data processing and
reporting services for certificateholders and Purchasers and on behalf of the
Trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the Servicer covenants, among other
things, that (a) it will duly satisfy all obligations on its part to be
fulfilled under or in connection with the Receivables and Accounts, will
maintain in effect all material qualifications required in order to service the
Receivables and Accounts and will comply in all material respects with all
requirements of law in connection with servicing the Receivables and the
Accounts, the failure to comply with which would have a materially adverse
effect on the certificateholders of any outstanding Series or on the Purchasers
of any Purchased Interest; (b) it will not permit any rescission or cancellation
of a Receivable except as ordered by a court of competent jurisdiction or other
government authority; (c) it will do nothing to impair the rights of the
Certificateholders or Purchasers in the Receivables or Accounts; and (d) it will
not reschedule, revise or defer payments due on any Receivable except in
accordance with its guidelines for servicing revolving credit line dealer
wholesale loans.
Under the terms of the Pooling and Servicing Agreement, if the Transferor
or the Servicer discovers, or receives written notice from the Trustee, any
Purchaser or any Enhancement Provider, that any covenant of the Servicer set
forth above has not been complied with in all material respects and such
noncompliance has not been cured within 30 days thereafter (or such longer
period as the Trustee may agree to) and has a materially adverse effect on the
interests of all certificateholders and Purchasers in any Receivable or Account,
the Servicer will purchase such Receivable or all Receivables in such Account,
as applicable. Such purchase will be made on the Determination Date following
the expiration of the 30 day cure period and the Servicer will be obligated to
deposit into the Collection Account an amount equal to the amount of such
Receivable plus accrued and unpaid interest thereon in the Collection Account.
The amount of such deposit shall be deemed a Transfer Deposit Amount. The
purchase by the Servicer constitutes the sole remedy available to the
certificateholders if such covenant or warranty of the Servicer is not satisfied
and the Trust's interest in any such purchased Receivables shall be
automatically assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation with respect to the Receivables for its
servicing activities and reimbursement for its expenses will be a monthly
servicing fee (the "Servicing Fee") in an amount payable in arrears on each
Distribution Date prior to the Termination Date generally equal to one-twelfth
of the product of (a) 1.0% or, if the Servicing Fee has been waived as described
below, 0% for the Distribution Date in respect of which the Servicing Fee has
been waived (the "Servicing Fee Rate"), and (b) the aggregate amount of
Principal Receivables included in the Trust as of the last day of the second
preceding Collection Period. The share of the Servicing Fee allocable to the
Certificateholders with respect to any Distribution Date (the
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"Monthly Servicing Fee") generally will be equal to one-twelfth of the product
of (a) the Servicing Fee Rate and (b) the Invested Amount as of the last day of
the second preceding Collection Period. The remainder of the Servicing Fee shall
be paid by the Transferor, the certificateholders of other Series and the
Purchasers of Purchased Interests. The Monthly Servicing Fee shall be payable to
the Servicer solely to the extent amounts are available for distribution
therefor in accordance with the terms of the Pooling and Servicing Agreement.
The Servicer will be permitted to waive its right to receive the Servicing
Fee on any Distribution Date, so long as it believes that sufficient Interest
Collections will be available on a future Distribution Date to pay the Monthly
Servicing Fee relating to such waived Servicing Fee, in which case the Servicing
Fee and the Monthly Servicing Fee for such Distribution Date shall be deemed to
be zero.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, payment of fees and disbursements of the Trustee
and independent accountants and all other fees and expenses which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
Trust, the certificateholders or the Purchasers other than Federal, state and
local income and franchise taxes, if any, of the Trust, the Certificateholders
or the Purchasers.
CERTAIN MATTERS REGARDING THE SERVICER
WOFCO, as Servicer, is permitted to delegate any of its duties as Servicer
to any of its affiliates, but any such delegation (other than any Annual
Servicing Transfer) will not relieve the Servicer of its obligations under the
Pooling and Servicing Agreement. The Servicer may not resign from its
obligations and duties under the Pooling and Servicing Agreement, except upon
determination that such duties are no longer permissible under applicable law.
No such resignation will become effective until the Trustee or a successor to
the Servicer has assumed the Servicer's responsibilities and obligations under
the Pooling and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default, the Trustee, by written notice to the
Servicer, may terminate all of the rights and obligations of the Servicer, as
servicer, under the Pooling and Servicing Agreement and in and to the
Receivables and the proceeds thereof and appoint a new Servicer (a "Service
Transfer"). The rights and interest of the Transferor under the Pooling and
Servicing Agreement in the Transferor Interest will not be affected by any
Service Transfer. The Trustee shall as promptly as possible appoint a successor
Servicer (subject to the consent of any Enhancement Provider and of any
Purchaser) and if no successor Servicer has been appointed by the Trustee and
has accepted such appointment by the time the Servicer ceases to act as
Servicer, all rights, authority, power and obligations of the Servicer under the
Pooling and Servicing Agreement shall pass to and be vested in the Trustee.
Prior to any Service Transfer, the Trustee will review any bids obtained from
potential servicers meeting certain eligibility requirements set forth in the
Pooling and Servicing Agreement to serve as successor Servicer for servicing
compensation not in excess of the Servicing Fee plus certain excess amounts
payable by the Transferor.
A "Servicer Default" refers to any of the following events:
1. failure by the Servicer to make any payment, transfer or deposit,
or to give instructions to the Trustee to make any payment, transfer or
deposit, on the date the Servicer is required to do so under the Pooling
and Servicing Agreement, which is not cured within a five business day
grace period after notice to the Servicer;
2. failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer in the Pooling and Servicing
Agreement (exclusive of breaches of covenants in respect of
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which the Servicer repurchases the related Receivables, as described under
"-- Servicer Covenants") which has a materially adverse effect on the
rights of the certificateholders of any outstanding Series or the Purchaser
of any Purchased Interest, and which material adverse effect continues
unremedied for a period of 30 days after the earlier of written notice or
actual knowledge of such breach, or the Servicer delegates its duties under
the Pooling and Servicing Agreement, except as specifically permitted
thereunder;
3. any representation, warranty or certification made by the Servicer
in the Pooling and Servicing Agreement or in any certificate delivered
pursuant to the Pooling and Servicing Agreement proves to have been
incorrect in any material respect when made, which has a material adverse
effect on the rights of the certificateholders of any outstanding Series or
the Purchaser of any Purchased Interest, and which material adverse effect
continues for a period of 60 days after written notice of such breach; or
4. the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (1) above for a period of ten business days or referred
to under clauses (2) or (3) for a period of 60 business days, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and was caused by an act of
God or other similar occurrence. Upon the occurrence of any such event, the
Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of the Pooling and
Servicing Agreement and the Servicer shall provide the Trustee, any Enhancement
Provider, the Transferor, the certificateholders and the Purchasers prompt
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. The Servicer shall immediately notify the
Trustee in writing of any Servicer Default reports.
PERIODIC REPORTS
On each Distribution Date, the Trustee will forward (or cause to be
forwarded) to each Certificateholder of record (which is expected to be Cede, as
nominee for DTC, unless Definitive Certificates are issued) a statement (the
"Distribution Date Statement") prepared by the Servicer setting forth the
following information (which, in the case of (c), (d) and (e) below, will be
stated on the basis of an original principal amount of $1,000 per Certificate if
the Accumulation Period or an Early Amortization Period has commenced): (a) the
aggregate amount of collections, the aggregate amount of Interest Collections
and the aggregate amount of Principal Collections processed during the
immediately preceding Collection Period; (b) the Series 1996-2 Allocation
Percentage, the Floating Allocation Percentage and the Principal Allocation
Percentage for such Collection Period; (c) the total amount, if any, distributed
on the Certificates; (d) the amount of such distribution allocable to principal
on the Certificates; (e) the amount of such distribution allocable to interest
on the Certificates; (f) the Investor Default Amount for such Distribution Date;
(g) the Draw Amount, if any, for the preceding Collection Period; (h) the amount
of the Investor Charge-Offs and the amounts of reimbursements thereof for the
preceding Collection Period; (i) the amount of the Monthly Servicing Fee for the
preceding Collection Period; (j) the Controlled Distribution Amount; (k) the
Invested Amounts, the Excess Funding Account balance and the outstanding
principal balance of the Certificates for such distribution (after giving effect
to all distributions which will occur on each Distribution Date); (l) the "pool
factor" for the Certificates as of the Determination Date with respect to such
Distribution Date (consisting of an eleven-digit decimal expressing the sum of
the Class A Principal Amount and the Class B Principal Amount as of such
Determination Date (determined after taking into account any increases or
decreases which will occur on such Distribution Date) as a portion of the
Invested Amount); (m) the Available Subordinated Amount for such Determination
Date; (n) the Reserve Fund balance for such date; and (o) the Principal Funding
Account Balance with respect to such date.
On or before April 30 of each calendar year, beginning with April 30, 1997,
the Trustee will furnish (or cause to be furnished) to each person who at any
time during the preceding calendar year was a Certificateholder of record (which
is expected to be Cede, as nominee for DTC, unless Definitive Certificates are
issued) a statement containing the information required to be provided by an
issuer of indebtedness under
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the Code for such preceding calendar year or the applicable portion thereof
during which such person was a Certificateholder, together with such other
customary information as is required to be provided by an issuer of indebtedness
under the Code and such other customary information as is necessary to enable
the Certificateholders to prepare their United States Federal income tax
returns. Moreover, as long as the Certificateholder of record is Cede, as
nominee for DTC, Certificate Owners will receive such tax information from
Direct Participants and Indirect Participants rather than from the Trustee. See
"Certain Tax Matters."
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that, on or before April 30 of
each calendar year, the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report relating to certain matters in
connection with the servicing of WOFCO's portfolio of wholesale receivables.
The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before April 30 of each calendar year of a statement signed by an officer of
the Servicer to the effect that the Servicer has fully performed, or caused to
be fully performed its obligations in all material respects under the Pooling
and Servicing Agreement throughout the preceding year or, if there has been a
default in the performance of any such obligation, specifying the nature and
status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement may be amended by the Transferor, the
Servicer and the Trustee, without certificateholder or Purchaser consent, so
long as any such action shall not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interest of the certificateholders
or the Purchasers.
The Pooling and Servicing Agreement may be amended by the Transferor, the
Servicer and the Trustee with the consent of the holders of certificates and
Purchasers evidencing not less than 51% of the aggregate unpaid principal amount
of the certificates and Purchased Interests of all adversely affected Series and
Purchased Interests for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or of modifying in any manner the rights of certificateholders or
Purchasers. No such amendment, however, may (a) reduce in any manner the amount
of, or delay the timing of, distributions required to be made on any certificate
or Purchased Interest, (b) change the definition or the manner of calculating
any certificateholders' or Purchasers' interest, (c) reduce the amount available
under any Enhancement, (d) adversely affect the rating of any Series or class or
Purchased Interest by each Rating Agency without the consent of the holders of
certificates of such Series, or class or Purchased Interest evidencing not less
than 51% of the aggregate unpaid principal amount of the certificates of such
Series or class or Purchased Interest or (e) reduce the aforesaid percentage of
the unpaid principal amount of certificates or Purchasers the holders of which
are required to consent to any such amendment, in the case of (a), without the
consent of the holder of such certificate or Purchaser and, in the case of (b),
(c) and (e), without the consent of all certificateholders of the adversely
affected Series and all Purchasers of the adversely affected Purchased Interest.
Promptly following the execution of any amendment to the Pooling and Servicing
Agreement (other than an amendment described in the preceding paragraph), the
Trustee will furnish written notice of the substance of such amendment to each
certificateholder and Purchaser.
The Pooling and Servicing Agreement may not be amended in any manner which
materially adversely affects the interests of any Enhancement Provider without
its prior consent.
LIST OF CERTIFICATEHOLDERS AND PURCHASERS
Upon written request of any of the certificateholders or Purchasers of
record, the Trustee will afford, within five business days after receipt of such
request, such certificateholders and Purchasers access during business hours to
the current list of certificateholders and Purchasers for purposes of
communicating with
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other certificateholders or Purchasers with respect to their rights under the
Pooling and Servicing Agreement. See "-- Book-Entry Registration" and
"-- Definitive Certificates."
The Pooling and Servicing Agreement provides for special meetings of the
Certificateholders under certain limited circumstances but will not provide for
any annual or other meetings of Certificateholders.
THE TRUSTEE
Fleet National Bank, a national banking association, will act as Trustee
under the Pooling and Servicing Agreement. The Trustee's corporate trust
department is located at One Federal Street, Boston, Massachusetts 02211. The
Servicer and its affiliates (excluding, as to obtaining credit, the Transferor)
may from time to time enter into normal banking and trustee relationships with
the Trustee and its affiliates. In addition, for purposes of meeting the legal
requirements of certain local jurisdictions, the Trustee shall have the power to
appoint a co-trustee or separate trustees of all or a part of the Trust. In the
event of such appointments, all rights, powers, duties and obligations shall be
conferred or imposed upon the Trustee and such separate trustee or co-trustee
jointly, or in any jurisdiction in which the Trustee shall be incompetent or
unqualified to perform certain acts singly upon such separate trustee or
co-trustee, who shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Servicer may appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee does not become
effective until the acceptance of the appointment by the successor Trustee.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables that are transferred to the Trust by WODFI are acquired by
WODFI from WOFCO pursuant to the Receivables Purchase Agreement. The following
summary describes certain terms of the Receivables Purchase Agreement and is
qualified in its entirety by reference to the Receivables Purchase Agreement.
SALE OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement, WOFCO sells and transfers
to the Transferor all of its right, title and interest in and to all of the
Receivables and related Collateral Security. As described herein, pursuant to
the Pooling and Servicing Agreement, the Transferor transfers to the Trust all
of its right, title and interest in and to the Receivables Purchase Agreement.
In connection with its sale of Receivables to the Transferor, WOFCO has and
will continue to indicate in its computer files that the Receivables have been
sold to the Transferor and that such Receivables have been transferred by the
Transferor to the Trust. In addition, WOFCO has (i) provided to WODFI a computer
file or microfiche or written list containing a true and complete list of all
such Receivables, identifying the principal balances of the Receivables as of
the Initial Closing Date and (ii) delivered to WODFI all documents, if any,
evidencing the Receivables which constitute "instruments" (as defined in the
UCC). As a precautionary measure, WOFCO has filed UCC financing statements with
respect to the Receivables meeting the requirements of Florida state law. See
"Risk Factors -- Sale and Transfer of Receivables; Security Interest and
Insolvency Considerations" and "Certain Legal Aspects of the
Receivables -- Transfer of Receivables."
REPRESENTATIONS AND WARRANTIES
WOFCO has made certain representations and warranties to the Transferor to
the effect that, among other things, (a) as of the Initial Closing Date, and
each Series Issuance Date, it was duly incorporated and in good standing and
that it has the authority to consummate the transactions contemplated by the
Receivables
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Purchase Agreement and (b) as of the Initial Closing Date (or, in the case of an
Additional Account, as of the Additional Cut-Off Date and Addition Date), each
Account or Additional Account was an Eligible Account.
WOFCO also has made representations and warranties to the Transferor
relating to the Receivables to the effect, among other things, that (a) as of
the Initial Closing Date and each Series Issuance Date, each of the Accounts was
or is an Eligible Account or, if it was or is an Ineligible Account on such
date, such Account is being removed from the Trust to the extent required by the
Pooling and Servicing Agreement, (b) the amount of Receivables that are reported
as Ineligible Receivables transferred to the Transferor or the Trust on the
Initial Closing Date, or any Additional Cut-Off Date for the purpose of
facilitating the administration and reporting obligations of the Servicer, is
true and correct and there are no other Receivables that are Ineligible
Receivables except as so reported and (c) as of the date any new Receivable is
created, such Receivable is (unless identified by WOFCO as an Ineligible
Receivable on that date) an Eligible Receivable. In the event of a breach of any
representation and warranty set forth in this paragraph which results in an
Ineligible Receivable and the requirement that the Transferor accept retransfer
of such Ineligible Receivable pursuant to the Pooling and Servicing Agreement,
then WOFCO shall repurchase such Ineligible Receivable from the Transferor on
the date of such retransfer. The purchase price for such Ineligible Receivables
shall be the face amount thereof, of which at least the amount of any cash
deposit required to be made by the Transferor under the Pooling and Servicing
Agreement in respect of the retransfer of such Ineligible Receivables shall be
paid in cash.
WOFCO also has made representations and warranties to the Transferor to the
effect, among other things, that as of the Initial Closing Date and each Series
Issuance Date, as applicable, (a) the Receivables Purchase Agreement constitutes
a legal, valid and binding obligation of WOFCO and (b) the Receivables Purchase
Agreement constitutes a valid sale or transfer to the Transferor of all right,
title and interest of WOFCO in and to the Receivables, whether then existing or
thereafter created in the Accounts, the Collateral Security and the proceeds
thereof which is effective as to each Receivable upon the creation thereof. If
the breach of any of the representations and warranties described in this
paragraph results in the obligation of the Transferor under the Pooling and
Servicing Agreement to accept retransfer of the Receivables, WOFCO will be
obligated to repurchase the Receivables retransferred to WOFCO for an amount of
cash equal to the amount of cash the Transferor is required to deposit under the
Pooling and Servicing Agreement in connection with such retransfer.
WOFCO has agreed to indemnify the Transferor and to hold the Transferor
harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by the Transferor if the
foregoing representations and warranties are materially false.
CERTAIN COVENANTS
In the Receivables Purchase Agreement, WOFCO has agreed that it will
perform its obligations under the agreements relating to the Receivables and the
Accounts in conformity with its then-current policies and procedures relating to
the Receivables and the Accounts.
WOFCO has also agreed that, except for the sale and conveyances under the
Receivables Purchase Agreement and the interests created under the Pooling and
Servicing Agreement, WOFCO will not sell, pledge, assign or transfer any
interest in the Receivables to any other person. WOFCO also has agreed to defend
and indemnify the Transferor for any loss, liability or expense incurred by the
Transferor in connection with a breach by WOFCO of any of its representations,
warranties or covenants contained in the Receivables Purchase Agreement.
WOFCO has agreed not to realize upon any security interest in a Vehicle
that it may have in respect of advances or loans to Dealers other than the
related Receivable until the Trust has fully realized on its security interest
in such Vehicle.
In addition, WOFCO has expressly acknowledged and consented to the
Transferor's assignment of its rights relating to the Receivables under the
Receivables Purchase Agreement to the Trustee.
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TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
Trust terminates. In addition, if WOFCO becomes party to any bankruptcy or
similar proceeding (other than as a claimant), WOFCO will immediately cease to
sell or transfer Receivables to the Transferor and will promptly give notice of
such event to the Transferor and to the Trustee. WOFCO may, however, resume such
sales upon satisfying certain conditions.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On and after the Initial Closing Date, WOFCO has sold and assigned, and
will continue to sell and assign, the Receivables to the Transferor (which
Receivables will be immediately transferred to the Trust). The Transferor has
represented and warranted that, (i) such sale or transfer to the Trust
constitutes a valid transfer and assignment to the Trust of all right, title and
interest of the Transferor in, to and under the Receivables (ii) under
applicable Florida law, there exists a valid, ownership interest in the
Receivables and (iii) in the event the transfer by the Transferor to the Trust
is recharacterized as a grant of a security interest, there exists an
enforceable first priority perfected security interest of the Trust in the
Receivables in existence at the time of the formation of the Trust, at the date
of addition of any Additional Accounts or at any time on and after their
creation. For a discussion of the Trust's rights arising from these
representations and warranties not being satisfied, see "Description of the
Certificates -- Representations and Warranties."
Each of WOFCO and the Transferor has represented that the Receivables are
"instruments,"
"accounts," "chattel paper" or "general intangibles" for purposes of the UCC as
in effect in Florida. All Dealer promissory notes, if any, evidencing the
Receivables which constitute "instruments" under the UCC have been and will
continue to be transferred by the Transferor to the Trustee to an office of the
Trustee located in Hartford, Connecticut. However, if the Receivables are deemed
to be accounts, chattel paper or general intangibles and the transfer thereof by
either WOFCO to the Transferor or by the Transferor to the Trust is deemed
either to be a sale or to create a security interest, the UCC or other
applicable law applies and, in the case of chattel paper, the Trustee, as
transferee, must either take possession of the chattel paper or file an
appropriate financing statement or statements in order to perfect its interests
therein. As a precautionary measure, financing statements covering the
Receivables have been filed under the UCC as in effect in Florida by both the
Transferor and the Trust to perfect their respective interests in the
Receivables and continuation statements will be filed, as required to continue
the perfection of such interests.
There are certain limited circumstances under the UCC and applicable
Federal law in which prior or subsequent transferees of Receivables could have
an interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables who gives new value and takes possession of the
instruments which evidence the Receivables in the ordinary course of such
purchaser's business may, under certain circumstances, have priority over the
interest of the Trust in the Receivables. A tax or other government lien on
property of WOFCO or the Transferor arising prior to the time a Receivable is
conveyed to the Trust may also have priority over the interest of the Trust in
such Receivable. Under the Receivables Purchase Agreement, WOFCO has warranted
to the Transferor, and under the Pooling and Servicing Agreement the Transferor
will warrant to the Trust, that the Receivables have been transferred free and
clear of the lien of any third party. In addition, the Transferor has covenanted
under the Pooling and Servicing Agreement to deliver to the Trustee all
instruments, if any (such as any promissory notes received from Dealers) which
evidence the Receivables. Each of WOFCO and the Transferor has also covenanted
that it will not sell, pledge, assign, transfer or grant any lien on any
Receivable or, except as described under "Description of the
Certificates -- Supplemental Certificates," the Transferor Certificate (or any
interest there in) other than to the Trust. In addition, while WOFCO is the
Servicer, cash collections on the Receivables may, under certain circumstances,
be commingled with the funds of WOFCO prior to each Distribution Date and, in
the event of the bankruptcy of WOFCO, the Trust may not have a perfected
interest in such collections.
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CERTAIN MATTERS RELATING TO BANKRUPTCY
WOFCO has warranted to the Transferor in the Receivables Purchase Agreement
that the sale of certain Receivables by it to the Transferor is a valid sale of
the Receivables to the Transferor. In addition, WOFCO and the Transferor have
agreed to treat the transactions described herein as a sale of the Receivables
to the Transferor, and WOFCO has or will take all actions that are required
under Florida law to perfect the Transferor's ownership interest in the
Receivables. If the transactions contemplated herein are treated as a sale,
Receivables would not be part of WOFCO's bankruptcy estate and would not be
available to WOFCO's creditors. However, in a recent decision, Octagon Gas
Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the United States Court
of Appeals for the Tenth Circuit suggested that, even where a transfer of
accounts from a seller to a buyer constitutes a "true sale," the accounts would
nevertheless constitute property of the seller's bankruptcy estate in a
bankruptcy of the seller. The Transferor has been advised by counsel that the
reasoning of the Octagon court appears to be inconsistent with established
precedent and the UCC. In addition, the Permanent Editorial Board of the UCC has
issued an official commentary (P&B Commentary No. 14) which characterizes the
Octagon court's interpretation of Article 9 of the UCC to be erroneous. Such
commentary states that nothing in Article 9 is intended to prevent the transfer
of ownership of accounts or chattel paper. However, if the Transferor were to
become a debtor in a bankruptcy case, an Early Amortization Event would occur
which may result in an insufficiency of funds available to pay in full the
principal of, and any accrued and unpaid interest due and owing on, the
Certificates at such time. See "-- Certain Matters Relating to Bankruptcy."
Notwithstanding the foregoing, if WOFCO were to become a debtor in a
bankruptcy case and a creditor or trustee in bankruptcy of such debtor or such
debtor itself were to take the position that the sale of Receivables from such
debtor to the Transferor should be recharacterized as a pledge of such
Receivables to secure a borrowing from such debtor, then delays in payments of
collections of Receivables to the Transferor could occur or (should the court
rule in favor of any such trustee, debtor in possession or creditor) reductions
in the amount of such payments could result.
In addition, if WOFCO were to become a debtor in a bankruptcy case and a
creditor or trustee-in-bankruptcy of such debtor or such debtor itself were to
request a court to order that WOFCO should be substantively consolidated with
the Transferor, delays in payments on the Certificates could result. Should the
bankruptcy court rule in favor of any such creditor, trustee-in-bankruptcy or
such debtor, reductions in such payments could result.
The Transferor has warranted to the Trust that the transfer of Receivables
to the Trust is either a valid transfer and assignment of the Receivables to the
Trust or the grant of a first priority perfected security interest therein and,
with certain exceptions, the proceeds thereof. Nevertheless, a tax or government
lien on property of WOFCO or the Transferor arising prior to the time a
Receivable is conveyed to the Trust may have priority over the interest of the
Trust in such Receivable. WODFI's articles of incorporation provide that, under
certain circumstances, WODFI is required to have two independent directors (as
defined therein), in which event it shall not file a voluntary application for
relief under Title 11 of the United States Code (the "Bankruptcy Code") without
the affirmative vote of its two independent directors. Pursuant to the Pooling
and Serving Agreement, the Trustee, all certificateholders and Purchasers and
any Enhancement Provider have and will covenant, as applicable, that they will
not at any time institute against the Transferor any bankruptcy, reorganization
or other proceedings under any Federal or state bankruptcy or similar law. In
addition, certain other steps have been taken to avoid the Transferor's becoming
a debtor in a bankruptcy case. Notwithstanding such steps, if the Transferor
were to become a debtor in a bankruptcy case, and a bankruptcy trustee for the
Transferor or the Transferor as debtor in possession or a creditor of the
Transferor were to take the position that the transfer of the Receivables from
the Transferor to the Trust should be characterized as a pledge of such
Receivables, then delays in payments on the Certificates or (should the court
rule in favor of any such trustee, debtor-in-possession or creditor) reductions
in the amount of such payments could result.
The Transferor does not intend to file, and WOFCO has agreed that it will
not cause the Transferor to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the
Transferor so long as the Transferor is solvent and does not foresee becoming
insolvent.
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If WOFCO or the Transferor were to become a debtor in a bankruptcy case
causing an Early Amortization Event to occur, then, pursuant to the Receivables
Purchase Agreement, new Receivables would not longer be transferred to the
Transferor, and pursuant to the Pooling and Servicing Agreement, only
collections on Receivables theretofore sold to the Transferor and transferred to
the Trust would be available to be applied to pay interest accruing on the
Certificates and to pay the principal amount of the Certificates. Under such
circumstances, the Servicer is obligated to allocate all collections on
Principal Receivables to the oldest principal balance first. If such allocation
method were to be altered by the bankruptcy court, the rate of payment on the
Certificates might be adversely affected. In addition, distributions of
principal on each Certificate would not be subject to the applicable Controlled
Distribution Amount.
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in an Early Amortization Event. If no other
Servicer Default other than the commencement of such bankruptcy or similar event
exists, a trustee-in-bankruptcy of the Servicer may have the power to prevent
either the Trustee or the certificateholders from appointing a successor
Servicer.
Adjustment Payments and payments made in respect of repurchases of
Receivables by WOFCO or the Transferor pursuant to the Pooling and Servicing
Agreement may be recoverable by WOFCO or the Transferor, as debtor in
possession, or by a creditor or a trustee-in-bankruptcy of WOFCO or the
Transferor as a preferential transfer from WOFCO or the Transferor if such
payments are made within one year prior to the filing of a bankruptcy case in
respect of WOFCO.
CERTAIN TAX MATTERS
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General. Set forth below is a discussion of certain Federal income tax
consequences to Certificate Owners who are original owners of the Certificates
and hold the Certificates as capital assets under the Internal Revenue Code of
1986, as amended (the "Code"). This discussion does not purport to be complete
or to deal with all aspects of Federal income taxation that may be relevant to
Certificate Owners in light of their particular circumstances, nor to certain
types of Certificate Owners subject to special treatment under the Federal
income tax laws (for example, banks and life insurance companies). This
discussion is based upon 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. PROSPECTIVE INVESTORS ARE
ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP OR DISPOSITION OF INTERESTS IN THE
CERTIFICATES, AS WELL AS THE TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION.
Characterization of the Certificates as Debt. The Transferor has expressed
in the Pooling and Servicing Agreement its intent that, for Federal, state and
local income or franchise tax purposes, the Certificates of each Series will be
debt secured by the Receivables. The Transferor (and any subsequent holder of an
interest in a Transferor Interest) and each Certificateholder, by acquiring an
interest in a Certificate of a Series, agree, or will be deemed to agree, to
treat the Certificates of such Series as debt for Federal, state and local
income or franchise tax purpose. However, because different criteria are used in
determining the non-tax accounting treatment of the transaction the Transferor
expects to treat each transaction, for regulatory and financial accounting
purposes, as a sale of an ownership interest in the Receivables and not as debt.
The economic substance of a transaction generally determines its tax
consequences. The form of a transaction, while it is one of the factors
considered, is not conclusive evidence of its tax characterization, although in
some instances, courts have held that a taxpayer is bound by the particular form
it has chosen for a transaction, even if the substance of the transaction does
not accord with its form.
Based upon the application of existing law to the facts of the transaction
as set forth in the Pooling and Servicing Agreement and other relevant
documents, Skadden, Arps, Slate, Meagher & Flom, special tax
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counsel to the Transferor ("Tax Counsel") has advised the Transferor that based
upon the analysis set forth in its opinion, the Certificates will properly be
treated for Federal income tax purposes as indebtedness.
In general, whether for Federal income tax purposes a transaction
constitutes a sale of property or a loan, the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction. The Internal Revenue Service ("IRS") and
the courts have set forth several factors to be taken into account in
determining whether a transaction should be characterized for Federal income tax
purposes as the issuance of secured debt or whether, alternatively, the
transaction should be treated as the sale of an equity interest in the issuer or
of certain assets of the issuer. The primary factor distinguishing an issuance
of secured debt from a sale for the underlying assets is whether the transferee
has assumed the risk of loss or other economic burdens relating to the property
and has obtained the benefits of ownership thereof. As is set forth in its
opinion, Tax Counsel will analyze and rely on several factors in reaching its
opinion that the weight of the benefits and burdens of ownership of the
Receivables have not been transferred to the Certificateholders.
Except as specifically set forth below, the remainder of the analysis
assumes that the certificates will be treated as debt.
Tax Characterization of the Trust. The Pooling and Servicing Agreement
permits the issuance of classes of certificates that are treated for Federal
income tax purposes either as indebtedness or as an interest in a partnership.
Accordingly, the Trust could be characterized either as (i) a security device to
hold Receivables securing the repayment of the certificates of all Series or
(ii) a partnership in which the Transferor and certain classes of
certificateholders are partners, and which has issued debt represented by other
classes of certificates. In connection with the issuance of the Series 1996-2
Certificates, Tax Counsel will render an opinion to the Transferor, based on the
assumptions and qualifications set forth therein, that under current law, the
issuance of the Series 1996-2 Certificates will not itself cause the Trust to be
characterized for Federal income tax purposes as an association (or publicly
traded partnership) taxable as a corporation. However, the status of the Trust
will depend upon a number of factors, including the classification of other
Series as debt for federal income tax purposes and the Trust satisfying certain
rules applicable to publicly traded partnerships, as described below.
Other Characterizations of the Trust and the Certificates. The opinion of
Tax Counsel with respect to the Certificates and the Trust will not be binding
on the courts or the IRS. It is possible that the IRS could assert that, for
purposes of the Code, the transactions entered into by the Transferor and the
Trust constitute a sale of the Receivables (or an interest therein) to the
Certificate Owners or the certificate owners of one or more other Series and
that the proper classification of the legal relationship between the Transferor
and some or all of the Certificate Owners or certificate owners of one or more
other Series resulting from the transaction is that of a partnership (including
a publicly traded partnership), a publicly traded partnership taxable as a
corporation, or an association taxable as a corporation. The Transferor
currently does not intend to comply with the Federal income tax reporting
requirements that would apply if any Series were treated as interests in a
partnership or corporation (unless, as is permitted by the Pooling and Servicing
Agreement, an interest in the Trust is issued or sold that is intended to be
classified as an interest in a partnership).
If a Trust were treated in whole or in part as a partnership in which some
or all holders of interests in the certificates of a Series were partners, that
partnership could be classified as publicly traded partnership which could be
taxable as a corporation, although the Certificates might nevertheless be
treated as debt.
If a trust were classified as a publicly traded partnership, whether by
reason of the treatment of the Certificates or the certificates of one or more
other Series as equity or by reason of applicable Treasury regulations governing
the treatment of publicly traded partnerships (the "Regulations"), it would
avoid taxation as a corporation if its income were not derived in the conduct of
a "financial business"; however, whether the income of the Trust would be so
classified is unclear. Under the Code and the Regulations, a partnership will be
classified as a publicly traded partnership if equity interests therein are
traded on an "established securities market," or are "readily tradable" on a
"secondary market" or its "substantial equivalent." The Transferor intends to
take measures designed to reduce the risk that the Trust could be classified as
a publicly traded partnership taxable as a corporation by reason of interests in
the Trust other than
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the Certificates and other certificates with respect to which an opinion is
rendered that such certificates constitute debt for Federal income tax purposes.
Although the Transferor expects such measures will ultimately be successful,
Series issued prior to the issue date of the Regulations cannot be conformed to
the measures taken by the Transferor with respect to Series issued on or after
that date. As a result, there can be no assurance that the measures the
Transferor intends to take will be sufficient to prevent the Trust from being
classified as a publicly traded partnership under the Regulations. Moreover, any
such measures would not protect the Trust from classification as a publicly
traded partnership taxable as a corporation if the opinion with respect to the
treatment of the Certificates or certificates of other Series as debt were not
upheld.
If a transaction were treated as creating a partnership between the
Transferor and the certificate owners or certificateholders of one or more
Series, the partnership itself would not be subject to Federal income tax
(unless it were to be characterized as a publicly traded partnership taxable as
a corporation); rather, the partners of such partnership, including the
certificate owners or certificateholders of such Series, would be taxed
individually on their respective distributive shares of the partnership's
income, gain, loss, deductions and credits. The amount and timing of items of
income and deductions of a certificate owner could differ if the Certificates
were held to constitute partnership interests, rather than indebtedness.
Moreover, unless the partnership were treated as engaged in a trade or business,
an individual's share of expenses of the partnership would be miscellaneous
itemized deductions that, in the aggregate, are allowed as deductions only to
the extent they exceed two percent of the individual's adjusted gross income,
and would be subject to reduction under Section 68 of the Code if the
individual's adjusted gross income exceeded certain limits. As a result, the
individual might be taxed on a greater amount of income than the stated rate on
the Certificates. Finally, assuming the partnership is a "publicly traded
partnership" (as defined in Section 469(k)(2) of the Code), even if it qualifies
for exemption from taxation as a corporation, all or a portion of any taxable
income allocated to a Certificate Owner that is a pension, profit-sharing or
employee benefit plan or other tax-exempt entity (including an individual
retirement account) may, under certain circumstances, constitute "unrelated
business taxable income" which generally would be taxable to the holder under
the Code. Partnership characterization also may have adverse state and local
income or franchise tax consequences for a Certificate Owner.
If a transaction were treated as creating an entity classified as an
association or as a publicly traded partnership taxable as a corporation, the
Trust would be subject to Federal income tax at corporate income tax rates on
the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Certificate Owners, possibly including
Certificate Owners of a Class that is treated as indebtedness. Such
classification may also have adverse state and local tax consequences that would
reduce amounts available for distribution to Certificate Owners. Cash
distributions to the Certificate Owners (except any Class not recharacterized as
an equity interest in an association) generally would be treated as dividends
for tax purposes to the extent of such deemed corporation's earnings and
profits.
Taxation of Interest and Discount Income of Certificate Owners. Assuming
that the Certificate Owners are owners of debt obligations for Federal income
tax purposes, and subject to the following discussion of OID, interest received
on the Certificates generally will be taxable as ordinary income for Federal
income tax purposes when received by Certificate Owners utilizing the cash
method of accounting and when accrued by Certificate Owners utilizing the
accrual method of accounting. Interest received on the Certificates may also
constitute "investment income" for purposes of certain limitations of the Code
concerning the deductibility of investment interest expense.
It is not anticipated that the Certificates will be issued at a greater
than de minimis discount from their principal amounts (as calculated under the
Code and applicable Treasury regulations). However, the
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application of current Treasury regulations (the "OID Regulations") governing
the calculation of original issue discount ("OID") is unclear. In general, the
excess of the "stated redemption price at maturity" of a Class of Certificates
(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 its original issue price (the initial price at which a
substantial amount of the Certificates of a Class are sold) will constitute OID.
A Certificate Owner must include OID in income over the term of the Certificate
under a constant yield method. In general, OID must be included in income in
advance of the receipt of cash representing that income.
It is possible that, because (i) failure to pay interest currently at the
Class A or Class B LIBOR Rate results in the imposition of a penalty interest
rate on the overdue interest and (ii) the Transferor is required to pay any
Shortfall Amount or Carryover Amount to the Trust for distribution to
Certificateholders, interest on the Certificates will be "qualified stated
interest." Nevertheless, the limitation on current payment of interest to the
Asset Receivables Rate, if such rate is less than the applicable LIBOR Rate, may
result in failure of all or a portion of the interest on the Certificates to be
treated as "qualified stated interest."
If interest on the Certificates is not "qualified stated interest," then
the Certificates may be treated as "variable rate debt instruments" (within the
meaning of the OID Regulations) that do not provide for qualified stated
interest. In that event, OID on a Class of Certificates should generally be
calculated by determining the value of the applicable Class A or Class B
Certificate Rate on the Closing Date and calculating OID as if the related Class
of Certificates bore interest at a fixed rate equal to such rate. If OID on the
Certificates were calculated in this manner, OID that would otherwise be de
minimis would not be de minimis and therefore would be includible in income on a
constant yield method as it accrues. In addition, any Shortfall Amount or
Carry-Over Amount would be treated as OID and therefore would be includible in
income as it accrues under a constant yield method. In the case of an accrual
basis taxpayer that purchases a Certificate upon issuance at a de minimis
discount from its face amount, the effect of treating interest as OID would be
to require such de minimis discount to be included in income on a constant yield
method over the term of the Certificates, rather than upon receipt of principal
payments thereon.
Alternatively, it is possible that the IRS would take the position that
interest payable on the Certificates is contingent. There are no currently
effective rules governing the accrual of interest or OID on contingent payment
instruments. Under proposed Treasury regulations, which are expected to be
revised substantially before being issued in final form, contingent interest
would be includible in income when the amount thereof becomes fixed.
In view of the uncertainties set forth above, prospective
Certificateholders are advised to consult their own tax advisers regarding OID
and the accrual of interest on the Certificates.
Certificate Owners should be aware that the resale of a Certificate may be
affected by the market discount rules of the Code. These rules generally provide
that, subject to a de minimis exception, if a holder of a Certificate acquires
it at a market discount (i.e., at a price below its "stated redemption price at
maturity", or its "revised issue price" if it was issued with OID), the lesser
of any gain realized upon disposition of a Certificate and the portion of the
market discount that accrued while the Certificate was held by such holder will
be treated as ordinary interest income realized at the time of the disposition
of a Certificate or, if earlier, receipt of principal payments thereon.
Certificate Owners are advised to consult their own tax advisors regarding
the impact of the OID and market discount rules.
Sales of Certificates. In general, a Certificate Owner will recognize gain
or loss upon the sale, exchange, redemption or other taxable disposition of a
Certificate measured by the difference between (i) the amount of cash and the
fair market value of any property received (other than amounts attributable to,
and taxable as, accrued interest) and (ii) the owner's tax basis in the
Certificate (as increased by any OID or market discount previously included as
income by the holder and decreased by any deductions previously allowed for
amortizable bond premium and by any payments reflecting principal or OID
received with respect to such Certificate). Subject to the market discount rules
discussed above and to the one-year holding requirement for long-term capital
gain treatment, any such gain or loss generally will be long-term capital gain,
provided that
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the Certificate was held as a capital asset. The Federal income tax rates
applicable to capital gains for taxpayers other than individuals, estates and
trusts are currently the same as those applicable to ordinary income; however,
the maximum ordinary income rate for individuals, estates and trusts is 39.6%,
whereas the maximum long-term capital gains rate for such taxpayers is 28%. Any
capital losses realized will be deductible by an individual taxpayer only to the
extent of capital gains plus $3,000 of other income and by a corporate taxpayer
only to the extent of capital gains.
Federal Income Tax Consequences to Foreign Investors. Tax Counsel has
advised that the Certificates will be classified as debt for Federal income tax
purposes. The following information describes the U.S. Federal income tax
treatment of investors that are not U.S. persons ("Foreign Investors") if the
Certificates are treated as debt. The term "Foreign Investor" means any person
other than (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity organized in or under the laws of the United States
or any political subdivision thereof or (iii) an estate or trust the income of
which is includible in gross income for U.S. Federal income tax purposes,
regardless of its source.
Interest, including OID, if any, paid to a Foreign Investor will be subject
to U.S. withholding taxes at a rate of 30% unless (i) the income is "effectively
connected" with the conduct by such Foreign Investor of a trade or business in
the United States or (ii) the Foreign Investor and each securities clearing
organization, bank or other financial institution that holds the Certificates on
behalf of the customer in the ordinary course of its trade or business, in the
chain between the Certificate Owner and the U.S. person otherwise required to
withhold the U.S. tax, complies with applicable identification requirements (and
the Certificate Owner does not actually or constructively own 10% or more of the
voting stock of JMFE and is not a controlled foreign corporation with respect to
JMFE). Applicable identification requirements will be satisfied if there is
delivered to a securities clearing organization (i) IRS Form W-8 signed under
penalties of perjury by the Certificate Owner stating that the Certificate Owner
is not a U.S. person and providing such Certificate Owner's name and address,
(ii) IRS Form 1001 signed by the Certificate Owner or such Certificate Owner's
agent claiming exemption from withholding under an applicable tax treaty, or
(iii) IRS Form 4224 signed by the Certificate Owner or such owner's agent
claiming exemption from withholding of tax on income effectively connected with
the conduct of a trade or business in the U.S.; provided that in any such case
(x) the applicable form is delivered pursuant to applicable procedures and is
properly transmitted to the United States entity otherwise required to withhold
tax and (y) none of the entities receiving the form has actual knowledge that
the Certificate Owner is a U.S. person or that any certification on that form is
false.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to U.S. Federal income tax on gain realized on the sale, exchange
or redemption of a Certificate, provided that (i) such gain is not effectively
connected with a trade or business carried on by the Certificate Owner in the
U.S., (ii) in the case of a Certificate Owner that is an individual, such
Certificate Owner is not present in the U.S. 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.
A Certificate held by an individual who at the time of death is a
nonresident alien will not be subject to U.S. Federal estate tax as a result of
such individual's death if, immediately before his death, (i) the individual did
not actively or constructively own 10% or more of the voting stock of the
Transferor and (ii) the holding of such Certificate was not effectively
connected with the conduct by the decedent of a trade or business in the U.S.
If the IRS were to contend successfully that the Certificates are interests
in a partnership (not taxable as a corporation), a Certificate Owner that is a
Foreign Investor might be required to file a U.S. Federal income tax return and
pay tax on its share of partnership income at regular U.S. rates, including the
branch profits tax, and would be subject to withholding tax at a rate of the
maximum applicable tax rate on its share of partnership income. If the
Certificates were recharacterized as interests in an association taxable as a
corporation or a "publicly traded partnership" taxable as a corporation, to the
extent distributions on the Certificates were treated as dividends a Foreign
Investor would generally be subject to withholding tax on the gross amount of
such dividends at the rate of 30% unless such rate were reduced by an applicable
treaty.
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Backup Withholding. The Servicer will be required to report annually to
the IRS, and to each Certificateholder of record, the amount of interest paid
(and OID accrued, if any) on the Certificates (and the amount of interest
withheld for Federal income taxes, if any) for each calendar year, except as to
exempt holders (generally, holders that are corporations, certain tax-exempt
organizations or nonresident aliens who provide certification as to their status
as nonresidents). Each non-exempt Certificateholder will be required to provide,
under penalty of perjury, a certificate on IRS Form W-9 containing his or her
name, address, correct Federal taxpayer identification number and a statement
that he or she is not subject to backup withholding. Should a nonexempt
Certificateholder fail to provide the required certification, the
Certificateholder will be subject to backup withholding of U.S. Federal income
tax at a rate of 31% of the amounts otherwise payable to the holder. Such amount
would be remitted to the IRS as a credit against the Certificateholder's Federal
income tax liability.
STATE AND LOCAL 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 Certificates, then a financial organization investing in the
Certificates would be subject to Florida corporate income tax on a portion of
its income at a maximum rate of 5.5%, and would be required to file an income
tax return in Florida, even if it has no other Florida contacts. On the Closing
Date, Macfarlane Ausley Ferguson & McMullen, special Florida counsel to the
Seller, will opine that, although the issue is not free from doubt, 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 should hold that the Loan Rule should not apply to an investment in
the Certificates or the receipt of interest thereon by a financial organization
with no other Florida contacts. There can be no assurance that such a court
would so hold. Consequently, prospective investors are urged to consult their
own tax advisors as to the applicability of Florida taxation to their
investments in the Certificates and to their ability to offset any such Florida
tax against any other state tax liabilities that such investors might have.
The State of Florida imposes a value-based intangibles tax on January 1 of
each year at the rate of $2.00 per $1,000 of value on all intangibles owned,
managed or controlled by Florida domiciliaries or intangibles having a business
situs in Florida. On December 31, of each year, in an effort to minimize the
impact of this intangibles tax, the Transferor intends to transfer 99% of its
interest in the Receivables, and WOFCO intends to transfer all authorizations
and obligations to manage and control the Receivables, to a wholly-owned
subsidiary of the Transferor that is located and managed outside the State of
Florida (such transfer, the "Annual Servicing Transfer"). The Trust will
continue to maintain its first priority perfected security interest in the
Receivables. Only the Transferor's interest in the Receivables, together with
WOFCO's management and control authority and obligations, will be transferred to
WODFI's wholly-owned subsidiary, to be held in escrow and returned to the
Transferor and WOFCO, respectively, on January 2 of each year. This annual
transfer is consistent with the Technical Assistance Advisement 95(C)2-021
issued by the Florida Department of Revenue, which holds that a transfer of
receivables to a wholly-owned subsidiary located outside the State of Florida
and having no contacts with the State of Florida was sufficient to avoid the
imposition of the intangibles tax on the receivables subject to such tax. As
additional protection, the Trust will be indemnified by the Transferor with
respect to any liability for this intangibles tax. The Servicer has agreed in
the Pooling and Servicing Agreement not to conduct any servicing activities
during the period of the Annual Servicing Transfer.
The discussion above does not address the tax treatment of the Trust, the
Certificates or the Certificate Owners under any state or local tax law other
than Florida law to the extent set forth above. Prospective investors are urged
to consult their own tax advisors regarding the local tax treatment of the Trust
and the
78
<PAGE> 79
Certificates, and the consequences of purchase, ownership or disposition of the
Certificates under any state or local tax law, if applicable.
ERISA CONSIDERATIONS
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a Benefit Plan
from engaging in certain transactions involving "plan assets" with persons that
are "parties in interest" under ERISA or "disqualified persons" under the Code
with respect to the plan. In addition, ERISA imposes certain fiduciary duties on
persons deemed to have management authority or control over the assets of
Benefit Plans. A violation of the "prohibited transaction" rules may generate
excise tax and other liabilities under ERISA and the Code for the parties
involved in such transaction. Certain exemptions from the prohibited transaction
rules may be applicable, however.
The Department of Labor has issued a final regulation (the "Plan Assets
Regulation") concerning the definition of what constitutes the "assets" of a
Benefit Plan. The Plan Assets Regulation provides that, as a general rule, the
assets and properties of certain corporations, partnerships, trusts and certain
other entities in which a Benefit Plan acquires an "equity interest" will be
deemed to be assets of such Benefit Plan unless certain exceptions are
applicable. The Plan Assets Regulation defines an "equity interest" as any
interest in an entity other than an instrument that is treated as indebtedness
under applicable local law and which has no substantial equity features. The
Certificates offered hereby would likely constitute "equity interests" in the
Trust for purposes of the Plan Assets Regulation.
CLASS A CERTIFICATES
The Plan Assets Regulation contains an exception (the "Publicly-Offered
Securities Exception") that provides that if a Benefit Plan acquires a
"publicly-offered security," the issuer of the security is not deemed to hold
plan assets solely by reason of such Benefit Plan's investment. A
publicly-offered security is a security that is (i) freely transferable, (ii)
part of a class of securities that is widely held (i.e., owned by 100 or more
investors independent of the issuer and of one another) and (iii) either is (A)
part of a class of securities registered under Section 12(b) or 12(g) of the
Exchange Act or (B) sold to the Benefit Plan as part of an offering of
securities to the public pursuant to an effective registration statement under
the Securities Act and the class of securities of which such security is a part
is registered under the Exchange Act within 120 days (or such later time as may
be allowed by the Commission) after the end of the fiscal year of the issuer
during which the offering of such securities to the public occurred.
It is anticipated that the Class A Certificates (but not the Class B
Certificates) will meet the criteria of the Publicly-Offered Securities
Exception as set forth above. The Underwriter expects (although no assurance can
be given) that the Class A Certificates will be held by at least 100 independent
persons at the conclusion of the offering; there are no restrictions imposed on
the transfer of the Class A Certificates; and the Class A Certificates will be
sold as part of an offering pursuant to an effective registration statement
under the Securities Act, and then will be timely registered under the Exchange
Act. The Underwriter will notify the Trustee as to whether or not the Class A
Certificates will be held by 100 independent persons at the conclusion of the
offering. Neither the Transferor, the Underwriter, nor the Trustee will,
however, determine whether the Publicly-Offered Securities Exception is
satisfied with respect to the Class A Certificates. If the Class A Certificates
do not satisfy the requirements of the Publicly-Offered Securities Exception,
and the Trust's assets are deemed to include assets of Benefit Plans that
acquire the Class A Certificates, prohibited transaction and other liability
under ERISA may be incurred by Benefit Plan fiduciaries and other parties to
transactions involving the Trust.
CLASS B CERTIFICATES
The Publicly-Offered Securities Exception will not apply to the Class B
Certificates. Because no applicable exemption is likely to apply to all the
potential transactions involving the assets of the Trust, the
79
<PAGE> 80
Class B Certificates may not be purchased by any Benefit Plan, including,
without limitation, any insurance company general account.
REVIEW BY BENEFIT PLAN FIDUCIARIES
Due to the complexity of the Fiduciary Responsibility Provisions and the
penalties imposed upon persons involved in prohibited transactions, it is
especially important that any Benefit Plan fiduciary who proposes to cause a
Benefit Plan to purchase Certificates consult with its own counsel with respect
to the potential consequences under ERISA and the Code of the Benefit Plan's
acquisition and ownership of Certificates. Assets of a Benefit Plan should not
be invested in the Class A Certificates unless it is clear that the Publicly-
Offered Securities Exception applies, and should not, in any event, be invested
in the Class B Certificates.
Moreover, in the event the Publicly-Offered Securities Exception applies to
a purchase of the Class A Certificates, each Benefit Plan fiduciary should
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the Class A Certificates is appropriate
for the plan, taking into account the overall investment policy of the plan and
the composition of the plan's investment portfolio.
UNDERWRITING
Under the terms and subject to the conditions contained in an the
Underwriting Agreement (the "Underwriting Agreement"), CS First Boston
Corporation (the "Underwriter") has agreed to purchase from WODFI, the entire
principal amount of the Class A Certificates and the Class B Certificates.
WODFI has been advised by the Underwriter that the Underwriter proposes
initially to offer each Class of Certificates to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of 0.150% of the principal
amount of the Class A Certificates and 0.225% of the principal amount of the
Class B Certificates. The Underwriter may allow and such dealers may reallow to
other dealers a discount not in excess of 0.125% of such principal amount of
each Class. After the initial public offering, such public offering price,
concession and reallowance may be changed.
The Underwriter has agreed to reimburse WODFI for a portion of the expenses
of WODFI in connection with the offering of the Certificates.
The Underwriting Agreement provides that WODFI will indemnify the
Underwriter against certain liabilities, including liabilities under applicable
securities laws, or contribute to payments the Underwriter may be required to
make in respect thereof. A separate indemnification agreement provides that
WOFCO will indemnify the Underwriter against certain liabilities, including
liabilities under applicable securities laws, or contribute to payments the
Underwriter may be required to make in respect thereof.
The Underwriter has informed the Transferor that it does not expect
discretionary sales by the Underwriter to exceed 5% of the principal amount of
the Certificates being offered hereby.
The Underwriter has performed investment banking services for WOFCO and its
affiliates in the past and may provide investment banking services to WOFCO and
its affiliates in the future.
The Underwriter has advised the Transferor that it intends to make a market
for the Certificates. However, the Underwriter is not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Certificates.
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<PAGE> 81
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Certificates in Canada is being made only on a
private placement basis exempt from the requirement that the Transferor prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of Certificates are effected. Accordingly, any resale of
the Certificates in Canada must be made in accordance with applicable securities
laws which will vary depending upon 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 Certificates.
REPRESENTATIONS OF PURCHASERS
Each purchaser of a Certificate 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 Certificate 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 "Resale
Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer, and Ontario
purchasers will not receive the contractual right of actions prescribed by
Section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages for rescission or rights of action under
the civil liability 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.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Certificates to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten (10) days of the sale of any
Certificates acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #88/5, a copy of which may be obtained from the Transferor. Only one
such report must be filed in respect of Certificates acquired on the same date
and under the same prospectus exemption.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Transferor and the Underwriter by Skadden, Arps, Slate, Meagher & Flom.
Certain United States Federal income tax matters will be passed upon for the
Transferor and the Trust by Skadden, Arps, Slate, Meagher & Flom and, with
respect to Florida tax matters, by Macfarlane Ausley Ferguson & McMullen.
81
<PAGE> 82
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Accounts................................. cover
Accumulation Period...................... 11
Accumulation Period Commencement Date.... 12
Accumulation Period Length............... 12
Addition Date............................ 42
Additional Accounts...................... 45
Additional Cut-Off Date.................. 42
Adjusted Invested Amount................. 45
Adjustment Payment....................... 60
Annual Servicing Transfer................ 78
Asset Composition Event.................. 13, 63
Asset Correction Amount.................. 13, 63
Asset Receivables Rate................... 10, 35
Available Certificateholder Principal
Collections............................ 57
Available Subordinated Amount............ 54
Available Transferor Collections......... 52
Available Transferor Interest
Collections............................ 52
Available Transferor Principal
Collections............................ 52
Bank Group............................... 21
Bankruptcy Code.......................... 72
Benefit Plans............................ 16
Book Review.............................. 28
Carry-Over Amount........................ 11
Cede..................................... 2, 35
Certificate Owners....................... 2, 23
Certificateholder Interest Collections... 56
Certificateholders....................... 7
Certificateholders' Interest............. 5
Certificates............................. cover, 3
Class A Certificate Owners............... 23
Class A Certificate Rate................. 9, 35
Class A Certificateholders............... 7, 23
Class A Certificates..................... cover, 3
Class A Initial Principal Amount......... 6, 49
Class A Investor Charge-Off.............. 61
Class A LIBOR Rate....................... 9, 35
Class A Monthly Interest................. 53
Class A Monthly Principal................ 57
Class A Principal Amount................. 6, 49
Class B Certificate Owners............... 23
Class B Certificate Rate................. 9, 35
Class B Certificateholders............... 7, 23
Class B Certificates..................... cover, 3
Class B Initial Principal Amount......... 6, 49
Class B Investor Charge-Off.............. 60
Class B LIBOR Rate....................... 9, 35
Class B Monthly Interest................. 54
Class B Monthly Principal................ 58
Class B Principal Amount................. 6, 49
Class I Dealers.......................... 26
Class II Dealers......................... 26
Class III Dealers........................ 26
Class IV Dealers......................... 26
Closing Date............................. 5
Code..................................... 73
Collateral Security...................... 4
Collection Account....................... 47
Collection Period........................ 8
<CAPTION>
PAGE
-------------
<S> <C>
Commission............................... 2
Concentration Amount..................... 8, 48
Concentration Limit...................... 48
Concentration Percentage................. 49
Concentration Pool....................... 8, 49
Concentration Pool Balance............... 49
Concentration Series..................... 8, 49
Controlled Amortization Amount........... 58
Controlled Distribution Amount........... 58
Dealer Agreement......................... 25
Dealer Market Analysis Report............ 25
Dealers.................................. 4
Defaulted Receivables.................... 59
Deficiency Amount........................ 53
Definitive Certificates.................. 39
Depository............................... 35
Determination Date....................... 15
Dilution Reserve Deposit Date............ 58
Dilution Reserve Fund.................... 58
Dilution Reserve Period.................. 59
Dilution Reserve Trigger Date............ 59
Direct Participants...................... 38
Distribution Date........................ 9
Distribution Date Statement.............. 67
Draw Amount.............................. 53
DTC...................................... 2
Early Amortization Event................. 61
Early Amortization Period................ 11, 62
Eligible Account......................... 43
Eligible Accounts........................ 4
Eligible Deposit Account................. 47
Eligible Institution..................... 47
Eligible Investments..................... 47
Eligible Portfolio....................... 30
Eligible Receivable...................... 43
Eligible Receivables..................... 5
Enhancement.............................. 4
Enhancement Provider..................... 43
ERISA.................................... 16
Excess Funding Account................... 47
Excess Interest.......................... 56
Excess Receivables....................... 45
Excess Reserve Fund Required Amount...... 56
Excess Transferor Percentage............. 52
Exchange Act............................. 2
Expected Final Payment Date.............. 11, 33
Fiduciary Responsibility Provisions...... 16
Financial Statement Review............... 26
Five-State Area.......................... 33
Floating Allocation Percentage........... 50
Forecast of Operations................... 25
Foreign Investor......................... 77
Foreign Investors........................ 77
Holders.................................. 39
Incremental Subordinated Amount.......... 54
Indirect Participants.................... 38
Ineligible Account....................... 42
Ineligible Receivables................... 42
Initial Closing Date..................... 23
</TABLE>
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<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Initial Invested Amount.................. 6, 50
Initial Principal Amount................. 6
Insolvency Laws.......................... 23
Interest Collections..................... 4
Interest Determination Date.............. 36
Interest Period.......................... 36
Invested Amount.......................... 50
Investment Proceeds...................... 56
Investor Charge-Off...................... 60
Investor Default Amount.................. 60
IRS...................................... 74
JMFE..................................... 3, 33
LIBOR Rate............................... 9
Loan Rule................................ 78
London Business Day...................... 36
Minimum Receivables Amount............... 46
Minimum Transferor Amount................ 51
Miscellaneous Payments................... 50
Monthly Dilution Amount.................. 53
Monthly Principal........................ 58
Monthly Servicing Fee.................... 66
New Issuance............................. 7
Non-Vehicle Collateral Security.......... 29
OID...................................... 76
OID Regulations.......................... 76
Omnibus Proxy............................ 39
One-Month LIBOR.......................... 36
One-Month LIBOR Rate..................... 36
Plan Assets Regulation................... 79
Pool Balance............................. 8
Pooling and Servicing Agreement.......... 3, 34
Principal Allocation Percentage.......... 50
Principal Collections.................... 4
Principal Funding Account................ 12, 59
Principal Funding Account Balance........ 59
Principal Receivables.................... 7
Principal Shortfalls..................... 51
Principal Terms.......................... 40
Program Sales............................ 24
Progress Report.......................... 28
Publicly-Offered Securities Exception.... 16, 79
Purchase Agreement....................... 7
Purchased Interest....................... cover
Purchaser................................ 5
Rating Agency............................ 16
Receivables.............................. cover
Receivables Purchase Agreement........... 4
Record Date.............................. 38
Reference Agent.......................... 36
Reference Banks.......................... 36
Registration Statement................... 2
Regular Defaulted Amount................. 60
Regular Minimum Receivables Amount....... 46
Regular Minimum Transferor Amount........ 51
Regular Pool............................. 8
Regular Pool Balance..................... 8, 49
Regular Transferor Amount................ 53
Regular Trust Adjusted Invested Amount... 50
Regular Trust Available Subordinated
Amount................................. 50
<CAPTION>
PAGE
-------------
<S> <C>
Regulations.............................. 74
Removal Date............................. 46
Removal Notice........................... 46
Removed Accounts......................... 46
Required Subordinated Amount............. 14, 54
Reserve Fund............................. 56
Reserve Fund Deposit Amount.............. 56
Reserve Fund Required Amount............. 56
Revolving Period......................... 11
Securities Act........................... 2
Series................................... cover
Series 1994-1 Certificates............... 3
Series 1995-1 Certificates............... 3
Series 1996-1 Certificates............... 3
Series 1996-2............................ 3
Series 1996-2 Allocation Percentage...... 50
Series Issuance Date..................... 42
Service Transfer......................... 66
Servicer................................. cover, 3, 33
Servicer Default......................... 66
Servicing Fee............................ 65
Servicing Fee Rate....................... 65
SET...................................... 4, 33
Shared Principal Collections............. 51
Shortfall Amount......................... 9
Special Payment Date..................... 13
St. Paul................................. 26
Subordinated Percentage.................. 14, 54
SuperWRAP Program........................ 29
Supplement............................... 7
Supplemental Certificate................. 39
Target Adjusted Invested Amount.......... 45
Target 1996-2 Adjusted Invested Amount... 45
Target 1996-2 Allocation Percentage...... 45
Tax Counsel.............................. 74
Telerate Page 3750....................... 36
Termination Date......................... 63
Toyota................................... 4
Toyota Renewed........................... 24
Toyota U.S.A............................. 4
Transfer Date............................ 42
Transfer Deposit Amount.................. 42
Transferor............................... cover, 3
Transferor Amount........................ 53
Transferor Certificate................... 39
Transferor Interest...................... 2, 5
Transferor Percentage.................... 53
Trust.................................... cover, 3
Trust Available Subordinated Amount...... 51
Trustee.................................. 3
UCC...................................... 18
Unallocated Principal Collections........ 51
Underwriter.............................. 80
Underwriting Agreement................... 80
Vehicles................................. 4
Wholesale Portfolio...................... 30
WODFI.................................... cover, 3
WOFCO.................................... cover, 3, 33
</TABLE>
83
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- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SERVICER, THE TRANSFEROR OR THE 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 TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER 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 OR THE SERVICER SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Reports to Certificateholders......... 2
Prospectus Summary.................... 3
Risk Factors.......................... 18
World Omni Dealer Funding Inc. and the
Trust............................... 23
Use of Proceeds....................... 24
The Dealer Floorplan Financing
Business............................ 24
The Accounts.......................... 30
The Servicer.......................... 33
Maturity and Principal Payment
Considerations...................... 33
Description of the Certificates....... 34
Description of the Receivables
Purchase Agreement.................. 69
Certain Legal Aspects of the
Receivables......................... 71
Certain Tax Matters................... 73
ERISA Considerations.................. 79
Underwriting.......................... 80
Notice to Canadian Residents.......... 81
Legal Matters......................... 81
Index of Principal Terms.............. 82
- ------------------
UNTIL AUGUST 14, 1996 (90 DAYS AFTER
THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES,
WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- --------------------------------------------
- --------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
LOGO
$175,000,000
WORLD OMNI WHOLESALE
MASTER TRUST
$167,500,000
SERIES 1996-2, FLOATING RATE
DEALER LOAN BACKED CERTIFICATES,
CLASS A
$7,500,000
SERIES 1996-2, FLOATING RATE
DEALER LOAN BACKED CERTIFICATES,
CLASS B
WORLD OMNI DEALER
FUNDING INC.
Transferor
WORLD OMNI
FINANCIAL CORP.
Servicer
PROSPECTUS
(LOGO)bcd CS FIRST BOSTON
- ------------------------------------------------------
- ------------------------------------------------------
