<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1997
REGISTRATION NO. 333-35847
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FIRST SECURITY-REGISTERED TRADEMARK- AUTO GRANTOR TRUSTS
(Issuer with respect to the Certificates)
FIRST SECURITY BANK,-REGISTERED TRADEMARK- N.A.
(Originator of the Trusts described herein)
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UNITED STATES OF AMERICA 6025 87-0131890
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of Classification Code No.) Identification
incorporation or organization) No.)
</TABLE>
FIRST SECURITY BANK, N.A.
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-6000
(Address, including zip code, and telephone number, including
area code, of the Registrant's principal executive office)
------------------------------
SCOTT C. ULBRICH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
A.R. THORUP KENNETH P. MORRISON
RAY, QUINNEY & NEBEKER KIRKLAND & ELLIS
79 SOUTH MAIN STREET, 400 DESERT 200 EAST RANDOLPH DRIVE
BUILDING
SALT LAKE CITY, UTAH 84145-0385 CHICAGO, ILLINOIS 60601
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset Backed Certificates............ $2,000,000,000 100% $2,000,000,000 $605,757.56*
</TABLE>
(1) Estimated in accordance with Rule 457 of the Securities Act solely for the
purpose of determining the registration fee.
*Net of the $303.04 of such fee which has been previously paid.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to Completion
Dated ,
PROSPECTUS
FIRST SECURITY-REGISTERED TRADEMARK- AUTO GRANTOR TRUSTS
ASSET BACKED CERTIFICATES, CLASS A
ASSET BACKED CERTIFICATES, CLASS B
FIRST SECURITY BANK-REGISTERED TRADEMARK- N.A.
SELLER AND SERVICER
------------------
The Asset Backed Certificates (the "CERTIFICATES") described herein may be
sold from time to time in one or more series, in amounts, at prices and on terms
to be determined at the time of sale and to be set forth in a supplement to this
Prospectus (a "PROSPECTUS SUPPLEMENT"). Each series of Certificates will consist
of two classes of Certificates, the Class A Certificates and the Class B
Certificates. The Class A Certificates of any series will evidence in the
aggregate an undivided ownership interest equal to the Class A Percentage (as
defined in the related Prospectus Supplement) and the Class B Certificates of
any series will evidence in the aggregate an undivided ownership interest equal
to the Class B Percentage (as defined in the related Prospectus Supplement) of
the grantor trust to be formed with respect to such series (a "TRUST"). Each
Trust will be formed pursuant to a Pooling and Servicing Agreement (an
"AGREEMENT"; collectively referred to herein as "AGREEMENTS") to be entered into
among First Security Bank, N.A., as seller (the "SELLER" and the "BANK"), and as
servicer (the "SERVICER"), and the trustee specified in the related Prospectus
Supplement (the "TRUSTEE"). The property of each Trust will include a pool of
fixed rate simple interest retail motor vehicle installment sale contracts and
installment loans directly or indirectly originated by the Seller (collectively,
the "RECEIVABLES"), certain monies due or received thereunder on and after the
Cutoff Date set forth in the related Prospectus Supplement, security interests
in the vehicles financed thereby and certain other property.
Principal and interest at the Class A Pass-Through Rate (as defined in the
related Prospectus Supplement) will be distributed on the 15th day of each month
(or the next following business day) beginning on the date set forth in the
related Prospectus Supplement or such other day as is specified in the
Prospectus Supplement (each, a "DISTRIBUTION DATE"). Principal and interest at
the Class B Pass-Through Rate (as defined in the related Prospectus Supplement)
will be distributed on each Distribution Date. The rights of the Class B
Certificateholders to receive distributions will be subordinated to the rights
of the related Class A Certificateholders to the extent described herein.
Unless otherwise provided in the Prospectus Supplement, the Certificates
initially will be represented by global certificates registered in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC"). The interests of
the beneficial owners of the Certificates will be represented by book entries on
the records of DTC and participating members thereof. Definitive Certificates
will be available only under the limited circumstances described herein.
------------------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN EACH TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, FIRST SECURITY
CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
------------------------
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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
Retain this Prospectus for future reference. This Prospectus may not be used to
consummate sales of securities offered hereby unless accompanied by a Prospectus
Supplement.
THE DATE OF THIS PROSPECTUS IS , 1997.
2
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITERS. 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 OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE SELLER OR THE TRUSTS SINCE SUCH DATE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"COMMISSION"), on behalf of each Trust, a Registration Statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), with respect to each
series of Certificates offered pursuant to this Prospectus and the related
Prospectus Supplement. For further information, reference is made to such
Registration Statement, and the exhibits thereto, which are available for
inspection without charge at the public reference facilities of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the Regional
Offices of the Commission at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such information can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at the following address: http://www.sec.gov.
The Servicer, on behalf of each Trust, will also file or cause to be filed with
the Commission such periodic reports as may be required under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and
regulations of the Commission thereunder.
REPORTS TO CERTIFICATEHOLDERS
With respect to any series of Certificates, unless and until Definitive
Certificates are issued, unaudited monthly and annual reports concerning the
Receivables and the Trust will be prepared by the Servicer and sent by the
Trustee, on behalf of the Trust, only to Cede & Co. as nominee of DTC, the
registered holder of the Class A Certificates and the Class B Certificates,
pursuant to the Agreement. Such reports will not contain audited financial
statements with respect to the related Trust. Owners of beneficial interests in
the Certificates may obtain these reports by a request in writing to the
Trustee. The Seller does not intend to send any of its financial reports to
Certificateholders or Certificate Owners. See "The Certificates--Book Entry
Registration" and "--Statements to Certificateholders."
3
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PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND BY REFERENCE TO THE
INFORMATION WITH RESPECT TO THE CERTIFICATES CONTAINED IN THE RELATED PROSPECTUS
SUPPLEMENT TO BE PREPARED AND DELIVERED IN CONNECTION WITH THE OFFERING OF EACH
SERIES. CERTAIN CAPITALIZED TERMS USED IN THIS PROSPECTUS SUMMARY ARE DEFINED
ELSEWHERE IN THIS PROSPECTUS. A LISTING OF THE PAGES ON WHICH SOME OF SUCH TERMS
ARE DEFINED IS FOUND IN THE INDEX OF PRINCIPAL TERMS.
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Issuer................... With respect to each series of Certificates, a grantor
trust (a "TRUST") will be formed by First Security
Bank, N.A. (the "SELLER" and the "SERVICER" in its
capacity as such; and otherwise sometimes referred to
herein as the "BANK") pursuant to a Pooling and
Servicing Agreement (an "AGREEMENT") between the Bank,
as Seller and Servicer, and the Trustee.
Seller and Servicer...... First Security Bank, N.A.
Trustee.................. The trustee for each Trust will be specified in the
related Prospectus Supplement (the "TRUSTEE").
Collateral Agent......... The collateral agent for each Trust will be specified
in the related Prospectus Supplement (the "COLLATERAL
AGENT").
Trust Assets............. The property of each Trust (the "TRUST PROPERTY") will
include (i) a pool of fixed rate retail motor vehicle
installment sale contracts and installment loans
directly or indirectly originated by the Seller that
provide for the allocation of payments between
principal and interest according to the simple interest
method (collectively, the "RECEIVABLES"), (ii) all
monies due or received thereunder on and after the
Cutoff Date set forth in the related Prospectus
Supplement, (iii) security interests in the new and
used automobiles and light trucks financed thereby
(collectively, the "FINANCED VEHICLES"), (iv) certain
rights of such Trust under the related Yield Supplement
Agreement as described below, (v) the Seller's rights
(if any) to receive proceeds from claims under certain
insurance policies relating to the Financed Vehicles or
the obligors under the Receivables (each, an
"OBLIGOR"), (vi) certain of the Seller's rights
relating to the Receivables under agreements between
the Seller and the motor vehicle dealers ("DEALERS")
that sold the Financed Vehicles and any assignments and
other documents related thereto (collectively, the
"DEALER AGREEMENTS") and under the documents and
instruments contained in the Receivable Files, (vii)
all rights of such Trust under the related Agreement,
(viii) certain amounts from time to time on deposit in
the related Certificate Account, Class A Distribution
Account and Class B Distribution Account and (ix) all
proceeds of the foregoing within the meaning of the
UCC. The related Reserve Account and Yield Supplement
Account, and any amounts therein, will not be property
of such Trust, but will be pledged to and held by the
Collateral Agent, as secured party for the benefit of
the Certificateholders.
</TABLE>
3
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Certificates............. Each series of Certificates will consist of two
classes, the Class A Certificates and the Class B
Certificates, in each case as designated in the related
Prospectus Supplement. The Class A Certificates will be
issued in an initial principal amount specified in the
related Prospectus Supplement (the "ORIGINAL CLASS A
CERTIFICATE BALANCE"), and the Class B Certificates
will be issued in an initial principal amount specified
in the related Prospectus Supplement (the "ORIGINAL
CLASS B CERTIFICATE BALANCE" and, together with the
Original Class A Certificate Balance, the "ORIGINAL
CERTIFICATE BALANCE"). For any series of Certificates,
the Original Class A Certificate Balance will equal
approximately the Class A Percentage (as defined in the
related Prospectus Supplement) of the outstanding
principal balance of the Receivables determined in
accordance with the Agreement (the "POOL BALANCE") as
of the Cutoff Date (the "ORIGINAL POOL BALANCE"). The
Original Class B Certificate Balance will equal
approximately the Class B Percentage (as defined in the
related Prospectus Supplement) multiplied by the
Original Pool Balance.
Registration of With respect to each series of Certificates, the Class
Certificates........... A Certificates and the Class B Certificates will each
be represented initially by global certificates
registered in the name of the Certificateholders,
initially Cede & Co. ("CEDE"), as nominee of The
Depository Trust Company ("DTC"). No person acquiring a
beneficial ownership interest in the Certificates (a
"CERTIFICATE OWNER") will be entitled to receive a
Definitive Certificate representing such person's
interest in such Trust except in certain limited
circumstances. Under the terms of each Agreement,
Certificate Owners will not be recognized as
Certificateholders and will be permitted to exercise
the rights of the Certificateholders only indirectly
through DTC. See "Risk Factors -- Absence of Definitive
Certificates" and "The Certificates -- Book Entry
Registration."
Distribution Date........ With respect to each series of Certificates, the 15th
day of each month or such other date as is specified in
the related Prospectus Supplement (or, if such day is
not a business day, the next succeeding business day)
(each, a "DISTRIBUTION DATE"), beginning on that date
(the "INITIAL DISTRIBUTION DATE") specified in the
related Prospectus Supplement.
</TABLE>
4
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<TABLE>
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Interest................. With respect to each series of Certificates, on each
Distribution Date, interest at the Class A Pass-Through
Rate (as defined in the related Prospectus Supplement)
on the Class A Certificate Balance and interest at the
Class B Pass-Through Rate (as defined in the related
Prospectus Supplement) on the Class B Certificate
Balance, in each case as of the immediately preceding
Distribution Date (after giving effect to any payments
of principal made on such Distribution Date) will be
distributed to the registered holders of the Class A
Certificates ("CLASS A CERTIFICATEHOLDERS") and the
registered holders of the Class B Certificates ("CLASS
B CERTIFICATEHOLDERS" and, together with the Class A
Certificateholders, the "CERTIFICATEHOLDERS"),
respectively, initially, Cede as nominee of DTC, as of
the day immediately preceding such Distribution Date
(or, if Definitive Certificates are issued, the last
day of the related Collection Period) (the "RECORD
DATE") to the extent that sufficient funds are on
deposit for such Distribution Date in the Certificate
Account or available in the Reserve Account to make
such distribution. A "COLLECTION PERIOD" means a period
during the term of the related Agreement from and
including the 26th day of a calendar month to and
including the 25th day of the succeeding calendar month
(or, in the case of the initial Collection Period, the
period from but not including the Cutoff Date to and
including such date as specified in the related
Prospectus Supplement). See "The Certificates --
Distributions on Certificates and " -- Reserve
Account." The rights of Class B Certificateholders to
receive payments of interest will be subordinated to
the rights of the Class A Certificateholders to receive
payments of interest to the extent described herein.
See "Risk Factors -- Limited Assets of each Trust" and
" -- Subordination of the Class B Certificates."
Principal................ With respect to each series of Certificates, on each
Distribution Date, as described more fully herein, all
payments of principal on the Receivables received by
the Servicer during the related Collection Period, plus
all Liquidation Proceeds, to the extent allocable to
principal will be distributed by the Trustee PRO RATA
to the Class A Certificateholders and to the Class B
Certificateholders of record on the related Record Date
to the extent that sufficient funds are on deposit in
the Certificate Account or available in the Reserve
Account to make such distribution. See "The
Certificates -- Distributions on Certificates" and " --
Reserve Account." The rights of the Class B
Certificateholders to receive payments of principal
will be subordinated to the rights of the Class A
Certificateholders to receive payments of interest and
principal to the extent described herein. See "Risk
Factors-Limited Assets of Each Trust" and " --
Subordination of the Class B Certificates."
</TABLE>
5
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Servicing Fees........... With respect to each series of Certificates, on each
Distribution Date, the Servicer will receive a fee for
servicing the Receivables, equal to the Basic Servicing
Fee. In addition, the Servicer will be entitled to the
Supplemental Servicing Fee. See "The Certificates --
Servicing Compensation."
Subordination of Class B Distributions of interest and principal on any series
Certificates........... of Class B Certificates will be subordinated in
priority of payment to distributions of interest and
principal due on the Class A Certificates of such
series in the event of defaults on the Receivables to
the extent described herein. The Class B
Certificateholders will not receive any distributions
of interest with respect to a Collection Period until
the full amount of interest on the Class A Certificates
relating to such Collection Period has been deposited
in the Class A Distribution Account. The Class B
Certificateholders will not receive any distributions
of principal with respect to such Collection Period
until the full amount of interest on and principal of
the Class A Certificates relating to such Collection
Period has been deposited in the Class A Distribution
Account. See "Risk Factors -- Limited Assets of Each
Trust" and " -- Subordination of the Class B
Certificates."
Advances................. With respect to each series of Certificates, on each
Deposit Date, the Servicer may, subject to the
following, make a payment (an "ADVANCE") with respect
to each Receivable serviced by it (other than a
Defaulted Receivable) equal to the excess, if any, of
(x) the product of the principal balance of such
Receivable as of the first day of the related
Collection Period and one-twelfth of its Contract Rate
(calculated on the basis of a 360-day year comprised of
twelve 30-day months), over (y) the interest actually
received by the Servicer with respect to such
Receivable from the Obligor or from payments of the
Purchase Amount, Liquidation Proceeds or Recoveries (in
each case for the related Collection Period and to the
extent allocable to interest) during or with respect to
such Collection Period. The Servicer may elect not to
make an Advance of interest due and unpaid with respect
to a Receivable to the extent that the Servicer, in its
sole discretion, determines that such Advance is not
recoverable from subsequent payments on such Receivable
or from funds in the related Reserve Account. See "The
Certificates-Advances."
</TABLE>
6
<PAGE>
Yield Supplement With respect to each series of Certificates, to the
Agreement.............. extent that any Receivable has a Contract Rate below
the applicable Class A Pass-Through Rate or the Class B
Pass-Through Rate, plus the Basic Servicing Fee Rate,
the Seller will enter into a yield supplement agreement
with the related Trust (a "YIELD SUPPLEMENT AGREEMENT")
which will provide funds to supplement the interest
collections on such Receivables, as described below.
Such Yield Supplement Agreement will, with respect to
each Receivable, provide for payment by the Seller on
or prior to the business day preceding each
Distribution Date (each such date, a "DEPOSIT DATE") of
an amount (if positive) calculated by the Servicer
equal to one-twelfth of the excess, if any, of (i) the
sum of interest on the Class A Percentage of such
Receivable's principal balance as of the first day of
the related Collection Period at a rate equal to the
sum of the Class A Pass-Through Rate and the Basic
Servicing Fee Rate and interest on the Class B
Percentage of such Receivable's principal balance as of
the first day of the related Collection Period at a
rate equal to the sum of the Class B Pass-Through Rate
and the Basic Servicing Fee Rate over (ii) interest at
the Contract Rate on such Receivable's principal
balance as of the first day of the related Collection
Period (in the aggregate for all Receivables with
respect to any Deposit Date, the "YIELD SUPPLEMENT
AMOUNT"). The Seller's obligations under any Yield
Supplement Agreement will be secured by funds on
deposit in an account to be maintained by the Seller in
the name of the Collateral Agent (a "YIELD SUPPLEMENT
ACCOUNT"). The amount on deposit in a Yield Supplement
Account and available on any Distribution Date will be
equal to at least the sum of all projected Yield
Supplement Amounts for all future Distribution Dates,
assuming that future scheduled payments on the
Receivables are made on their scheduled due dates (the
"SPECIFIED YIELD SUPPLEMENT BALANCE"); provided that if
on any date the Seller shall fail to pay the amount
payable under a Yield Supplement Agreement in
accordance with the terms thereof, then, in such event,
the Specified Yield Supplement Balance shall not
thereafter be reduced. The amount required to be
deposited by the Seller into a Yield Supplement Account
on or prior to the Closing Date will be specified in
the related Prospectus Supplement (the "YIELD
SUPPLEMENT INITIAL DEPOSIT").
7
<PAGE>
Reserve Account.......... With respect to each series of Certificates, a reserve
account (the "RESERVE ACCOUNT") will be established and
maintained by the Seller, in the name of, and under the
control of, the Collateral Agent with an initial
deposit of cash or certain investments having an
aggregate value that will be specified in the related
Prospectus Supplement (the "RESERVE ACCOUNT INITIAL
DEPOSIT"). In addition, on each Distribution Date, any
amounts on deposit in the Certificate Account with
respect to the related Collection Period after payments
to the Certificateholders and the Servicer have been
made will be deposited into the Reserve Account until
the amount of the Reserve Account is equal to the
related Specified Reserve Account Balance. The Reserve
Account provides credit enhancement and liquidity to
the Certificateholders that will be available in the
event that, as a result of defaults or delinquencies,
Collections on the Receivables are insufficient to make
the distributions on the Certificates. On or prior to
each Deposit Date, the Collateral Agent will withdraw
funds from the Reserve Account, to the extent of the
funds therein (net of investment earnings), (i) to the
extent required to reimburse the Servicer for Advances
previously made and not reimbursed ("OUTSTANDING
ADVANCES") to the extent provided in the related
Agreement and (ii) to the extent (x) the sum of the
amounts required to be distributed to
Certificateholders and the Servicer on the related
Distribution Date exceeds (y) the amount on deposit in
the Certificate Account as of the last day of the
related Collection Period (net of investment earnings).
If the amount in the Reserve Account is reduced to
zero, Certificateholders will bear directly the credit
and other risks associated with ownership of the
Receivables, including the risk that such Trust may not
have a perfected security interest in the Financed
Vehicles. See "Risk Factors-Possible Subordination of
Security Interests," "The Certificates-Reserve
Account," "Certain Legal Aspects of the Receivables."
8
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Specified Reserve Account With respect to each series of Certificates, on each
Balance................ Distribution Date, the "SPECIFIED RESERVE ACCOUNT
BALANCE" will equal the Basic Reserve Account
Percentage of the Pool Balance as of the last day of
the related Collection Period, but in any event will
not be less than the lesser of (i) the Reserve Account
Floor Amount and (ii) the Full Payoff Amount (or, under
certain circumstances, a higher amount). The Specified
Reserve Account Balance may be reduced to a lesser
amount as determined by the Seller, provided that such
reduction does not adversely affect the ratings of the
Certificates by the Rating Agencies. Amounts in the
Reserve Account on any Distribution Date (after giving
effect to all distributions made on that date) in
excess of the Specified Reserve Account Balance for
such Distribution Date will be paid to the Seller. See
"The Certificates-Reserve Account."
Optional Purchase........ With respect to any series of Certificates, if (i) the
Pool Balance as of the last day of a Collection Period
has declined to 10% or less of the Original Pool
Balance (or such other percentage as may be specified
in the related Prospectus Supplement) and (ii) the
aggregate Purchase Amount for the Receivables is
greater than or equal to the sum of the Class A
Certificate Balance and the Class B Certificate
Balance, the Servicer may purchase all remaining Trust
Property on any Distribution Date occurring in a
subsequent Collection Period at a purchase price equal
to the aggregate of the Purchase Amounts of the
remaining Receivables (other than Defaulted
Receivables). See "The Certificates-Termination."
</TABLE>
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Tax Status............... In the opinion of Kirkland & Ellis, special tax counsel
to the Seller, each Trust will be classified for
Federal income tax purposes as a grantor trust and not
as an association taxable as a corporation. Certificate
Owners must report their respective allocable shares of
income earned on Trust assets and, subject to certain
limitations applicable to individuals, estates and
trusts, may deduct their respective allocable shares of
reasonable servicing and other fees. Individuals should
consult their own tax advisors to determine the
federal, state, local, and other tax consequences of
the purchase, ownership and disposition of the Class A
Certificates or the Class B Certificates. Prospective
investors should note that no rulings have been or will
be sought from the Internal Revenue Service (the "IRS")
with respect to any of the federal income tax
consequences discussed herein, and no assurance can be
given that the IRS will not take a contrary position.
See "Federal Income Tax Consequences."
Prepayment The weighted average life of the Certificates of any
Considerations......... series may be reduced by full or partial prepayments on
the Receivables. The Receivables are prepayable at any
time. Prepayments may also result from liquidations due
to default, the receipt of monthly installments earlier
than the scheduled due dates for such installments, the
receipt of proceeds from credit life, disability, theft
or physical damage insurance, repurchases by the Seller
as a result of certain uncured breaches of the
warranties made by it in the related Agreement with
respect to the Receivables, purchases by the Servicer
as a result of certain uncured breaches of the
covenants made by it in such Agreement with respect to
the Receivables, or the Servicer exercising its
optional purchase right. The rate of prepayments on the
Receivables may be influenced by a variety of economic,
social, and other factors, including Obligor
refinancings resulting from decreases in interest rates
and the fact that the Obligor may not sell or transfer
the Financed Vehicle securing a Receivable without the
consent of the Seller. No prediction can be made as to
the actual prepayment rates which will be experienced
on the Receivables. If prepayments were to occur after
a decline in interest rates, investors seeking to
reinvest their distributed funds might be required to
invest at a return lower than the applicable
Pass-Through Rate. Certificate Owners will bear all
reinvestment risk resulting from prepayment of the
Receivables. See "Risk Factors -- Reduction in Weighted
Average Life of the Certificates; Possible Reinvestment
Risk" and "The Receivables -- Maturity and Prepayment
Assumptions."
</TABLE>
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<TABLE>
<S> <C>
Rating................... It is a condition to the issuance of each series of the
Certificates that each of the Class A Certificates and
the Class B Certificates of a series be rated at least
in the respective rating categories (or their
equivalents) specified in the Prospectus Supplement
(the "REQUIRED CLASS A RATING" and the "REQUIRED CLASS
B RATING"), respectively, in each case by at least one
nationally recognized rating agency (a "RATING
AGENCY"). A security rating is not a recommendation to
buy, sell or hold securities and may be revised or
withdrawn at any time by the assigning Rating Agency.
The ratings on the Certificates of a series do not
address the timing of distributions of principal on
such Certificates prior to their Final Scheduled
Distribution Date.
ERISA Considerations..... As described herein and in the related Prospectus
Supplement, the Class A Certificates may be purchased
by employee benefit plans that are subject to the
Employee Retirement Income Security Act of 1974, as
amended, upon satisfaction of certain conditions
described herein. Employee benefit plans subject to
ERISA will not be eligible to purchase Class B
Certificates, because the Class B Certificates are
subordinated to the Class A Certificates. Any benefit
plan fiduciary considering a purchase of Certificates
should, among other things, consult with experienced
legal counsel in determining whether all required
conditions have been satisfied. See "ERISA
Considerations."
Risk Factors............. Prospective investors should consider the factors set
forth under "Risk Factors."
</TABLE>
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AND
ANY RISK FACTORS SET FORTH IN THE PROSPECTUS SUPPLEMENT BEFORE INVESTING IN
CERTIFICATES.
LIMITED LIQUIDITY
Immediately after issuance of each series of Certificates, there will be no
secondary market for the Class A Certificates or the Class B Certificates. The
Seller believes that the related Underwriters may, but will not be obligated to,
make a market in the Certificates of such series. There is no assurance that any
such market will develop or, if one does develop, that it will provide liquidity
of investment or will continue for the life of such Class A Certificates or such
Class B Certificates, as the case may be.
POSSIBLE SUBORDINATION OF SECURITY INTERESTS
The Seller will cause financing statements to be filed with the appropriate
governmental authorities to perfect the interest of each Trust in its purchase
of the Receivables in accordance with the requirements of the Uniform Commercial
Code in effect in the relevant states (the "UCC"), and the Trustee will appoint
First Security Service Company, an affiliate of the Servicer, to hold the
Receivables and Receivable Files as custodian for the Trustee following the sale
and assignment of the Receivables to such Trust. Although the Receivable Files
will not be segregated, stamped or otherwise marked to so indicate, the Servicer
and First Security Service Company will note in their computer records that the
Receivables have been sold to such Trust. If, through inadvertence or otherwise,
another party purchases (or takes a security interest in) the Receivables for
new value in the ordinary course of business and takes possession of the
Receivables without actual knowledge of such Trust's interest, such purchaser
(or secured party) will acquire an interest in the Receivables superior to the
interest of such Trust.
The Seller will assign its security interests in the Financed Vehicles along
with the sale and assignment of the Receivables to the Trustee. The certificates
of title or ownership will not be endorsed or otherwise amended to identify the
Trust as the new secured party. In Utah, Idaho and most other states, in the
absence of fraud or forgery by the vehicle owner or of fraud, forgery,
negligence or error by the Bank or administrative error by state or local
agencies, the filing within 20 days after the Obligor takes possession of the
Financed Vehicle of an application requesting the notation of the Bank's lien on
the certificates of title or ownership and/or possession of such certificates
with such notation will be sufficient to perfect the security interest of such
Trust in the Financed Vehicle which will protect such Trust against the rights
of subsequent purchasers of a Financed Vehicle or subsequent lenders who take a
security interest in a Financed Vehicle. In Idaho, if the Bank and the
department agree, a paperless electronic record of title may be made in lieu of
a paper certificate. In that case, perfection of the security interest occurs
upon filing in the electronic records department. There exists a risk, however,
in certain states that by not identifying such Trust or the related Trustee as
the new secured party on the certificate of title that the security interest of
such Trust or the related Trustee may not be perfected. In the event such Trust
has failed to obtain or maintain a perfected security interest in a Financed
Vehicle, its security interest would be subordinate to, among others, a
bankruptcy trustee of the Obligor, a subsequent purchaser of the Financed
Vehicle or a holder of a perfected security interest. See "Certain Legal Aspects
of the Receivables."
POSSIBLE REDUCTIONS AND DELAYS IN PAYMENTS DUE TO BANKRUPTCY AND INSOLVENCY
The Bank intends that the transfer of the Receivables by it under each
Agreement constitute a sale. In the event that the Bank were to become
insolvent, the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA") sets forth certain powers that the Federal Deposit Insurance
Corporation (the "FDIC") could exercise if it were appointed as receiver of the
Bank. Subject to clarification by FDIC regulations or interpretations, it would
appear from the positions taken by the FDIC
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before and after the passage of FIRREA that the FDIC, in its capacity as
receiver for the Bank, would not interfere with the timely transfer to the
related Trust of payments collected on the Receivables. If the transfer to such
Trust were to be characterized as a loan secured by a pledge of Receivables, to
the extent that the Bank would be deemed to have granted a security interest in
the Receivables to such Trust, and that interest had been validly perfected
before the Bank's insolvency and had not been taken in contemplation of
insolvency, that security interest should not be subject to avoidance, and
payments to such Trust with respect to the Receivables should not be subject to
recovery by the FDIC as receiver of the Bank. If, however, the FDIC were to
assert a contrary position, such as by requiring the Trustee to establish its
right to those payments by submitting to and completing the administrative
claims procedure established under FIRREA, delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur. Alternatively, in such circumstances, the FDIC might have the right to
repay the Certificates for an amount which may be greater or less than the
principal balance thereof and which would shorten their weighted average life.
See "Certain Legal Aspects of the Receivables."
LIMITED ENFORCEABILITY OF THE RECEIVABLES
Numerous Federal and state consumer protection laws and related regulations
impose substantial and detailed requirements upon lenders and servicers involved
in consumer finance. These requirements impose specific statutory liabilities
upon creditors who fail to comply with their provisions where applicable. In
most cases, this liability could affect the ability of an assignee, such as the
Trustee, to enforce secured loans such as the Receivables. If, as of the Cutoff
Date, an Obligor had a claim against any Trust for violation of any law and such
claim materially and adversely affects that Trust's interest in a Receivable,
such violation would create an obligation of the Seller to repurchase the
Receivable unless the breach was cured. See "Certain Legal Aspects of the
Receivables -- Consumer Protection Laws."
REDUCTION IN WEIGHTED AVERAGE LIFE OF THE CERTIFICATES; POSSIBLE REINVESTMENT
RISK
The weighted average life of the Certificates may be reduced by full or
partial prepayments on the Receivables. Each Receivable is prepayable by the
related Obligor at any time. Prepayments may also result from liquidation due to
default, the receipt of monthly installments earlier than the scheduled due
dates for such installments, the receipt of proceeds from credit life,
disability, theft or physical damage insurance, repurchases by the Seller as a
result of certain uncured breaches of the warranties made by it in each
Agreement with respect to the Receivables, purchases by the Servicer as a result
of certain uncured breaches of the covenants made by it in such Agreement with
respect to the Receivables, or the Servicer exercising its optional purchase
right. The rate of prepayment on the Receivables may be influenced by a variety
of economic, social, and other factors, including decreases in interest rates
and the fact that the Obligor may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of the Seller. No prediction can be
made as to the actual prepayment rates which will be experienced on the
Receivables. If prepayments were to occur after a decline in interest rates,
investors seeking to reinvest their funds might be required to invest at a
return lower than the applicable Pass-Through Rate. Certificate Owners will bear
all reinvestment risk resulting from prepayment of the Receivables. See "The
Receivables -- Maturity and Prepayment Assumptions."
LIMITED RELIANCE ON THE SELLER, THE SERVICER AND THEIR AFFILIATES
None of the Seller, the Servicer or their affiliates is generally obligated
to make any payments in respect of the Certificates or the Receivables. However,
in connection with the sale of Receivables by the Seller to the related Trust,
the Seller will make representations and warranties with respect to the
characteristics of such Receivables and, in certain circumstances, the Seller
may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "The Certificates --
Mandatory Repurchase of the Receivables." In addition, under certain
circumstances, the Servicer may be required to purchase Receivables. See "The
Certificates -- Servicing Procedures." If
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<PAGE>
collections on any Receivable were reduced as a result of any matter giving rise
to a repurchase or purchase obligation on the part of the Seller or the
Servicer, respectively, and the Seller or the Servicer failed for any reason to
perform in accordance with that obligation, then delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur. Moreover, if the Bank were to cease acting as the Servicer, delays in
processing payments on the Receivables and information in respect thereof could
occur and result in delays in payments to the Certificateholders.
The Bank's parent, First Security Corporation, is subject to the information
requirements of the Exchange Act and in accordance therewith files reports and
other information with the Commission. For further information regarding First
Security Corporation, reference is made to such reports and other information
which are available at the addresses specified under "Available Information."
EXTENSIONS AND DEFERRALS OF PAYMENTS ON RECEIVABLES
The Bank may, on a case-by-case basis, permit extensions with respect to the
due dates of the Receivables in the discretion of a senior credit officer other
than the origination officer. In addition to such extensions, the Servicer has
historically offered payment deferrals to a broader population of qualifying
applicants in June and in December. All Obligors that meet the Bank's
eligibility requirements will be given the opportunity to take advantage of such
payment deferrals. Any such deferrals or extensions may extend the maturity of
the applicable Receivable and increase the weighted average life of the
Receivables and any fees associated therewith will increase the principal
balance of the related Receivable. Any reinvestment risks resulting from
extensions and deferrals of payments on Receivables will be borne entirely by
the Certificate Owners. However, if any payment deferral results in the final
scheduled payment on the applicable Receivable falling after the Final Scheduled
Distribution Date, the Servicer will be required to purchase the Receivable from
the related Trust. See "The Certificates -- Credit Deferrals and Optional
Payment Deferrals."
LIMITED ASSETS OF EACH TRUST
No Trust is permitted or expected to have access to any significant assets
or sources of funds other than the Receivables and the right to receive payments
under certain circumstances from the Reserve Account or pursuant to the Yield
Supplement Agreement. The Certificates represent interests solely in the related
Trust and neither the Class A Certificates nor the Class B Certificates will be
insured or guaranteed by First Security Corporation, the Seller, the Servicer,
the Trustee, or any other person or entity. Consequently, Certificateholders
must rely for payment upon collections on the Receivables, the Yield Supplement
Agreement and, if and to the extent available, amounts on deposit in the Reserve
Account. Amounts on deposit in a Reserve Account are limited in amount and will
be reduced as the Pool Balance declines.
Amounts on deposit in a Reserve Account will be available on any
Distribution Date first to cover shortfalls in reimbursement of Outstanding
Advances and payment of Basic Servicing Fees to the Servicer, then shortfalls in
distributions of interest on the Class A Certificates and then shortfalls in
distributions of interest on the Class B Certificates. After distributions of
interest on the Certificates have been made, the remaining amounts on deposit in
such Reserve Account will be available first to cover shortfalls in
distributions of principal on the Class A Certificates and then shortfalls in
distributions of principal on the Class B Certificates. If a Reserve Account is
exhausted (and not replenished from Collections on Receivables), the related
Trust will depend solely on payments on the Receivables to make distributions on
the Certificates, and Certificateholders will bear, without any additional
credit enhancement (except with respect to the Yield Supplement Agreement and to
the extent that the Reserve Account is later replenished), the risk of
delinquency, loan losses and repossessions with respect to the Receivables.
There can be no assurance that the future delinquency, loan loss and
repossession experience of any Trust with respect to its Receivables will be
better or worse than that set forth herein with respect to the total portfolio
of Motor Vehicle Loans owned and serviced by the Bank. See "The Motor Vehicle
Loan Portfolio
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- -- Delinquency and Loss Experience," "The Certificates -- Reserve Accounts" and
"-- Distributions on Certificates."
SUBORDINATION OF THE CLASS B CERTIFICATES
Distributions of interest and principal on the Class B Certificates will be
subordinated in priority of payment to interest due on the Class A Certificates.
The Class B Certificateholders will not receive any distributions of interest
with respect to a Collection Period until the full amount of interest on the
Class A Certificates relating to such Collection Period has been deposited in
the Class A Distribution Account. Distributions of principal on the Class B
Certificates will be subordinated in priority of payment to interest and
principal due on the Class A Certificates. Class B Certificateholders will not
receive any distributions of principal with respect to such Collection Period
until the full amount of interest on and principal of the Class A Certificates
relating to such Collection Period has been deposited in the Class A
Distribution Account. However, distributions of interest on the Class B
Certificates, to the extent of collections on the Receivables allocable to
interest and the amounts on deposit in the Reserve Account available after the
payment of interest on the Class A Certificates has been made, will not be
subordinated to the payment of principal on the Class A Certificates. See "The
Certificates -- Distributions on Certificates."
RISK OF COMMINGLING OF COLLECTIONS BY THE SERVICER
The Servicer will deposit all payments on Receivables (other than late fees,
prepayment charges and certain other amounts payable to the Servicer under the
Agreement which are not required to be deposited into the Certificate Account)
into the related Certificate Account not later than two business days after
receipt thereof. However, if conditions satisfactory to the Rating Agencies have
been met, the Servicer will no longer be required to make such payments within
two business days, but instead will be permitted to make such payments for a
Collection Period into such Certificate Account not later than the opening of
business (New York time) on the related Deposit Date. The Servicer intends to
satisfy such conditions and make deposits only on Deposit Dates for the related
Collection Period. Pending deposit into the Certificate Account, collections may
be invested by the Servicer at its own risk and for its own benefit and will not
be segregated from funds of the Servicer. If the Servicer were unable to remit
such funds, the Certificateholders might incur a loss. In order to satisfy the
requirements described above, the Servicer may, upon confirmation by the Rating
Agencies that the rating of a series of Class A Certificates and Class B
Certificates would not be lowered as a result, obtain a letter of credit or make
other arrangements for the benefit of the related Trust to secure timely
remittances of collections on the Receivables (other than with respect to
Advances) and payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
FEDERAL INCOME TAXATION; SUBORDINATION OF CLASS B CERTIFICATE OWNERS
It is expected that, for Federal income tax purposes, amounts otherwise
payable to the Class B Certificate Owners that are paid to the Class A
Certificate Owners pursuant to the subordination provisions described above
under "--Subordination of the Class B Certificates" will be deemed to have been
received by the Class B Certificate Owners and then paid by them to the Class A
Certificate Owners pursuant to a guaranty. See "Federal Income Tax Consequences
- -- Class B Certificate Owners."
If the Class B Certificate Owners received distributions of less than their
share of the related Trust's receipts of principal or interest (the "SHORTFALL
AMOUNT") because of the subordination of the Class B Certificates, it is
expected that Class B Certificate Owners would, for Federal income tax purposes,
be treated as if they had (i) received as distributions their full share of such
receipts, (ii) paid over to the Class A Certificate Owners an amount equal to
such Shortfall Amount, and (iii) retained the right to reimbursement of such
amounts to the extent of future Collections otherwise available for deposit in
the Reserve Account.
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Under this analysis, (i) Class B Certificate Owners would be required to
accrue as current income any interest or OID income of such Trust that was a
component of the Shortfall Amount, even though such amount was in fact paid to
the Class A Certificate Owners, (ii) a loss would only be allowed to the Class B
Certificate Owners when their right to receive reimbursement of such Shortfall
Amount became worthless (i.e., when it becomes clear that such amount will not
be available from any source to reimburse such loss), and (iii) reimbursement of
such Shortfall Amount prior to such a claim of worthlessness would not be
taxable income to Class B Certificate Owners because such amount was previously
included in income. Those results should not significantly affect the inclusion
of income for Class B Certificate Owners on the accrual method of accounting,
but could accelerate inclusion of income to Class B Certificate Owners on the
cash method of accounting by, in effect, placing them on the accrual method.
Moreover, the character and timing of loss deductions is unclear.
LIMITED SIGNIFICANCE OF RATINGS
It will be a condition to the issuance of any series of Certificates that
the Class A Certificates and the Class B Certificates be rated at or above the
Required Class A Rating and the Required Class B Rating, respectively, by at
least one Rating Agency. A security rating is not a recommendation to buy, sell
or hold securities and may be revised or withdrawn at any time by the assigning
Rating Agency. In addition, the ratings on the Certificates do not address the
timing of distributions of principal on the Certificates prior to the applicable
Final Scheduled Distribution Date.
ABSENCE OF DEFINITIVE CERTIFICATES
With respect to any series of Certificates, the Class A Certificates and the
Class B Certificates will each be represented initially by global certificates
registered in the name of Cede, as nominee of DTC. No Certificate Owner will be
entitled to receive a Definitive Certificate representing such person's interest
in the related Trust except in certain limited circumstances. Under the terms of
each Agreement, Certificate Owners will not be recognized as Certificateholders,
and will be permitted to exercise the rights of the Certificateholders only
indirectly through DTC. See "The Certificates -- Book Entry Registration" and
"-- Definitive Certificates."
FORMATION OF THE TRUSTS
With respect to each series of Certificates, the Seller will establish a
Trust by selling and assigning the Receivables and certain other Trust Property
to the related Trust in exchange for the Certificates. Prior to such sale and
assignment, such Trust will have no assets or obligations or any operating
history. No Trust will engage in any activity other than acquiring and holding
the related Trust Property, issuing the Certificates and distributing payments
on the Certificates.
The Servicer will service the Receivables of each Trust, either directly or
through subservicers, and will be paid the Basic Servicing Fee out of
collections from the Receivables, prior to distributions to the
Certificateholders. Certain other expenses of each Trust will be paid by the
Servicer or by the Seller as provided in the Agreement. See "The Certificates --
Servicing Procedures," "-- Servicing Compensation" and "-- Distributions on
Certificates."
The Servicer will appoint an affiliate, First Security Service Company, to
hold the Receivables and Receivable Files as custodian for the Trustee. Although
the Receivables will not be marked or stamped to indicate that they have been
sold to a Trust, and the certificates of title for the Financed Vehicles will
not be endorsed or otherwise amended to identify such Trust as the new secured
party, the Servicer and First Security Service Company will indicate in their
computer records that the Receivables have been sold to that Trust. Under such
circumstances and in certain jurisdictions, a Trust's interest in the
Receivables and the Financed Vehicles may be subordinate to certain third
parties. See "Certain Legal Aspects of the Receivables -- Rights in the
Receivables" and "-- Security Interests in the Financed Vehicles."
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No Trust will acquire any assets other than the related Trust Property, and
it is not anticipated that any Trust will have a need for additional capital
resources. Because each Trust will have no operating history upon its
establishment and will not engage in any activity other than acquiring and
holding the Trust Property, issuing the Certificates and distributing payments
on the Certificates, no historical or pro forma financial statements or ratios
of earnings to fixed charges with respect to a Trust have been included herein,
nor will any be included in a Prospectus Supplement.
TRUST PROPERTY
Each Certificate will represent a fractional undivided interest in the
related Trust. The property of each Trust will include (i) the Receivables, (ii)
all monies due or received under such Receivables after the Cutoff Date, (iii)
certain amounts from time to time on deposit in the related Certificate Account,
Class A Distribution Account and Class B Distribution Account, (iv) security
interests in the related Financed Vehicles, (v) certain rights of such Trust
under the related Yield Supplement Agreement, (vi) the Seller's rights (if any)
to receive proceeds from claims on credit life, disability, theft and physical
damage insurance policies covering such Financed Vehicles or the related
Obligors, (vii) the Seller's right to all documents and information contained in
the Receivable Files, (viii) the rights of such Trust under the related
Agreement, (ix) certain of the Seller's rights relating to such Receivables
under Dealer Agreements and (x) all proceeds (within the meaning of the UCC) of
the foregoing. The Reserve Account and the Yield Supplement Account for a series
of Certificates, and any amounts therein, will not be property of the related
Trust, but will be pledged to and held by the Collateral Agent, as secured party
for the benefit of the related Certificateholders.
THE MOTOR VEHICLE LOAN PORTFOLIO
GENERAL
The Bank originates retail motor vehicle installment sale contracts and
installment loans secured by new and used automobiles and light-duty trucks
manufactured by a number of automobile manufacturers through Dealers and
branches of the Bank ("MOTOR VEHICLE LOANS"). The Motor Vehicle Loans to be
transferred to any Trust have been or will be originated by participating
Dealers or will be made by the Bank directly to borrowers. All applications are
reviewed by the Bank in accordance with its established underwriting procedures.
The following is a description of the origination, underwriting and
servicing of the Bank's portfolio of Motor Vehicle Loans as of the date of this
Prospectus. Any material changes to this information with respect to a Trust
known at the time such Trust is created will be set forth in the related
Prospectus Supplement.
ORIGINATION OF RECEIVABLES
Since September 30, 1996, the Bank's direct loans have been referred to, and
approved at, the Direct Loan Center located in Boise. Prior to this date, direct
loans for the State of Utah were approved at a Direct Loan Center in Salt Lake
City and the direct loans for the State of Idaho were approved at a Direct Loan
Center in Boise.
Applications for credit which originate with Dealers are sent via facsimile
to the Application Processing Center in Boise. These applications are
data-entered and transmitted through the Application Processing System to
Regional Dealer Services Centers located in Salt Lake City, Utah and Boise and
Lewiston, Idaho. These centers are responsible for all credit analysis and
credit decisions on indirect loan requests.
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Since September 30, 1996, bank wide consumer loan collections have been
performed by the Consumer Collection Center located in Salt Lake City. Prior to
this date, collection activities for Utah were performed in Salt Lake City and
collection activities for Idaho were handled in Boise.
The Consumer Loan Servicing Center located in Boise, reviews and tracks all
loan documentation, stores and maintains all loan files, follows up on lien
perfection, processes payments, reconciles accounting records and provides for
internal and external reporting for all of the Bank's direct and indirect
consumer lending business. In addition, this department provides central
processing of dealer flooring, including processing of manufacturers' drafts and
flooring requests for the Regional Dealer Services Centers and processing of
flooring billing and payments.
Credit administration is provided by the Small Business and Consumer Loan
Administration department located in Boise. This department provides policy and
functional guidance for all areas of consumer lending.
UNDERWRITING
The Bank uses the applicant's creditworthiness as the basic criterion in
purchasing a retail installment sale contract from a Dealer and in making an
installment loan. Each applicant is evaluated individually by the Bank based on
underwriting guidelines developed by the Bank. These underwriting guidelines are
intended to assess the applicant's ability to repay such loan and the adequacy
of the Financed Vehicle as collateral. Among the criteria considered in
evaluating the individual applications are (i) stability of the applicant with
specific regard to the applicant's length of residence in the area, occupation,
length of employment, and whether the applicant rents or owns a residence, (ii)
the applicant's payment history, (iii) a debt service to net monthly income
ratio test, and (iv) a loan to value ratio test taking into account the age,
type and market value of the Financed Vehicle.
The Bank obtains information from the loan application form which generally
lists the applicant's income, deposit accounts, liabilities, credit history,
employment history, and a description of the Financed Vehicle. Upon receipt of
an application, the Bank obtains a credit bureau report from a major credit
reporting agency summarizing the applicant's credit history and paying habits,
including such items as open accounts, delinquent payments, bankruptcies,
repossessions, lawsuits and judgments. The Bank's analysts generally verify the
applicant's employment or, where appropriate, check directly with the
applicant's creditors. The Bank's general policy has been to reject applications
for applicants whose debt service to net monthly income ratio exceeds 45%.
The amount financed by the Bank under a retail installment sale contract
generally will not exceed (i) for a new Financed Vehicle, the Dealer wholesale
price, plus sales tax, license fees, title fees, service and warranty contracts,
and premiums for credit life and credit accident and health insurance obtained
in connection with the vehicle or the financing and (ii) for a used Financed
Vehicle, the wholesale value of the Financed Vehicle (as determined according to
industry standards and price quotations), plus sales tax, license fees, title
fees, and premiums for credit life and credit accident and health insurance
obtained in connection with the vehicle or the financing. However, the maximum
amount advanced for Motor Vehicle Loans is often less than such amounts
depending on a number of factors, including the length of the Motor Vehicle Loan
term and the model and year of the Financed Vehicle. These adjustments are made
to assure that the Financed Vehicle constitutes adequate collateral to secure
the Motor Vehicle Loan.
Since January 1994, an empirically based credit scoring process has been
used to objectively index an applicant's creditworthiness. This scoring process
was created using historical information from the database of Motor Vehicle
Loans owned and serviced by the Bank. Through credit scoring, the Bank evaluates
credit profiles in order to quantify credit risk. The credit scoring process
entails the use of statistics to correlate common characteristics with credit
risk. The credit scoring process used by the Bank is periodically reviewed and
validated and, if necessary, updated based upon statistical sampling of actual
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credit results. The Bank's credit scoring process is intended to provide a basis
for lending decisions, but is not meant to supersede the judgment of the credit
analyst.
Such information is evaluated by the Bank's experienced credit officers as a
package; no one factor is determinative to the analysis. As a result, certain
contracts may not comply with all of the Bank's guidelines. Deviations from the
guidelines must be approved by a lending officer with appropriate authority.
Motor Vehicle Loans which do not comply with all of the Bank's guidelines must
have strong compensating factors which indicate a high ability of the applicant
to repay the loan. Any Receivables sold by the Bank to any Trust which were the
subject of special financing or other promotional programs will have been
approved by the Bank in accordance with its normal and customary underwriting
practices and procedures for all Motor Vehicle Loans.
The Bank has established internal control procedures and performs periodic
audits to ensure compliance with the underwriting guidelines and its established
policies and procedures for Motor Vehicle Loans originated directly by the Bank
as well as those originated through Dealers.
Dealers from which the Bank purchases retail installment sale contracts have
been selected by the Bank based on the Dealer's financial and operating history,
and have made representations and warranties to the Bank with respect to the
contracts and the security interests in the Financed Vehicles relating thereto,
which representations and warranties do not relate to the creditworthiness of
the applicant or the collectibility of the loans. In addition, as to a generally
small percentage of Motor Vehicle Loans, there is recourse to a Dealer ("DIRECT
RECOURSE") if an applicant defaults under a Receivable, subject to certain
conditions to be fulfilled by the Bank. Upon breach of any representation or
warranty made by such a Dealer with respect to a retail installment sale
contract, the Bank has a right of recourse against such Dealer to require it to
repurchase such contract. Generally, in determining whether to exercise such
right or any right of direct recourse, the Bank considers the prior performance
of the Dealer and other business and commercial considerations. The Bank, as
Servicer, is obligated to enforce such rights with respect to Dealer Agreements
relating to the Receivables in accordance with such customary practices, and the
right to any proceeds received upon such enforcement will be conveyed to the
applicable Trust.
The Bank may, on a case-by-case basis, permit extensions with respect to the
due dates of Receivables or payment deferrals in the discretion of a senior
credit officer other than the origination officer. In addition to such
extensions, the Bank has historically offered payment deferrals to a broader
population of qualifying applicants in June and in December. Unless otherwise
specified in a Prospectus Supplement, all obligors that meet the Bank's
eligibility requirements will be given the opportunity to take advantage of such
payment deferrals. Any such deferrals or extensions may extend the maturity of
the applicable Receivable and increase the weighted average life of the
Receivables and any fees associated therewith will increase the principal
balance of the related Receivable.
SERVICING AND COLLECTIONS
Collection activities with respect to delinquent contracts are performed by
the Bank's collection personnel. Under current practices, collection personnel
generally initiate contact, by mail, with obligors whose contracts have become
more than 10 days delinquent. In the event that such contact fails to resolve
the delinquency, the collection personnel typically contact the obligor by
telephone after the contract becomes 15 days delinquent. Generally, after a
contract continues delinquent for 90 days, the vehicle is repossessed; however,
under certain circumstances, the vehicle may be repossessed immediately after a
contract has become delinquent. After repossession, the Bank is required to give
reasonable notice of any proposed sale of the vehicle, and the Bank's practice
is to give the obligor 10 days' notice. Losses may occur in connection with
delinquent contracts and can arise in several ways, including inability to
locate the vehicle to be repossessed. The Bank recognizes losses on Motor
Vehicle Loans at the time it deems such Motor Vehicle Loans to be uncollectible,
which is generally at the time it has exhausted all of its non-legal remedies,
typically no later than the 120th day of delinquency. The servicing and
charge-off policies and
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collection practices of the Bank may change over time in accordance with the
Bank's business judgment. Upon repossession and disposition of the vehicle, any
deficiency remaining will be pursued to the extent deemed practical.
PHYSICAL DAMAGE INSURANCE
The Bank requires that an obligor provide an insurance policy covering
collision and comprehensive insurance. The deductibles are a maximum of $1,000
each for the collision insurance and the comprehensive insurance. The Bank uses
an automatic insurance tracking system. If, after 42 days, the Bank has not
received evidence of the proper insurance, a notice is sent to the obligor.
After giving the obligor another 28 days to purchase the required insurance, the
Bank force places "collateral protection insurance" policies on the Financed
Vehicle. If the principal balance of a Motor Vehicle Loan is less than $2,000,
the Bank does not force place insurance. An amount equal to the premium to cover
the policy is added to the loan, and monthly payments are adjusted to pay for
the insurance premium over a nine-month period. Unless otherwise specified in
the Prospectus Supplement, such additional principal and any interest thereon
will not be deemed Trust Property. Virtually all of such force placed insurance
policies are written for one year and then re-issued for subsequent years if
necessary. Unless otherwise specified in the Prospectus Supplement, insurance on
the Receivables in a Trust will be written through Balboa Life and Casualty
Company. Balboa Life and Casualty Company also provides the Bank with an errors
and omissions policy for insurance follow-ups.
DELINQUENCY AND LOSS EXPERIENCE
Fluctuations in delinquencies, repossessions and charge-offs generally
follow trends in the overall economic environment and may be affected by such
factors as increased competition for obligors, rising consumer debt burden per
household and increases in personal bankruptcies. Information with respect to
delinquencies, repossessions and charge-offs will be set forth in the Prospectus
Supplement, including, to the extent appropriate, past data indicating the
delinquency and credit/loss repossession experience for each of the last five
calendar years of the Bank's entire portfolio of Motor Vehicle Loans.
MATURITY AND PREPAYMENT ASSUMPTIONS
Full or partial prepayments on the Receivables in a Trust will have the
effect of reducing the weighted average life of the Receivables, while
delinquencies by Obligors under the Receivables, as well as extensions and
deferrals on the Receivables, will have the effect of increasing the weighted
average life of the Certificates. The Receivables may be prepaid at any time and
mandatory prepayments of a Receivable may result from, among other things, the
sale, insured loss or other disposition of the related Financed Vehicle or the
Receivable becoming a Defaulted Receivable. No assurance can be given as to the
level or timing of prepayments. If prepayments were to occur after a decline in
interest rates, investors seeking to reinvest their funds might be required to
invest at a return lower than the applicable Pass-Through Rate.
Certificateholders will bear all reinvestment risk resulting from prepayment of
the Receivables in the related Trust.
The rate of prepayments on the Receivables may be influenced by a variety of
economic, social and other factors, including the fact that an Obligor may not
sell or transfer a Financed Vehicle without the consent of the Servicer. The
Servicer believes that the actual rate of prepayments will result in a
substantially shorter weighted average life than the scheduled weighted average
life of the Receivables in a Trust. Any reinvestment risks resulting from a
faster or slower incidence of prepayment of such Receivables will be borne by
the related Certificateholders. See "The Certificates -- Termination" regarding
the Servicer's option to purchase all of the Receivables in a Trust as of the
last day of any Collection Period in which the Pool Balance of such Trust as a
percentage of the Original Pool Balance is 10.0% or less (or such other
percentage as is specified in the related Prospectus Supplement).
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The Bank maintains certain records of the historical prepayment experience
of its portfolio of indirect Motor Vehicle Loans. The Bank does not believe that
such records are adequate to provide meaningful information with respect to the
Receivables in a Trust. In any event, no assurance can be given that prepayments
on such Receivables would conform to any historical experience, and no
prediction can be made as to the actual prepayment experience to be expected
with respect to any Receivables.
YIELD CONSIDERATIONS
With respect to any series of Certificates, on each Distribution Date,
interest on the Certificates will be distributed at the applicable Pass-Through
Rate on the Class A Certificate Balance and the Class B Certificate Balance as
of the immediately preceding Distribution Date (after giving effect to all
payments made on such preceding Distribution Date). In the event of a principal
prepayment on a Receivable during a Collection Period, Certificateholders will
receive their PRO RATA share of interest for the full Collection Period with
respect to the unpaid principal balance of such Receivable as of the first day
of such Collection Period to the extent that amounts on deposit in the related
Certificate Account and in the related Reserve Account are available for such
purpose. The Receivables are Simple Interest Receivables and, to the extent that
payments of the fixed monthly installments thereunder are received prior to the
scheduled due dates for such installments, the portions of such installments
allocable to interest will be less than they would be if the payments were
received as scheduled. If the related Reserve Account is exhausted, the amount
of interest distributed to the Class B Certificateholders and, in certain
circumstances, the Class A Certificateholders, may be less than that described
above. See "The Certificates -- Distributions on Certificates."
Although the Receivables have different Contract Rates, disproportionate
rates of prepayments between Receivables with Contract Rates greater than or
less than a rate equal to the sum of the applicable Pass-Through Rate and the
Basic Servicing Fee Rate will generally not affect the yield to the
Certificateholders because the Seller has entered into a Yield Supplement
Agreement with each Trust. However, higher rates of prepayments of Receivables
with higher Contract Rates will decrease the amount available to cover
delinquencies and defaults on the Receivables. See "The Certificates --
Distributions on Certificates."
Additional information concerning the Receivables, including the selection
criteria and other characteristics of the Receivables, will be set forth in the
Prospectus Supplement for each series of Certificates.
POOL FACTORS AND OTHER INFORMATION
The "CLASS A POOL FACTOR" and the "CLASS B POOL FACTOR" for any series of
Certificates will each be a seven-digit decimal that the Servicer will compute
each month indicating the remaining Class A Certificate Balance and Class B
Certificate Balance, respectively, as of the close of business of the Servicer
on the Distribution Date, as a fraction of the respective initial outstanding
principal balance of the Class A Certificates and the Class B Certificates. The
Class A Pool Factor and the Class B Pool Factor will each be 1.0000000 as of the
date of the initial issuance of the Certificates (the "CLOSING DATE"), and
thereafter will decline to reflect reductions in the outstanding principal
balance of the Class A Certificates and Class B Certificates.
A Class A Certificateholder's portion of the aggregate outstanding principal
balance of the Class A Certificates is the product of (i) the original
denomination of the holder's Class A Certificate and (ii) the related Class A
Pool Factor. A Class B Certificateholder's portion of the aggregate outstanding
principal balance of the Class B Certificates is the product of (i) the original
denomination of the holder's Class B Certificate and (ii) the related Class B
Pool Factor.
Pursuant to the applicable Agreement, the Certificateholders of a series
will receive from the related Trustee monthly reports concerning the payments
received on the Receivables, Pool Balance, Class A Pool Factor and Class B Pool
Factor, and various other items of information. Certificateholders of record
during
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any calendar year will be furnished information by such Trustee for tax
reporting purposes not later than the latest date permitted by law. See "The
Certificates -- Statements to Certificateholders."
USE OF PROCEEDS
For any series of Certificates, the Seller will receive the Certificates in
exchange for the contribution to a Trust of the Receivables and the other Trust
Property described in a related Prospectus Supplement. Unless otherwise
described in the Prospectus Supplement, the net proceeds to be received by the
Seller from the sale of the Certificates will be added to its general corporate
funds and will be used for general corporate purposes.
THE BANK
The Bank, which will act as the Seller and Servicer for the Trusts, is a
subsidiary of First Security Corporation, a Delaware multi-state financial
services corporation based in Salt Lake City, Utah. First Security Corporation
is the oldest continuously operating multi-state bank holding company in the
United States. The Bank is a major participant in the motor vehicle financing
and dealer flooring markets in Utah, Idaho and neighboring market areas, as well
as in all facets of consumer and commercial lending.
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THE CERTIFICATES
The Certificates will be issued in series. Each series of Certificates will
be issued pursuant to an Agreement to be entered into by the Bank and the
Trustee specified in the related Prospectus Supplement. A form of Agreement has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. Copies of an Agreement may be obtained by the Certificateholders upon
written request to the Bank at 79 South Main Street, Salt Lake City, Utah 84111.
The following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the related
Agreement. Where particular provisions or terms used in an Agreement are
referred to, the actual provisions (including definitions of terms) are
incorporated by reference as a part of such summaries.
GENERAL
Each series of Certificates will evidence interests in a Trust to be created
pursuant to an Agreement. The Class A Certificates will evidence in the
aggregate an undivided ownership interest of the Class A Percentage of the Trust
and the Class B Certificates will evidence in the aggregate an undivided
ownership interest of the Class B Percentage of the Trust. On each Distribution
Date, the Trustee will distribute, to Certificateholders of the related Trust of
record on the related Record Date, all payments of principal on the Receivables
received by the Servicer during the related Collection Period, plus interest at
the applicable Pass-Through Rate on the Class A Certificate Balance and the
Class B Certificate Balance as of the immediately preceding Distribution Date
(after giving effect to all payments made on such Distribution Date), to the
extent that sufficient funds are on deposit in the related Certificate Account
or available in the related Reserve Account to make such distribution. See
"--Distributions on Certificates" and "-- Reserve Account." Principal and
interest to be distributed to Certificateholders may be provided by payments
made by or on behalf of Obligors, the payment of Purchase Amounts by the Seller
or the Servicer, draws from the related Reserve Account, payments pursuant to
the related Yield Supplement Agreement, repossession of, or other enforcement
measures taken with respect to, Financed Vehicles after default by Obligors and
the realization of net Liquidation Proceeds with respect thereto, or Recoveries
(if any) of deficiencies from Obligors after repossession and sale of Financed
Vehicles. See "--Sale and Assignment of the Receivables" and "--Servicing
Procedures." In the event that, on any Distribution Date, funds available from
the foregoing sources are insufficient to provide for such distributions, any
shortfall will be payable on the subsequent Distribution Date, to the extent
funds are available therefor.
The Certificates will be offered for purchase in denominations of $1,000 and
integral multiples thereof and will be represented initially by global
certificates registered in the name of Cede, as nominee of DTC. No Certificate
Owner will be entitled to receive a Definitive Certificate representing such
person's interest in any Trust unless Definitive Certificates are issued under
the limited circumstances described herein. Unless and until Definitive
Certificates are issued, all references to actions by Certificateholders shall
refer to actions taken by DTC upon instructions from its Direct Participants and
all references to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and statements
to DTC. See "--Definitive Certificates."
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 New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("DIRECT
PARTICIPANTS")and to facilitate the clearance and settlement of securities
transactions between Direct Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Direct
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations, and may include certain other organizations. Indirect
access to the DTC system is also available to others such as
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banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("INDIRECT PARTICIPANTS").
Certificate Owners 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 or
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the appropriate Trustee through
Direct Participants or Indirect Participants. Under a book-entry format,
Certificate Owners may experience some delay in their receipt of payments, as
such payments will be forwarded by the Trustee to Cede as nominee of DTC. DTC
will forward such payments to its Direct Participants which thereafter will
forward them to Indirect Participants or Certificate Owners. It is anticipated
that the only "Certificateholder" will be Cede as nominee of DTC. Certificate
Owners will not be recognized by the Trustee as Certificateholders, as such term
is used in the Agreement, and Certificate Owners will be permitted to exercise
the rights of Certificateholders only indirectly through DTC and its Direct
Participants and Indirect Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (THE "RULES"), DTC will be required to make book-entry transfers
of Certificates among Direct Participants and 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. Accordingly, although Certificate Owners will not
possess Certificates, the Rules provide a mechanism by which Participants will
receive payments and Certificate Owners will be able to transfer their
interests.
Because DTC can only act on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants, and on behalf of certain banks, trust
companies and other persons approved by it, the ability of a Certificate Owner
to pledge Certificates to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Certificates, may be limited
due to the absence of physical certificates for such Certificates.
DTC has advised the Seller that it will take any action permitted to be
taken by a Certificateholder under the related 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 Seller that to the extent that
the applicable Agreement requires that any action may be taken only by holders
of Class A Certificates or Class B Certificates representing specified
percentages 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 percentages.
DTC may take conflicting actions with respect to other undivided interests to
the extent that such actions are taken on behalf of Direct Participants whose
holdings include such undivided interests.
DEFINITIVE CERTIFICATES
Each series of Certificates will be issued in fully registered, certificated
form ("DEFINITIVE CERTIFICATES") to Certificate Owners or their nominees, rather
than to DTC or its nominee, only if (i) the Seller advises the related Trustee
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to the Certificates and such Trustee
or the Seller is unable to locate a qualified successor, (ii) the Seller, at its
option, elects to terminate the book-entry system through DTC or (iii) after the
occurrence of an Event of Servicing Termination, with respect to a series of the
Class A Certificates, Class A Certificate Owners of such series representing in
the aggregate not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates or, with respect to the Class B
Certificates, Class B Certificate Owners representing in the aggregate not less
than a majority of the aggregate outstanding principal balance of the Class B
Certificates, advise the Trustee and DTC through Direct Participants in writing
that the continuation of a book-entry system through DTC (or successor
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thereto) is no longer in the Class A Certificate Owners' or the Class B
Certificate Owners', as the case may be, best interests.
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. Upon surrender by DTC to
the Trustee of the global certificates representing the Certificates and receipt
by the Trustee of instructions for re-registration, the Trustee will reissue the
Certificates as Definitive Certificates and thereafter the Trustee will
recognize the holders of such Definitive Certificates as Certificateholders
under the related Agreement ("HOLDERS").
Distributions of principal of, and interest on, the Class A Certificates and
the Class B Certificates will be made by the Trustee directly to Holders of
Definitive Certificates in accordance with the procedures set forth herein and
in the related Agreement. Distributions of principal and interest on each
Distribution Date will be made to Holders in whose names the Definitive
Certificates were registered at the close of business of the Trustee on the
related Record Date. Such distributions will be made by check mailed to the
address of such Holder as it appears on the register maintained by such Trustee.
The final payment on any Definitive Certificate, however, will be made only upon
presentation and surrender of the Definitive Certificate at the office or agency
specified in the related notice of final distribution mailed to Holders.
Definitive Certificates will be transferable and exchangeable subject to
such reasonable regulations as the Trustee may prescribe. 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 government charge
imposed in connection therewith.
SALE AND ASSIGNMENT OF THE RECEIVABLES
On or prior to a Closing Date, pursuant to each Agreement, the Seller will
sell and assign to the related Trust, without recourse, the Seller's entire
interest in the Receivables and the proceeds thereof, including its security
interests in the Financed Vehicles. Each Receivable with respect to a Trust will
be identified in a schedule incorporated by reference into the related Agreement
(the "SCHEDULE OF RECEIVABLES"). The Trustee will, concurrently with such sale
and assignment, execute, authenticate and deliver the global certificates
representing the Certificates to the Seller, to be delivered by, or on behalf
of, the Seller to DTC.
The Seller will warrant in each Agreement as to each Receivable conveyed by
it to the related Trust that, among other things, as of the Closing Date (unless
otherwise indicated): (i) the Receivable has been fully and properly executed by
the parties thereto and (a) has been originated by the Seller or has been
originated by a Dealer for the retail sale of a Motor Vehicle in the ordinary
course of such Dealer's business and has been purchased by the Seller in the
ordinary course of the Seller's business and has been validly assigned by such
Dealer to the Seller, (b) is secured by a valid, subsisting and enforceable
security interest in favor of the Seller in the Financed Vehicle (subject to
administrative delays and clerical errors on the part of the applicable
government agency) prior in right to the security interest of any other
creditor, which security interest is assignable together with such Receivable,
and has been so assigned, by the Seller to the Trustee, (c) contains customary
and enforceable provisions such that the rights and remedies of the holder
thereof are adequate for realization against the collateral of the benefits of
the security, (d) provided, at origination, for level monthly payments (although
the amount of the first and last payments may be different), which fully
amortize the initial principal balance of the Receivable over the original term
and (e) provides for a payment that will fully pay the principal balance of such
Receivable as of the first day of the Collection Period in which the Receivable
is fully prepaid, together with interest accrued at least to the date of
prepayment at the related Contract Rate; (ii) the information set forth in the
related Schedule of Receivables was true and correct as of the close of business
of the Seller on the Cutoff Date; (iii) the Receivable complied at the time it
was originated or made, and will comply as of the Closing Date, in all material
respects with all requirements of applicable Federal, state and local laws, and
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regulations thereunder; (iv) the Receivable constitutes the genuine, legal,
valid and binding payment obligation in writing of the Obligor, enforceable in
all material respects by the holder thereof in accordance with its terms, and
the Receivable is not subject to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, and the operation of any of the
terms of the Receivable, or the exercise of any right thereunder, will not
render the Receivable unenforceable in whole or in part or subject to any right
of rescission, setoff, counterclaim or defense, including the defense of usury,
and the Seller has no notice that any right of rescission, setoff, counterclaim
or defense has been asserted with respect thereto; (v) the Seller has taken no
action which would have the effect of releasing the related Financed Vehicle
from the lien granted by the Receivable in whole or in part; (vi) no material
provision of the Receivable has been amended, waived, altered or modified in any
respect, except such waivers as would be permitted under the related Agreement,
and no amendment, waiver, alteration or modification causes such Receivable not
to conform to the other representations or warranties contained in this
paragraph; (vii) the Seller has not received notice of any liens or claims,
including liens for work, labor, materials or unpaid state or Federal taxes
relating to the Financed Vehicle securing the Receivable, that are or may be
prior to or equal to the lien granted by the Receivable; (viii) except for
payment delinquencies continuing for a period of not more than 30 days as of the
Cutoff Date, no default, breach, violation or event permitting acceleration
under the terms of the Receivable exists and no continuing condition that with
notice or lapse of time, or both, would constitute a default, breach, violation
or event permitting acceleration under the terms of the Receivable has arisen;
(ix) if the principal balance of a Receivable exceeds $2,000 (or such other
amount as is specified in the related Prospectus Supplement), the Financed
Vehicle securing such Receivable is insured under an insurance policy covering
theft and physical damage, the premiums for which have been paid in full, and
such insurance policy is in full force and effect, (x) the Receivable has not
been sold, assigned, pledged or otherwise conveyed by the Seller to any person
other than the related Trust, and, immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable title to the
Receivable free and clear of any encumbrance, equity, lien, pledge, charge,
claim, security interest or other right or interest of any other person and had
full right and power to transfer and assign the Receivable to the Trust and
immediately upon the transfer and assignment of the Receivable to the Trust,
such Trust will have good and marketable title to the Receivable, free and clear
of any encumbrance, equity, lien, pledge, charge, claim, security interest or
other right or interest of any other person and, if such transfer to such Trust
is deemed to be a transfer for security, such Trust's interest in the Receivable
resulting from the transfer has been perfected under the UCC; (xi) the Seller
has duly fulfilled all obligations on its part to be fulfilled under, or in
connection with, the Receivable and (xii) there is only one original executed
Receivable, and immediately prior to the related Closing Date, the Seller will
have possession of such original executed Receivable.
The Seller also will warrant in each Agreement that: (i) the Original Pool
Balance will be a specified amount (which amount is described in the related
Prospectus Supplement); (ii) as of the related Cutoff Date, the Receivables had
the individual characteristics described in the applicable Prospectus Supplement
under "The Receivables--Selection Criteria;" (iii) as of the related Cutoff
Date, the Receivables had the characteristics described in the applicable
Prospectus Supplement under "The Receivables--Certain Characteristics;" (iv) by
the related Closing Date, the Seller will have caused the portions of the
Seller's electronic master record of retail motor vehicle loans relating to the
Receivables to be clearly and unambiguously marked to show that such Receivables
constitute part of the Trust Property and are owned by such Trust in accordance
with the terms of the related Agreement; and (v) the Seller has not taken any
action to convey any right to any person that would result in such person having
a right to payments received under the related theft and physical damage
insurance policies or Dealer Agreements or to payments due under such
Receivables that is senior to or equal with that of the Trust.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, pursuant to each Agreement, the Trustee will appoint the
Servicer and the Servicer will appoint First Security Service Company, an
affiliate of the Servicer, as initial custodian of the Receivables held by the
related Trust. First Security Service Company, in its capacity as custodian with
respect to the Receivables, will hold such
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Receivables and the motor vehicle certificates of title relating thereto (each,
a "RECEIVABLE FILE") on behalf of the Trustee for the benefit of
Certificateholders. The Receivables will not be stamped or otherwise marked to
reflect the sale and assignment of the Receivables to the Trust and will not be
segregated from other receivables held by First Security Service Company on
behalf of the Servicer. Documents related to the Receivables that are not
included in the original Receivable Files will be maintained by First Security
Service Company, on behalf of the Servicer, in a computer imaging system (but
not in original form). The Seller's and First Security Service Company's
accounting records and computer systems will reflect the sale and assignment of
the Receivables to such Trust, and UCC financing statements with respect to such
sale and assignment will be filed. See "Formation of the Trusts" and "Certain
Legal Aspects of the Receivables."
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach or failure to be true of any warranty described in
"--Sale and Assignment of the Receivables" by the Seller with respect to the
Receivables in a Trust, which breach or failure materially and adversely affects
the interests of such Trust and the related Certificateholders in a Receivable
(it being understood that any such breach or failure with respect to certain
representations and warranties which does not affect the ability of the Trust to
receive and retain payment in full on the Receivable will not be deemed to have
such a material and adverse effect), the Seller, unless such breach or failure
has been cured by the last day of the related Collection Period which includes
the 60th day after the date on which the Seller becomes aware of, or receives
written notice from the Trustee or the Servicer of, such breach or failure, will
be required to repurchase the Receivable from the Trustee, without recourse,
representation or warranty, other than that the Trustee has not imposed any
liens on such Receivable to be repurchased, for the Purchase Amount. In
addition, if any payment deferral or credit extension permitted by the Servicer
results in the term of a Receivable extending beyond the last day of the
Collection Period immediately preceding the related Final Scheduled Distribution
Date, the Servicer is required to purchase that Receivable for the Purchase
Amount. See "--Credit Deferrals and Optional Payment Deferrals." The Purchase
Amount is payable on the Deposit Date related to such Collection Period. The
repurchase obligation will constitute the sole remedy available to the related
Certificateholders, Trustee or Trust against the Seller for any such uncured
breach or failure, except with respect to certain indemnities of the Seller
under the related Agreement.
The "PURCHASE AMOUNT" of any Receivable means, with respect to any Deposit
Date, an amount equal to the sum of (i) the outstanding principal balance of
such Receivable as of the last day of the related Collection Period and (ii) an
amount equal to the amount of accrued and unpaid interest on such principal
balance at the applicable Contract Rate through the last day of such related
Collection Period, in each case after giving effect to Collections on such
Receivable in such Collection Period.
CREDIT DEFERRALS AND OPTIONAL PAYMENT DEFERRALS
Other than as described below, the Servicer will not be allowed to increase
or decrease the amount or number of payments under a Receivable or the Contract
Rate of a Receivable, or extend, rewrite or otherwise modify the payment terms
of a Receivable, release collateral securing a Receivable, or otherwise modify
or waive any material term of a Receivable. Notwithstanding the foregoing, the
Servicer will be allowed to grant to an Obligor one or more payment deferrals
(each, a "CREDIT DEFERRAL") if (i) the Servicer determines that, absent such
deferral, a payment default by the Obligor is reasonably foreseeable, (ii) the
Servicer would grant such Credit Deferral if the Receivable were serviced by it
for its own account and in accordance with its customary standards, (iii) the
cumulative extensions with respect to any Receivable would not cause the term of
such Receivable to extend beyond the last day of the Collection Period
immediately preceding the related Final Scheduled Distribution Date, (iv) such
extensions in the aggregate would not exceed two months for each twelve months
of the original term of the Receivable and (v) interest would continue to accrue
on the outstanding principal balance of the Receivable during the
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term of such Credit Deferral. In the event that the Servicer fails to comply
with the provisions of the preceding sentence, the Servicer will be required to
purchase the Receivable or Receivables affected thereby for the Purchase Amount.
The Servicer will receive a fee in connection with the grant of Credit
Deferrals, which fee is then added to the principal balance of the related
Receivable.
Unless otherwise provided in a Prospectus Supplement, the Servicer will be
allowed to grant non-credit related extensions of any regularly scheduled
payment due under a Receivable (each, an "OPTIONAL PAYMENT DEFERRAL") to
Obligors satisfying the following conditions: (i) at the time of the extension,
the Receivable is not the subject of two Optional Payment Deferrals in the
related fiscal year of the related Trust; (ii) the Receivable is (x) not the
subject of any Credit Deferral within 90 days of the related Optional Payment
Deferral, or (y) not the subject of more than two Credit Deferrals since its
date of origination; (iii) the Receivable has been more than 30 days past due no
more than once; (iv) at the time of the Optional Payment Deferral, the
Receivable is not 15 days or more delinquent; (v) at the time of the Optional
Payment Deferral, the remaining term of the Receivable is greater than 20%, but
not more than 95%, of the original specified term of the Receivable; and (vi) in
the reasonable judgment of the Servicer, the Receivable is not likely to become
a Defaulted Receivable following the Optional Payment Deferral. If, as an
inadvertent result of any Optional Payment Deferral, the extension breached any
of the terms of the preceding criteria (i) through (vi) or caused the term of
the Receivable to extend beyond the last day of the Collection Period
immediately preceding the Final Scheduled Distribution Date, then the Servicer
will be obligated to purchase the Receivable for the Purchase Amount. The
Servicer will receive a fee in connection with the grant of Optional Payment
Deferrals, which fee is then added to the principal balance of the related
Receivable.
ACCOUNTS
With respect to each series of Certificates, the Trustee will establish one
or more segregated accounts (collectively for such series, the "CERTIFICATE
ACCOUNT"), in the name of the Trustee on behalf of the related Trust and for the
benefit of the Certificateholders of such series, into which all payments made
on or with respect to the Receivables will be deposited. Additionally, with
respect to each series of Certificates, the Trustee will establish a segregated
account (the "CLASS A DISTRIBUTION ACCOUNT") in the name of the Trustee on
behalf of the related Trust and for the benefit of the Class A
Certificateholders, and a segregated account (the "CLASS B DISTRIBUTION
ACCOUNT") in the name of the Trustee on behalf of the related Trust and for the
benefit of the Class B Certificateholders, from which all distributions with
respect to the Class A Certificates and the Class B Certificates, respectively,
will be made. The Certificate Account, the Class A Distribution Account and the
Class B Distribution Account for a series are collectively referred to as the
"ACCOUNTS," and such Accounts shall initially be established with the Trustee.
Each Account will be at all times an Eligible Deposit Account. If any
Account held by the Trustee in its own trust department ceases to be an Eligible
Deposit Account, the Trustee will be required to transfer such Account to an
Eligible Bank or otherwise cause such Account to again become an Eligible
Deposit Account. "ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated
account with an Eligible Bank or (b) a segregated trust account with the trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having trust powers and acting as
trustee for funds deposited in such account, so long as the long-term unsecured
debt of such depository institution shall have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"ELIGIBLE BANK" means any institution with trust powers (which may be the
Bank or the Trustee), organized under the laws of the United States of America
or any one of the states thereof or the District of Columbia (or any domestic
branch of a foreign bank) which has a combined capital and surplus in excess of
$50,000,000, the deposits of which are insured to the full extent permitted by
law by the Federal Deposit Insurance Corporation (the "FDIC"), which is subject
to supervision and examination by Federal or state banking authorities and which
has (i) a rating of at least P-1 from Moody's Investors Service, Inc.
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("MOODY'S")and A-l+ from Standard & Poor's Ratings Service, a Division of the
McGraw Hill Companies ("S&P") with respect to short-term deposits obligations,
(ii) a rating of A2 or higher from Moody's and A from S&P with respect to
long-term unsecured debt obligations, or (iii) such other ratings as may be
described in a Prospectus Supplement.
The Accounts may be maintained with the Bank, or any affiliate of the Bank,
if the Bank or such affiliate, as the case may be, and the Accounts meet the
eligibility criteria described in the preceding paragraphs.
Funds in the Accounts will be invested as provided in the related Agreement
in Eligible Investments. "ELIGIBLE INVESTMENTS" will generally be limited to
investments acceptable to the Rating Agencies as being consistent with the
rating of the Certificates and may include, if otherwise eligible, debt
securities of the Trustee, the Bank or any of their affiliates and money market
funds for which the Trustee, the Bank or any of their affiliates is an
investment manager or investment advisor. Investments of amounts on deposit in
the Accounts with respect to any Collection Period or Distribution Date are
limited to obligations or securities that mature not later than the related
Deposit Date. However, to the extent permitted by each Rating Agency, funds on
deposit in the Reserve Account may be invested in securities that will not
mature prior to the date of the next distribution with respect to the
Certificates. Any earnings (net of losses and investment expenses) on amounts on
deposit in the Accounts will be paid to the Seller and will not be available to
Certificateholders.
COLLECTIONS ON THE RECEIVABLES
The Servicer will deposit all payments on Receivables held by a Trust (other
than late fees, prepayment charges and certain other amounts payable to the
Servicer under the applicable Agreement, which are not required to be deposited
into the related Certificate Account) into the Certificate Account not later
than two business days after receipt thereof. However, if conditions
satisfactory to the Rating Agencies have been met, the Servicer will no longer
be required to make such payments within two business days, but instead will be
permitted to make such payments for a Collection Period into the Certificate
Account not later than the close of business (New York time) on the related
Deposit Date. Notwithstanding that payments received in respect of the
Receivables by the Servicer may not be required to be segregated from the
Servicer's own funds, the Agreement requires the Servicer to deposit into the
Certificate Account the full amount of all payments received from Obligors
during the related Collection Period and consequently the Servicer, not the
Certificateholders, will bear the risk of loss on all amounts received with
respect to the Receivables prior to their deposit into the Certificate Account.
The Seller and the Servicer will also deposit into the Certificate Account
on or before the next Deposit Date the Purchase Amount of each Receivable to be
repurchased or purchased by them pursuant to an obligation that arose during the
related Collection Period. The Servicer will be entitled to retain, or to be
reimbursed from, amounts otherwise payable into, or on deposit in, the
Certificate Account but later determined to have resulted from mistaken deposits
or postings or checks returned for insufficient funds.
As an administrative convenience, so long as no Event of Servicing
Termination has occurred, the Servicer will be permitted to make deposits for a
Collection Period net of distributions to be made to it with respect to such
Collection Period. The Servicer will account to the Trustee and to the
Certificateholders, however, as if all such deposits and distributions were made
individually.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by a Trust in a manner consistent with the
related Agreement and will exercise the degree of skill and care that the
Servicer exercises with respect to similar motor vehicle loans serviced by the
Servicer for itself or others and that are consistent with prudent industry
standards. The Servicer is permitted to delegate (i) any and all of its
servicing duties to any of its affiliates or (ii) specific duties to
subcontractors who are in
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the business of performing such duties; PROVIDED, HOWEVER, the Servicer will
remain obligated and liable to the Trustee and the Certificateholders for
servicing and administering the Receivables in accordance with the related
Agreement as if the Servicer alone were servicing the Receivables. References
herein to actions required or permitted to be taken, or restrictions on actions
to be taken, by the Servicer include such actions by a subservicer. References
herein to amounts received by the Servicer include amounts received by a
subservicer.
In each Agreement, the Servicer will covenant that: (A) the Servicer will
not release the Financed Vehicle from the security interest granted by the
related Receivable in whole or in part, except upon payment in full of the
Receivable or as otherwise contemplated by such Agreement; (B) the Servicer will
not impair in any material respect the rights of the Certificateholders in the
Receivables, the Dealer Agreements or the physical damage insurance policies;
and (C) except in the case of certain extensions, amendments or modifications
explicitly permitted by such Agreement, the Servicer will not (i) amend or
modify the principal balance or Contract Rate of any Receivable or (ii) amend,
waive or otherwise modify any material term of a Receivable.
In the event of a breach by the Servicer of any covenant described above
that materially and adversely affects the interests of the related Trust and the
Certificateholders in a Receivable, the Servicer, unless such breach has been
cured by the last day of the Collection Period which includes the 60th day after
the date on which the Servicer becomes aware of, or receives written notice of
such breach from the Trustee or the Seller, will be required to purchase the
Receivable from the Trustee, without recourse, representation or warranty, other
than that the Trustee has not imposed any liens on such Receivable to be
repurchased, for the Purchase Amount on the Deposit Date related to such
Collection Period or earlier under certain circumstances. In addition, if any
payment deferral or credit extension permitted by the Servicer results in the
term of a Receivable extending beyond the last day of the Collection Period
immediately preceding the Final Scheduled Distribution Date of the related
series, the Servicer will be required to purchase that Receivable for the
Purchase Amount. Such purchase will occur as of the last day of the related
Collection Period. The purchase obligation will constitute the sole remedy
available to the Certificateholders, the related Trust or Trustee against the
Servicer for any such uncured breach, except with respect to certain indemnities
of the Servicer under the related Agreement.
Each Agreement will also generally require the Servicer to charge off a
Receivable as a Defaulted Receivable in accordance with its customary servicing
procedures, to use its best efforts to repossess and liquidate the Financed
Vehicle as soon as feasible and to follow such of its normal collection
practices and procedures as it deems necessary or advisable, and that are
consistent with the standard of care required by the related Agreement, to
realize upon any Receivable. The Servicer may sell the Financed Vehicle securing
such Receivable at judicial sale or take any other action permitted by
applicable law. See "Certain Legal Aspects of the Receivables."
Each Agreement will provide that the Servicer will defend and indemnify the
related Trust, Collateral Agent and Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, arising out of or
resulting from (i) the use, ownership or operations by the Servicer or any
affiliate thereof of any Financed Vehicle or (ii) the willful misfeasance,
negligence or bad faith of the Servicer in the performance of its duties under
an Agreement. The Servicer's obligations to indemnify the related Trust, the
Collateral Agent and the Certificateholders for the Servicer's actions or
omissions will survive the removal of the Servicer, but will not apply to any
action or omission of a successor servicer.
SERVICING COMPENSATION
With respect to each series of Certificates, on each Distribution Date, to
the extent of Interest Collections, the Servicer will receive a fee for
servicing the Receivables equal to one-twelfth of a per annum rate (the "BASIC
SERVICING FEE RATE") multiplied by the Pool Balance as of the first day of the
related
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Collection Period (the "BASIC SERVICING FEE"). If it is acceptable to each
Rating Agency without a reduction in the rating of the Certificates, the Basic
Servicing Fee in respect of a Collection Period (together with any portion of
the Basic Servicing Fee that remains unpaid from prior Distribution Dates) at
the option of the Servicer may be paid at or as soon as possible after the
beginning of such Collection Period out of the first collections of interest
received on the Receivables for such Collection Period. The Basic Servicing Fee
Rate will equal 1.0% per annum (or such other percentage as is set forth in the
related Prospectus Supplement). In addition, with respect to each series of
Certificates, the Servicer will be entitled to retain any late fees, prepayment
charges (other than Deferral Fees) and other fees and charges collected during
the related Collection Period, plus any interest earned during the Collection
Period on deposits in the Accounts (the "SUPPLEMENTAL SERVICING FEE").
The Basic Servicing Fee and Supplemental Servicing Fee with respect to each
series of Certificates will compensate the Servicer for performing the functions
of a third party servicer of Motor Vehicle Loans and for administering the
Receivables on behalf of the Certificateholders, including collecting payments,
accounting for collections, furnishing monthly and annual statements to the
Trustee with respect to distributions, responding to inquiries of Obligors,
investigating delinquencies and providing collection and repossession services
in cases of Obligor default. The Basic Servicing Fee and Supplemental Servicing
Fee will provide further compensation for certain taxes, accounting fees,
outside auditor fees and processing costs, and other costs incurred by the
Servicer under each Agreement in connection with administering and servicing the
Receivables.
ADVANCES
With respect to any series of Certificates, on each Deposit Date, the
Servicer may, subject to the following and unless otherwise specified in a
Prospectus Supplement, make a payment with respect to each Receivable serviced
by it (other than a Defaulted Receivable) equal to the excess, if any, of (x)
the product of the principal balance of such Receivable as of the first day of
the applicable Collection Period and one-twelfth of its Contract Rate
(calculated on the basis of a 360-day year comprised of twelve 30-day months),
over (y) Interest Collections actually received by the Servicer as of the last
day of such Collection Period with respect to such Receivable. The Servicer may
elect not to make any Advance of due and unpaid interest with respect to a
Receivable to the extent that the Servicer, in its sole discretion, determines
that such Advance is not recoverable from subsequent payments on such Receivable
or from funds in the Reserve Account.
With respect to any series of Certificates, on each Distribution Date, prior
to making any distribution to the Certificateholders, the Servicer shall be
reimbursed for all Outstanding Advances with respect to prior Distribution
Dates, to the extent of the Interest Collections for such Distribution Date and,
to the extent such Interest Collections are insufficient, to the extent of the
funds in the related Reserve Account. If it is acceptable to each Rating Agency
without reduction in the rating of the Certificates, the Outstanding Advances at
the option the Servicer may be paid at or as soon as possible after the
beginning of the applicable Collection Period out of the first collections of
interest received on the Receivables held by the related Trust for such
Collection Period.
The Servicer will deposit all Advances into the applicable Certificate
Account on the Deposit Date.
YIELD SUPPLEMENT AGREEMENT
With respect to any series of Certificates, simultaneously with the sale and
assignment of the Receivables by the Seller to the related Trust, such Trust and
the Seller will enter into a Yield Supplement Agreement if the amount calculated
below is greater than zero. Each Yield Supplement Agreement will, with respect
to each Receivable held by the related Trust, provide for the payment by the
Servicer on or prior to each Deposit Date of an amount (if positive) calculated
by the Servicer equal to one-twelfth of the excess of (i) the sum of the amount
of interest that would accrue on the Class A Percentage of such
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Receivable's principal balance as of the first day of the related Collection
Period at a rate equal to the sum of the Class A Pass-Through Rate and the Basic
Servicing Fee Rate and the amount of interest that would accrue on the Class B
Percentage of such Receivable's principal balance as of the first day of the
related Collection Period at a rate equal to the sum of the Class B Pass-Through
Rate and the Basic Servicing Fee Rate over (ii) interest at the Contract Rate on
such Receivable's principal balance as of the first day of the applicable
Collection Period.
The Seller's obligations under each Yield Supplement Agreement will be
secured by funds on deposit in a separate Eligible Deposit Account to be
maintained by the Seller in the name of the Collateral Agent for the benefit of
the Certificateholders (a "YIELD SUPPLEMENT ACCOUNT"). The amount required to be
deposited by the Seller into such Yield Supplement Account on the Closing Date
will be equal to the Yield Supplement Initial Deposit, and the amount on deposit
in the Yield Supplement Account and available on any Distribution Date will be
the Specified Yield Supplement Balance.
Each Yield Supplement Account will be an Eligible Deposit Account which the
Seller shall establish and maintain in the name of, and under the control of,
the Collateral Agent. Funds on deposit in such Yield Supplement Account will be
invested in Eligible Investments selected by the Seller; PROVIDED that, if
permitted by the Rating Agencies, funds on deposit in a Yield Supplement Account
may be invested in Eligible Investments that mature later than the next Deposit
Date. A Yield Supplement Account and any amounts therein shall not be property
of the related Trust, but will be pledged to and held for the benefit of the
Collateral Agent, as secured party for the benefit of the Certificateholders.
Each Yield Supplement Account shall initially be maintained at the corporate
trust office of the related Trustee.
Amounts on deposit in a Yield Supplement Account will be released to the
Seller on each Distribution Date to the extent the amount on deposit in such
Yield Supplement Account exceeds the Specified Yield Supplement Balance. The
Collateral Agent also shall cause all investment earnings attributable to any
Yield Supplement Account to be distributed on each Distribution Date to the
Seller. Upon any distribution to the Seller of amounts from a Yield Supplement
Account, the Certificateholders will not have any rights in, or claims to, such
amounts.
RESERVE ACCOUNT
With respect to each series of Certificates, a separate Reserve Account will
be created with an initial deposit of cash or Eligible Investments having a
value of at least the Reserve Account Initial Deposit. In addition, on each
Distribution Date, any amounts on deposit in the related Certificate Account
with respect to the related Collection Period after payments to the
Certificateholders and the Servicer have been made will be deposited into the
related Reserve Account until the amount of such Reserve Account is equal to the
Specified Reserve Account Balance.
Each Reserve Account will be an Eligible Deposit Account which the Seller
shall establish and maintain in the name of, and under the control of, the
related Collateral Agent. Funds on deposit in any Reserve Account will be
invested in Eligible Investments selected by the Seller; PROVIDED that, if
permitted by the Rating Agencies, funds on deposit in such Reserve Account may
be invested in Eligible Investments that mature later than the next Deposit
Date. A Reserve Account and any amounts therein will not be property of the
Trust, but will be pledged to and held by the related Collateral Agent, as
secured party for the benefit of the related Certificateholders.
On each Distribution Date, the amount available in any Reserve Account (the
"AVAILABLE RESERVE AMOUNT") will equal the lesser of (i) the amount on deposit
in such Reserve Account (net of investment earnings) and (ii) the Specified
Reserve Account Balance.
For each series, on or prior to each Deposit Date, the related Collateral
Agent will withdraw funds from the applicable Reserve Account (i) to the extent
required to make reimbursements of Outstanding Advances to the extent not
recovered from Interest Collections and (ii) to the extent (x) the sum of the
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amounts required to be distributed to Certificateholders and the accrued and
unpaid Basic Servicing Fees payable to the Servicer on such Distribution Date
exceeds (y) the amount on deposit in the Certificate Account as of the last day
of the related Collection Period (net of investment income). Such deficiencies
in a Certificate Account may result from, among other things, Receivables
becoming Defaulted Receivables or the failure of the Servicer to make any
remittance required to be made under the related Agreement. The aggregate amount
to be withdrawn from a specific Reserve Account on any Deposit Date will not
exceed the Available Reserve Amount with respect to the applicable Distribution
Date. The related Collateral Agent will deposit the proceeds of the withdrawal
described in clause (ii) above into the Certificate Account on or before the
Distribution Date with respect to which such withdrawal was made.
For each series, the Specified Reserve Account Balance on any Distribution
Date will equal the Basic Reserve Account Percentage of the related Pool Balance
as of the last day of the related Collection Period, but in any event will not
be less than the lesser of (i) the Reserve Account Floor Amount and (ii) the
Full Payoff Amount; provided that the Specified Reserve Account Balance will be
calculated using the Reserve Account Increase Percentage instead of the Basic
Reserve Account Percentage for any Distribution Date (beginning on the Reserve
Account Trigger Starting Date) on which the Average Net Loss Ratio exceeds the
Default Trigger or the Average Delinquency Ratio exceeds the Delinquency
Trigger.
"AGGREGATE NET LOSSES" means, for each series, for any Collection Period,
the aggregate amount allocable to principal of all Receivables newly
designated during such Collection Period as Defaulted Receivables minus all
Liquidation Proceeds to the extent allocable to principal collected during
such Collection Period with respect to all Defaulted Receivables (whether or
not newly designated as such).
"AVERAGE DELINQUENCY RATIO" means, for each series, as of any Distribution
Date, the average of the Delinquency Ratios for the preceding three
Collection Periods.
"AVERAGE NET LOSS RATIO" means, for each series, as of any Distribution
Date, the average of the Net Loss Ratios for the preceding three Collection
Periods.
"BASIC RESERVE ACCOUNT PERCENTAGE" for any series will be specified in the
related Prospectus Supplement.
"DEFAULTED RECEIVABLE" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which the Servicer, on behalf
of the Trust, has determined to charge off during such Collection Period in
accordance with its customary servicing practices; provided, however, that
any Receivable which the Seller or the Servicer is obligated to repurchase
or purchase shall be deemed not to be a Defaulted Receivable during a
Collection Period unless the Seller or the Servicer fails to deposit the
Purchase Amount on the related Deposit Date when due unless such Receivable
is otherwise repurchased or purchased on or prior to the last day of the
Collection Period in which such Receivable is determined to be a Defaulted
Receivable.
"DEFAULT TRIGGER" for any series will be specified in the related Prospectus
Supplement.
"DELINQUENCY RATIO" means, for each series, for any Collection Period, the
ratio, expressed as a percentage, of (i) the principal amount of all
outstanding Receivables (other than Purchased Receivables and Defaulted
Receivables) which are 60 or more days delinquent as of the last day of such
Collection Period, determined in accordance with the Servicer's customary
practices, divided by (ii) the Pool Balance as of the last day of such
Collection Period.
"DELINQUENCY TRIGGER" for any series will be specified in the related
Prospectus Supplement.
"FULL PAYOFF AMOUNT" for a series means the sum of the Pool Balance of the
related Trust plus an amount sufficient to pay interest on (i) the Class A
Percentage of such Pool Balance at a rate equal to the sum of the Class A
Pass-Through Rate and the Basic Servicing Fee Rate through the Final
Scheduled Distribution Date and (ii) the Class B Percentage of such Pool
Balance at a rate equal to
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the sum of the Class B Pass-Through Rate and the Basic Servicing Fee Rate
through the Final Scheduled Distribution Date
"LIQUIDATION PROCEEDS" means, for each series, with respect to any
Distribution Date and a Receivable that became a Defaulted Receivable during
the related Collection Period, (i) insurance proceeds received during such
Collection Period by the Servicer, with respect to insurance policies
relating to the Financed Vehicles or the Obligors, (ii) amounts received by
the Servicer during such Collection Period from a Dealer in connection with
such Defaulted Receivable pursuant to the exercise of rights under a Dealer
Agreement, and (iii) the monies collected by the Servicer (from whatever
source, including proceeds of a sale of a Financed Vehicle or deficiency
balance recovered after the charge-off of the related Receivable) during
such Collection Period on such Defaulted Receivable net of any expenses
incurred by the Servicer in connection with the collection of such
Receivable and the disposition of the Financed Vehicle and any payments
required by law to be remitted to the Obligor, but, in any event, not less
than zero. Liquidation Proceeds shall be applied first to accrued and unpaid
interest on the Receivable and then to the principal balance thereof.
"NET LOSS RATIO" means, for each series, for any Collection Period, an
amount, expressed as a percentage, equal to (i) the product of (a) the
Aggregate Net Losses minus Recoveries for such Collection Period and (b)
twelve, divided by (ii) the average of the Pool Balances on each of the
first day of such Collection Period and the last day of such Collection
Period.
"RECOVERIES" means, for each series, with respect to any Distribution Date,
all monies received by the Servicer with respect to any Defaulted Receivable
during the related Collection Period if such Collection Period follows the
Collection Period in which such Receivable became a Defaulted Receivable,
net of the sum of (i) any expenses incurred by the Servicer in connection
with the collection of such Receivable and the disposition of the Financed
Vehicle (to the extent not previously reimbursed) and (ii) any payments
required by law to be remitted to the Obligor, but, in any event, not less
than zero.
"RESERVE ACCOUNT FLOOR AMOUNT" for any series will be specified in the
related Prospectus Supplement.
"RESERVE ACCOUNT INCREASE PERCENTAGE" for any series will be specified in
the related Prospectus Supplement.
"RESERVE ACCOUNT TRIGGER STARTING DATE" for any series will be specified in
the related Prospectus Supplement.
The Specified Reserve Account Balance with respect to each series of
Certificates may be reduced to a lesser amount as determined by the Seller,
provided that such reduction does not adversely affect the ratings of the
Certificates by the Rating Agencies. Amounts on deposit in any Reserve Account
will be released to the Seller on each Distribution Date to the extent that the
amount on deposit in such Reserve Account would exceed the Specified Reserve
Account Balance. The related Collateral Agent will cause all investment earnings
attributable to the applicable Reserve Account to be distributed on each
Distribution Date to the Seller. Upon any distribution to the Seller of amounts
from any Reserve Account, the Certificateholders will not have any rights in, or
claims to, such amounts.
In the event that the funds in a Reserve Account are reduced to zero, the
Certificateholders of such series will bear directly the credit and other risks
associated with ownership of the Receivables held by the related Trust,
including the risk that such Trust may not have a perfected security interest in
the Financed Vehicles. In such a case, the amount available for distribution may
be less than that described below, and the Certificateholders may experience
delays or suffer losses as a result, among other things, of defaults or
delinquencies by the Obligors or previous extensions made by the Servicer.
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DISTRIBUTIONS ON CERTIFICATES
DEPOSITS TO CERTIFICATE ACCOUNT. With respect to each series of
Certificates, on or before the tenth calendar day of each month (the
"DETERMINATION DATE"), the Servicer will provide the related Trustee and
Collateral Agent with a certificate (the "SERVICER'S CERTIFICATE") containing
certain information with respect to the applicable Collection Period, including
the amount of aggregate collections on the Receivables during such Collection
Period, the aggregate amount of Receivables held by the related Trust which
became Defaulted Receivables during such Collection Period, the Yield Supplement
Amount, the aggregate Purchase Amounts of Receivables to be repurchased by the
Seller or to be purchased by the Servicer on the related Deposit Date and the
aggregate amount to be withdrawn from the Reserve Account.
With respect to each series of Certificates, on or before each Deposit Date,
(a) the Servicer will cause all related Collections and Liquidation Proceeds and
Recoveries to be deposited into the applicable Certificate Account and will
deposit into the Certificate Account all Purchase Amounts of Receivables to be
purchased by the Servicer on such Deposit Date, (b) the Seller will deposit into
the Certificate Account all Purchase Amounts of Receivables to be repurchased by
the Seller on such Deposit Date, (c) the Collateral Agent will make any required
withdrawals for the related Distribution Date from the Reserve Account for such
series and deposit such amounts into the Certificate Account, (d) the Servicer
will deposit all Advances for the related Distribution Date into the Certificate
Account and (e) the Seller (or, if the Seller fails to do so, the Collateral
Agent) will deposit the Yield Supplement Amount for such Distribution Date into
the Certificate Account.
"AVAILABLE INTEREST" means, for each series, with respect to any
Distribution Date, the excess of (a) the sum of (i) Interest Collections for
such Distribution Date, (ii) the Yield Supplement Amount for such
Distribution Date and (iii) all Advances made by the Servicer with respect
to such Distribution Date, over (b) the amount of Outstanding Advances to be
reimbursed on or with respect to such Distribution Date.
"AVAILABLE PRINCIPAL" means, for each series, with respect to any
Distribution Date, the sum of the following amounts with respect to the
related Collection Period: (i) that portion of all Collections allocable to
principal in accordance with the terms of the Receivables and the Servicer's
customary servicing procedures; (ii) to the extent attributable to
principal, the Purchase Amount received with respect to each Receivable
repurchased by the Seller or purchased by the Servicer under an obligation
which arose during the related Collection Period; and (iii) all related
Liquidation Proceeds, to the extent allocable to principal. "Available
Principal" on any Distribution Date shall exclude all payments and proceeds
of any Receivables the Purchase Amount of which has been distributed on a
prior Distribution Date.
"COLLECTIONS" means all collections on the Receivables.
"INTEREST COLLECTIONS" means, for each series, for any Distribution
Date, the sum of the following amounts for the related Collection Period:
(i) that portion of the Collections on the Receivables received during the
related Collection Period that is allocable to interest in accordance with
the terms of the Receivables and the Servicer's customary procedures, (ii)
all related Liquidation Proceeds, to the extent allocable to interest, (iii)
to the extent allocable to interest, all related Recoveries and (iv) to the
extent attributable to interest, the Purchase Amount of all Receivables that
are repurchased by the Seller or purchased by the Servicer as of any day in
the related Collection Period. "Interest Collections" for any Distribution
Date shall exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution Date.
"PURCHASED RECEIVABLE" means, at any time, a Receivable as to which
payment of the Purchase Amount has previously been made by the Seller or the
Servicer pursuant to the applicable Agreement.
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DEPOSITS TO THE DISTRIBUTION ACCOUNTS. With respect to each series of
Certificates, on each Distribution Date, after making reimbursements of
Outstanding Advances to the Servicer, the Trustee will make the following
deposits and distributions, to the extent of Available Interest and any
Available Reserve Amount remaining after such reimbursements (and, in the case
of shortfalls occurring under clause (ii) below in the Class A Interest
Distribution, the Class B Percentage of Available Principal to the extent of
such shortfalls), in the following priority, all in accordance with the
direction contained in the Servicer's Certificate:
(i) to the Servicer, any unpaid Basic Servicing Fee for the related
Collection Period and all unpaid Basic Servicing Fees from prior
Collection Periods, but only from Interest Collections;
(ii) to the Class A Distribution Account, the Class A Interest Distribution
for such Distribution Date; and
(iii) to the Class B Distribution Account, the Class B Interest Distribution
for such Distribution Date.
With respect to each series of Certificates, on each Distribution Date, the
Trustee will make the following deposits and distributions, to the extent of the
portion of Available Principal, Available Interest and Available Reserve Amount
remaining after the application of clauses (i), (ii) and (iii) above, in the
following priority:
(a) to the Class A Distribution Account, the Class A Principal Distribution
for such Distribution Date;
(b) to the Class B Distribution Account, the Class B Principal Distribution
for such Distribution Date;
(c) to the Collateral Agent for deposit in the Reserve Account, any amounts
remaining, until the amount on deposit in the Reserve Account equals the
Specified Reserve Account Balance; and
(d) to the Collateral Agent for distribution to the Seller, any amounts
remaining.
With respect to any series of Certificates, on each Distribution Date, all
amounts on deposit in the Class A Distribution Account will be distributed to
the Class A Certificateholders by the Trustee, all amounts on deposit in the
Class B Distribution Account will be distributed to the Class B
Certificateholders by the Trustee and all amounts on deposit in the Reserve
Account in excess of the Specified Reserve Account Balance will be distributed
to the Seller by the Collateral Agent; PROVIDED, HOWEVER, that upon distribution
with respect to such Class A Certificates of an amount, together with all prior
distributions with respect to the Class A Certificates, equal to the Original
Class A Certificate Balance plus interest thereon, such Class A
Certificateholders shall have no right to any additional distribution and the
Trustee shall make no distributions with respect to the Class A Certificates and
upon distribution with respect to the Class B Certificates of an amount,
together with all prior distributions with respect to the Class B Certificates,
equal to the Original Class B Certificate Balance plus interest thereon, the
Class B Certificateholders shall have no right to any additional distribution
and the Trustee shall make no distributions with respect to the Class B
Certificates.
"CLASS A CERTIFICATE BALANCE" for each series, at any time, equals the
Original Class A Certificate Balance, as reduced by all amounts allocable to
principal on such Class A Certificates distributed to Class A
Certificateholders prior to such time.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, for each series, (i) with
respect to any initial Distribution Date, zero, and (ii) with respect to any
other Distribution Date, the excess of Class A Monthly Interest for the
preceding Distribution Date and any outstanding Class A Interest Carryover
Shortfall on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Class A Distribution Account on
such preceding Distribution Date, plus 30 days of interest on such excess,
to the extent permitted by law, at the applicable Class A Pass-Through Rate.
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"CLASS A INTEREST DISTRIBUTION" means, for each series, with respect to
any Distribution Date, the sum of Class A Monthly Interest for such
Distribution Date and the Class A Interest Carryover Shortfall for such
Distribution Date.
"CLASS A MONTHLY INTEREST" means, for each series, with respect to any
Distribution Date, one-twelfth of the applicable Class A Pass-Through Rate
multiplied by the Class A Certificate Balance as of the preceding
Distribution Date, or, in the case of the first Distribution Date, as of the
Interest Accrual Date.
"CLASS A MONTHLY PRINCIPAL" means, for each series, with respect to any
Distribution Date, the Class A Percentage of Available Principal for such
Distribution Date plus the Class A Percentage of Realized Losses with
respect to the related Collection Period.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, for each series, (i)
with respect to the initial Distribution Date, zero and (ii) with respect to
any other Distribution Date, the excess of Class A Monthly Principal for
such Distribution Date and any outstanding Class A Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Class A Distribution Account on
such Distribution Date.
"CLASS A PRINCIPAL DISTRIBUTION" means, for each series, with respect
to the initial Distribution Date, the Class A Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other than the
initial Distribution Date, the sum of the Class A Monthly Principal for such
Distribution Date and the Class A Principal Carryover Shortfall as of the
close of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date for such series, the Class A Principal
Distribution shall include the amount that is necessary (after giving effect
to the other amounts described above to be distributed to the Class A
Certificateholders on such Distribution Date and allocable to principal) to
reduce the Class A Certificate Balance to zero.
"CLASS B CERTIFICATE BALANCE" for each series, at any time, equals the
Original Class B Certificate Balance, as reduced by all amounts allocable to
principal on such Class B Certificates distributed to Class B
Certificateholders prior to such time.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, for each series, (i) with
respect to the initial Distribution Date, zero, and (ii) with respect to any
other Distribution Date, the excess of Class B Monthly Interest for the
preceding Distribution Date and any outstanding Class B Interest Carryover
Shortfall on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Class B Distribution Account on
such preceding Distribution Date, plus 30 days of interest on such excess,
to the extent permitted by law, at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTION" means, for each series, with respect to
any Distribution Date, the sum of Class B Monthly Interest for such
Distribution Date and the Class B Interest Carryover Shortfall for such
Distribution Date.
"CLASS B MONTHLY INTEREST" means, for each series, with respect to any
Distribution Date, one-twelfth of the Class B Pass-Through Rate multiplied
by the Class B Certificate Balance as of the preceding Distribution Date
(after giving effect to any distributions made on such Distribution Date)
or, in the case of the first Distribution Date, as of the Interest Accrual
Date.
"CLASS B MONTHLY PRINCIPAL" means, for each series, with respect to any
Distribution Date, the Class B Percentage of Available Principal for such
Distribution Date plus the Class B Percentage of Realized Losses with
respect to the related Collection Period.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, for each series, (i)
with respect to the initial Distribution Date, zero and (ii) with respect to
any other Distribution Date, the excess of Class B
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Monthly Principal for such Distribution Date and any outstanding Class B
Principal Carryover Shortfall from the preceding Distribution Date over the
amount in respect of principal that is actually deposited in the Class B
Distribution Account on such Distribution Date.
"CLASS B PRINCIPAL DISTRIBUTION" means, for each series, with respect
to any initial Distribution Date, the Class B Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other than the
initial Distribution Date, the sum of Class B Monthly Principal for such
Distribution Date and the Class B Principal Carryover Shortfall as of the
close of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date for such series, the Class B Principal
Distribution will include the amount that is necessary (after giving effect
to the other amounts described above to be distributed to the Class B
Certificateholders on such Distribution Date and allocable to principal) to
reduce the Class B Certificate Balance to zero.
"INTEREST ACCRUAL DATE" means, for each series, the date on which
interest begins to accrue on the Certificates of such series, which date
will be specified in the Prospectus Supplement.
"REALIZED LOSSES" means, with respect to any Distribution Date and a
Receivable that became a Defaulted Receivable during the related Collection
Period, the excess of (i) the aggregate principal balance of such Receivable
as of the first day of the related Collection Period over (ii) Liquidation
Proceeds received with respect to such Receivable during such Collection
Period, to the extent allocable to principal.
The following chart sets forth an example of the application of the
foregoing provisions to a hypothetical monthly distribution with respect to a
series of Certificates:
<TABLE>
<S> <C>
February 26-March 25 COLLECTION PERIOD. The Servicer receives monthly payments,
prepayments, and other proceeds in respect of the
Receivables.
April 10 DETERMINATION DATE. On or before this date, the Servicer
delivers to the Trustee the Servicer's Certificate, which
notifies the Trustee of the amounts required to be
distributed and the amounts available for distribution on
the next Distribution Date.
April 14 RECORD DATE. Distributions on the next Distribution Date are
made to Certificateholders of record at the close of
business of the Trustee on this date (or, if Definitive
Certificates are issued, the Record Date will be March 25).
April 15 DEPOSIT DATE. All Collections, Advances and any Yield
Supplement Amount relating to the related Collection Period
are required to be deposited into the Certificate Account on
or before this date.The Trustee withdraws funds from the
Reserve Account to the extent necessary.
April 15 DISTRIBUTION DATE. The Trustee distributes to
Certificateholders amounts payable in respect of the
Certificates, pays the Basic Servicing Fee and reimburses
Outstanding Advances to the Servicer, deposits any excess
funds to the Reserve Account and, if the Reserve Account is
equal to the Specified Reserve Account Balance, pays any
remaining funds to the Seller.
</TABLE>
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STATEMENTS TO CERTIFICATEHOLDERS
With respect to each series of Certificates, on each Distribution Date, the
Trustee will include with the distribution to each Class A Certificateholder and
Class B Certificateholder a statement setting forth the following information
for the related Collection Period, to the extent applicable to that series:
(i) the amount of the distribution allocable to principal on the Class A
Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on the Class A
Certificates and the Class B Certificates;
(iii) the Yield Supplement Amount;
(iv) the amount of the Basic Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(v) the Class A Certificate Balance, the Class A Pool Factor, the Class B
Certificate Balance and the Class B Pool Factor as of such Distribution
Date, after giving effect to payments allocated to principal reported
under clause (i) above;
(vi) the Pool Balance as of the close of business of the Servicer on the
last day of the related Collection Period;
(vii) the amount of the aggregate Realized Losses, if any, for such
Collection Period;
(viii) the amount of the aggregate Defaulted Receivables, if any, for such
Collection Period;
(ix) the amount otherwise distributable to the Class B Certificateholders
that is distributed to the Class A Certificateholders for the related
Collection Period;
(x) the aggregate Purchase Amount of Receivables repurchased by the Seller
or purchased by the Servicer with respect to the related Collection
Period;
(xi) the amount of Advances made in respect of such Collection Period and
the amount of unreimbursed Advances on such Distribution Date;
(xii) the balance of the Reserve Account on such Distribution Date, after
giving effect to changes therein on such Distribution Date;
(xiii) the excess, if any, of the Class A Certificate Balance over the Pool
Balance and the excess, if any, of the Class B Certificate Balance over
the amount by which the Pool Balance exceeds the Class A Certificate
Balance; and
(xiv) the aggregate outstanding balances of the Receivables which were
delinquent 30-59 days, 60-89 days, 90-119 days and 120 or more days,
respectively, as of the close of business on the last day of the related
Collection Period.
Each amount set forth pursuant to clauses (i) through (iv) above will be
expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of the Certificates.
With respect to each series of Certificates, within a reasonable period of
time after the end of each calendar year, but not later than the latest date
permitted by law, the Trustee will furnish to each person who at any time during
such calendar year was a Certificateholder of such series a statement containing
the sum of the amounts described in the clauses (i) and (ii) above and such
other information as is available to the Servicer as the Servicer deems
necessary or desirable to enable Certificateholders to prepare their Federal
income tax returns. See "Federal Income Tax Consequences."
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EVIDENCE AS TO COMPLIANCE
Each Agreement will provide that a firm of independent certified public
accountants, who may provide audit and other services to the Servicer, will
furnish to the Trustee, on or before March 15 of each year, beginning the first
March 15 which is at least three months after the related Closing Date, a report
of examination to the effect that such firm has examined the motor vehicle loan
servicing functions of the Servicer over the previous calendar year (or shorter
or longer period in the case of the first such report) and that such examination
(i) included tests relating to motor vehicle loans serviced and such other
auditing procedures as such firm considered necessary under the circumstances
and (ii) except as described in such report, disclosed no exceptions or errors
in the records relating to motor vehicle loans serviced that, in such firm's
opinion, requires such firm to report.
Each Agreement will also provide for delivery to the Trustee, on or before
March 15 of each year, beginning on the first March 15 which is at least three
months after the related Closing Date, of a certificate signed by an officer of
the Servicer stating that, to the best of such officer's knowledge, the Servicer
has fulfilled its obligations under the Agreement for the previous calendar year
(or shorter period in the case of the first such certificate) or, if there has
been a default in the fulfillment of any such obligation, describing each such
default.
Certificateholders and Certificate Owners may obtain copies of such
statements and certificates by written request addressed to the Trustee. See "--
The Trustee."
CERTAIN MATTERS REGARDING THE SERVICER
Each Agreement will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon a determination that
the Servicer's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the Trustee or a
successor servicer has assumed the Servicer's servicing obligations and duties
under the Agreement.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or that may result from any merger, conversion or consolidation to
which the Servicer is a party, or any entity that may succeed by purchase and
assumption to all or substantially all the business of the Servicer, where the
Servicer is not the surviving entity and where such corporation or other entity
assumes the obligations of the Servicer under an Agreement, will be the
successor to the Servicer under that Agreement.
Each Agreement will provide that the Servicer will be liable only to the
extent of the obligations specifically undertaken by it under such Agreement and
will have no other obligations or liabilities thereunder.
Each Agreement will also provide that the Servicer will not be under any
obligation to appear in, prosecute, or defend any legal action that is not
incidental to the Servicer's servicing responsibilities under such Agreement and
that, in its opinion, may cause it to incur any expense or liability. The
Servicer may, however, at its expense undertake any reasonable action that it
may deem necessary or desirable in respect of an Agreement and the rights and
duties of the parties thereto and the interests of the Certificateholders
thereunder.
EVENTS OF SERVICING TERMINATION
With respect to any series of Certificates, the following events will
constitute "EVENTS OF SERVICING TERMINATION" under the applicable Agreement: (i)
any failure by the Servicer to deliver to the related Trustee the Servicer's
Certificate for any Collection Period (which failure continues beyond the
earlier of three business days from the date the Servicer's Certificate was due
to be delivered and the related Deposit Date), (ii) any failure by the Servicer
to deliver to the related Accounts any required payment or deposit, which
failure continues unremedied for five business days following the due date (or,
in the case of a payment or deposit to be made not later than a Deposit Date
related to a Distribution Date, the failure to
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make such payment or deposit by such Distribution Date), (iii) any failure by
the Servicer duly to observe or perform in any material respect any other
covenant or agreement in the Certificates and the related Agreement, which
failure materially and adversely affects the rights of Certificateholders of
such series (which determination shall be made without regard to whether funds
are available to the Certificateholders pursuant to the applicable Reserve
Account) and which continues unremedied for 90 days after written notice of such
failure is given to the Servicer or the Seller by the Trustee or to the Servicer
and Trustee by the holders of Certificates of such series evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates of such series taken together as a
single class, (iv) certain events of bankruptcy, receivership, insolvency or
similar proceedings and certain actions by the Servicer indicating its
insolvency pursuant to bankruptcy, receivership, conservatorship, insolvency or
similar proceedings or its inability to pay its obligations and (v) the failure
by the Servicer to be an Eligible Servicer.
The holders of Certificates of such series evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates, with respect to that series of
Certificates, taken together as a single class may waive any Event of Servicing
Termination, except an event resulting from the failure to make any required
deposit or payment to a related Account.
If an Event of Servicing Termination occurs, the Trustee will have no
obligation to notify Certificateholders of such series of such event prior to
the end of any cure period described above.
RIGHTS UPON AN EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination under an Agreement remains
unremedied, the Trustee or the holders of Certificates of such series evidencing
not less than a majority of the aggregate outstanding principal balance of the
Class A Certificates and the Class B Certificates of such series taken together
as a single class may terminate the Servicer's rights and obligations under such
Agreement, whereupon the Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such Agreement. Thereafter, the
Trustee will be entitled to the same Basic Servicing Fee and Supplemental
Servicing Fee otherwise payable to the Servicer. The Trustee may appoint, or
petition a court of competent jurisdiction for the appointment of, an Eligible
Servicer to act as successor to the outgoing Servicer under such Agreement. In
no event may the servicing compensation to be paid to such successor be greater
than the Basic Servicing Fees payable to the outgoing Servicer under such
Agreement. In the event of the bankruptcy or insolvency of the Servicer, the
bankruptcy trustee or the Servicer, as debtor-in-possession, may have the power
to prevent a termination of the Servicer's rights and obligations under the
related Agreement. The Bank will be entitled to receive all accrued and unpaid
Basic Servicing Fees and Supplemental Servicing Fees through and including, and
to be reimbursed for all Outstanding Advances as of, the effective date of its
termination as the Servicer.
"Eligible Servicer" means (a) any affiliate of the Seller, (b) the Trustee
or (c) any person which, at the time of its appointment as Servicer, (i) has a
net worth of not less than $50,000,000 (or such other amount as is specified in
the related Prospectus Supplement), (ii) is servicing a portfolio of motor
vehicle retail installment sale contracts and/or motor vehicle loans, (iii) is
legally qualified, and has the capacity, to service the Receivables, (iv) has
demonstrated the ability to service a portfolio of motor vehicle loans similar
to the Receivables professionally and completely in accordance with standards of
skill and care that are consistent with prudent industry standards, and (v) is
qualified and entitled to use pursuant to a license or other written agreement,
and agrees to maintain the confidentiality of, the software which the Servicer
uses in connection with performing its duties and responsibilities under the
related Agreement or obtains rights to use, or develops at its own expense,
software which is adequate to perform its duties and responsibilities under the
related Agreement.
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AMENDMENT
Each Agreement may be amended by the Seller, the Servicer and the Trustee,
without the consent of the Certificateholders of such series, to add any
provisions to or change in any manner or eliminate any of the provisions of any
Agreement or modify the rights of the Certificateholders of such series;
PROVIDED, HOWEVER, that such action will not, in the opinion of counsel (which
may be an employee of the Seller, the Servicer or any of their affiliates)
reasonably satisfactory in form to the Trustee, materially and adversely affect
the interests of any Certificateholder of such series or cause the related Trust
to be classified for Federal income tax purposes as an association taxable as a
corporation. Each such Agreement also may be amended by the Seller, the Servicer
and the Trustee with the consent of the holders of Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates and the Class B Certificates of such series taken together as a
single class, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of that Agreement or of modifying
the rights of the Certificateholders of such series; except that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, or change the allocation or priority of, Collections or
distributions that are required to be made on any Certificate of such series,
without the consent of all adversely affected Certificateholders, (ii) reduce
the percentage of the aggregate outstanding principal balance of the
Certificates of such series, the holders of which are required to consent to any
such amendment, without the consent of all Certificateholders of such series,
(iii) materially and adversely affect the interests of either the Class A
Certificateholders or the Class B Certificateholders without the consent of the
holders of Class A Certificates or Class B Certificates of such series, as the
case may be, evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A Certificates or the Class B Certificates, as
the case may be, (iv) adversely affect the rating of the Class A Certificates or
the Class B Certificates by any Rating Agency without the consent of holders of
Class A Certificates or Class B Certificates, as the case may be, evidencing not
less than two-thirds of the aggregate outstanding principal balance of the Class
A Certificates or the Class B Certificates of such series, as the case may be or
(v) cause the related Trust to be taxable as a corporation.
LIST OF CERTIFICATEHOLDERS
With respect to any series of Certificates, if Definitive Certificates have
been issued, the Trustee, upon written request of the holders of Class A
Certificates or Class B Certificates evidencing not less than 25% of the
aggregate outstanding principal balance of either the Class A Certificates or
the Class B Certificates of such series, as the case may be, will afford such
Class A Certificateholders or Class B Certificateholders access during business
hours to the most current list of Certificateholders of such series for purposes
of communicating with other Certificateholders of such series with respect to
their rights under the related Agreement. Prior to such time, neither the
Trustee nor DTC will have an obligation to maintain, or provide Certificate
Owners with access to, a list of Certificate Owners. Definitive Certificates
will be issued only in the limited circumstances described above in " --
Definitive Certificates."
No Agreement will provide for holding any annual or other meetings of
Certificateholders.
TERMINATION
With respect to each series of Certificates, the Trust, and the respective
obligations and responsibilities of the Seller, the Servicer and the Trustee
under each such Agreement will, except with respect to certain reporting
requirements, terminate upon the earliest of (i) the Distribution Date next
succeeding the Servicer's purchase of the remaining Trust Property, as described
below, (ii) payment to Certificateholders, the Trustee and the Collateral Agent
of all amounts required to be paid to them pursuant to the related Agreement and
(iii) the Distribution Date next succeeding the month which is six months after
the maturity or liquidation of the last Receivable held in the Trust and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust in accordance with the terms and priorities set forth in the
Agreement.
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In order to avoid excessive administration expense, the Servicer will be
permitted, at its option, in the event that the Pool Balance as of the last day
of a Collection Period has declined to 10.0% or less of the applicable Original
Pool Balance (or such other percentage as is specified in the related Prospectus
Supplement), to purchase from the Trust, on any Distribution Date occurring in a
subsequent Collection Period, all remaining Trust Property at a purchase price
equal to the aggregate of the Purchase Amounts of the remaining Receivables. The
exercise of this right may effect an early retirement of the related
Certificates.
The Trustee will give written notice of termination of the Trust to each
related Certificateholder of record. The final distribution to any
Certificateholder will be made only upon surrender and cancellation of such
holder's Certificate (whether a Definitive Certificate or the physical
certificate representing the Certificates) at the office or agency of the
Trustee specified in the notice of termination. Any funds remaining in such
Trust after setting aside all funds required to be distributed to
Certificateholders, will be distributed to the Seller or as otherwise provided
in the related Agreement.
THE TRUSTEE
With respect to any series of Certificates, the Trustee will be specified in
the related Prospectus Supplement. The Trustee, in its individual capacity or
otherwise, and any of its affiliates, may hold Certificates in their own names
or as pledgee. In addition, for the purpose of meeting the legal requirements of
certain jurisdictions, the Servicer and the Trustee, acting jointly (or in some
instances, the Trustee, acting alone), will have the power to appoint
co-trustees or separate trustees of all or any part of the related Trust. In the
event of such appointment, all rights, powers, duties, and obligations conferred
or imposed upon the Trustee by an Agreement will be conferred or imposed upon
the Trustee and such co-trustee or separate trustee jointly, or, in any
jurisdiction where the Trustee is incompetent or unqualified to perform certain
acts, singly upon such co-trustee or separate trustee who shall exercise and
perform such rights, powers, duties and obligations solely at the direction of
the Trustee. Each Agreement will provide that the Servicer will pay the
Trustee's reasonable fees and expenses.
A Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Servicer may also remove a Trustee
if such Trustee ceases to be eligible to serve, becomes legally unable to act,
is adjudged bankrupt, insolvent or is placed in receivership or similar
proceedings. In such circumstances, the Servicer will be obligated to appoint a
successor trustee. Any resignation or removal of a Trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by the successor Trustee. Upon removal or termination of a Trustee for any
reason, the related Collateral Agent will also be removed or terminated, and the
successor Trustee shall also become the successor Collateral Agent.
The address of the Trustee's Corporate Trust Office will be specified in the
related Prospectus Supplement. The Seller, the Servicer and their respective
affiliates may have other banking relationships with a Trustee and its
affiliates in the ordinary course of their business.
DUTIES OF THE TRUSTEE
No Trustee will make representations as to the validity or sufficiency of
any Agreement, the Certificates (other than the execution and authentication of
the Certificates), the Receivables, or any related documents, and no Trustee
will be accountable for the use or application by the Seller or the Servicer of
any funds paid to the Seller or the Servicer in respect of the Certificates or
the Receivables or for any monies prior to the time such monies are deposited
into the related Certificate Account. No Trustee will independently verify the
Receivables.
If no Event of Servicing Termination has occurred and is continuing, a
Trustee will be required to perform only those duties specifically required of
it under the related Agreement. Generally, those duties are limited to the
receipt of the various certificates, reports or other instruments required to be
furnished
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by the Servicer to such Trustee under the related Agreement, in which case the
Trustee will only be required to examine such instruments to determine whether
they conform to the requirements of the related Agreement.
No Trustee will be under any obligation to exercise any of the rights or
powers vested in it by the related Agreement or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order, or
direction of any of the Certificateholders, unless such Certificateholders have
offered such Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby. No
Certificateholder will have any right under such Agreement to institute any
proceeding with respect to that Agreement, unless such holder has given the
Trustee written notice of default and unless holders of the Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates of such series,
taken together as a single class, shall have made a written request to the
Trustee to institute such proceeding in its own name as Trustee thereunder and
have offered to the Trustee reasonable indemnity, and the Trustee for 30 days
has neglected or refused to institute any such proceeding.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
With respect to any series of Certificates, the Receivables are "chattel
paper" as defined in Article 9 of the UCC. Article 9 of the UCC specifically
states that with respect to a sale of chattel paper, the provisions of Article 9
apply. In that connection and to avail the related Trust of the benefits and
protections afforded by the UCC to a purchaser of chattel paper against other
competing claimants, actions prescribed by the UCC will be taken to "perfect"
the interests of the Trust in the Receivables transferred to such Trust. First,
the Seller will cause appropriate financing statements to be filed with the
appropriate governmental authorities in the states of Utah and Idaho. Second,
following the sale and assignment of the Receivables to such Trust, pursuant to
the related Agreement, an affiliate of the Servicer, First Security Service
Company, will be appointed by the Trustee to have physical possession of the
Receivables and the Receivable Files as custodian for the Trustee. The
Receivables will not be stamped, or otherwise marked to indicate that they have
been sold to such Trust; however, the Servicer and First Security Service
Company will indicate in their computer records that the Receivables have been
sold to that Trust and both will have notice of the interest of such Trust in
such Receivables. If, through inadvertence or otherwise, another party purchases
(or takes a security interest in) the Receivables for new value in the ordinary
course of business and somehow manages to take possession of the Receivables
without actual knowledge of the Trust's interests, such purchaser (or secured
party) will acquire an interest in the Receivables superior to the interest of
that Trust. Under the related Agreement, in addition to the obligation to
provide for perfection as above-described, the Seller is also obligated to
assure that the interest of the Trust in the Receivables is perfected in such a
manner as to affect the highest priority afforded by the UCC to such interests.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Generally, retail motor vehicle installment sale contracts and installment
loans such as the Receivables evidence loans to obligors to finance the purchase
of such motor vehicles. The loan documents also constitute personal property
security agreements and include grants of security interests in the vehicles
under the UCC. Perfection of security interests in motor vehicles is generally
governed by the motor vehicle registration laws of the state in which the
vehicle is located. In Utah, Idaho and most other states, with the exception of
the Idaho electronic title option hereinafter described, perfection of a
security interest in the vehicle is accomplished by taking action to have the
secured party's lien noted on the certificate of title. If the filing of the
registration, title and lien application papers necessary to cause such notation
to occur is accomplished within the appropriate period (20 days for Idaho and 30
days for Utah), the date of perfection is the date that such papers were
executed. Otherwise, perfection is deemed to occur at the time of filing such
papers. Accordingly, if for any reason there is a failure to file such papers
within the aforesaid period, subsequent purchasers and lien or security interest
claimants whose interests are perfected before the filing of such papers would
have prior claims to the vehicle. Also, even though the laws in Utah allow 30
days for such filing, a filing after 20 days exposes the secured party to a
possible claim in a bankruptcy proceeding that the Obligor's grant of the
security interest is a preferential transfer.
In Idaho, upon receipt of a properly completed title application, the
department of motor vehicles is authorized to create a paperless electronic
record of title to a vehicle in lieu of issuing a paper certificate of title if
the department and the lienholder so agree in writing. Under this alternative
method of registering and maintaining title to a motor vehicle, liens filed with
the department shall be perfected and take priority according to the order of
time in which the same are entered into the electronic records of the
department. In the absence of a written agreement between the department and the
lienholder to create a paperless electronic title, the paper certificate of
title is the controlling title document evidencing the recording date.
The Bank's practice is to take such action as is required in accordance with
its normal and customary servicing practices and procedures to perfect its
security interest in a Financed Vehicle under the laws of
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the jurisdiction in which the Financed Vehicle is registered. If the Bank,
because of clerical error or otherwise, has failed to take such action with
respect to a Financed Vehicle, it will not have a perfected security interest in
the Financed Vehicle and its security interest may be subordinate to the
interests of, among others, subsequent purchasers of the Financed Vehicle that
give value without notice of the Bank's security interest and to whom a
certificate of title is issued in such purchaser's name, holders of perfected
security interests in the Financed Vehicle, and the trustee in bankruptcy of the
Obligor. The Bank's security interest may also be subordinate to such third
parties in the event of fraud or forgery by the Obligor or administrative error
by state recording officials or in the circumstances noted below. As described
more fully below, the Bank will warrant in each Agreement that it has an
enforceable first priority perfected security interest with respect to each
Financed Vehicle and will be required to repurchase the related Receivable in
the event of an uncured breach of such warranty.
Pursuant to each Agreement, the Seller will assign its security interests in
the Financed Vehicles, along with the sale and assignment of the Receivables, to
the related Trustee. The certificates of title will not be endorsed or otherwise
amended to identify the Trust or Trustee as the new secured party, however,
because of the administrative burden and expense involved.
In Utah, Idaho and most other states, an assignment of a security interest
in a Financed Vehicle along with the applicable Receivable is effective without
amendment of any lien noted on a vehicle's certificate of title or ownership,
and the assignee succeeds thereby to the assignor's rights as secured party. In
Utah, Idaho and most other states, in the absence of fraud or forgery by the
vehicle owner or of fraud, forgery, negligence or error by the Bank or
administrative error by state or local agencies, the notation of the Bank's lien
on the certificates of title or ownership and/or possession of such certificates
with such notation will be sufficient to protect the related Trust against the
rights of subsequent purchasers of a Financed Vehicle or subsequent lenders who
take a security interest in a Financed Vehicle. There exists a risk, however, in
not identifying the Trust or Trustee as the new secured party on the certificate
of title that the security interest of the Trust or the Trustee may not be
enforceable. In the event the related Trust has failed to obtain or maintain a
perfected security interest in a Financed Vehicle, its security interest would
be subordinate to, among others, a bankruptcy trustee of the Obligor, a
subsequent purchaser of the Financed Vehicle or a holder of a perfected security
interest.
The Seller will warrant in the related Agreement as to each Receivable
conveyed by it to the Trust that, on the Closing Date, it has a valid,
subsisting, and enforceable first priority perfected security interest in the
Financed Vehicle securing the Receivable (subject to administrative delays and
clerical errors on the part of the applicable government agency) and such
security interest will be assigned by the Seller to the related Trust or
Trustee. In the event of an uncured breach of such warranty, the Seller will be
required to repurchase such Receivable for its Purchase Amount. The repurchase
obligation will constitute the sole remedy available to the affected Trust or
Trustee and the Certificateholders for such breach. The Seller's warranties with
respect to perfection and enforceability of a security interest in a Financed
Vehicle will not cover statutory or other liens arising after the Closing Date
by operation of law which have priority over such security interest.
Accordingly, any such lien would not by itself give rise to a repurchase
obligation on the part of the Seller.
In the event that an Obligor moves to a state other than the state in which
the Financed Vehicle is registered, under the laws of Utah, Idaho and most
states, a perfected security interest in a motor vehicle continues for four
months after such relocation and thereafter, in most instances, until the
Obligor re-registers the motor vehicle in the new state, but in any event not
beyond the surrender of the certificate of title. A majority of states require
surrender of a certificate of title to reregister a motor vehicle, and many
require that notice of such surrender be given to each secured party noticed on
the certificate of title. In those states that require a secured party to take
possession of a certificate of title to perfect a security interest, the secured
party would likely learn of the re-registration through the request from the
Obligor to surrender possession of the certificate of title. In those states
that require a secured party to note its lien on a certificate of title to
perfect a security interest but do not require possession of the certificate of
title, the
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secured party would likely learn of the re-registration through the notice from
the state department of motor vehicles that the certificate of title had been
surrendered. The requirements that a certificate of title be surrendered and
that notices of such surrender be given to each secured party also apply to re-
registrations effected following a sale of a motor vehicle. The Seller would
therefore have the opportunity to re-perfect its security interest in a Financed
Vehicle in the state of re-registration following relocation of the Obligor and
would be able to require satisfaction of the related Receivable following a sale
of the Financed Vehicle. In states that do not require a certificate of title
for registration of a motor vehicle, re-registration could defeat perfection. In
the ordinary course of servicing Motor Vehicle Loans, the Servicer takes steps
to effect re-perfection upon receipt of notice of re-registration or information
from the Obligor of a relocation. However, there is a risk that an Obligor could
relocate without notification to the Seller, then file a false affidavit with
the new state to cause a new certificate of title to be issued without notation
of the Seller's lien.
Under the laws of Utah, Idaho and many other states, certain possessory
liens for repairs performed on or storage of a motor vehicle and liens for
unpaid taxes may take priority over a perfected security interest in the motor
vehicle. The Code also grants priority to certain Federal tax liens over the
lien of a secured party. The laws of certain states and Federal law permit the
confiscation of motor vehicles under certain circumstances if used in unlawful
activities, which may result in a loss of a secured party's perfected security
interest in the confiscated motor vehicle. The Seller will warrant in the
related Agreement that, as of the Closing Date, the Seller has not taken any
action which would have a material and adverse effect on the interests of the
related Trust and Certificateholders, and the Seller will be required to
repurchase the Receivable secured by the Financed Vehicle involved. This
repurchase obligation will constitute the sole remedy available to the related
Trust and Certificateholders for such breach. Any liens for repairs or taxes
arising at any time after the Closing Date during the term of a Receivable would
not give rise to a repurchase obligation on the part of the Seller.
REPOSSESSION
In the event of a default by an Obligor, the holder of a Receivable has all
the remedies of a secured party under the UCC, except where specifically limited
by other state laws or by contract. The remedies of a secured party under the
UCC include the right to repossession by means of self-help, unless such means
would constitute a breach of the peace. Self-help repossession is the method
employed by the Bank in most cases, and is accomplished simply by taking
possession of the Financed Vehicle. Generally, where the Obligor objects or
raises a defense to repossession, a court order must be obtained from the
appropriate state court, and the Financed Vehicle must then be repossessed in
accordance with that order. In the event of a default by an Obligor, the laws of
many jurisdictions (but not Utah and Idaho) require that the Obligor be notified
of the default and be given a time period within which he may cure the default
prior to repossession, except such notice need not be given in emergency
situations pursuant to an order from the appropriate state court.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an Obligor
with reasonable notice of the date, time and place of any public sale and/or the
date after which any private sale of the collateral may be held. The Obligor
generally has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation plus accrued
and unpaid interest and, in most cases, reasonable expenses for repossessing,
holding and preparing the collateral for disposition and arranging for its sale
plus, in some jurisdictions, reasonable attorneys' fees. In some states (but not
Utah and Idaho), the Obligor has the right, prior to actual sale, to
reinstatement of the original loan terms and to return of the collateral by
payment of delinquent installments of the unpaid balance.
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DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not cover
the full amount of the indebtedness, a deficiency judgment can be sought in
Utah, Idaho and those states that do not prohibit or limit such judgments
(assuming proper notice of sale has been given and the sale has been conducted
in a commercially reasonable manner and otherwise in compliance with applicable
UCC provisions). Any such deficiency judgment would be a personal judgment
against the Obligor for the shortfall, however, and a defaulting Obligor may
have very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment or,
if one is obtained, it may be settled at a significant discount or not paid at
all.
Occasionally, after resale of a repossessed motor vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the secured party to remit the surplus to any other holder of a lien
with respect to the Financed Vehicle or, if no such lienholder exists or funds
remain after paying such other lienholders, to the Obligor.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial and detailed requirements upon lenders and servicers involved
in consumer finance. These laws include the Truth In Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B,
Z, and AA, and other similar acts and regulations, state adoptions of the
National Consumer Act and of the Uniform Consumer Credit Code and other similar
laws. Also, state laws impose other restrictions on consumer transactions, may
require contract disclosures in addition to those required under Federal law and
may limit the remedies available in the event of default by an Obligor. These
requirements impose specific statutory liabilities upon creditors who fail to
comply with their provisions where applicable. In most cases, this liability
could affect the ability of an assignee, such as the Trustee, to enforce secured
loans such as the Receivables.
The FTC's holder-in-due-course rule (the "FTC RULE") has the effect of
subjecting a seller of motor vehicles (and certain related lenders and their
assignees) in a consumer credit transaction and any assignee of the seller to
all claims and defenses which the purchaser could assert against the seller.
Liability under the FTC Rule is limited to the amounts paid by the purchaser
under the contract, and the holder of the contract may also be unable to collect
any balance remaining due thereunder from the purchaser. The FTC Rule is
generally duplicated by state statutes or the common law in certain states.
Although the Bank is not a seller of motor vehicles and is not subject to the
jurisdiction of the FTC, the loan agreements evidencing the Receivables contain
provisions which contractually apply the FTC Rule. Accordingly, the Bank, and
each Trustee as a holder of Receivables, will be subject to claims or defenses,
if any, that the purchaser of a Financed Vehicle may assert against the seller
of such vehicle. In Utah and Idaho, such claims and defenses could also arise
under state "lemon laws," statutes governing the sale of "salvage" vehicles, and
other consumer protection laws. Other examples of such claims include, but are
not limited to, breach of implied UCC warranties and fraud.
Under the motor vehicle dealer licensing laws of most states, sellers of
motor vehicles are required to be licensed to sell such vehicles at retail sale.
In addition, with respect to used motor vehicles, the FTC's Rule on Sale of Used
Vehicles requires that all sellers of used motor vehicles prepare, complete and
display a "Buyer's Guide" which explains the warranty coverage of such vehicles.
Federal Odometer Regulations promulgated under the Motor Vehicle Information and
Cost Savings Act require that all sellers of used motor vehicles furnish a
written statement signed by the seller certifying the accuracy of the odometer
reading. If a seller is not properly licensed or if either a Buyer's Guide or
Odometer Disclosure
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Statement was not properly provided to the purchaser of a Financed Vehicle, such
purchaser may be able to assert a claim against the seller of such vehicle.
Although the Bank is not a seller of motor vehicles and is not subject to those
laws, a violation thereof may form the basis for a claim or defense against the
Bank or Trustee as a holder of the affected Receivable.
Courts have applied general equitable principles to secured parties pursuing
repossession or litigation involving deficiency balances. These equitable
principles may have the effect of relieving an Obligor from some or all of the
legal consequences of a default.
The Seller will warrant in each Agreement as to each Receivable conveyed by
it to the related Trust that such Receivable complied at the time it was
originated and as of the Closing Date in all material respects with all
requirements of applicable law. If, as of the Cutoff Date, an Obligor had a
claim against such Trust for violation of any law and such claim materially and
adversely affects that Trust's interest in a Receivable, such violation would
create an obligation of the Seller to repurchase the Receivable unless the
breach was cured. This repurchase obligation will constitute the sole remedy of
the related Trustee and Certificateholders against the Seller in respect of any
such uncured breach, except with respect to the affected Seller's indemnity
obligations under the related Agreement with respect thereto. See "The
Certificates -- Sale and Assignment of the Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the United States Bankruptcy Code, a court may
prevent a lender from repossessing a motor vehicle and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the market
value of such vehicle at the time of bankruptcy (as determined by the court),
leaving the party providing financing as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the monthly
payments due under a contract or change the rate of interest and time of
repayment of the indebtedness.
The Seller intends that the transfer of the Receivables under each Agreement
constitute a sale. FIRREA sets forth certain powers that the FDIC could exercise
if it were appointed as receiver for the Seller. Subject to clarification by
FDIC regulations or interpretations, it would appear from the positions taken by
the FDIC before and after the passage of FIRREA that the FDIC in its capacity as
receiver for the Seller would not interfere with the timely transfer to a Trust
of payments collected on the Receivables. To the extent that the Seller is
deemed to have granted a security interest in the Receivables to the Trust, and
that interest was validly perfected before the Seller's insolvency and was not
taken in contemplation of insolvency, that security interest should not be
subject to avoidance, and payments to the Trust with respect to the affected
Receivables should not be subject to recovery by the FDIC as receiver. If,
however, the FDIC were to assert a contrary position, such as by requiring the
Trustee to establish its right to those payments by submitting to and completing
the administrative claims procedure established under FIRREA, delays in
distributions on the Certificates and possible reductions in the amount of those
payments could occur. Alternatively, in such circumstances, the FDIC might have
the right to repay the Certificates for an amount which may be greater or less
than the principal balance thereof and which would shorten their weighted
average life.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated Federal income tax
consequences of the purchase, ownership, and disposition of Certificates. This
summary is based upon laws, regulations, rulings, and decisions currently in
effect, all of which are subject to change. The discussion does not deal with
all Federal tax consequences applicable to all categories of investors, some of
which may be subject to special
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rules. In addition, this summary is generally limited to investors who will hold
the Certificates as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "CODE"). Consequences to individual investors of investment in the
Certificates will vary according to circumstances; accordingly, investors should
consult their own tax advisors to determine the Federal, state, local, and other
tax consequences of the purchase, ownership, and disposition of the
Certificates. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the "IRS") with respect to any
of the Federal income tax consequences discussed below, and no assurance can be
given that the IRS will not take contrary positions.
TAX STATUS OF THE TRUSTS
In the opinion of Kirkland & Ellis, special tax counsel to the Seller, each
Trust will be classified as a grantor trust and not as an association taxable as
a corporation for Federal income tax purposes. Accordingly, each Certificate
Owner will be subject to Federal income taxation as if it owned directly its
interest in each asset owned by the related Trust and paid directly its share of
reasonable expenses paid by that Trust.
TREATMENT OF CERTIFICATE OWNERS' INTEREST IN TRUST PROPERTY
With respect to any series of Certificates, each Certificate Owner could be
considered to own either (i) an undivided interest in a single debt obligation
held by the related Trust and having a principal amount equal to the total
stated principal amount of the Receivables and an interest rate equal to the
applicable Pass-Through Rate, or (ii) an interest in each of the Receivables and
in the Yield Supplement Agreement and any other Trust Property. Each Agreement
will express the intent of the Seller to sell, and the Certificateholders to
purchase, the Receivables (other than the Retained Yield), and the Seller, the
Certificateholders, and each Certificate Owner, by accepting a beneficial
interest in a Certificate, will agree to treat the Certificates as ownership
interests in such Receivables.
TREATMENT AS DEBT OBLIGATION. If a Certificate Owner were considered to own
an undivided interest in a single debt obligation, rather than reporting its
share of the interest accrued on each Receivable it would, in general, be
required to include in income interest accrued or received on the Class A
Certificate Balance or the Class B Certificate Balance, as the case may be, at
the applicable Pass-Through Rate in accordance with its usual method of
accounting.
The Certificates would be subject to the original issue discount ("OID")
rules, generally in the manner discussed below with respect to Stripped
Receivables. However, in determining whether such OID is DE MINIMIS, the
weighted average life of the Certificates would be determined using a reasonable
assumption regarding anticipated prepayments (a "PREPAYMENT ASSUMPTION"). OID
includible in income for any accrual period (generally, the period between
Distribution Dates) would generally be calculated using a Prepayment Assumption
and an anticipated yield established as of the date of initial sale of the
related Certificates, and would increase or decrease to reflect prepayments at a
faster or slower rate than anticipated. The related Certificates would also be
subject to the market discount provisions of the Code to the extent that a
Certificate Owner purchased such Certificates at a discount from the initial
issue price (as adjusted to reflect prior accruals of OID).
INCOME ON RECEIVABLES. The remainder of the discussion herein assumes that
a Certificate Owner of any given series will be treated as owning an interest in
each Receivable (and the proceeds thereof) held by the related Trust and an
interest in the related Yield Supplement Agreement and other Trust Property of
such Trust.
For Federal income tax purposes, the Seller will be treated as having
retained a fixed portion of the interest due on each Receivable having an annual
percentage rate in excess of the sum of the applicable Pass-Through Rate and the
Basic Servicing Fee Rate (each, a "STRIPPED RECEIVABLE") equal to the difference
between (x) the annual percentage rate of the Receivable and (y) the sum of the
applicable Pass-Through
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Rate and the Basic Servicing Fee Rate (the "RETAINED YIELD"). The Retained Yield
will be treated as "STRIPPED COUPONS" within the meaning of Section 1286 of the
Code, and the Stripped Receivables will be treated as "STRIPPED BONDS."
Accordingly, each Certificate Owner will be treated as owning its PRO RATA
percentage interest in (i) payments received under the Yield Supplement
Agreement, and (ii) the principal of, and interest payable on, each Receivable
(minus the Retained Yield on the Stripped Receivables).
Those Receivables that bear interest at a rate which is less than or equal
to the sum of the applicable Pass-Through Rate and the Basic Servicing Fee Rate
(the "SUPPLEMENTED RECEIVABLES") will not be treated as Stripped Receivables.
Instead, Yield Supplement Amounts will be payable to eliminate the difference
between the actual yield on each Supplemented Receivable and the yield such
Receivable would have had if its interest rate had equaled the sum of the
applicable Pass-Through Rate and the Basic Servicing Fee Rate. See "--Yield
Supplement Amounts."
Each Certificate Owner will be required to report on its Federal income tax
return its share of the gross income of the Trust, including interest and
certain other charges accrued on the Receivables and any gain upon collection or
disposition of the Receivables (but not including any portion of the Retained
Yield). Such gross income attributable to interest on such Receivables will
exceed the Class A Pass-Through Rate by an amount equal to the Class A
Certificate Owner's share of the expenses of the Trust for the period during
which it owns a Class A Certificate. The Class A Certificate Owner will be
entitled to deduct its share of expenses of the Trust to the extent described
below. Any amounts received by a Class A Certificate Owner from the Reserve
Account or from the subordination of the Class B Certificates will be treated
for Federal income tax purposes as having the same characteristics as the
payments they replace.
A Class A Certificate Owner will report its share of the income of the Trust
including interest and certain other charges accrued on the Receivables, OID and
market discount, payments received under the Yield Supplement Agreement (to the
extent treated as income) and investment earnings on funds held pending
distribution, under its usual method of accounting. Accordingly, interest,
excluding OID or market discount, will be includible in a Certificate Owner's
gross income when it accrues on the Receivables, or, in the case of Certificate
Owners who are cash basis taxpayers, when received by the Servicer on behalf of
Certificate Owners. Because (i) interest accrues on the Receivables over
differing monthly periods and is paid in arrears and (ii) interest collected on
a Receivable generally is paid to Certificateholders in the following month, the
amount of interest accruing to a Certificate Owner during any calendar month
will not equal the interest distributed in that month. The actual amount of
discount on a Receivable will be includible in income as principal payments are
received on the Receivables.
For administrative convenience, the Servicer intends to report the total
amount of income with respect to the Class A Certificates of any given series on
an aggregate basis (as though all of the Receivables and the Yield Supplement
Agreement were a single obligation), rather than on an asset-by-asset basis. The
amount and, in some instances, character, of the income reported to a
Certificate Owner may differ under this method for a particular period from that
which would be reported if income were reported on a precise asset-by-asset
basis. Accordingly, the IRS could require that a Certificate Owner calculate its
income either (i) on an asset-by-asset basis, accounting separately for each
Receivable and the Yield Supplement Agreement, or (ii) by aggregating all
Stripped Receivables under the aggregation rule described below and accounting
for the remaining Receivables and the Yield Supplement Agreement on an
asset-by-asset basis. See "--Discount and Premium --Original Issue Discount on
Stripped Receivables." In computing its income on an asset-by-asset basis, a
Certificate Owner would allocate its tax basis among the Receivables and its
interest in the Yield Supplement Agreement in proportion to their fair market
values. Because the annual percentage rates of the Receivables vary widely, the
allocation of basis and computation of income on an asset-by-asset basis could
have a more significant effect on the income of a Certificate Owner than it
would if the Receivables had more uniform characteristics.
The remainder of the disclosure generally describes the Code provisions
governing reporting of income on the Receivables and the Yield Supplement
Agreement on a separate asset basis.
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DISCOUNT AND PREMIUM
In determining whether a Certificate Owner has purchased its interest in the
Receivables (or any Receivable) held by the related Trust at a discount and
whether such Receivables (or any Receivable) have OID or, in the case of
Supplemented Receivables, market discount, a portion of the purchase price of a
Certificate should be allocated to the Certificate Owner's undivided interest in
accrued but unpaid interest, amounts collected at the time of purchase but not
distributed, and rights to receive Yield Supplement Amounts. As a result, the
portion of the purchase price allocable to a Certificate Owner's undivided
interest in the Receivables (or any Receivable) (the "PURCHASE PRICE") will be
decreased and the potential OID and/or market discount on the Receivables (or
any Receivable) could be increased.
ORIGINAL ISSUE DISCOUNT ON STRIPPED RECEIVABLES. Because the Stripped
Receivables represent stripped bonds, they will be subject to the OID rules of
the Code. Accordingly, the tax treatment of a Certificate Owner will depend in
part upon whether the amount of OID on a Stripped Receivable is less than a
statutorily defined DE MINIMIS amount.
In general, under Treasury Regulations issued under Section 1286 of the Code
(the "SECTION 1286 REGULATIONS"), the amount of OID on a receivable treated as a
"stripped bond" will be DE MINIMIS if it is less than 1/4 of one percent for
each full year of weighted average life remaining after the purchase date until
the maturity of the Receivable, although it is not clear whether expected
prepayments are taken into account. Under the Section 1286 Regulations, it
appears that the portion of the interest on each Receivable payable to the
Certificate Owners may be treated as "qualified stated interest." As a result,
the amount of OID on a Stripped Receivable will equal the amount by which the
Purchase Price of a Stripped Receivable is less than the portion of the
remaining principal balance of the Receivable allocable to the interest
acquired.
If the amount of OID is DE MINIMIS under the rule set forth above, a
Stripped Receivable would not be treated as having OID. The actual amount of
discount on a Stripped Receivable would be includible in income as principal
payments are received on the Receivable, in the proportion that each principal
payment bears to the total principal amount of the Receivable.
If the OID on a Receivable is not treated as being DE MINIMIS, in addition
to the amounts described above, a Certificate Owner will be required to include
in income any OID as it accrues on a daily basis, regardless of when cash
payments are received, using a method reflecting a constant yield on the
Receivable (or Receivables). It is possible that the IRS could require use of a
Prepayment Assumption in computing the yield of a Receivable. Accrued OID would
increase a Class A Certificate Owner's tax basis in the Class A Certificate (and
the applicable Receivables). Distributions of principal and other items
attributable to accrued OID (other than payments of interest on the Receivables
at the sum of the Class A Pass-Through Rate and the Basic Servicing Fee Rate)
would reduce a Class A Certificate Owner's tax basis. If a Receivable is deemed
to be acquired by a Certificate Owner at a significant discount, such treatment
could accelerate the accrual of income by a Certificate Owner.
The Trustee intends to account for OID, if any, reportable by
Certificateholders by reference to the price paid for a Certificate by an
initial purchaser, although the amount of OID will differ for subsequent
purchasers. Such subsequent purchasers should consult their tax advisers
regarding the proper calculation of OID on the interest in Receivables
represented by a Certificate.
The Trustee will calculate OID, if any, on all of the Receivables (including
both Stripped Receivables and Supplemented Receivables) on an aggregate basis
and without the use of a Prepayment Assumption. Regulations issued under the OID
provisions of the Code (the "OID REGULATIONS") suggest that all payments on the
Stripped Receivables allocable to the Certificates may be aggregated in
determining whether the Stripped Receivables will be treated as having OID,
although the regulation does not include the Supplemented Receivables, since
they are not "stripped bonds." Separate accounting for the Stripped Receivables
and the Receivables that are not stripped would reduce the possibility that the
Stripped
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Receivables would be treated as issued with OID; however, as discussed below,
the Supplemented Receivables would be treated as having imputed interest, market
discount, or both. In addition, it is not clear whether use of a Prepayment
Assumption is required in computing OID. If the IRS were to require that OID be
computed on a Receivable-by-Receivable basis, or that a Prepayment Assumption be
used, the character and timing of a Certificate Owner's income could be
adversely affected. Because under the stripped bond rules, each sale of a
Certificate results in a recalculation of OID, a Certificate Owner technically
will not be subject to the market discount provisions of the Code with respect
to Stripped Receivables.
In the event that a Receivable is treated as purchased at a premium (I.E.,
its Purchase Price exceeds the portion of the remaining principal balance of
such Receivable allocable to the Certificate Owner), such premium will be
amortizable by the Certificate Owner as an offset to interest income (with a
corresponding reduction in the Certificate Owner's basis) under a constant yield
method over the term of the Receivable if an election under Section 171 of the
Code is made with respect to the interests in the Receivables represented by the
Certificates of a particular Trust or was previously in effect. Any such
election will also apply to all debt instruments held by the Certificate Owner
during the year in which the election is made and all debt instruments acquired
thereafter.
A Certificate Owner will be entitled to deduct, consistent with its method
of accounting, its PRO RATA share of reasonable servicing fees and other fees
paid or incurred by the Trust as provided in Section 163 or 212 of the Code. If
a Certificate Owner is an individual, estate or trust, the deduction for such
holder's share of such fees will be allowed only to the extent that all of such
holder's miscellaneous itemized deductions, including such holder's share of
such fees, exceed 2% of such holder's adjusted gross income. In addition, in the
case of Certificate Owners who are individuals, certain otherwise allowable
itemized deductions will be reduced, but not by more than 80%, by an amount
equal to 3% of such holder's adjusted gross income in excess of a statutorily
defined threshold ($121,200 in the case of a married couple filing jointly for
the taxable year beginning in 1997). Because the Servicer will not report to
Certificate Owners the amount of income or deductions attributable to interest
earned on Collections, such a holder may effectively underreport its net taxable
income.
SUPPLEMENTED RECEIVABLES. The Supplemented Receivables will not be treated
as stripped bonds. A portion of the Certificate Owner's purchase price for a
Certificate will be allocated to each Supplemented Receivable, based on its fair
market value relative to the other assets of the Trust.
Some or all of the Supplemented Receivables may have imputed interest and/or
market discount. If, as is likely, a Supplemented Receivable did not have
"adequate stated interest" (as defined in the Code) when originated, then such
Receivable has "imputed interest." Under the imputed interest rules of the Code,
the "total unstated interest" on any Receivable as of its origination would
equal the excess of (a) the sum of all principal payments due more than six
months after such Receivable's date of origination over (b) the sum of the
discounted present values of such principal payments and all interest payments
due under such Receivable. The discount rate to be used in computing the present
values is the "applicable federal rate" for the period during which the
Receivable was originated. A portion of the Receivable's stated principal amount
equal to such total unstated interest would be recharacterized as interest, and
the Receivable's principal amount would be correspondingly reduced, thus
increasing the total amount of income to be realized with respect to the
Receivable. The total unstated interest would be included in gross income over
the term of the Receivable using a constant yield-to-maturity method. It is not
clear whether imputed interest may be reduced to the extent that a Receivable
having imputed interest is subsequently sold for a price in excess of the
imputed principal amount. It would appear reasonable to reduce the amount of
imputed interest to the extent that such a purchase price reflects a movement of
market interest rates since the origination of the Receivable.
To the extent that the portion of the purchase price allocated to a
Certificate Owner's undivided interest in a Supplemented Receivable is less than
the "stated redemption price at maturity" (or possibly
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<PAGE>
the imputed principal amount, in the case of a Receivable with imputed interest)
such Receivable will have market discount. The allocation of a portion of the
purchase price of a Certificate to the rights to payments under the Yield
Supplement Agreement, accrued interest and/or amounts collected and
undistributed as of the date such Certificate was purchased may cause or
increase the amount of market discount.
In general, under the market discount provisions of the Code, principal
payments received by a Trust and all or a portion of the gain recognized upon a
sale or other disposition of a Receivable or upon the sale or other disposition
of a Certificate by a Certificate Owner will be treated as ordinary income to
the extent of accrued market discount. Any payment received by a Certificate
Owner upon a sale or other disposition of a Certificate in an amount in excess
of accrued market discount will be treated as capital gain, assuming the
Certificate Owner held such Certificate as a capital asset. In addition, a
portion of the interest deductions of the Certificate Owner attributable to any
indebtedness treated as incurred or continued to purchase or carry a Receivable
may have to be deferred, unless a Certificate Owner makes an election to include
market discount in income currently as it accrues, which election would apply to
all debt instruments acquired by the taxpayer on or after the first day of the
first taxable year to which such election applies. Taxpayers may, in general,
elect to accrue market discount either (i) under a constant yield-to-maturity
method or (ii) in the proportion that the stated interest paid on the obligation
for the current period bears to the total remaining interest on the obligation.
The manner in which the imputed interest rules interact with the market
discount rules is unclear. It is also not clear whether the stated redemption
price at maturity should be determined by excluding imputed interest under
Section 483 of the Code, thereby avoiding duplicative amounts of market discount
and imputed interest or whether the imputed interest is also recharacterized as
market discount. The effect of a discount sale of a debt instrument that did not
have adequate stated interest when originated may be to create overlapping
amounts of imputed interest and market discount. It is unclear whether a
purchaser of a debt instrument, such as a Supplemented Receivable, which has
imputed interest and market discount should continue to report the imputed
interest using the rules of Section 483 of the Code and the regulations
thereunder (with a corresponding reduction in the amount of market discount) or
whether all or a portion of such imputed interest is instead converted into
market discount.
CLASS B CERTIFICATE OWNERS
IN GENERAL. Except as described below, it is believed that the Class B
Certificate Owners will be subject to tax in the same manner as Class A
Certificate Owners. However, no Federal income tax authorities address the
precise method of taxation of an instrument such as the Class B Certificates. In
the absence of applicable authorities, the Trustee intends to report income to
Class B Certificate Owners in the manner described below.
Each Class B Certificate Owner will be treated as owning (i) the Class B
Percentage of the principal on each Receivable plus (ii) a proportionate portion
of the interest on each Receivable (not including the Retained Yield). Income
will be reported to a Class B Certificate Owner based on the assumption that all
amounts payable to the Class B Certificate Owners are taxable under the coupon
stripping provisions of the Code and treated as a single obligation. In applying
those provisions, the Trustee will take the position that a Class B Certificate
Owner's entire share of the interest on a Receivable will qualify as "qualified
stated interest." Thus, except to the extent modified by the effects of
subordination of the Class B Certificates, as described below, income will be
reported to Class B Certificate Owners in the manner described above for the
Class A Certificate Owners.
EFFECT OF SUBORDINATION. If the Class B Certificate Owners received
distributions of less than their share of the Trust's receipts of principal or
interest (the "SHORTFALL AMOUNT") because of the subordination of the Class B
Certificates, Class B Certificate Owners would probably be treated for Federal
income tax purposes as if they had (1) received as distributions their full
share of such receipts, (2) paid over to the Class A Certificate Owners an
amount equal to such Shortfall Amount, and (3) retained the right to
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<PAGE>
reimbursement of such amounts to the extent of future Collections otherwise
available for deposit in the Reserve Account.
Under this analysis, (1) Class B Certificate Owners would be required to
accrue as current income any interest or OID income of the Trust that was a
component of the Shortfall Amount, even though such amount was in fact paid to
the Class A Certificate Owners, (2) a loss would only be allowed to the Class B
Certificate Owners when their right to receive reimbursement of such Shortfall
Amount became worthless (i.e., when it becomes clear that the amount will not be
available from any source to reimburse such loss), and (3) reimbursement of such
Shortfall Amount prior to such a claim of worthlessness would not be taxable
income to Class B Certificate Owners because such amount was previously included
in income. Those results should not significantly affect the inclusion of income
for Class B Certificate Owners on the accrual method of accounting, but could
accelerate inclusion of income to Class B Certificate Owners on the cash method
of accounting by, in effect, placing them on the accrual method. Moreover, the
character and timing of loss deductions is unclear.
YIELD SUPPLEMENT AMOUNTS
The proper Federal income tax characterization of the Yield Supplement
Amounts is not clear. Moreover, the sum of the income and deductions properly
reportable by a Certificate Owner in any taxable year may not equal the amounts
that would be reportable if a Certificate Owner held instead of an interest in
the Receivables and in the Yield Supplement Agreement either (i) a debt
instrument bearing interest at the applicable Pass-Through Rate or (ii) an
interest in a trust holding Receivables each of which bears interest at a rate
at least equal to the sum of the Pass-Through Rate plus the Basic Servicing Fee
Rate.
It is likely that the right to receive Yield Supplement Amounts will be
treated as a separate asset purchased by each Certificate Owner, in which case a
portion of each Certificate Owner's purchase price or other tax basis in the
Certificate equal to the fair market value of the right to receive such Yield
Supplement Amounts should be allocated to the right to receive payments of Yield
Supplement Amounts. See "--Discount and Premium--Original Issue Discount on
Stripped Receivables." The right to receive Yield Supplement Amounts may be
treated as a loan made by a Certificate Owner to the Seller in an amount equal
to the present value, discounted at a rate equal to the sum of the applicable
Pass-Through Rate and the Basic Servicing Fee Rate, of the projected Yield
Supplement Amounts. In that event, a portion of the Yield Supplement Amounts
generally representing a yield equal to the applicable Pass-Through Rate plus
the Basic Servicing Fee Rate on such discounted value should be treated as
interest includible in income as accrued or received, and the remainder should
be treated as a return of the principal amount of the deemed loan.
Alternatively, it is possible that the entire amount of each Yield Supplement
Amount should be included in income as accrued or received, in which event a
Certificate Owner should also be entitled to amortize the portion of its
purchase price allocable to its right to receive Yield Supplement Amounts. The
method of calculating such amortization is unclear, and could result in the
inclusion of greater amounts of income than a Certificate Owner's actual yield
on a Receivable.
Alternatively, it is possible that the Yield Supplement Amounts could be
treated as payments adjusting the purchase price of the Supplemented
Receivables, rather than as a separate asset. In that event, a Certificate Owner
could be treated as having purchased each Supplemented Receivable at a discount
(which may consist of imputed interest, market discount, or both) that, combined
with the actual coupon rate of such Receivable, produces a yield equal to the
sum of the applicable Pass-Through Rate and the Basic Servicing Fee Rate. See
"--Discount and Premium."
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It is not clear whether, and to what extent, the amounts includible in
income or amortizable under any of these methods would be adjusted to take
account of prepayments on the Receivables. Moreover, it is possible that the IRS
might contend that none of the above methods is appropriate, and that income
with respect to the Yield Supplement Agreement should be reported by a
Certificate Owner in some other manner. In addition, to the extent that the
amounts payable pursuant to Yield Supplement Agreement decline during any period
by reason of prepayments on the Receivables, it is possible that a portion of
the amount amortizable by the Certificate Owner during such period would be
treated as a capital loss (which would not offset ordinary income), rather than
as an ordinary deduction. It is expected that the annual statement furnished to
Certificateholders will report the net income derived from the Yield Supplement
Agreement using a method that causes the total income attributable to a
Certificate to equal income at the applicable Pass-Through Rate on the Class A
Percentage or Class B Percentage of the Pool Balance. Certificate Owners are
advised to consult their tax advisors regarding the appropriate method of
accounting for income attributable to the Yield Supplement Agreement.
SALE OF A CERTIFICATE
With respect to any series of Certificates, if a Certificate is sold, gain
or loss will be recognized equal to the difference between the amount realized
on the sale and the Certificate Owner's adjusted basis in the Receivables and
any other assets held by the related Trust. A Certificate Owner's adjusted basis
will equal the Certificate Owner's cost for the Certificate, increased by any
discount previously included in income, and decreased by any deduction
previously allowed for accrued premium and by the amount of principal payments
previously received on the Receivables. Any gain or loss not attributable to
accrued interest will be capital gain or loss if the Certificate was held as a
capital asset.
FOREIGN CERTIFICATE OWNERS
Interest attributable to Receivables held by any Trust which is payable to a
foreign Certificate Owner will generally not be subject to the normal 30%
withholding tax imposed with respect to such payments, PROVIDED that such
Certificate Owner is not engaged in a trade or business in the United States and
that such Certificate Owner fulfills certain certification requirements. Under
such certification requirements, the Certificate Owner must certify, under
penalties of perjury, that it is not a "United States person" and it is the
beneficial owner of the Certificates, and must provide its name and address. For
this purpose, "United States person" means a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust the income of which is includible in gross income for United
States Federal income tax purposes, regardless of its source.
It is not clear whether amounts received by Certificate Owners that are
attributable to payments of Yield Supplement Amounts received pursuant to any
Yield Supplement Agreement would be subject to withholding tax. Accordingly, a
prospective investor in Certificates who is not a United States person should
assume that tax will be withheld from such payments at a rate of 30% (or such
lower rate as may be provided in an applicable tax treaty). As a result, a
Certificate may not be a suitable investment for a non-United States person.
BACKUP WITHHOLDING
Payments made on the Certificates and proceeds from the sale of Certificates
will not be subject to a "backup" withholding tax of 31% (or such other level as
may be applicable under then current law) unless, in general, the Certificate
Owner fails to comply with certain reporting procedures and is not an exempt
recipient under applicable provisions of the Code.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans and certain
other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts in which such plans, accounts or arrangements are invested that are
subject to ERISA and the Code (all of which are hereinafter referred to as a
"PLAN") and on persons who are fiduciaries with respect to such Plans. Moreover,
based on the reasoning of the United States Supreme Court in JOHN HANCOCK LIFE
INS. CO. V. HARRIS TRUST AND SAV. BANK, 510 U.S. 86 (1993), an insurance
company's general account may be deemed to include assets of the Plans investing
in the general account (e.g., through the purchase of an annuity contract), and
the insurance company might be treated as a fiduciary with respect to such plans
by virtue of such investment. In accordance with ERISA's general fiduciary
standards, before investing in a Certificate, a Plan fiduciary should determine
whether such an investment is permitted under the governing Plan instruments and
is appropriate for the Plan in view of its overall investment policy and the
composition and diversification of its portfolio. Other provisions of ERISA and
the Code prohibit certain transactions involving the assets of a Plan and
persons who have certain specified relationships to the Plan ("parties in
interest" within the meaning of ERISA or "disqualified persons" within the
meaning of the Code). Thus, a Plan fiduciary considering an investment in
Certificates should also consider whether such an investment might constitute or
give rise to a prohibited transaction under ERISA or the Code.
An investment in any series of Certificates by a Plan might result in the
assets of the related Trust being deemed to constitute Plan assets, which in
turn might mean that certain aspects of such investment, including the operation
of such Trust, might be prohibited transactions under ERISA and the Code. There
may also be an improper delegation of the responsibility to manage Plan assets
if Plans that purchase any Certificates are deemed to own an interest in the
underlying assets of the related Trust. Neither ERISA nor the Code defines the
term "plan assets." Under Section 2510.3-101 of the United States Department of
Labor ("DOL") regulations (THE "REGULATION"), a Plan's assets may include an
interest in the underlying assets of an entity (such as a trust) for certain
purposes, including the prohibited transaction provisions of ERISA and the Code,
if the Plan acquires an "equity interest" in such entity.
Unless otherwise provided in the Prospectus Supplement, the DOL has granted
an administrative exemption (each, an "EXEMPTION") to the underwriter(s)
specified in the related Prospectus Supplement, exempting from the application
of the prohibited transaction provisions of Section 406 of ERISA and the excise
taxes imposed on such prohibited transactions pursuant to Section 4975(a) and
(b) of the Code and Section 502(i) of ERISA certain transactions relating to the
initial purchase, holding and subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements set forth in the
applicable Exemption. The receivables covered by the Exemption include motor
vehicle installment obligations such as the Receivables. The Exemption will
apply to the acquisition, holding and resale of the Class A Certificates by a
Plan from the underwriter specified in the Prospectus Supplement, provided that
specified conditions (certain of which are described below) are met. The Seller
believes that the Exemption will apply to the acquisition and holding of the
Class A Certificates by a Plan and that all conditions of the Exemption other
than those within the control of the investors have been or will be met.
The Exemption sets forth six general conditions that must be satisfied for a
transaction involving the acquisition of the Class A Certificates by a Plan to
be eligible for the exemptive relief thereunder:
(1) the acquisition of the Class A Certificates by a Plan is on terms
(including the price for the Class A Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length transaction
with an unrelated party;
(2) the rights and interests evidenced by the Class A Certificates acquired
by a Plan are not subordinated to the rights and interests evidenced by
other certificates of the related Trust;
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(3) the Class A Certificates acquired by the Plan have received a rating at
the time of such acquisition that is in one of the three highest generic
rating categories from any one of four rating entities, including S&P and
Moody's;
(4) the Trustee is not an affiliate of any other member of the "RESTRICTED
GROUP," which consists of the Underwriters, the Seller, the Trustee and
any Obligor with respect to the Receivables included in the Trust
constituting more than 5% of the aggregate unamortized principal balance
of the assets of the related Trust as of the date of initial issuance of
the Class A Certificates, and any affiliate of such parties;
(5) the sum of all payments made to and retained by the underwriter
specified in the related prospectus supplement in connection with the
distribution or placement of the Class A Certificates represents not more
than reasonable compensation for underwriting or placing the Class A
Certificates. The sum of all payments made to and retained by the Seller
pursuant to the sale of the Receivables to the related Trust represents
not more than the fair market value of such Receivables. The sum of all
payments made to and retained by the Servicer represents not more than
reasonable compensation for the Servicer's services under the Agreement
and reimbursement of the Servicer's reasonable expenses in connection
therewith; and
(6) the Plan investing in the Class A Certificates must be an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Commission
under the Securities Act.
Because the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interests evidenced by
other certificates of the related Trust, the second general condition set forth
above is satisfied. It is a condition of the issuance of the Class A
Certificates that they be rated in the highest rating category by any one of the
rating entities, including S&P and Moody's. A fiduciary of a Plan contemplating
purchasing a Class A Certificate must make its own determination that at the
time of such acquisition, the Class A Certificates continue to satisfy the
fourth general condition set forth above. The Seller and the Servicer expect
that the fifth general condition set forth above will be satisfied with respect
to the Class A Certificates. A fiduciary of a Plan contemplating purchasing a
Class A Certificate must make its own determination that the first and sixth
general conditions set forth above will be satisfied with respect to the Class A
Certificates.
In addition the related Trust must satisfy the following requirements:
(a) the corpus of such Trust must consist solely of assets of the type which
have been included in other investment pools,
(b) certificates in such other investment pools must have been rated in one
of the three highest generic rating categories of S&P, Moody's, Duff &
Phelps Credit Rating Co. or Fitch Investors Service, Inc. for at least
one year prior to the Plan's acquisition of Class A Certificates, and
(c) certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year
prior to any Plan's acquisition of Class A Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide relief from the restrictions imposed by Section 406(a) and 407(a) of
ERISA as well as the excise taxes imposed by Section 4975(a) and (b) of the Code
by reason of Section 4975(c)(1)(A) through (D) of the Code, in connection with
the direct or indirect sale, exchange, transfer or holding of the Class A
Certificates by a Plan. However, no exemption is provided from the restrictions
of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or
holding of a Class A Certificate on behalf of an Excluded Plan by any person who
has discretionary authority or renders investment advice with respect to the
assets of such Excluded Plan. For purposes of the Class A Certificates, an
"Excluded Plan" is a Plan sponsored by any member of the Restricted Group.
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If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide relief from the restrictions imposed by Sections 406(b)(1)
and (b)(2) and 407(a) of ERISA and the taxes imposed by Section 4975(a) and (b)
of the Code by reason of Section 4975(c)(1)(E) of the Code in connection with
the direct or indirect sale, exchange, transfer or holding of Class A
Certificates in the initial issuance of Class A Certificates between the Seller
or underwriter specified in the related Prospectus Supplement and a Plan other
than an Excluded Plan when the person who has discretionary authority or renders
investment advice with respect to the investment of Plan assets in the Class A
Certificates is (a) an Obligor with respect to 5% or less of the fair market
value of the Receivables or (b) an affiliate of such person.
The Exemption also applies to transactions in connection with the servicing,
management and operation of the related Trust, provided that, in addition to the
general requirements described above, (a) such transactions are carried out in
accordance with the terms of a binding pooling and servicing agreement and (b)
the pooling and servicing agreement is provided to, or described in all material
respects in the prospectus provided to, investing Plans before their purchase of
Class A Certificates issued by the related Trust. Each Agreement is a pooling
and servicing agreement as defined in the Exemption. All transactions relating
to the servicing, management and operations of each Trust will be carried out in
accordance with the related Agreement. See "The Certificates."
The Exemption also may provide relief from the restriction imposed by
Sections 406(a) and 407(a) of ERISA and the taxes imposed by Section
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to
otherwise apply merely because a person is deemed to be a party in interest or a
disqualified person with respect to an investing Plan by virtue of providing
services to a Plan (or by virtue of having certain specified relationships to
such a person) solely as a result of such Plan's ownership of Class A
Certificates.
Any Plan fiduciary considering whether to purchase a Class A Certificate on
behalf of a Plan should consult with its counsel regarding the applicability of
the Exemption and other applicable issues and whether the Class A Certificates
are an appropriate investment for a Plan under ERISA and the Code.
Because the Class B Certificates are subordinate interests, the Exemption
will not be available for Class B Certificates. Accordingly, no Plan will be
eligible to purchase or otherwise hold Class B Certificates and no beneficial
interest therein may be sold or otherwise transferred to a Plan.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
relating to any series of Certificates (an "UNDERWRITING AGREEMENT"), the Seller
will agree to sell to each of the underwriters named therein and in the related
Prospectus Supplement, and each of such underwriters will severally agree to
purchase from the Seller, the principal amount of Class A Certificates and Class
B Certificates set forth therein and in the related Prospectus Supplement
(subject to proportional adjustment on the terms and conditions set forth in the
related Underwriting Agreement (if any) in the event of an increase or decrease
in the aggregate amount of Class A Certificates and Class B Certificates offered
hereby and by the related Prospectus Supplement).
In each Underwriting Agreement, the several underwriters will agree, subject
to the terms and conditions set forth therein, to purchase all the Class A
Certificates and Class B Certificates offered hereby and by the related
Prospectus Supplement if any of such Class A Certificates and Class B
Certificates are purchased. In the event of a default by any underwriter, each
Underwriting Agreement will provide that, in certain circumstances, purchase
commitments of the nondefaulting underwriters may be increased or the
Underwriting Agreement may be terminated.
Each Prospectus Supplement will set forth the prices at which the Class A
Certificates and Class B Certificates being offered thereby initially will be
offered to the public and any concessions that may be
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offered to certain dealers participating in the offering of such Certificates.
After the initial public offering, the public offering price and such
concessions may be changed.
Each Underwriting Agreement will provide that the Seller will indemnify the
related underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
The place and time of delivery for the Securities in respect of which this
Prospectus is being delivered will be set forth in the accompanying Prospectus
Supplement.
LEGAL MATTERS
Certain legal matters will be passed upon for the Seller by Ray, Quinney &
Nebeker, Salt Lake City, Utah and for the Underwriters by Kirkland & Ellis.
Certain federal income tax and other matters will be passed upon for the Seller
by Kirkland & Ellis. Certain Idaho state tax and other matters will be passed
upon for the Seller by Moffatt, Thomas, Barrett, Rock & Fields. Alonzo W.
Watson, a shareholder and director of Ray, Quinney & Nebeker, is also an officer
of First Security Corporation. A daughter of the chief executive officer of
First Security Corporation is a shareholder and director of Ray, Quinney &
Nebeker.
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
<S> <C>
Advance.................................................................................................. 5
Aggregate Net losses..................................................................................... 29
Agreement................................................................................................ 1, 3
Agreements............................................................................................... 1
Available Interest....................................................................................... 31
Available Principal...................................................................................... 31
Available Reserve Amount................................................................................. 28
Average Delinquency Ratio................................................................................ 29
Average Net Loss Ratio................................................................................... 29
Bank..................................................................................................... 1, 3
Basic Reserve Account Percentage......................................................................... 29
Basic Servicing Fee...................................................................................... 27
Basic Servicing Fee Rate................................................................................. 27
Cede..................................................................................................... 4
Certificate Account...................................................................................... 24
Certificate Owner........................................................................................ 4
Certificateholders....................................................................................... 4
Certificates............................................................................................. 1
Class A Certificate Balance.............................................................................. 32
Class A Certificateholders............................................................................... 4
Class A Distribution Account............................................................................. 24
Class A Interest Carryover Shortfall..................................................................... 32
Class A Interest Distribution............................................................................ 33
Class A Monthly Interest................................................................................. 33
Class A Monthly Principal................................................................................ 33
Class A Pool Factor...................................................................................... 18
Class A Principal Carryover Shortfall.................................................................... 33
Class A Principal Distribution........................................................................... 33
Class B Certificate Balance.............................................................................. 33
Class B Certificateholders............................................................................... 4
Class B Distribution Account............................................................................. 24
Class B Interest Carryover Shortfall..................................................................... 33
Class B Interest Distribution............................................................................ 33
Class B Monthly Interest................................................................................. 33
Class B Monthly Principal................................................................................ 33
Class B Pool Factor...................................................................................... 18
Class B Principal Carryover Shortfall.................................................................... 33
Class B Principal Distribution........................................................................... 34
Closing Date............................................................................................. 18
Code..................................................................................................... 44
Collateral Agent......................................................................................... 3
Collection Period........................................................................................ 4
Collections.............................................................................................. 31
Commission............................................................................................... 2
Credit Deferral.......................................................................................... 24
Dealer Agreements........................................................................................ 3
Dealers.................................................................................................. 3
Default Trigger.......................................................................................... 29
</TABLE>
61
<PAGE>
<TABLE>
<S> <C>
Defaulted Receivable..................................................................................... 29
Definitive Certificates.................................................................................. 21
Delinquency Ratio........................................................................................ 29
Delinquency Trigger...................................................................................... 30
Deposit Date............................................................................................. 6
Determination Date....................................................................................... 31
Direct Participants...................................................................................... 20
Distribution Date........................................................................................ 1, 4
DOL...................................................................................................... 51
DTC...................................................................................................... 1, 4
Eligible Bank............................................................................................ 25
Eligible Deposit Account................................................................................. 25
Eligible Investments..................................................................................... 25
ERISA.................................................................................................... 50
Events of Servicing Termination.......................................................................... 36
Exemption................................................................................................ 51
FDIC..................................................................................................... 10, 25
Financed Vehicles........................................................................................ 3
FIRREA................................................................................................... 10
FTC Rule................................................................................................. 43
Full Payoff Amount....................................................................................... 30
Holders.................................................................................................. 21
Indirect Participants.................................................................................... 20
Initial Distribution Date................................................................................ 4
Interest Accrual Rate.................................................................................... 34
Interest Collections..................................................................................... 31
IRS...................................................................................................... 8, 44
Liquidation Proceeds..................................................................................... 30
Moody's.................................................................................................. 25
Motor Vehicle Loans...................................................................................... 15
Net Loss Ratio........................................................................................... 30
Obligor.................................................................................................. 3
OID...................................................................................................... 45
OID Regulations.......................................................................................... 47
Optional Payment Deferral................................................................................ 24
Original Certificate Balance............................................................................. 4
Original Class A Certificate Balance..................................................................... 4
Original Class B Certificate Balance..................................................................... 4
Original Pool Balance.................................................................................... 4
Outstanding Advances..................................................................................... 7
Plan..................................................................................................... 51
Pool Balance............................................................................................. 4
Prepayment Assumption.................................................................................... 45
Prospectus Supplement.................................................................................... 1
Purchase Amount.......................................................................................... 24
Purchase Price........................................................................................... 46
Purchased Receivable..................................................................................... 31
Rating Agency............................................................................................ 8
Realized Losses.......................................................................................... 34
Receivable File.......................................................................................... 23
Receivables.............................................................................................. 1, 3
</TABLE>
62
<PAGE>
<TABLE>
<S> <C>
Record Date.............................................................................................. 4
Recoveries............................................................................................... 30
Regulation............................................................................................... 51
Required Class A Rating.................................................................................. 8
Required Class B Rating.................................................................................. 8
Reserve Account.......................................................................................... 6
Reserve Account Floor Amount............................................................................. 30
Reserve Account Increase Percentage...................................................................... 30
Reserve Account Initial Deposit.......................................................................... 7
Reserve Account Trigger Starting Date.................................................................... 30
Restricted Group......................................................................................... 51
Retained Yield........................................................................................... 45
Rules.................................................................................................... 21
S&P...................................................................................................... 25
Schedule of Receivables.................................................................................. 22
Section 1286 Regulations................................................................................. 46
Securities Act........................................................................................... 2
Seller................................................................................................... 1, 3
Servicer................................................................................................. 1, 3
Servicer's Certificate................................................................................... 31
Shortfall Amount......................................................................................... 13, 49
Specified Reserve Account Balance........................................................................ 7
Specified Yield Supplement Balance....................................................................... 6
Stripped Receivable...................................................................................... 45
Supplemental Servicing Fee............................................................................... 27
Supplemented Receivables................................................................................. 45
Trust.................................................................................................... 1, 3
Trust Property........................................................................................... 3
Trustee.................................................................................................. 1, 3
UCC...................................................................................................... 10
Underwriting Agreement................................................................................... 53
Yield Supplement Account................................................................................. 6, 28
Yield Supplement Agreement............................................................................... 6
Yield Supplement Amount.................................................................................. 6
Yield Supplement Initial Deposit......................................................................... 6
</TABLE>
63
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 330.00
Printing and Engraving............................................. *
Legal Fees and Expenses............................................ *
Blue Sky Fees and Expenses......................................... *
Accountant's Fees and Expenses..................................... *
Rating Agency Fees................................................. *
Miscellaneous Fees and Expenses.................................... *
---------
Total Expenses................................................... $ *
---------
---------
</TABLE>
- ------------------------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Association of First Security Bank, N.A. (the "Bank")
requires the Bank to indemnify its officers and directors against reasonable
expenses (in the event of a derivative claim), and against reasonable expenses
and damages (in the event of a third-party claim). This indemnity is available
only if the officer or director in question was at the time of the acts
complained of acting in his or her official capacity, in good faith and in or
not opposed to the best interests of the Bank. However, no indemnity is allowed
by the Bank if the officer or director is found to have been guilty of a crime,
or to have acted in a manner evidencing willful misconduct or gross negligence,
or where there is a final order assessing civil money penalties or requiring
payments by the officer or director to the Bank. The Bank will not provide
indemnity for a derivative claim if the officer or director shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the Bank, unless a court shall nevertheless determine that indemnity
is proper. The availability of indemnification for an officer or director will
be determined under the foregoing standards by (a) a majority of disinterested
directors, (b) the opinion of independent legal counsel retained to examine the
conduct in question, or (c) a vote of the shareholders of the Bank.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
4.1* Form of Prospectus Supplement
4.2 Form of Pooling and Servicing Agreement, including the form of Asset
Backed Certificate, Class A and the form of Asset Backed Certificate,
Class B and Yield Supplement Agreement as exhibits thereto
5.1 Opinion of Kirkland & Ellis re: Legality
8.1 Opinion of Kirkland & Ellis re: Tax Consequences
24.1 Consent of Kirkland & Ellis (contained in Exhibits 5.1 and 8.1)
24.2 Consent of Ray, Quinney & Nebeker
24.3 Consent of Moffatt, Thomas, Barrett, Rock & Fields
25.1* Powers of Attorney of directors and officers of First Security Bank, N.A.
(included on the signature pages to the Registration Statement).
</TABLE>
- ------------------------
* Previously filed.
II-1
<PAGE>
(b) Financial Statement Schedules.
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby agrees:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(1) To include any prospectus required by section 10(a)(3) of the Securities
Act;
(2) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(3) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.
(b) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(d) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(e) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned thereto duly authorized, in Salt Lake City, State
of Utah, on October 24, 1997.
<TABLE>
<S> <C> <C>
FIRST SECURITY BANK, N.A.
as originator of the Trusts, Registrant
By: *
-----------------------------------------
L. Scott Nelson
CHAIRMAN
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------- ------------------------- -------------------------
<C> <S> <C>
* Chairman (a Principal
- ------------------------- Executive Officer) and September 17, 1997
L. Scott Nelson Director
* President (a Principal
- ------------------------- Executive Officer) and September 17, 1997
J. Patrick McMurray Director
Executive Vice President
* and Cashier (Principal
- ------------------------- Financial and September 17, 1997
Scott C. Ulbrich Accounting Officer) and
Director
*
- ------------------------- Director September 17, 1997
Spencer F. Eccles
*
- ------------------------- Director September 17, 1997
Morgan J. Evans
*
- ------------------------- Director September 17, 1997
Michael P. Caughlin
*
- ------------------------- Director September 17, 1997
Mark D. Howell
*
- ------------------------- Director September 17, 1997
Brad D. Hardy
</TABLE>
The undersigned, by signing his name hereto, does hereby sign this Amendment
No. 1 to Registration Statement on behalf of each of the above indicated
officers and directors of the registrant pursuant to the power of attorney
signed by such officers and directors.
<TABLE>
<S> <C> <C>
By: /s/ A. ROBERT THORUP
-----------------------------------------
A. Robert Thorup
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement
4.1* Form of Prospectus Supplement
4.2 Form of Pooling and Servicing Agreement, including the form of Asset Backed Certificate, Class A
and the form of Asset Backed Certificate, Class B and Yield Supplement Agreement as exhibits
thereto
5.1 Opinion of Kirkland & Ellis re: Legality
8.1 Opinion of Kirkland & Ellis re: Tax Consequences
24.1 Consent of Kirkland & Ellis(contained in Exhibits 5.1 and 8.1)
24.2 Consent of Ray, Quinney & Nebeker
24.3 Consent of Moffatt, Thomas, Barrett, Rock & Fields
25.1* Powers of Attorney of directors and officers of First Security Bank, N.A. (included on the
signature pages to the Registration Statement)
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT 1.1
<PAGE>
FORM OF
UNDERWRITING AGREEMENT
FIRST SECURITY AUTO GRANTOR TRUST______
____% ASSET BACKED CERTIFICATES, CLASS A
____% ASSET BACKED CERTIFICATES, CLASS B
FIRST SECURITY BANK, N.A.
(Seller and Servicer)
-------------
- -----------------------
As Representative of the Several Underwriters
Listed in Schedule I (the "Representative")
- ----------------------
- ----------------------
Ladies and Gentlemen:
First Security Bank, N.A. (the "BANK"), proposes to sell to the
several Underwriters listed on Schedule I hereto (the "UNDERWRITERS")
$__________ principal amount of ____% Asset Backed Certificates, Class A (the
"CLASS A CERTIFICATES") and $_________ principal amount of ____% Asset Backed
Certificates, Class B (the "CLASS B CERTIFICATES," and together with the Class A
Certificates, the "CERTIFICATES") to be issued by the First Security Auto
Grantor Trust _______. Each Certificate will represent an undivided interest in
the First Security Auto Grantor Trust _______ (the "TRUST"). The assets of the
Trust will include, among other things, a pool of retail motor vehicle
installment sale contracts and installment loans secured by new and used
automobiles and light trucks (collectively, the "RECEIVABLES") and certain
monies due thereunder after the close of business of the Bank on ___________
(the "CUTOFF DATE"), such Receivables and other property to be sold to the Trust
by the Bank and to be serviced for the Trust by the Servicer. The Class B
Certificates are, to the extent specified in the Pooling and Servicing
Agreement, subordinated to the rights of the holders of the Class A
Certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), by and among the
Bank, as seller (in such capacity, the "SELLER") and as servicer (in such
capacity, the "SERVICER"), and ____________, as trustee (in such capacity, the
"TRUSTEE"), and as collateral agent for the Yield Supplement Account and the
Reserve Account (in such capacity, the "COLLATERAL AGENT").
The Bank has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended (the "ACT"), and the rules and regulations of
the Commission thereunder (the "RULES AND REGULATIONS"), a registration
statement, including a prospectus, and a prospectus supplement relating to the
Certificates. The registration statement as amended at the time when it shall
become effective, or, if a post-effective amendment is filed with respect
thereto, as amended by such post-effective
<PAGE>
amendment at the time of its effectiveness, including in each case information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is referred to in this
Agreement as the "REGISTRATION STATEMENT," and the prospectus supplement in the
form used to confirm sales of the Certificates is referred to in this Agreement
as the "PROSPECTUS SUPPLEMENT."
The terms which follow, when used in this Agreement, shall have the
meanings indicated. "EXECUTION TIME" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "REGISTRATION
STATEMENT EFFECTIVE DATE" shall mean each date that the Registration Statement
and any post-effective amendment or amendments thereto became or become
effective. "RULE 424" and "RULE 430A" refer to such rules under the Act.
"SUPPLEMENT EFFECTIVE DATE" shall mean the date the Prospectus Supplement and
any post-effective amendment or amendment thereto became or become effective To
the extent not defined herein, capitalized terms used herein have the meanings
assigned to such terms in the Pooling and Servicing Agreement.
The Bank represents and warrants to, and agrees with, the Underwriters
as follows:
1. The Bank hereby agrees to sell and deliver the Certificates to
the several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Bank the respective principal amount of the Certificates set forth
opposite such Underwriter's name in Schedule I hereto. The Class A Certificates
and the Class B Certificates are to be purchased by the Underwriters at the
purchase price of __________ and ___________, respectively, of the aggregate
principal amount thereof plus accrued interest on the principal amount thereof
at the applicable Pass-Through Rate calculated from (and including) __________,
to (but excluding) the Closing Date.
2. The Bank understands that the Underwriters intend (i) to make a
public offering of their respective portions of the Certificates as soon after
the Prospectus Supplement and this Agreement have become effective as in the
judgment of the Representative is advisable and (ii) initially to offer the
Certificates upon the terms set forth in the Prospectus and the Prospectus
Supplement.
3. Payment for the Certificates shall be made to the Bank or to its
order, by wire transfer of same day funds at the office of Kirkland & Ellis, 153
East 53rd Street, New York, New York 10022, at 9:00 a.m. (New York time) on
____________ (the "CLOSING DATE"), or at such other time on the same or such
other date, not later than the fifth Business Day thereafter, as the
Representative and the Bank may agree upon in writing. As used herein, the term
"BUSINESS DAY" means any day other than a day on which banks are permitted or
required to be closed in the City of New York.
-2-
<PAGE>
Payment for the Certificates shall be made against delivery to the
Representative for the respective accounts of the several Underwriters of the
Certificates registered in the name of Cede & Co. as nominee of The Depositary
Trust Company and in such denominations, as permitted by the Pooling and
Servicing Agreement, as the Representative shall request in writing not later
than two full Business Days prior to the Closing Date, with any transfer taxes
payable in connection with the transfer to the Underwriters of the Certificates
duly paid by the Bank. The certificates for the Certificates will be made
available for inspection and packaging by the Representative at the office of
Kirkland & Ellis, 153 East 53rd Street, New York, New York 10022, not later than
1:00 p.m. (New York time) on the Business Day prior to the Closing Date.
4. The Bank hereby represents and warrants to, and agrees with, each
Underwriter that:
(a) The Registration Statement on Form S-1 (no. 333-35847),
including the Prospectus, Prospectus Supplement and such amendments thereto as
may have been required on or prior to the date hereof, relating to the
Certificates, has been filed with the Commission and such Registration Statement
as amended has become effective. With respect to the Registration Statement,
the conditions to the use of a registration statement on Form S-3 under the Act,
as set forth in the General Instructions to Form S-3, have been satisfied by the
Bank;
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Bank, threatened by the Commission,
and on the Registration Statement Effective Date of the Registration Statement,
the Registration Statement and the Prospectus conformed in all respects to the
requirements of the Act and the Rules and Regulations, and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and, on the Closing Date, the Registration Statement, the Prospectus and the
Prospectus Supplement will conform in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents will include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished to the Bank in writing by any Underwriter through the
Representative expressly for use therein;
(c) The computer tape with respect to the Receivables to be sold
to the Trust created as of the Cutoff Date (the "COMPUTER TAPE"), and made
available to the Representative by the Bank, was complete and accurate in all
material respects as of the date thereof;
(d) The Bank has been duly organized and is validly existing as
a United States banking association, is in good standing under the laws of the
United States, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has been
duly qualified for the transaction of business and is in good standing under
-3-
<PAGE>
the laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Bank;
(e) The Certificates have been duly authorized, and, when issued
and delivered pursuant to the Pooling and Servicing Agreement, duly
authenticated by the Trustee and paid for by the Underwriters in accordance with
the terms of this Agreement, will be duly and validly issued, authenticated and
delivered and entitled to the benefits provided by the Pooling and Servicing
Agreement; each of the Pooling and Servicing Agreement, the Yield Supplement
Agreement and this Agreement have been duly authorized by the Bank and, when
executed and delivered by the Bank and the other parties thereto (in the case of
the Pooling and Servicing Agreement and the Yield Supplement Agreement), each of
the Pooling and Servicing Agreement, the Yield Supplement Agreement and this
Agreement will constitute a valid and binding agreement of the Bank; the
Certificates, the Pooling and Servicing Agreement and the Yield Supplement
Agreement will conform to the descriptions thereof in the Prospectus Supplement
in all material respects;
(f) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required to be obtained or
made by the Bank for the consummation of the transactions contemplated by this
Agreement, the Pooling and Servicing Agreement or the Yield Supplement Agreement
except such as have been obtained and made under the Act, such as may be
required under state securities laws and the filing of any financing statements
required to perfect the Trust's interest in the Receivables;
(g) The Bank is neither in violation of its articles of
association or by-laws nor is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any agreement or
instrument to which it is a party or by which it or its properties is bound
which would have a material adverse effect on the transactions contemplated
herein or in the Pooling and Servicing Agreement or the Yield Supplement
Agreement. The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement and the Yield Supplement Agreement, and the
issuance and sale of the Certificates and compliance with the terms and
provisions hereof and thereof, will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any statute,
rule, regulation or order of any governmental agency or body or any court having
jurisdiction over the Bank or any of its properties or any agreement or
instrument to which the Bank is a party or by which the Bank is bound or to
which any of the properties of the Bank is subject, or the articles of
association or by-laws of the Bank; and the Bank has full power and authority to
authorize and to sell, and to establish the Trust that will issue, the
Certificates as contemplated by this Agreement and to enter into this Agreement,
the Pooling and Servicing Agreement and the Yield Supplement Agreement;
(h) Other than as set forth or contemplated in the Prospectus
and the Prospectus Supplement, there are no legal or governmental proceedings
pending or, to the knowledge of the Bank, threatened, to which the Bank is or
may be a party or to which any property
-4-
<PAGE>
of the Bank is or may be the subject which, if determined adversely to the Bank,
could individually or in the aggregate reasonably be expected to have a material
adverse effect on the general affairs, business, prospects, management,
financial position, stockholders, equity or results of operations of the Bank or
that would reasonably be expected to materially adversely affect the interests
of the holders of the Certificates; and there are no contracts or other
documents of a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement, the
Prospectus or the Prospectus Supplement which are not filed or described as
required; and
(i) By assignment and delivery of each of the Receivables to the
Trust as of the Closing Date, the Bank will transfer all of its right, title and
interest in, to and under the Receivables and certain related property to the
Trust, subject to no prior lien, mortgage, security interest, pledge, adverse
claim, charge or other encumbrance.
5. The Bank covenants and agrees with the several Underwriters that:
(a) Prior to the termination of the offering of the
Certificates, the Bank will not file or cause to be filed any amendment of the
Registration Statement or supplement to the Prospectus which shall be reasonably
disapproved of promptly by the Representative after reasonable notice thereof.
Subject to the foregoing sentence, if the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Bank will cause the Prospectus,
properly completed, and any supplement thereto, to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Underwriters of such
timely filing. The Bank will promptly advise the Underwriters (i) when the
Prospectus, and any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b), (ii) when, prior to termination of the
offering of the Certificates, any amendment to the Registration Statement shall
have become effective, (iii) of any request by the Commission for any amendment
of the Registration Statement or supplement to the Prospectus or for any
additional information, (iv) of the receipt by the Bank of notification with
respect to the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening of
any proceeding for that purpose and (v) of the receipt by the Bank of
notification with respect to the suspension of the qualification of the
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Bank will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof;
(b) The Bank will deliver or cause to be delivered, at its
expense, to the Representative, two signed copies of the Registration Statement
(as originally filed) and each amendment thereto, in each case including
exhibits, and to each other Underwriter a conformed copy of the Registration
Statement and each amendment thereto, in each case without exhibits, and, during
the period mentioned in paragraph (e) below, to each of the Underwriters as many
copies of the Prospectus (including all amendments and supplements thereto) as
the Representative may
-5-
<PAGE>
reasonably request. The Bank will furnish or cause to be furnished to the
Representative copies of all reports on Form SR required by Rule 463 under the
Act;
(c) The Bank will, if (i) during such period of time after the
first date of the public offering of the Certificates as in the opinion of
counsel for the Underwriters a Prospectus and Prospectus Supplement relating to
the Certificates is required by law to be delivered in connection with sales by
an underwriter or dealer, (ii) any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus and Prospectus
Supplement are delivered to a purchaser, not misleading, or (iii) it is
necessary to amend or supplement the Prospectus and Prospectus Supplement to
comply with the applicable law, forthwith prepare and furnish, at the expense of
the Bank, to the Underwriters and to the dealers (whose names and addresses the
Representative will furnish to the Bank) to which the Certificates may have been
sold by the Representative on behalf of the Underwriters and upon request by the
Representative to any other dealers identified by the Representative, such
amendments or supplements to the Prospectus and Prospectus Supplement as may be
necessary so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus and Prospectus Supplement
will comply with the law;
(d) The Bank will qualify the Certificates for offer and sale
under the securities or "BLUE SKY" laws of such jurisdictions as the
Representative shall reasonably request and will continue such qualification in
effect so long as reasonably required for distribution of the Certificates and
will pay all fees and expenses (including fees and disbursements of counsel to
the Underwriters) reasonably incurred in connection with such qualification and
in connection with the determination of the eligibility of the Certificates for
investment under the laws of such jurisdictions as the Representative may
designate; PROVIDED, HOWEVER, that the Bank shall not be obligated to qualify to
do business in any jurisdiction in which it is not currently so qualified; and
PROVIDED FURTHER that the Bank shall not be required to file a general consent
to service of process in any jurisdiction;
(e) On or before ____________, the Bank will cause the Trust to
make generally available to the Certificateholders and to the Representative as
soon as practicable an earnings statement covering a period of at least twelve
months beginning with the first fiscal quarter of the Trust occurring after the
effective date of the Registration Statement, which shall satisfy the provisions
of Section 11(a) of the Act and Rule 158 of the Commission promulgated
thereunder;
(f) For the period from the date of this Agreement until the
retirement of the Certificates the Servicer will furnish to the Representative
(x) copies of each certificate and the annual statements of compliance delivered
to the Trustee pursuant to the Pooling and Servicing Agreement and the annual
independent certified public accountant's servicing reports furnished to the
Trustee pursuant to the Pooling and Servicing Agreement, by first-class mail as
soon as practicable after such statements and reports are furnished to the
Trustee and (y) copies of each
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<PAGE>
amendment to the Pooling and Servicing Agreement, and on each Determination Date
or as soon thereafter as practicable, the Servicer shall give notice
substantially in the form of Schedule II hereto by telex or telecopy to the
Representative of the Class A Pool Factor and the Class B Pool Factor as of the
related Record Date;
(g) During the period beginning on the date hereof and
continuing to and including the Business Day following the Closing Date, the
Bank will not offer, sell, contract to sell or otherwise dispose of any
securities of or guaranteed by the Bank which are substantially similar to the
Certificates without the prior written consent of the Representative;
(h) To the extent, if any, that the rating provided with respect
to the Certificates by the rating agency or rating agencies rating the
Certificates (the "RATING AGENCY") is conditional upon the furnishing of
documents or the taking of any other action by the Bank agreed upon on or prior
to the Closing Date, the Bank shall use its reasonable best efforts to furnish
such documents and take any such other action; and
(i) So long as any of the Certificates are outstanding, the Bank
will furnish to the Representative, by first class mail, (i) as soon as
practical after the end of the Bank's fiscal year, copies of all documents,
records and financial statements required to be distributed to
Certificateholders (including Certificate Owners) or filed with the Commission
pursuant to the Exchange Act, or any order of the Commission thereunder and
(ii) from time to time, any other information concerning the Bank filed with any
government or regulatory authority or national securities exchange which is
otherwise publicly available, as the Representative may reasonably request.
6. The Bank will pay all costs and expenses incident to the
performance of its obligations under this Agreement, including, without limiting
the generality of the foregoing, all costs and expenses (i) incident to the
preparation, issuance, execution, authentication and delivery of the
Certificates, (ii) incident to the preparation, printing and filing under the
Act of the Registration Statement, the Prospectus, any preliminary prospectus
and the Prospectus Supplement (including in each case all exhibits, amendments
and supplements thereto), (iii) incurred in connection with the registration or
qualification and determination of eligibility for investment of the
Certificates under the laws of such jurisdictions as the Underwriters may
designate (including fees and disbursements of counsel for the Underwriters with
respect thereto), (iv) related to any filing with the National Association of
Securities Dealers, Inc., (v) in connection with the printing (including word
processing and duplication costs) and delivery of this Agreement, the Pooling
and Servicing Agreement, the Yield Supplement Agreement and any Blue Sky
Memorandum and the furnishing to the Underwriters and dealers of copies of the
Registration Statement, the Prospectus and the Prospectus Supplement as herein
provided, (vi) the fees and disbursements of the Bank's counsel and accountants
and that portion of the Underwriters' counsel fees and disbursements that are
chargeable to the Bank, and (vii) any fees and expenses payable to the Rating
Agencies in connection with the rating of the Certificates.
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<PAGE>
7. The obligations of the several Underwriters to purchase and pay
for the Certificates will be subject to the accuracy of the representations and
warranties on the part of the Bank herein, to the accuracy of the statements of
officers of the Bank made pursuant to the provisions hereof, to the performance
by the Bank of its obligations hereunder and to the following additional
conditions precedent:
(a) At the time this Agreement is executed and delivered by the
Bank and at the Closing Date, Deloitte and Touche, L.L.P. shall have furnished
to the Representative letters dated, respectively, as of the date of this
Agreement and as of the Closing Date substantially in the forms of the drafts to
which the Representative previously agreed.
(b) The Prospectus and Prospectus Supplement shall have been
filed with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the Rules and Regulations and in accordance
with Section 5(a) of this Agreement; no stop order suspending the effectiveness
of the Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or, to the knowledge of the Bank, threatened by
the Commission; and all requests for additional information from the Commission
with respect to the Registration Statement shall have been complied with to the
satisfaction of the Representative.
(c) The Representative shall have received an officer's
certificate, dated the Closing Date, signed by the Chairman of the Board, the
President, or any Vice President of the Bank representing and warranting that,
as of the Closing Date, except to the extent that they relate expressly to
another date (in which case they will be true and correct as of such date on the
Closing Date), the representations and warranties of the Bank in this Agreement
are true and correct, that the Bank has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date, that no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the best of its knowledge, are contemplated by the
Commission.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Trust, the Bank or the Servicer which, in the judgment of the
Representative, materially impairs the investment quality of the Certificates or
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Certificates or (ii) any downgrading in the rating of any
debt securities of the Bank or any of its direct or indirect subsidiaries by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any such debt
securities (other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such rating).
-8-
<PAGE>
(e) Ray, Quinney & Nebeker, special counsel to the Bank, shall
have furnished to the Representative its written opinion, dated the Closing
Date, in form and substance satisfactory to the Representative, to the effect
that:
(i) The Bank has been duly organized and is validly
existing as a United States banking association in good standing under the
laws of the United States with full corporate power and authority to own
its properties and conduct its business as described in the Prospectus, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the ownership of its
property requires such qualification except where the failure to be so
qualified or in good standing would not have a material adverse effect on
the Bank.
(ii) The Pooling and Servicing Agreement and the Yield
Supplement Agreement have been duly authorized, executed and delivered by
the Bank.
(iii) This Agreement has been duly authorized, executed and
delivered by the Bank.
(iv) The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement and the Yield Supplement
Agreement by the Bank will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any of
the properties or assets of the Bank, pursuant to its articles of
association or by-laws, any statute, regulation or publicly issued rule or
order, or, to the best of such counsel's knowledge, after due inquiry, any
privately issued rule or order of any governmental agency or body or any
court having jurisdiction over the Bank, or its properties or any agreement
or instrument known to such counsel to which the Bank, is a party or by
which the Bank, or any of its respective properties is bound.
(v) To the best of such counsel's knowledge, after due
inquiry, no authorization, approval or consent of any court or governmental
agency or authority is necessary in connection with the execution, delivery
and performance by the Bank of this Agreement, the Pooling and Servicing
Agreement or the Yield Supplement Agreement, except such as may be required
under the Act or the Rules and Regulations and state securities laws, and
except for such authorizations, approvals or consents (specified in such
opinion) as are in full force and effect as of the Closing Date.
(vi) The Certificates have been duly authorized by the
Bank.
(vii) Nothing has come to such counsel's attention that
would cause it to believe that as of the latest Supplement Effective Date
and at the Closing Date (x) the Registration Statement, the Prospectus and
the Prospectus Supplement (other than the financial statements and the
other accounting, statistical and financial information contained
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<PAGE>
therein or omitted therefrom) contained or contain any untrue statement of
a material fact or omitted or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and (y) the
descriptions therein of statutes and governmental proceedings and contracts
and other documents are inaccurate in any material respect or do not fairly
present the information required to be shown therein.
(viii) Such counsel does not know of any contract or other
document of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement, the Prospectus or the Prospectus Supplement which is not filed
or described as required.
(ix) There are no legal or governmental proceedings
pending to which the Bank is a party, or of which any property, of the Bank
is the subject, and no such proceedings are known by such counsel to be
threatened or contemplated by governmental authorities or threatened by
others, in each such case, (A) that are required to be disclosed in the
Registration Statement or (B) asserting the invalidity of all or part of
this Agreement, the Pooling and Servicing Agreement or the Yield Supplement
Agreement, (C) seeking to prevent the issuance of the Certificates,
(D) that could materially and adversely affect the Bank's obligations under
this Agreement, the Pooling and Servicing Agreement or the Yield Supplement
Agreement, as applicable, or (E) seeking to affect adversely the federal or
state income tax attributes of the Certificates.
(x) The Bank has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust pursuant to the Pooling and Servicing
Agreement and has duly authorized such sale and assignment to the Trustee
by all necessary corporate action.
(xi) To the best of such counsel's knowledge, immediately
prior to the transfer of Receivables by the Bank pursuant to the Pooling
and Servicing Agreement, the Bank was the sole owner of all right, title
and interest in its Receivables and the other property to be transferred by
it to the Trust.
(xii) To the best of such counsel's knowledge, Receivables
transferred to the Trust by the Bank are "chattel paper" as defined in the
Relevant UCC.
(xiii) Such counsel is familiar with the Bank's standard
operating procedures relating to the Bank's acquisition of a perfected
first priority security interest in the vehicles financed by the Bank
pursuant to retail installment sale contracts in the ordinary course of the
Bank's business. Assuming that the Bank's standard procedures have been
followed with respect to the perfection of security interests in the
Financed Vehicles (and such counsel has no reason to believe that the Bank
has not followed its standard procedures in connection with the perfection
of security interest in the Financed Vehicles), the Bank has
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acquired or will acquire a perfected first priority security interest in
each of the Financed Vehicles.
(xiv) To the extent that the Relevant UCC applies to the
perfection of the Trustee's security interests in the Receivables and other
property, rights and interests conveyed by the Bank to the Trust pursuant
to the Pooling and Servicing Agreement, when financing statements have been
duly executed and delivered and filed or recorded, as appropriate, in the
appropriate filing offices, such security interests will be perfected.
Under the Relevant UCC, no other security interest of any other creditor of
the Bank is equal or prior to the security interest of the Trustee in such
Receivables and other property conveyed to the Trust.
(xv) All filings necessary under applicable law to perfect
both the sale of, and grant of a security interest in, Receivables and the
proceeds thereof by the Bank to the Trustee as Trustee of the Trust
pursuant to the Pooling and Servicing Agreement have been made and,
provided that the Bank does not relocate its chief executive office in a
state other than Utah, and that the Trustee maintains the list of
Receivables for inspection by interested parties, and no administrative
errors are made by state or local agencies, no other filings (other than
the filing of continuation statements) need be made to maintain the
perfection of the transfer of the Receivables and the proceeds thereof to
the Trustee as Trustee of the Trust pursuant to the Pooling and Servicing
Agreement.
(xvi) The statements in the Registration Statement, the
Prospectus and the Prospectus Supplement under the headings "ERISA
Considerations" and "Certain Legal Aspects of the Receivables," to the
extent they constitute descriptions of matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such counsel and
are correct in all material respects.
(xvii) The Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act of 1939, as amended, and the
Trust is not required to be registered as an "investment company" under the
Investment Company Act of 1940, as amended.
(xviii) The Registration Statement has become effective under
the Act and no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceeding for that
purpose has been instituted or, to the best of such counsel's knowledge,
threatened by the Commission; the Registration Statement, the Prospectus
and the Prospectus Supplement (other than the accounting, financial and
statistical data contained in the Registration Statement, the Prospectus or
the Prospectus Supplement, or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects with
the requirements of the Act and the Rules and Regulations.
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<PAGE>
(xix) The Certificates, this Agreement, the Pooling and
Servicing Agreement and the Yield Supplement Agreement each conform in all
material respects with the descriptions thereof contained in the
Registration Statement, the Prospectus and the Prospectus Supplement.
(f) Kirkland & Ellis shall have furnished to the Representative
its written opinion, dated the Closing Date, in form and substance satisfactory
to the Representative, to the effect that, (i) assuming the due authorization,
execution and delivery of the Pooling and Servicing Agreement and the Yield
Supplement Agreement by the Bank, each of the Pooling and Servicing Agreement
and the Yield Supplement Agreement constitutes the legal, valid and binding
obligation of the Bank, enforceable against the Bank in accordance with its
terms, and (ii) when executed and authenticated by the Trustee in accordance
with the Pooling and Servicing Agreement and delivered and paid for in
accordance with this Agreement, the Certificates will be validly issued and
outstanding and entitled to the benefits provided by the Pooling and Servicing
Agreement. Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Pooling and Servicing Agreement and the Yield
Supplement Agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(g) Kirkland & Ellis shall have furnished to the Representative
its written opinion, dated the Closing Date, in form and substance satisfactory
to the Representative, to the effect that:
(i) The Trust created by the Pooling and Servicing
Agreement will not be classified as an association taxable as a corporation
for federal income tax purposes and, instead, under subpart E, part I of
subchapter J of the Internal Revenue Code of 1986, as amended, the Trust
will be treated as a grantor trust and, subject to possible
recharacterization of certain fees paid by the Trust to the Bank or the
Servicer, each Certificate Owner will be treated as the owner of an
undivided PRO RATA interest in the income and corpus attributable to the
Trust.
(ii) The statements in the Registration Statement,
Prospectus and Prospectus Supplement under the heading "Federal Income Tax
Consequences," to the extent that they constitute descriptions of matters
of law or legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material respects.
(iii) The Yield Supplement Account and the Reserve Account
will not be treated as an association taxable as a corporation or other
separate taxable entity for federal tax purposes; and neither the Trustee
nor the Certificate Owners will be treated as the owner of any portion of
the Yield Supplement Account or the Reserve Account and the funds therein
for such purposes.
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<PAGE>
(h) Ray, Quinney & Nebeker, special Utah tax counsel to the
Bank, shall have furnished to the Representative its written opinion, dated the
Closing Date, in form and substance satisfactory to the Representative, to the
effect that:
(i) The Trust will not be classified as a separate entity
on which Utah franchise tax will be imposed, and will not be subject to
other Utah taxes measured by income, capital, profits or receipts (other
than sales, excise, or AD VALOREM taxes that might be imposed upon the
ownership or sale of a vehicle acquired upon default of a Receivable);
(ii) Certificate owners who would not otherwise be subject
to tax in Utah will not be subject to Utah income or franchise taxes with
respect to interest or other amounts (including payments under the Yield
Supplement Agreement and from the Yield Supplement Account and the Reserve
Account) attributable solely to the beneficial ownership of a Certificate
(other than such Certificate Owner's share of sales, excise, or AD VALOREM
taxes that might be imposed upon the ownership or sale of a vehicle
acquired upon default of a Receivable);
(iii) The Yield Supplement Account and the Reserve Account
will not be treated as an association taxable as a corporation or other
separate taxable entity for Utah state tax purposes;
(iv) and neither the Trustee nor the Certificate Owners
will be treated as the owner of any portion of the Yield Supplement Account
or the Reserve Account and the funds therein for Utah state tax purposes.
(i) Moffatt, Thomas, Barrett, Rock & Fields, special Idaho tax
counsel to the Bank, shall have furnished to the Representative its written
opinion, dated the Closing Date, in form and substance satisfactory to the
Representative, to the effect that:
(i) The Trust will not be classified as a separate entity
on which Idaho franchise tax will be imposed, and will not be subject to
other Idaho taxes measured by income, capital, profits or receipts (other
than sales, excise, or AD VALOREM taxes that might be imposed upon the
ownership or sale of a vehicle acquired upon default of a Receivable);
(ii) Certificate owners who would not otherwise be subject
to tax in Idaho will not be subject to Idaho income or franchise taxes with
respect to interest or other amounts (including payments under the Yield
Supplement Agreement and from the Yield Supplement Account and the Reserve
Account) attributable solely to the beneficial ownership of a Certificate
(other than such Certificate Owner's share of sales, excise, or AD VALOREM
taxes that might be imposed upon the ownership or sale of a vehicle
acquired upon default of a Receivable);
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<PAGE>
(iii) The Yield Supplement Account and the Reserve
Account will not be treated as an association taxable as a corporation or
other separate taxable entity for Idaho state tax purposes;
(iv) and neither the Trustee nor the Certificate Owners will
be treated as the owner of any portion of the Yield Supplement Account or
the Reserve Account and the funds therein for Idaho state tax purposes.
(j) Kirkland & Ellis, special New York tax counsel to the Bank,
shall have furnished to the Representative its written opinion, dated the
Closing Date, in form and substance satisfactory to the Representative, to the
effect that:
(i) The Trust will not be classified as a separate entity
on which New York franchise tax will be imposed; and the Trust will not be
subject to other New York taxes measured by income, capital, profits or
receipts (other than sales, excise, or AD VALOREM taxes that might be
imposed upon the sale of a vehicle acquired upon default of a Receivable).
(ii) Certificate Owners who would not otherwise be subject
to tax in New York will not be subject to New York income or franchise
taxes with respect to interest or other amounts (including payments under
the Yield Supplement Agreement and from the Yield Supplement Account and
the Reserve Account) attributable solely to the beneficial ownership of a
Certificate (other than such Certificate Owner's share of sales, excise, or
AD VALOREM taxes that might be imposed upon the sale of a vehicle acquired
upon default of a Receivable).
(iii) The Yield Supplement Account and the Reserve Account
will not be treated as an association taxable as a corporation or other
separate taxable entity for New York state tax purposes; and neither the
Trustee nor the Certificate Owners will be treated as the owner of any
portion of the Yield Supplement Account or the Reserve Account and the
funds therein for such purposes.
(k) The Representative shall have received an opinion of
Kirkland & Ellis, dated the Closing Date, with respect to such matters as the
Representative shall require and the Bank shall have furnished or caused to be
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(l) The Representative shall have received an opinion of counsel
to Bankers Trust, addressed to the Underwriters and the Bank, dated the Closing
Date and satisfactory in form and substance to the Representative and its
counsel, to the effect that:
(i) Bankers Trust is a New York banking corporation duly
organized and validly existing under the laws of the United States.
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<PAGE>
(ii) Bankers Trust has the power and authority to enter
into and perform the Pooling and Servicing Agreement. The execution,
delivery and performance of the Pooling and Servicing Agreement have been
duly authorized by all requisite action, and the Pooling and Servicing
Agreement has been duly executed and delivered by Bankers Trust.
(iii) No consent, approval, authorization, order of or
filing with any court, governmental agency or body (including without
limitation, any banking regulatory agency or body or arbitrator having
jurisdiction over Bankers Trust) is required in connection with the
execution and delivery by Bankers Trust of the Pooling and Servicing
Agreement and the performance by Bankers Trust of the transactions
thereunder.
(iv) The Pooling and Servicing Agreement, assuming due
authorization, execution and delivery thereof by the Bank and the Servicer,
constitutes a valid and legally binding agreement of Bankers Trust and is
enforceable against Bankers Trust in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors' rights
generally and the rights of creditors of banks in particular and by general
principles of equity.
(v) The Certificates have been duly executed,
authenticated and delivered by Bankers Trust.
(vi) If Bankers Trust were acting as Servicer under the
Pooling and Servicing Agreement as of the date of this Agreement, Bankers
Trust would have the corporate power and authority to perform the
obligations of the Servicer as provided in the Pooling and Servicing
Agreement.
(m) The Representative shall have received a letter or letters
from each counsel delivering any written opinion to any Rating Agency in
connection with the transaction described herein which is not otherwise
described in this Agreement allowing the Underwriters to rely on such opinion as
if it were addressed to the Underwriters.
(n) The Representative shall have received an officer's
certificate dated the Closing Date of the Chairman of the Board, the President
or any Vice President and by a principal financial or accounting officer of the
Bank and the Servicer in which each such officer shall state that, the
representations and warranties of the Bank or the Servicer, as applicable,
contained in the Pooling and Servicing Agreement are true and correct in all
material respects and that the Bank or the Servicer, as applicable, has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied under such agreements at or prior to the Closing Date in all material
respects.
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<PAGE>
(o) The Class A Certificates shall have been rated "Aaa" by
Moody's and "AAA" by S&P and the Class B Certificates shall have been rated "A3"
by Moody's and "A" by S&P.
(p) On the Closing Date, the representations and warranties of
the Bank in the Pooling and Servicing Agreement will be true and correct.
(q) Any taxes, fees and other governmental charges which are due
and payable in connection with the execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, the Yield Supplement Agreement
and the Certificates shall have been paid by the Bank at or prior to the Closing
Date.
8. (a) The Bank agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the legal fees and other expenses reasonably incurred in
connection with investigating, preparing or defending any suit, action or
proceeding or any claim asserted, except as otherwise provided below regarding
the limitation on use of counsel) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Prospectus or the Prospectus Supplement (as amended or supplemented if the Bank
shall have furnished such amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
furnished to the Bank in writing by any Underwriter through the Representative
expressly for use therein; PROVIDED that the foregoing indemnity with respect to
any preliminary prospectus shall not inure to the benefit of any Underwriter (or
to the benefit of any person controlling such Underwriter) from whom the person
asserting any losses, claims or damages purchased Certificates if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus or the
Prospectus Supplement (as amended or supplemented if the Bank shall have
furnished any amendments or supplements thereto) and, if the furnishing of a
copy of the Prospectus (as so amended or supplemented) to such person was
required by law or was requested in writing by the Bank, a copy of the
Prospectus and the Prospectus Supplement (as so amended or supplemented) shall
not have been furnished to such person at or prior to the written confirmation
of the sale of such Certificates to such person.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Bank, each director and officer of the Bank who
signed the Registration Statement, and each person who controls the Bank within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Bank to each Underwriter,
but only with reference to information furnished to the Bank in writing by such
Underwriter through the Representative expressly for use in the Registration
Statement, the
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Prospectus, the Prospectus Supplement any amendment or supplement thereto, or
any preliminary prospectus.
(c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to
either of Sections 8(a) or (b), such person (the "INDEMNIFIED PERSON") shall
promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PERSON") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case such counsel for the Indemnified Person shall be reasonably
satisfactory to the Indemnifying Person. It is understood that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in the
same jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to one local counsel in each applicable jurisdiction) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Underwriters and such control
persons of the Underwriters shall be designated in writing by the Representative
and any such separate firm for the Bank or either of its directors or officers
who sign the Registration Statement or control persons shall be designated in
writing by the Bank. The Indemnifying Person shall not be liable for any
settlement of any claim or proceeding effected without its written consent.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for fees and expenses of counsel as contemplated by the third sentence of this
Section 8(c), the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in Sections 8(a) and (b)
is unavailable other than in accordance with its terms to an Indemnified Person
in respect of any losses,
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claims, damages or liabilities referred to therein, then each Indemnifying
Person under either of Sections 8(a) or (b), in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Bank on the one hand and the Underwriters on the other
hand from the offering of the Certificates or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Bank on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Bank
on the one hand and the Underwriters on the other shall be deemed to be in the
same respective proportions as the net proceeds from the offering (before
deducting expenses) received by the Bank and the total underwriting discounts
and the commissions received by the Underwriters, in each case as set forth in
the table on the cover of the Prospectus Supplement, bear to the aggregate
public offering price of the Certificates. The relative fault of the Bank on
the one hand and the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Bank or by any of the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(e) The Bank and the Underwriters agree that it would not be
just and equitable if contribution pursuant to Section 8 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of Section 8, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total price at which the Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of the Certificates set forth opposite their names
in Schedule I hereto, and not joint.
(f) The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
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<PAGE>
(g) The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Bank set forth in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Bank, or any of its officers or directors or any other person
controlling the Bank and (iii) acceptance of and payment for any of the
Certificates.
9. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representative, by notice given to
the Bank, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, the New York Stock Exchange or the
American Stock Exchange; (ii) trading of any securities of or guaranteed by the
Bank shall have been suspended on any exchange or in any over-the-counter
market; (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Representative is material and adverse and which, in the judgment of the
Representative, makes it impracticable to market the Certificates on the terms
and in the manner contemplated in the Prospectus and the Prospectus Supplement.
10. (a) This Agreement shall become effective upon the later of
(x) execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Prospectus Supplement (or, if
applicable, any post-effective amendment) by the Commission.
(b) If on the Closing Date any one or more of the Underwriters
shall fail or refuse to purchase Certificates which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Certificates which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Certificates to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the principal amount of
Certificates set forth opposite their respective names in Schedule I bears to
the aggregate principal amount of Certificates set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as the
Representative may specify, to purchase the Certificates which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; PROVIDED that in no event shall the principal amount of Certificates that
any Underwriter has agreed to purchase pursuant to Section 1 be increased
pursuant to this Section 10(b) by an amount in excess of one-ninth of such
principal amount of Certificates without the written consent of such
Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail
or refuse to purchase Certificates which it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Certificates with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Certificates to be purchased on such date, and arrangements
satisfactory to the Representative and the Bank for the purchase of such
Certificates are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter
or the
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<PAGE>
Bank. In any such case either the Representative or the Bank shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement, the
Prospectus and the Prospectus Supplement or in any other documents or
arrangements may be effected. Any action taken under this Section 10(b) shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
11. If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Bank to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Bank shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters cannot be fulfilled, the Bank
agrees to reimburse the Underwriters or such Underwriters as have so terminated
this Agreement with respect to themselves, severally, for all out-of-pocket
expenses (including the fees and expenses of their counsel) reasonably incurred
by such Underwriters in connection with this Agreement or the offering
contemplated hereunder.
12. Any action by the Underwriters hereunder may be taken by the
Representative alone on behalf of the Underwriters, and any such action taken by
the Representative alone shall be binding upon the Underwriters. All notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed, delivered by hand or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be given to the
Representative, c/o _______________________ (Facsimile No.: ___________),
Attention: _________. Notices to the Bank shall be given to it at First
Security Bank, N.A., 79 South Main Street, Salt Lake City, Utah 84111 (Facsimile
No.: 801-359-6928), Attention: Executive Vice President and Chief Financial
Officer.
13. This Agreement shall inure to the benefit of and be binding upon
the Bank, the Underwriters, any controlling persons referred to herein and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of the
Certificates from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
14. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
* * * * *
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement among the Bank and the Underwriters in
accordance with its terms.
Very truly yours,
FIRST SECURITY BANK, N.A.
BY:
-------------------------------------
Name: Scott C. Ulbrich
Title: Authorized Officer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
- ------------------------------
As Representative of
the Underwriters
By:
--------------------------
By:
----------------------------
Name:
Title:
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<PAGE>
SCHEDULE I
UNDERWRITERS
Principal Amount
----------------
- -------------------------
Class A Certificates $
Class B Certificates $
- -------------------------
Class A Certificates $
Class B Certificates $
A-1
<PAGE>
SCHEDULE II
FORM OF SERVICER'S CERTIFICATE
- -----------------
- -----------------
- -----------------
Attention:
Re: Pooling and Servicing Agreement dated as of ______________
(as amended, supplemented or otherwise modified and in
effect, the "Pooling and Servicing Agreement") between First
Security Bank, N.A., as seller and servicer and Bankers
Trust Company, as trustee and collateral agent ____________
____________________________________________________________
Determination Date to which this Certificate relates:
___________________, ____
For Monthly Period ending on ____________, ____
1. The undersigned Servicing Officer does hereby certify that the
Class A Pool Factor is ______________.
2. The undersigned Servicing Officer does hereby certify that the
Class B Pool Factor is ___________________________.
3. Capitalized terms used in this Certificate shall have the same
meanings as in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand as of the above-
referenced Determination Date.
, as Servicer
-----------------
By:
---------------------------------
Servicing Officer
A-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIRST SECURITY BANK, N.A.
AS SELLER AND SERVICER,
AND
BANKERS TRUST COMPANY
AS TRUSTEE
ON BEHALF OF THE CERTIFICATEHOLDERS
AND AS COLLATERAL AGENT
-------------------------------
POOLING AND SERVICING AGREEMENT
-------------------------------
DATED AS OF ____________
FIRST SECURITY AUTO GRANTOR TRUST_____-____
_____% ASSET BACKED CERTIFICATES, CLASS A
_____% ASSET BACKED CERTIFICATES, CLASS B
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.....................................................1
Section 1.2 Usage of Terms.................................................18
Section 1.3 Calculations...................................................18
Section 1.4 References.....................................................18
Section 1.5 Section References.............................................18
Section 1.6 Action by or Consent of Certificateholders.....................18
ARTICLE II
THE TRUST PROPERTY
Section 2.1 Conveyance of Trust Property...................................18
Section 2.2 Warranties of the Seller as to Each Receivable.................19
Section 2.3 Warranties as to the Receivables in the Aggregate and Actions
of the Seller..................................................22
Section 2.4 Repurchase upon Breach.........................................23
Section 2.5 Custody of Receivable Files....................................24
Section 2.6 Duties of the Servicer as Custodian............................25
Section 2.7 Instructions; Authority to Act.................................26
Section 2.8 Custodian's Indemnification....................................26
Section 2.9 Effective Period and Termination...............................26
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
Section 3.1 Duties of the Servicer.........................................27
Section 3.2 Collection of Receivable Payments; Credit Deferrals; Optional
Payment Deferrals..............................................29
Section 3.3 Realization upon Receivables...................................31
Section 3.4 Physical Damage Insurance......................................31
Section 3.5 Maintenance of Security Interests in Financed Vehicles.........32
Section 3.6 Covenants of the Servicer......................................32
Section 3.7 Purchases by the Servicer......................................33
Section 3.8 Servicing Compensation.........................................33
Section 3.9 Servicer's Certificate.........................................34
Section 3.10 Annual Statement as to Compliance..............................34
Section 3.11 Independent Certified Public Accountants' Reports..............34
Section 3.12 Access to Certain Documentation and Information Regarding
Receivables....................................................35
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Section 3.13 Reports to the Commission......................................35
Section 3.14 Reports to the Rating Agencies.................................35
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
Section 4.1 Establishment of Accounts......................................35
Section 4.2 Collections....................................................39
Section 4.3 Advances.......................................................41
Section 4.4 Additional Deposits; Net Deposits..............................41
Section 4.5 Distributions..................................................42
Section 4.6 Reserve Account................................................43
Section 4.7 Statements to Certificateholders...............................43
ARTICLE V
YIELD SUPPLEMENT ACCOUNT
Section 5.1 Yield Supplement Agreement.....................................45
Section 5.2 Yield Supplement Account.......................................45
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates...............................................48
Section 6.2 Authentication of Certificates.................................48
Section 6.3 Registration of Transfer and Exchange of Certificates..........49
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates..............49
Section 6.5 Persons Deemed Owners..........................................50
Section 6.6 Access to List of Certificateholders' Names and Addresses......50
Section 6.7 Maintenance of Office or Agency................................50
Section 6.8 Book-Entry Certificates........................................50
Section 6.9 Notices to Clearing Agency.....................................51
Section 6.10 Definitive Certificates........................................51
ARTICLE VII
THE SELLER
Section 7.1 Representations and Warranties of the Seller...................52
Section 7.2 Liability of the Seller; Indemnities...........................53
Section 7.3 Merger or Consolidation of the Seller..........................54
Section 7.4 Limitation on Liability of the Seller and Others...............54
Section 7.5 Seller May Own Certificates....................................55
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<PAGE>
ARTICLE VIII
THE SERVICER
Section 8.1 Representations and Warranties of the Servicer.................55
Section 8.2 Liability of the Servicer; Indemnities.........................56
Section 8.3 Merger or Consolidation of the Servicer........................57
Section 8.4 Limitation on Liability of the Servicer and Others.............58
Section 8.5 Servicer Not to Resign.........................................58
Section 8.6 Servicer May Own Certificates..................................58
ARTICLE IX
SERVICING TERMINATION
Section 9.1 Events of Servicing Termination................................58
Section 9.2 Trustee to Act; Appointment of Successor Servicer..............60
Section 9.3 Effect of Servicing Transfer...................................60
Section 9.4 Notification to Certificateholders.............................61
Section 9.5 Waiver of Past Events of Servicing Termination.................61
Section 9.6 Transfer of Accounts...........................................61
ARTICLE X
THE TRUSTEE
Section 10.1 Acceptance by Trustee..........................................62
Section 10.2 Duties of Trustee..............................................62
Section 10.3 Trustee's Certificate..........................................63
Section 10.4 Trustee's Assignment of Purchased Receivables..................63
Section 10.5 Certain Matters Affecting the Trustee..........................64
Section 10.6 Trustee Not Liable for Certificates or Receivables.............65
Section 10.7 Trustee May Own Certificates...................................66
Section 10.8 Trustee's and Collateral Agent's Fees and Expenses.............66
Section 10.9 Trustee May Enforce Claims Without Possession of Certificates..67
Section 10.10 Eligibility Requirements for Trustee...........................67
Section 10.11 Resignation or Removal of Trustee and Collateral Agent.........67
Section 10.12 Successor Trustee..............................................68
Section 10.13 Merger or Consolidation of Trustee.............................68
Section 10.14 Appointment of Co-Trustee or Separate Trustee..................69
Section 10.15 Representations and Warranties of Trustee......................70
Section 10.16 Reports by Trustee.............................................70
Section 10.17 Tax Accounting.................................................70
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<PAGE>
ARTICLE XI
TERMINATION
Section 11.1 Termination of the Trust.......................................71
Section 11.2 Optional Purchase of All Receivables...........................71
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment......................................................72
Section 12.2 Protection of Title to Trust...................................73
Section 12.3 Limitation on Rights of Certificateholders.....................74
Section 12.4 Governing Law..................................................75
Section 12.5 Notices........................................................75
Section 12.6 Severability of Provisions.....................................75
Section 12.7 Assignment.....................................................75
Section 12.8 Certificates Nonassessable and Fully Paid......................76
Section 12.9 Intention of Parties...........................................76
Section 12.10 Counterparts...................................................76
Section 12.11 Limitation of Liability of the Trustee and the Collateral
Agent..........................................................76
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Receivables File Locations
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Servicer's Certificate
Exhibit D Form of Depository Agreement
Exhibit E Form of Yield Supplement Agreement
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<PAGE>
POOLING AND SERVICING AGREEMENT
POOLING AND SERVICING AGREEMENT, dated as of ________ (as amended,
supplemented or otherwise modified and in effect, this "AGREEMENT"), by and
among FIRST SECURITY BANK, N.A., a national banking association, as Seller and
Servicer, and BANKERS TRUST COMPANY, a New York banking corporation, as trustee
hereunder (in such capacity, the "TRUSTEE") and as collateral agent with respect
to the Reserve Account and the Yield Supplement Account (in such capacity, the
"COLLATERAL AGENT").
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"ACCOUNTS" mean, collectively, the Certificate Account, the Class A
Distribution Account and the Class B Distribution Account.
"ACCOUNT PROPERTY" means all amounts and investments held from time to
time in any Account, the Reserve Account or the Yield Supplement Account, as the
case may be (whether in the form of deposit accounts, Physical Property,
book-entry securities, uncertificated securities or otherwise), and all proceeds
of the foregoing.
"ADVANCES" shall have the meaning specified in Section 4.3.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGGREGATE NET LOSSES" means, for any Collection Period, the aggregate
amount allocable to principal of all Receivables newly designated during such
Collection Period as Defaulted Receivables minus all Liquidation Proceeds to the
extent allocable to principal collected during such Collection Period with
respect to all Defaulted Receivables (whether or not newly designated as such).
<PAGE>
"AMOUNT FINANCED" in respect of a Receivable means the amount advanced
under the Receivable and related costs and shown as such in the contract
evidencing such Receivable and as disclosed for truth-in-lending purposes.
"AUTHORIZED OFFICER" means any officer within the Corporate Trust
Office of the Trustee, including any managing director, vice president,
assistant vice president, assistant treasurer, assistant secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"AVAILABLE INTEREST" means, with respect to any Distribution Date, the
excess of (a) the sum of (i) Interest Collections, (ii) the Yield Supplement
Amount for such Distribution Date and (iii) all Advances made by the Servicer
with respect to such Distribution Date pursuant to Section 4.3(a), over (b) the
amount of Outstanding Advances to be reimbursed on or with respect to such
Distribution Date pursuant to Section 4.3(c).
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date,
the sum of the following amounts with respect to the related Collection Period:
(i) that portion of all Collections received during such Collection Period and
allocable to principal in accordance with the terms of the Receivables and the
Servicer's customary servicing procedures; (ii) to the extent attributable to
principal, the Purchase Amount received with respect to each Receivable
repurchased by the Seller or purchased by the Servicer under an obligation which
arose during the related Collection Period; and (iii) all Liquidation Proceeds,
to the extent allocable to principal. "Available Principal" on any Distribution
Date shall exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution Date.
"AVAILABLE RESERVE AMOUNT" shall mean, for each Distribution Date, an
amount equal to the lesser of (i) the amount on deposit in the Reserve Account
(exclusive of investment earnings) and (ii) the Specified Reserve Account
Balance.
"AVERAGE DELINQUENCY RATIO" means, as of any Distribution Date, the
average of the Delinquency Ratios for the preceding three Collection Periods.
"AVERAGE NET LOSS RATIO" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"BASIC RESERVE ACCOUNT PERCENTAGE" means ____%.
"BASIC SERVICING FEE" means, with respect to any Distribution Date, an
amount equal to the product of (i) one-twelfth of the Basic Servicing Fee Rate
and (ii) the Pool Balance as of the first day of the preceding Collection
Period.
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<PAGE>
"BASIC SERVICING FEE RATE" shall be 1.0% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"BENEFIT PLAN" has the meaning specified in Section 6.3.
"BOOK-ENTRY CERTIFICATES" mean beneficial interests in the Definitive
Certificates, the ownership of which shall be evidenced, and transfers of which
shall be made, through book entries by a Clearing Agency as described in
Section 6.8.
"BUSINESS DAY" means a day on which the Trustee and commercial banks
located in the State of Utah, the State of Idaho and the City of New York, are
open for the purpose of conducting commercial banking business; PROVIDED,
HOWEVER, that for purposes of determining any Distribution Date, the term
"Business Day" shall mean a day on which the Trustee and commercial banks
located in the State of New York generally and the City of New York are open for
the purpose of conducting a commercial banking business.
"CERTIFICATE" means any Class A Certificate or Class B Certificate.
"CERTIFICATE ACCOUNT" means the account or accounts established and
maintained as such pursuant to Section 4.1.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules, regulations and procedures of such Clearing Agency).
"CERTIFICATE REGISTER" means the register maintained by the Trustee
for the registration of Certificates and of transfers and exchanges of
Certificates as provided in Section 6.3.
"CERTIFICATEHOLDER" means the Person in whose name a Certificate shall
be registered in the Certificate Register, EXCEPT THAT, solely for the purpose
of giving any consent, request or waiver pursuant to this Agreement, the
interest evidenced by any Certificate registered in the name of the Seller, the
Servicer, or any Person actually known to an Authorized Officer of the Trustee
to be an Affiliate of the Seller or the Servicer, shall not be taken into
account in determining whether the requisite percentage necessary to effect any
such consent, request or waiver shall have been obtained.
"CLASS A CERTIFICATE" means a certificate executed by the Trustee on
behalf of the Trust and authenticated by the Trustee, substantially in the form
of EXHIBIT A hereto.
"CLASS A CERTIFICATEHOLDER" or "CLASS A HOLDER" means the Person in
whose name a Class A Certificate shall be registered in the Certificate
Register, EXCEPT THAT, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Seller, the Servicer, or any Person
actually known
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<PAGE>
to an Authorized Officer of the Trustee to be an Affiliate of the Seller or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, request or waiver shall have
been obtained.
"CLASS A CERTIFICATE BALANCE" at any time, means the Original Class A
Certificate Balance as reduced by all amounts allocable to principal on the
Class A Certificates distributed to Class A Certificateholders prior to such
time.
"CLASS A CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class A Certificates, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"CLASS A DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.1.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, (i) with respect to the
initial Distribution Date, zero and (ii) with respect to any other Distribution
Date, the excess of Class A Monthly Interest for the preceding Distribution Date
and any outstanding Class A Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited into the Class A Distribution Account on such preceding Distribution
Date, plus 30 days of interest on such excess, to the extent permitted by law,
at the Class A Pass-Through Rate.
"CLASS A INTEREST DISTRIBUTION" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"CLASS A MONTHLY INTEREST" means, with respect to any Distribution
Date, one-twelfth of the Class A Pass-Through Rate multiplied by the Class A
Certificate Balance as of the preceding Distribution Date (after giving effect
to any distributions made on such Distribution Date) or, in the case of the
first Distribution Date, as of the Interest Accrual Date.
"CLASS A MONTHLY PRINCIPAL" means, with respect to any Distribution
Date, the Class A Percentage of Available Principal for such Distribution Date
plus the Class A Percentage of Realized Losses with respect to the related
Collection Period.
"CLASS A PASS-THROUGH RATE" means ____% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"CLASS A PERCENTAGE" means a fraction the numerator of which is the
Original Class A Certificate Balance and the denominator of which is the
Original Class A Certificate Balance plus the Original Class B Certificate
Balance.
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<PAGE>
"CLASS A POOL FACTOR" means, with respect to any Distribution Date,
the Class A Certificate Balance as of the immediately preceding Distribution
Date (after giving effect to any payments made on such Distribution Date)
divided by the Original Class A Certificate Balance, expressed as a seven-digit
decimal.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, (i) with respect to the
initial Distribution Date, zero and (ii) with respect to any other Distribution
Date, the excess of Class A Monthly Principal for such Distribution Date and any
outstanding Class A Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that is actually
deposited into the Class A Distribution Account on such Distribution Date.
"CLASS A PRINCIPAL DISTRIBUTION" means, with respect to the initial
Distribution Date, the Class A Monthly Principal for such Distribution Date and,
with respect to any Distribution Date other than the initial Distribution Date,
the sum of Class A Monthly Principal for such Distribution Date and the Class A
Principal Carryover Shortfall as of the close of the preceding Distribution
Date. In addition, on the Final Scheduled Distribution Date, the Class A
Principal Distribution shall include the amount that is necessary (after giving
effect to the other amounts described above to be distributed to the Class A
Certificateholders on such Distribution Date and allocable to principal) to
reduce the Class A Certificate Balance to zero.
"CLASS B CERTIFICATE" means a certificate executed by the Trustee on
behalf of the Trust and authenticated by the Trustee, substantially in the form
of EXHIBIT B hereto.
"CLASS B CERTIFICATEHOLDER" or "CLASS B HOLDER" means the Person in
whose name a Class B Certificate shall be registered in the Certificate
Register, EXCEPT THAT, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class B
Certificate registered in the name of the Seller, the Servicer, or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer, shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"CLASS B CERTIFICATE BALANCE" at any time, equals the Original Class B
Certificate Balance, as reduced by all amounts allocable to principal on the
Class B Certificates distributed to Class B Certificateholders prior to such
time.
"CLASS B CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class B Certificates, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"CLASS B DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.1.
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"CLASS B INTEREST CARRYOVER SHORTFALL" means, (i) with respect to the
initial Distribution Date, zero and (ii) with respect to any other Distribution
Date, the excess of Class B Monthly Interest for the preceding Distribution Date
and any outstanding Class B Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited into the Class B Distribution Account on such preceding Distribution
Date, plus 30 days of interest on such excess, to the extent permitted by law,
at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTION" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"CLASS B MONTHLY INTEREST" means, with respect to any Distribution
Date, one-twelfth of the Class B Pass-Through Rate multiplied by the Class B
Certificate Balance as of the preceding Distribution Date (after giving effect
to any distributions made on such Distribution Date) or, in the case of the
first Distribution Date, as of the Interest Accrual Date.
"CLASS B MONTHLY PRINCIPAL" means, with respect to any Distribution
Date, the Class B Percentage of Available Principal for such Distribution Date
plus the Class B Percentage of Realized Losses with respect to the related
Collection Period.
"CLASS B PASS-THROUGH RATE" means ____% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"CLASS B PERCENTAGE" means a fraction the numerator of which is the
Original Class B Certificate Balance and the denominator of which is the
Original Class A Certificate Balance plus the Original Class B Certificate
Balance.
"CLASS B POOL FACTOR" means, with respect to any Distribution Date,
the Class B Certificate Balance as of the immediately preceding Distribution
Date (after giving effect to any payments made on such Distribution Date)
divided by the Original Class B Certificate Balance, expressed as a seven-digit
decimal.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, (i) with respect to the
initial Distribution Date, zero and (ii) with respect to any other Distribution
Date, the excess of Class B Monthly Principal for such Distribution Date and any
outstanding Class B Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that is actually
deposited into the Class B Distribution Account on such Distribution Date.
"CLASS B PRINCIPAL DISTRIBUTION" means, with respect to the initial
Distribution Date, the Class B Monthly Principal for such Distribution Date and,
with respect to any Distribution Date other than the initial Distribution Date,
the sum of Class B Monthly Principal for such Distribution Date and the Class B
Principal Carryover Shortfall as of the close of the preceding Distribution
Date. In addition, on the Final Scheduled Distribution Date, the Class B
Principal Distribution shall include the amount that is necessary (after giving
effect to the other amounts described above to be
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distributed to the Class B Certificateholders on such Distribution Date and
allocable to principal) to reduce the Class B Certificate Balance to zero.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be The Depository Trust Company.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"CLOSING DATE" means the date of the initial issuance of the
Certificates hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means Bankers Trust Company, a New York banking
corporation, in its capacity as collateral agent for the benefit of the
Certificateholders with respect to the Reserve Account and the Yield Supplement
Account and any successor collateral agent appointed and acting pursuant to
Section 10.11.
"COLLECTION PERIOD" means, during the term of this Agreement, the
period from and including the 26th day of a calendar month to and including the
25th day of the next succeeding calendar month or, in the case of the initial
Collection Period, the period from the close of business of the Servicer on the
Cutoff Date to and including ______ 25, ____. With respect to any Determination
Date, Deposit Date or Distribution Date, the "related Collection Period" shall
mean the Collection Period preceding the month in which such Determination Date,
Deposit Date or Distribution Date occurs.
"COLLECTIONS" means all collections on the Receivables.
"COMMISSION" means the Securities and Exchange Commission, or any
successor thereto.
"COMPUTER TAPE" means the computer tape generated by the Seller which
provides information relating to the Receivables and which was used by the
Seller in selecting the Receivables conveyed to the Trust hereunder.
"CONTRACT RATE" means, with respect to a Receivable, the rate per
annum of interest charged on the outstanding Principal Balance of such
Receivable.
"CONTROL" over a Security Entitlement shall be considered obtained by
the Trustee if:
(i) the Trustee is the Securities Intermediary for the Account in
which such Security Entitlement is held, or (b) the Trustee
(1) is registered on the records of the Securities
Intermediary as the person having such a Security
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Entitlement against the Securities Intermediary, or (2) has
obtained the agreement, in writing, of the Securities
Intermediary for such Security Entitlement that it will comply
with orders of the Trustee regarding the sale or redemption of
the Security Entitlement without further consent of any other
person; and
(ii) the "Securities Intermediary" for such Security Entitlement
(a) is the registered owner of the related Financial Asset,
(b) is the holder of the Security Certificate for the related
Financial Asset, or (c) holds its interest in the related
Financial Asset directly through a clearing corporation (as
defined in Revised Article 8).
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of execution of this Agreement is located at Bankers Trust
Company, Four Albany Street, 10th Floor, New York, New York 10006, Attention:
Corporate Trust and Agency Group - Structured Finance, or at such other address
as the Trustee may designate from time to time by notice to the
Certificateholders, the Seller and the Servicer, or the principal corporate
trust office of any successor Trustee (the address of which the successor
Trustee will notify the Certificateholders, the Seller and the Servicer).
"CREDIT DEFERRAL" has the meaning specified in Section 3.2.
"CUTOFF DATE" means _____________.
"CUTOFF DATE PRINCIPAL BALANCE" means, with respect to any Receivable,
the initial Principal Balance of such Receivable minus the sum of the portion of
all payments received under such Receivable from or on behalf of the related
Obligor on or prior to the close of business of the Servicer on the Cutoff Date
and allocable to principal in accordance with the terms of the Receivable.
"DEALER" means, with respect to a Receivable, the seller of the
related Financed Vehicle, who originated and assigned the Receivable relating to
such Financed Vehicle to the Seller under a Dealer Agreement and a Dealer
Assignment.
"DEALER AGREEMENT" means an agreement between the Seller and a Dealer
relating to the assignment of Receivables to the Seller and all documents and
instruments (other than the related Dealer Assignments) relating thereto.
"DEALER ASSIGNMENT" means the executed assignment conveying a
Receivable from a Dealer to the Seller.
"DEALER LOAN" means a motor vehicle retail installment sale contract
originated by a Dealer and conveyed to the Seller pursuant to a Dealer
Assignment.
"DEFAULT TRIGGER" means ______________.
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"DEFAULTED RECEIVABLE" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which the Servicer, on behalf of
the Trust, has determined to charge off during such Collection Period in
accordance with its customary servicing practices; PROVIDED, HOWEVER, that any
Receivable which the Seller or the Servicer is obligated to repurchase or
purchase shall be deemed not to be a Defaulted Receivable during a Collection
Period unless the Seller or the Servicer fails to deposit the Purchase Amount on
the related Deposit Date when due, unless such Receivable is otherwise
repurchased or purchased on or prior to the last day of the Collection Period in
which such Receivable is determined to be a Defaulted Receivable.
"DEFERRAL FEE" means the fee associated with any Optional Payment
Deferral or Credit Deferral.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
Section 6.8.
"DELINQUENCY RATIO" means, for any Collection Period, the ratio,
expressed as a percentage, of (i) the principal amount of all outstanding
Receivables (other than Purchased Receivables and Defaulted Receivables) which
are 60 or more days delinquent as of the last day of such Collection Period,
determined in accordance with the Servicer's, customary practices, divided by
(ii) the Pool Balance as of the last day of such Collection Period.
"DELINQUENCY TRIGGER" means __________________.
"DELIVERY" when used with respect to Account Property means:
(a) with respect to Physical Property other than a certificated
security, transfer thereof to the Trustee or its nominee, agent or
custodian by physical delivery to the Trustee or its nominee, agent or
custodian endorsed to, or registered in the name of, the Trustee or its
nominee, agent or custodian or endorsed in blank, and, with respect to a
"certificated security" (as defined in Section 8-102(1)(a) of the Relevant
UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, the Trustee or its nominee,
agent or custodian or endorsed in blank to a "financial intermediary" (as
defined in Section 8-313(4) of the Relevant UCC) and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee or its nominee, agent
or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the Trustee
or its nominee, agent or custodian, or (ii) by delivery thereof to a
"clearing corporation" (as defined in Section 8-102(3) of the Relevant UCC)
and the making by such clearing corporation of appropriate entries on its
books reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial intermediary
by the amount of such certificated security, the identification by the
clearing corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a "custodian bank"
(as defined in Section 8-102(4) of the Relevant UCC) or the nominee of
either subject to the clearing corporation's exclusive control, the sending
of a confirmation by the financial intermediary of the purchase by the
Trustee or its nominee, agent or custodian of such
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securities and the making by such financial intermediary of entries on its
books and records identifying such certificated securities as belonging to
the Trustee, as applicable, or its respective nominee, agent or custodian,
and, in any event, any such Physical Property in registered form shall be
in the name of the Trustee or its nominee, agent or custodian; and such
additional or alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Account Property (as
defined herein) to the Trustee or its nominee, agent or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to any item of Account Property that is an
Uncertificated Security and that is not a Federal Book-Entry Security,
registration on the books and records of the issuer thereof in the name of
the financial intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Trustee or its nominee, agent or
custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Trustee or its nominee,
agent or custodian; and
(c) with respect to any Federal Book-Entry Security, the following
procedures, all in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the Relevant UCC: book-entry
registration of such Account Property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a financial intermediary which is
also a "depository" pursuant to applicable Federal regulations and issuance
by such financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee or its nominee,
agent or custodian of the purchase by the Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Trustee or its nominee,
agent or custodian and indicating that such custodian holds such Account
Property solely as agent for the Trustee or its nominee, agent or
custodian; and such additional or alternative procedures as may hereafter
become appropriate to effect the complete transfer of ownership of any such
Account Property to the Trustee or its nominee, agent or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof.
"DEPOSIT DATE" means, with respect to any Collection Period, the
Business Day preceding the related Distribution Date.
"DEPOSITORY AGREEMENT" means the agreement among the Seller, the
Servicer, the Trustee and the initial Clearing Agency, dated ___________,
substantially in the form attached hereto as EXHIBIT D.
"DETERMINATION DATE" means the tenth day of each month (or, if such
day is not a Business Day, the next succeeding Business Day).
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"DIRECT MOTOR VEHICLE LOAN" means a Receivable that is a motor vehicle
retail installment loan originated by the Seller.
"DISTRIBUTION DATE" means the 15th day of each month (or, if such day
is not a Business Day, the next succeeding Business Day), commencing
____________.
"ELECTRONIC LEDGER" means the electronic master record of the retail
installment sale contracts and retail installment loans of the Seller.
"ELIGIBLE DEPOSIT ACCOUNT" means either (i) a segregated account with
an Eligible Institution or (ii) a segregated trust account with the trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having trust powers and acting as
trustee for funds deposited in such account, so long as the long-term unsecured
debt rating of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories which signifies investment
grade.
"ELIGIBLE INSTITUTION" means any depository institution with trust
powers (which may include the Seller, the Servicer or the Trustee), organized
under the laws of the United States, any state thereof, the District of Columbia
or any domestic branch of a foreign bank, having combined capital and surplus in
excess of $50,000,000, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or state banking authorities and which
has (i) a rating of at least P-1 from Moody's and A-l from S&P with respect to
short-term deposit obligations, or (ii) if such institution has issued long-term
unsecured debt obligations, a rating of A2 or higher from Moody's and A or
higher from S&P with respect to long-term unsecured debt obligations. If such
depository institution publishes reports of condition at least annually,
pursuant to law or the requirements of the aforesaid supervising or examining
authority, then the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
"ELIGIBLE INVESTMENTS" shall mean, at any time, any one or more of the
following types of investments, each of which shall mature on or prior to the
next succeeding Distribution Date:
(a) direct marketable obligations of the United States having a
maturity of not more than 30 days from the date of acquisition;
(b) marketable obligations directly and fully guaranteed by the
United States as to the full and timely payment of principal and interest
having a maturity of not more than 30 days from the date of acquisition;
(c) bankers' acceptances and certificates of deposit denominated
in U.S. Dollars in each case having a maturity of not more than 30 days
from the date of acquisition, and issued by any bank with capital, surplus
and undivided profits aggregating at least
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$100,000,000, the short-term unsecured securities of which are rated at
least A-l by S&P and P-1 by Moody's; and
(d) commercial paper having a maturity of not more than 30 days
and which is rated at least A-l by S&P and P-1 by Moody's;
(e) freely redeemable shares in no-load money market funds which
invest solely in obligations, bankers' acceptances, certificates of deposit
and commercial paper of the types described in clauses (a) through (d),
without regard to the limitations as to the maturity of such obligations,
bankers' acceptances, certificates of deposit or commercial paper set forth
in such clauses, rated at least AAAm by S&P and Aaa by Moody's; and
(f) any Bankers Trust Company money market fund so long as it
shall be rated by each Rating Agency as either AAAm, Aaa, as an eligible
investment for AAA/Aaa rated transactions, or in the highest short-term
rating assigned by a particular Rating Agency.
Eligible Investments may include, if otherwise eligible pursuant to
paragraphs (a) to (e) above, debt securities of the Trustee, the Seller or any
of their Affiliates for which the Trustee, the Seller or any of their Affiliates
is an investment manager or investment advisor.
"ELIGIBLE SERVICER" means (a) any Affiliate of the Seller, (b) Bankers
Trust Company or (c) any Person which, at the time of its appointment as
Servicer or as a subservicer, (i) has a net worth of not less than $50,000,000,
(ii) is servicing a portfolio of motor vehicle retail installment sale contracts
and/or motor vehicle loans, (iii) is legally qualified, and has the capacity, to
service the Receivables, (iv) has demonstrated the ability to service a
portfolio of motor vehicle retail installment sale contracts and/or motor
vehicle loans similar to the Receivables professionally and competently in
accordance with standards of skill and care that are consistent with prudent
industry standards, and (v) is qualified and entitled to use pursuant to a
license or other written agreement, and agrees to maintain the confidentiality
of, the software which the Servicer or any subservicer uses in connection with
performing its duties and responsibilities under this Agreement or the related
subservicing agreement or obtains rights to use, or develops at its own expense,
software which is adequate to perform its duties and responsibilities under this
Agreement or the related subservicing agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF SERVICING TERMINATION" means an event specified in
Section 9.1.
"FEDERAL BOOK-ENTRY SECURITY" means an obligation issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or the Federal National
Mortgage Association, or any other direct obligation of, or obligation fully
guaranteed as to timely payment of principal and interest by, the United States
of America, that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations.
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"FINANCIAL ASSET" has the meaning given such term in Revised Article
8. As used herein, the Financial Asset "related to" a Security Entitlement is
the Financial Asset in which the entitlement holder (as defined in Revised
Article 8) holding such Security Entitlement has the rights and property
interest specified in Revised Article 8.
"FINAL SCHEDULED DISTRIBUTION DATE" means the ____________
Distribution Date.
"FINAL SCHEDULED MATURITY DATE" means the last day of the Collection
Period preceding the Final Scheduled Distribution Date.
"FINANCED VEHICLE" means the Motor Vehicle, together with all
accessions thereto, securing an Obligor's indebtedness under a Receivable.
"FULL PAYOFF AMOUNT" means the sum of the Pool Balance plus an amount
sufficient to pay interest on (i) the Class A Percentage of such Pool Balance at
a rate equal to the sum of the Class A Pass-Through Rate and the Basic Servicing
Fee Rate through the Final Scheduled Distribution Date and (ii) the Class B
Percentage of such Pool Balance at a rate equal to the sum of the Class B
Pass-Through Rate and the Basic Servicing Fee Rate through the Final Scheduled
Distribution Date.
"INSURANCE POLICIES" means all comprehensive and collision, fire and
theft insurance policies maintained by the Obligors naming the Seller as an
additional insured or loss payee and any credit and disability and physical
damage insurance policies maintained by the Obligors and benefitting any holder
of the Receivables.
"INTEREST ACCRUAL DATE" means _________________.
"INTEREST COLLECTIONS" means, for any Distribution Date, the sum of
the following amounts for the related Collection Period: (i) that portion of
the Collections on the Receivables received during the related Collection Period
that is allocable to interest in accordance with the Servicer's customary
procedures, (ii) all Liquidation Proceeds, to the extent allocable to interest,
(iii) all Recoveries, to the extent allocable to interest and (iv) to the extent
attributable to accrued interest, the Purchase Amount of all Receivables that
are repurchased or purchased by the Seller or the Servicer as of any day in the
related Collection Period. "Interest Collections" for any Distribution Date
shall exclude all payments and proceeds of any Receivables the Purchase Amount
of which has been distributed on a prior Distribution Date.
"LIQUIDATION PROCEEDS" means, with respect to any Distribution Date
and a Receivable that became a Defaulted Receivable during the related
Collection Period, (i) insurance proceeds received during such Collection Period
by the Servicer, with respect to insurance policies relating to the Financed
Vehicles or the Obligors, (ii) amounts received by the Servicer during such
Collection Period from a Dealer in connection with such Defaulted Receivable
pursuant to the exercise of rights under a Dealer Agreement, and (iii) the
monies collected by the Servicer (from
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whatever source, including proceeds of a sale of a Financed Vehicle or
deficiency balance recovered after the charge-off of the related Receivable)
during such Collection Period on such Defaulted Receivable net of any expenses
incurred by the Servicer in connection with the collection of such Receivable
and the disposition of the Financed Vehicle and any payments required by law to
be remitted to the Obligor, but, in any event, not less than zero. Liquidation
Proceeds shall be applied first to accrued and unpaid interest on the Receivable
and then to the Principal Balance thereof.
"MOODY'S" means Moody's Investors Service, Inc.
"MOTOR VEHICLE" means a new or used automobile or light-duty truck
which is the subject of a retail installment sale contract originated by a
dealer or a retail installment loan originated by the Seller.
"NET LOSS RATIO" means, for any Collection Period, an amount,
expressed as a percentage, equal to (i) the product of (a) the Aggregate Net
Losses minus Recoveries for such Collection Period, and (B) twelve divided by
(ii) the average of the Pool Balances on each of the first day of such
Collection Period and the last day of such Collection Period.
"OBLIGOR" means the purchaser or the co-purchasers of a Financed
Vehicle purchased in part or in whole by the execution and delivery of the
related Receivable or the borrower or co-borrowers under the related Receivables
the proceeds of which were applied to purchase in part or in whole the Financed
Vehicle, and any other co-signer of the Receivable who owes or may be liable for
payments under such Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the chairman,
the president, any vice president, the treasurer or the cashier of the Seller or
the Servicer, as the case may be, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
outside counsel to the Seller or the Servicer) acceptable in form to the
Trustee.
"OPTIONAL PAYMENT DEFERRAL" shall have the meaning specified in
Section 3.2(c).
"ORIGINAL CERTIFICATE BALANCE" means the sum of the Original Class A
Certificate Balance and the Original Class B Certificate Balance.
"ORIGINAL CLASS A CERTIFICATE BALANCE" means $_____________.
"ORIGINAL CLASS B CERTIFICATE BALANCE" means $_____________.
"ORIGINAL POOL BALANCE" means, as of the Cutoff Date, $___________.
"OUTSTANDING ADVANCES" means, with respect to any Distribution Date,
the aggregate of all Advances made by the Servicer with respect to prior
Distribution Dates that have not been reimbursed pursuant to Section 4.3(c).
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"PASS-THROUGH RATE" means the Class A Pass-Through Rate and the Class
B Pass-Through Rate.
"PERSON" means a legal person, including any individual, corporation,
limited liability company, estate, partnership, joint venture, association,
joint stock company, trust, unincorporated organization, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PHYSICAL PROPERTY" means (i) bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the Relevant UCC and
are susceptible of physical delivery and (ii) certificated securities (as
defined in Section 8-102 of the Relevant UCC).
"POOL BALANCE" means, on any date of determination, the aggregate
outstanding Principal Balance of the Receivables on such date.
"PRINCIPAL BALANCE" means, as of any time, for any Receivable, the
Cutoff Date Principal Balance minus the sum of the portions of all payments
received from or on behalf of the related Obligor after the close of business of
the Servicer on the Cutoff Date and prior to such time that are allocable to
principal in accordance with the terms of the Receivable plus the amount of any
Deferral Fee.
"PURCHASE AMOUNT" of any Receivable means, with respect to any Deposit
Date, an amount equal to the sum of (i) the outstanding Principal Balance of
such Receivable as of the last day of the related Collection Period and (ii) an
amount equal to the amount of accrued and unpaid interest on such Principal
Balance at the related Contract Rate through the last day of the related
Collection Period, in each case, after giving effect to Collections on such
Receivable in such Collection Period.
"PURCHASED RECEIVABLE" means, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller or the Servicer pursuant to this Agreement.
"RATING AGENCY" means at any time any nationally recognized
statistical rating agency providing a rating for the Certificates at the request
of the Seller at such time.
"REALIZED LOSSES" means, with respect to any Distribution Date and a
Receivable that became a Defaulted Receivable during the related Collection
Period, the excess of (i) the aggregate Principal Balance of such Receivable as
of the first day of the related Collection Period over (ii) Liquidation Proceeds
received with respect to such Receivable during such Collection Period to the
extent allocable to principal.
"RECEIVABLE" means a motor vehicle retail installment sale contract or
a motor vehicle retail installment loan described in the Schedule of
Receivables, but excluding any Purchased Receivables.
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"RECEIVABLE FILE" means, with respect to a Receivable, the electronic
entries, documents, instruments and writings specified in Section 2.5.
"RECORD DATE" means, with respect to each Collection Period and the
related Distribution Date, the day immediately preceding such Distribution Date
(or, if Definitive Certificates are issued, the last day of such Collection
Period).
"RECOVERIES" means, with respect to any Distribution Date, all monies
received by the Servicer with respect to any Defaulted Receivable during the
related Collection Period if such Collection Period follows the Collection
Period in which such Receivable became a Defaulted Receivable, net of the sum of
(i) any expenses incurred by the Servicer in connection with the collection of
such Receivable and the disposition of the Financed Vehicle (to the extent not
previously reimbursed) and (ii) any payments required by law to be remitted to
the Obligor, but, in any event, not less than zero.
"RELEVANT UCC" shall mean the Uniform Commercial Code as in effect in
the relevant jurisdiction, as amended from time to time.
"REQUIRED RATING" means a rating with respect to short-term deposit
obligations of at least P-1 by Moody's and at least A-1 by S&P.
"RESERVE ACCOUNT" means the fund established pursuant to Section 4.1
and maintained as such pursuant to Section 4.6.
"RESERVE ACCOUNT FLOOR AMOUNT" means $_____________.
"RESERVE ACCOUNT INCREASE PERCENTAGE" means ____%.
"RESERVE ACCOUNT INITIAL DEPOSIT" means, with respect to the Closing
Date, $__________.
"RESERVE ACCOUNT TRIGGER STARTING DATE" means _______________.
"REVISED ARTICLE 8" means Revised Article 8 (1994 Version) (and
corresponding amendments to Article 9) as promulgated in 1994 by the National
Conference of Commissioners on Uniform State Laws. From and after the Revised
Article 8 Effective Date, "Revised Article 8" means such version in the form in
which it is adopted in the State of New York.
"REVISED ARTICLE 8 EFFECTIVE DATE" means the date (if any) on which
Revised Article 8 (with such changes thereto as shall be effected by the State
of New York) becomes effective in the State of New York.
"S&P" means Standard & Poor's Ratings Service, a Division of the
McGraw Hill Companies.
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"SCHEDULE OF RECEIVABLES" means the list identifying the Receivables
attached hereto as Schedule A.
"SCHEDULED PAYMENT" means, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 or any rescheduling in any insolvency or
similar proceedings).
"SECURITY CERTIFICATE" has the meaning given such term in Revised
Article 8.
"SECURITY ENTITLEMENT" has the meaning given such term in Revised
Article 8.
"SELLER" means First Security Bank, N.A. (including all Persons merged
into or otherwise consolidated with, and all other predecessors thereto) in its
capacity as seller of the Receivables to the Trust under this Agreement, and
each successor thereto (in the same capacity) pursuant to Section 7.3.
"SERVICER" means First Security Bank, N.A., in its capacity as
servicer of the Receivables under this Agreement, each successor thereto (in the
same capacity) pursuant to Section 8.3, and each successor servicer appointed
and acting pursuant to Section 9.2.
"SERVICER'S CERTIFICATE" has the meaning specified in Section 3.9.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Receivables, whose name
appears on a list of servicing officers attached to an Officer's Certificate
furnished to the Trustee by the Servicer on the Closing Date, as such list may
be amended from time to time by the Servicer in writing.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the Contract
Rate multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and the remainder of
such payment is allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SPECIFIED RESERVE ACCOUNT BALANCE" with respect to any Distribution
Date, means the Basic Reserve Account Percentage of the Pool Balance as of the
last day of the preceding Collection Period, but in any event will not be less
than the lesser of (i) the Reserve Account Floor Amount and (ii) the Full Payoff
Amount; PROVIDED that the Specified Reserve Account Balance will be calculated
using the Reserve Account Increase Percentage instead of the Basic Reserve
Account Percentage for any Distribution Date (beginning on the Reserve Account
Trigger Starting Date) on which the Average Net Loss Ratio exceeds the Default
Trigger or the Average Delinquency Ratio
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exceeds the Delinquency Trigger. The Specified Reserve Account Balance may be
reduced to a lesser amount as determined by the Seller; PROVIDED that such
reduction does not adversely affect the ratings of the Certificates by the
Rating Agencies.
"SPECIFIED YIELD SUPPLEMENT BALANCE" means, with respect to any
Distribution Date, an amount equal to at least the sum of all projected Yield
Supplement Amounts for all future Distribution Dates, assuming that future
scheduled payments on the Receivables are made on their scheduled due dates;
PROVIDED that if on any date the Seller shall fail to pay the amount payable
under the Yield Supplement Agreement in accordance with the terms thereof, then,
in such event, the Specified Yield Supplement Balance shall not thereafter be
reduced hereunder.
"SUPPLEMENTAL SERVICING FEE" shall have the meaning set forth in
Section 3.8.
"TRADES" means regulations promulgated by the U.S. Department of the
Treasury governing book-entry Treasury bonds, notes and bills, 31 C.F.R. Part
357, which replace prior Treasury regulations and which designate Revised
Article 8 as the applicable governing law.
"TRADES EFFECTIVE DATE" means with respect to a Federal Book-Entry
Security, the date (which was January 1, 1997, in the case of securities issued
by the U.S. Treasury) on which TRADES or an equivalent set of regulations
becomes effective.
"TRANSFER DATE" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"TRUST" means the First Security Auto Grantor Trust _____-____ created
by this Agreement.
"TRUSTEE" means Bankers Trust Company, a New York banking corporation,
as Trustee under this Agreement, or any successor, and any successor trustee
appointed and acting pursuant to Sections 10.11 and 10.12.
"TRUST PROPERTY" means the Receivables; all monies due or received
under the Receivables after the close of business of the Servicer on the Cutoff
Date; the Certificate Account, the Class A Distribution Account and the Class B
Distribution Account and such amounts as from time to time may be held therein
(including the Account Property related thereto); security interests in the
Financed Vehicles; all rights of the Trust under the Yield Supplement Agreement;
the Seller's rights (if any) to receive proceeds from claims on Insurance
Policies covering the Financed Vehicles or the Obligors; the Seller's rights
relating to the Receivables under the Dealer Agreements and Dealer Assignments;
the Seller's rights to all documents and information contained in the Receivable
Files; the rights of the Trust under this Agreement; and all proceeds (within
the meaning of the Relevant UCC) of the foregoing. Notwithstanding anything to
the contrary contained herein, the Trust Property shall not include, and the
Trust shall not have any right to, the Reserve Account, the Yield Supplement
Account, any funds actually or deemed to be deposited in such accounts or any
investments therein or any amounts paid by the Servicer for physical damage
insurance pursuant to Section 3.4.
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"UNCERTIFICATED SECURITY" as of any date, has the meaning given to
such term under the Relevant UCC as in effect on such date.
"YIELD SUPPLEMENT ACCOUNT" shall mean the account established,
maintained and designated as the "Yield Supplement Account" pursuant to Section
5.2.
"YIELD SUPPLEMENT ACCOUNT PROPERTY" shall have the meaning set forth
in Section 5.2.
"YIELD SUPPLEMENT AGREEMENT" means the Yield Supplement Agreement
dated as of the Closing Date between the Seller and the Trustee, substantially
in the form attached hereto as EXHIBIT E.
"YIELD SUPPLEMENT AMOUNT" shall have the meaning specified in Section
5.l.
"YIELD SUPPLEMENT INITIAL DEPOSIT" means cash or Eligible Investments
having a value of at least $___________.
Section 1.2 USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
Section 1.3 CALCULATIONS. All calculations of the amount of
interest accrued on the Certificates during any Collection Period and all
calculations of the amount of the Basic Servicing Fee payable with respect to a
Collection Period shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
Section 1.4 REFERENCES. All references to the first day of a
Collection Period shall refer to the opening of business on such day. All
references to the last day of a Collection Period shall refer to the close of
business of the Servicer on such day.
Section 1.5 SECTION REFERENCES. All section references shall be to
Sections in this Agreement unless otherwise specified.
Section 1.6 ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever
any provision of this Agreement refers to action to be taken, or consented to,
by Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consented to by Certificateholders.
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ARTICLE II
THE TRUST PROPERTY
Section 2.1 CONVEYANCE OF TRUST PROPERTY. (a) In consideration of
the Trustee's delivery to, or upon the written order of, the Seller of
authenticated Certificates, in authorized denominations, in an aggregate amount
equal to the Original Certificate Balance and the rights to receive certain
amounts as specified herein, the Seller hereby sells, transfers, assigns and
conveys to the Trustee, on the behalf of the Trust, for the benefit of the
Certificateholders, upon the terms and conditions hereof, the Trust Property to
the Trust, without recourse. The sale, transfer, assignment and conveyance made
hereunder shall not constitute and is not intended to result in an assumption by
the Trustee, any Certificateholder or any Certificate Owner of any obligation of
the Seller to the Obligors, the Dealers, or any other Person in connection with
the Receivables and the other Trust Property or any agreement, document or
instrument related thereto.
(b) The Seller intends that the transfer and conveyance of the
Trust Property to the Trust hereunder constitutes a complete sale and assignment
of all of the Seller's right, title and interest in, to and under the Trust
Property to the Trust and that the beneficial interest of the Seller in, and
title to, the Trust Property will not be a part of the Seller's estate in the
event of any liquidation, reorganization or similar insolvency proceeding with
respect to the Seller. In the event that the transfer hereunder is not
respected as a complete sale and assignment of the Trust Property to the Trust,
then, in such event, the Seller hereby grants to the Trustee on behalf of the
Certificateholders a security interest in the Trust Property. This Agreement
shall constitute a security agreement under applicable law.
Section 2.2 WARRANTIES OF THE SELLER AS TO EACH RECEIVABLE. The
Seller hereby makes the following warranties as to each Receivable conveyed by
it to the Trust hereunder on which the Trustee shall rely in accepting the Trust
Property in trust and authenticating the Certificates. Unless otherwise
indicated, such warranties shall speak as of the Closing Date, but shall survive
the sale, transfer, and assignment of the Receivables and the other Trust
Property to the Trust.
(i) CHARACTERISTICS OF RECEIVABLES. The
Receivable has been fully and properly executed by the parties thereto and
(a) (x) has been originated by the Seller or (y) has been originated by a
Dealer for the retail sale of a Motor Vehicle in the ordinary course of
such Dealer's business, and has been purchased by the Seller from such
Dealer in the ordinary course of the Seller's business and has been validly
assigned by such Dealer to the Seller, (b) is secured by a valid,
subsisting, and enforceable first priority security interest in favor of
the Seller in the Financed Vehicle (subject to administrative delays and
clerical errors on the part of the applicable government agency), which
security interest is assignable together with such Receivable, and has been
so assigned, by the Seller to the Trustee, (c) contains or is accompanied
by a security agreement which contains customary and enforceable provisions
such that the rights and remedies of the secured party are adequate for
realization of the benefits of the security interest in the subject
collateral, (d) provides at origination for level monthly payments
(PROVIDED that the first and the last payment may be
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less than or minimally more than the level payment), which fully amortize
the Amount Financed over the original term and provides for interest at the
related Contract Rate and (e) provides for a payment that will fully pay
the Principal Balance of such Receivable as of the first day of the
Collection Period in which the Receivable is fully prepaid, together with
interest accrued at least to the date of prepayment at the related Contract
Rate.
(ii) SCHEDULE OF RECEIVABLES. The information set
forth in the Schedule of Receivables with respect to such Receivable has
been produced from the Electronic Ledger and was true and correct as of the
close of business of the Servicer on the Cutoff Date; and the Cutoff Date
Principal Balance and the Contract Rate of the Receivable have been
accurately and correctly calculated.
(iii) COMPLIANCE WITH LAWS. To the best knowledge
of the Seller, the Receivable, and the sale of the related Financed
Vehicle, complied at the time it was originated or made, and will comply as
of the Closing Date, in all material respects with all requirements of
applicable federal, state, and local laws, and regulations thereunder,
including, to the extent applicable, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, Federal Reserve Board Regulations B and Z, and any other
consumer credit, equal opportunity, and disclosure laws; PROVIDED, HOWEVER,
that if, notwithstanding the best knowledge of the Seller, any Receivable,
or the sale of the related Financed Vehicle, fails to comply with
applicable law in the manner and to the extent set forth herein, the Seller
shall repurchase such Receivable in accordance with the terms and
conditions set forth in Section 2.4, but such failure to comply with such
laws shall not constitute a breach of this warranty except for purposes of
Section 2.4.
(iv) BINDING OBLIGATION. The Receivable
constitutes the genuine, legal, valid, and binding payment obligation in
writing of the Obligor, enforceable by the holder thereof in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally.
(v) NO GOVERNMENT OBLIGOR. The Obligor on the
Receivable is not the United States of America or any State thereof or any
local government, or any agency, department, political subdivision or
instrumentality of the United States of America or any State thereof or any
local government.
(vi) RECEIVABLES IN FORCE. The Receivable has not
been satisfied, subordinated, or rescinded and the Financed Vehicle has not
been released from the lien granted by the Receivable in whole or in part.
(vii) NO AMENDMENT OR WAIVER. No material provision
of the Receivable has been amended, waived, altered or modified in any
respect, except pursuant to a document, instrument or writing included in
the Receivable File and reflected in the
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Electronic Ledger and no such amendment, waiver, alteration or modification
causes such Receivable not to conform to the other warranties contained in
this Section.
(viii) NO DEFENSES. The Receivable is not subject to
any right of rescission, setoff, counterclaim or defense, including the
defense of usury, and the operation of any of the terms of the Receivable,
or the exercise of any right thereunder, will not render the Receivable
unenforceable in whole or in part or subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and no
such right of rescission, setoff, counterclaim or defense has been asserted
with respect thereto.
(ix) NO LIENS. To the best knowledge of the
Seller, there are no liens or claims, including liens for work, labor,
materials or unpaid state or federal taxes relating to the Financed
Vehicle, that are or may be liens prior to, or equal to or coordinate with,
the lien granted by the Obligor.
(x) NO DEFAULT. Except for payment delinquencies
continuing for a period of not more than 30 days as of the Cutoff Date, no
default, breach, violation, or event permitting acceleration under the
terms of any Receivable exists; and no continuing condition that with
notice or lapse of time, or both, would constitute a default, breach,
violation, or event permitting acceleration under the terms of any
Receivable has arisen; and the Seller has not waived any of the foregoing.
(xi) INSURANCE. If the Principal Balance of the
Receivable exceeds $2,000, the Financed Vehicle securing such Receivable is
insured under an Insurance Policy, the premiums for which have been paid in
full, and such Insurance Policy is in full force and effect.
(xii) GOOD TITLE. The Receivable has not been sold,
assigned, pledged or otherwise conveyed by the Seller to any Person other
than the Trust, and, immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to the
Receivable free and clear of any encumbrance, equity, lien, pledge, charge,
claim, security interest or other right or interest of any other Person,
was the sole owner thereof and had full right and power to transfer and
assign the Receivable to the Trust. Immediately upon the transfer and
assignment of the Receivable to the Trust, the Trust shall have good and
marketable title to the Receivable, free and clear of any encumbrance,
equity, lien, pledge, charge, claim, security interest or other right or
interest of any other Person; and all filings and actions required by the
Relevant UCC with respect to the transfer of Receivables associated with
the sale of the same have been accomplished for the purpose of complying
with the Relevant UCC provisions governing the relative priority of
interests of parties in the Receivables.
(xiii) LAWFUL ASSIGNMENT. The Receivable has not
been originated in, and is not subject to the laws of, any jurisdiction
under which the sale, transfer, and assignment of such Receivable hereunder
or pursuant to transfers of the Certificates are unlawful, void, or
voidable.
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(xiv) ALL FILINGS MADE. All filings have been made,
including filings under the Relevant UCC, which are necessary in any
jurisdiction to cause the ownership and title interests of the Trust in the
Receivables to be afforded priority over competing claims of the holders of
security interests or other claims against whom such filings can assure
priority.
(xv) VALID SECURITY INTEREST. On the Closing Date,
there will exist a valid, subsisting and enforceable first priority
perfected security interest in the Financed Vehicle securing the Receivable
(subject to administrative delays and clerical errors on the part of the
applicable government agency and to any statutory or other lien arising by
operation of law after the Closing Date which is prior to such security
interest). With respect to the foregoing, the Seller hereby covenants to
take all action necessary such that, at such time as enforcement of such
security interest is sought, there shall exist a valid, subsisting and
enforceable first priority perfected security interest in the Financed
Vehicle for the benefit of the Trust (subject to administrative delays and
clerical errors on the part of the applicable government agency and any
statutory or other lien arising by operation of law after the Closing Date
which is prior to such interest).
(xvi) CAPACITY OF PARTIES. All parties to the
Receivable had capacity to execute the Receivable.
(xvii) ONE ORIGINAL. There is only one executed
original of each Receivable, which original has been delivered by the
Seller to the Trustee as provided in Section 2.5(i).
(xviii) OBLIGATIONS; NO IMPAIRMENT. The Seller has
duly fulfilled all obligations on its part to be fulfilled under, or in
connection with, the Receivable and has done nothing to impair the rights
of the Trust, the Class A Certificateholders or the Class B
Certificateholders in the Receivable or the proceeds thereof.
(xix) NO FRAUD OR MISREPRESENTATION. To the best
knowledge of the Seller, in the case of a Receivable originated by a
Dealer, the Receivable was originated by a Dealer and sold by such Dealer
to the Seller without any conduct constituting fraud or misrepresentation
on the part of such Dealer; PROVIDED, HOWEVER, that if, notwithstanding the
best knowledge of the Seller, any Receivable was originated and sold under
conduct constituting fraud or misrepresentation on the part of such Dealer,
the Seller shall repurchase such Receivable in accordance with the terms
and conditions of Section 2.4, with the existence of such conduct not
constituting a breach of this warranty, except for purposes of Section 2.4.
(xx) POSSESSION. Immediately prior to the Closing
Date, the Seller (or an Affiliate thereof) will have possession of the
original Receivable and the related Receivable File, and there are and
there will be no custodial agreements in effect materially adversely
affecting the right or ability of the Seller to make, or cause to be made,
any delivery required hereunder.
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(xxi) BULK TRANSFER LAWS. The transfer, assignment
and conveyance of the Receivable and Receivable Files by the Seller
pursuant to this Agreement is not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction.
Section 2.3 WARRANTIES AS TO THE RECEIVABLES IN THE AGGREGATE AND
ACTIONS OF THE SELLER. The Seller hereby makes the following warranties as to
the Receivables conveyed by it to the Trust hereunder on which the Trustee shall
rely in accepting the Trust Property in trust and authenticating the
Certificates. Unless otherwise indicated, such warranties shall speak as of the
Closing Date, but shall survive the sale, transfer, and assignment of the
Receivables and the other Trust Property to the Trust.
(i) AMOUNTS. The aggregate Cutoff Date Principal
Balances of the Receivables are equal to the Original Pool Balance.
(ii) INDIVIDUAL CHARACTERISTICS. The Receivables
have the following individual characteristics as of the close of business
of the Servicer on the Cutoff Date: (a) the obligations of the Obligors on
the Receivables are secured by security interests in new or used
automobiles or light-duty trucks; (b) each Receivable has a Contract Rate
of at least __% and not more than ___%; (c) each Receivable had a remaining
maturity, as of the Cutoff Date, of not less than six months and not more
than 60 months; (d) each Receivable had a remaining Principal Balance of
not less than $____ and not more than $_______ as of the Cutoff Date; (e)
no Receivable was more than 30 days delinquent as of the Cutoff Date; (f)
no Financed Vehicle had been repossessed as of the Cutoff Date; (g) each
Receivable is a motor vehicle retail installment sale contract or motor
vehicle retail installment loan; (h) each Receivable provides for
allocation of payments between principal and interest by the Simple
Interest Method; (i) the Dealers of the Financed Vehicles, if any, have no
participation in, or other right to receive, any proceeds of the
Receivable; and (j) each Receivable was originated on or after
____________. The Receivables were selected utilizing selection procedures
that were not adverse to the Certificateholders.
(iii) AGGREGATE CHARACTERISTICS. The Receivables
had the following characteristics in the aggregate as of the Cutoff Date:
(a) approximately ____% of the Original Pool Balance was attributable to
loans for purchases of new Financed Vehicles, and approximately _____% of
the Original Pool Balance was attributable to loans for purchases of used
Financed Vehicles; (b) approximately _____% of the Original Pool Balance
was attributable to Receivables the mailing addresses of the Obligors with
respect to which are located in the States of Utah and Idaho; (c) the
weighted average Contract Rate of the Receivables was _____%; (d)
approximately _____% of the Original Pool Balance was attributable to
Receivables originated by the Seller; (e) approximately _____% of the
Original Pool Balance was attributable to Receivables that are Dealer
Loans; and (f) approximately _____% of the Original Pool Balance was
attributable to Receivables that are subject to a repurchase obligation by
the originating Dealer upon default and repossession.
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(iv) COMPUTER TAPE. The Computer Tapes made
available by the Seller were complete and accurate as of the Cutoff Date
and include a description of the same Receivables that are described in the
Schedule of Receivables.
(v) MARKING RECORDS. By the Closing Date, the
Seller will have caused the portions of the Electronic Ledger relating to
the Receivables to be clearly and unambiguously marked to show that such
Receivables constitute part of the Trust Property and are owned by the
Trust in accordance with the terms of the trust created hereunder.
(vi) NO ASSIGNMENT. As of the Closing Date, the
Seller shall not have taken any action to convey any right to any Person
that would result in such Person having a right to payments received under
the Insurance Policies, the Dealer Agreements, the Dealer Assignments or
payments due under the Receivables that is senior to, or equal with, that
of the Trust.
Section 2.4 REPURCHASE UPON BREACH. The Seller, the Servicer, or
the Trustee, as the case may be, shall inform the other parties promptly, in
writing, upon the discovery of any breach or failure to be true of the
warranties (including in the case of Sections 2.2(iii), (ix) and (xix) any
breach or failure which would have occurred if such warranty had not been made
to the best knowledge of the Seller) made by the Seller pursuant to Section 2.2
or Section 2.3. Unless the breach or failure shall have been cured by the last
day of the Collection Period which includes the 60th day after the date on which
the Seller becomes aware of, or receives written notice from the Trustee or the
Servicer of, such breach or failure, the Seller shall repurchase from the Trust,
without recourse, representation or warranty, other than that the Trustee, on
behalf of the Trust, has not imposed any liens on the Receivable to be
repurchased, any Receivable, the interests of the Trust and the
Certificateholders in which is materially and adversely affected by the breach
or failure, on the Deposit Date related to such Collection Period. Such
purchase shall occur as of the last day of such Collection Period. Any breach
of a representation relating to the status of a Receivable as a Simple Interest
Receivable or the Contract Rate of a Receivable shall be deemed to materially
and adversely affect the Certificateholders. In consideration of the repurchase
of a Receivable hereunder, the Seller shall remit the Purchase Amount of such
Receivable, no later than the close of business (New York time) on the
applicable Deposit Date, in the manner specified in Section 4.3(b). Except as
provided in Section 7.2, the sole remedy of the Trust, the Trustee, or the
Certificateholders with respect to a breach or failure to be true of the
warranties made by the Seller pursuant to Section 2.2 or Section 2.3 shall be to
require the Seller to repurchase Receivables pursuant to this Section.
Section 2.5 CUSTODY OF RECEIVABLE FILES. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Trustee, on
behalf of the Trust, upon the execution and delivery of this Agreement,
revocably appoints the Servicer, as agent, and the Servicer accepts such
appointment and revocably appoints First Security Service Company, to act as
custodian on behalf of the Trustee of the following documents or instruments,
which are hereby constructively delivered to the Trustee with respect to each
Receivable (collectively, a "RECEIVABLE FILE"):
(i) the original of the Receivable;
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(ii) any documents evidencing the existence of any
Insurance Policies;
(iii) copies of the original credit application,
fully executed by the Obligor;
(iv) either (x) the original certificate of title,
or such other documents as the Seller shall keep on file, in accordance
with its customary procedures, evidencing the security interest of the
Seller in the Financed Vehicle or the efforts (including the proof of
application for notice of lien or other evidence of such security interest)
made by the Seller to perfect such security interest; or (y) with respect
to jurisdictions in which the certificate of title or other evidence of
ownership is not issued to the holder of a lien, evidence of the Seller's
security interest in the Financed Vehicle (or the efforts made by the
Seller to perfect such security interest (including the proof of
application for notice of lien or other evidence of such security
interest)), in each case issued by the appropriate governmental agency of
the State in which such Financed Vehicle is registered;
(v) electronic entries and originals or true
copies of all documents, instruments or writings relating to extensions,
amendments or waivers of the Receivable;
(vi) in the case of a Dealer Loan, the Dealer
Assignment; and
(vii) any and all other documents or electronic
records that the Seller or the Servicer, as the case may be, shall keep on
file, in accordance with its customary procedures, relating to the
Receivable, the Obligor or the Financed Vehicle.
Section 2.6 DUTIES OF THE SERVICER AS CUSTODIAN. (a) SAFEKEEPING.
The Servicer, in its capacity as custodian, shall hold, or cause an Affiliate to
hold, the Receivable Files on behalf of the Trustee for the benefit of all
present and future Certificateholders, and maintain such accurate and complete
accounts, records, and computer systems pertaining to each Receivable as shall
enable the Servicer and the Trustee to comply with the terms and provisions of
this Agreement applicable to it. In performing its duties as custodian
hereunder, the Servicer shall act with reasonable care, exercising the degree of
skill and care that the Servicer exercises with respect to similar motor vehicle
retail installment sale contracts owned and/or serviced by it and that is
consistent with industry standards. The Servicer shall implement written
policies and procedures, signed by a Servicing Officer, with respect to the
handling and custody of the Receivable Files, so that the integrity and physical
possession of the Receivable Files shall be maintained, and, in general, shall
attend to all details in connection with maintaining custody of the Receivable
Files as agent of the Trustee, for the benefit of the Trust and the
Certificateholders. The Servicer shall also maintain a current inventory of the
Receivables and conduct, or cause to be conducted, periodic audits (to the
extent required by Section 3.11) of the Receivable Files held by it under this
Agreement and the related accounts, records, and computer systems, and shall
otherwise maintain the Receivable Files in such a manner as shall enable the
Trustee to verify, if the Trustee so elects, the accuracy of the record keeping
of the Servicer. The Servicer shall promptly report to the Trustee any failure
on its
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part to hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided, and promptly take appropriate action to
remedy any such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Receivable File at the location specified in Schedule B to this
Agreement, or at such other office of the Servicer or an Affiliate within the
State of Utah or Idaho (or, in the case of any successor servicer, within the
State in which its principal place of business is located) as shall be specified
to the Trustee by 30 days' prior written notice. The Servicer shall make
available to the Trustee or its Authorized Officers (or, when requested in
writing by the Trustee, to its attorneys or auditors) and to Certificateholders
(for legitimate business purposes relating to the Trust) the Receivable Files
and the related accounts, records, and computer systems maintained by the
Servicer at such times during the normal business hours of the Servicer as the
Trustee shall reasonably instruct.
(c) RELEASE OF DOCUMENTS. Upon written instructions from the
Trustee, the Servicer shall release any document in the Receivable Files to the
Trustee, the Trustee's agent, or the Trustee's designee, as the case may be, at
such place or places as the Trustee may designate, as soon thereafter as is
practicable. Any document so released shall be handled by the Trustee with due
care and returned to the Servicer for safekeeping as soon as the Trustee or its
agent or designee, as the case may be, shall have no further need therefor.
(d) TITLE TO RECEIVABLES. The Servicer agrees that, in respect of
any Receivable held by it as custodian hereunder, the Servicer will not at any
time have or in any way attempt to assert any interest in such Receivable or the
related Receivable File, other than solely for the purpose of collecting or
enforcing the Receivable for the benefit of the Trust and that the entire
equitable interest in such Receivable and the related Receivable File shall at
all times be vested in the Trust.
Section 2.7 INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Trustee. A certified copy of excerpts of bylaws or certain resolutions of the
Board of Directors of the Trustee shall constitute conclusive evidence of the
authority of any such Authorized Officer to act and shall be considered in full
force and effect until receipt by the Servicer of written notice to the contrary
given by the Trustee.
Section 2.8 CUSTODIAN'S INDEMNIFICATION. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Trustee, its
officers, directors, employees and agents and the Certificateholders from and
against any and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses (including legal fees if any) of any kind whatsoever
that may be imposed on, incurred, or asserted against the Trustee or the
Certificateholders as the result of any act or omission relating to the
maintenance and custody of the Receivable Files; PROVIDED, HOWEVER, that the
Servicer shall not be liable hereunder to the extent, but only to the extent,
that such liabilities, obligations, losses, compensatory damages, payments,
costs or expenses result from the willful misfeasance, bad faith, or negligence
of the Trustee. The obligations of the Servicer, in its capacity as custodian
under this Section 2.8, shall survive the resignation or removal of the Servicer
as custodian under Section 2.9 hereof.
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Section 2.9 EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 2.9.
If the Servicer resigns as a Servicer under Section 8.5, or if all of the rights
and obligations of the Servicer shall have been terminated under Section 9.1,
the appointment of the Servicer as custodian hereunder may be terminated by the
Trustee or by the holders of Certificates evidencing not less than a majority of
the aggregate outstanding principal balance of the Class A Certificates and the
Class B Certificates taken together as a single class, in the same manner as the
Trustee or such holders may terminate the rights and obligations of the Servicer
under Section 9.1. The Trustee may terminate the Servicer's appointment as a
custodian hereunder at any time with cause, or with 30 days' prior notice
without cause, upon written notification to the Servicer. As soon as
practicable after any termination of such appointment the Servicer shall
deliver, or cause to be delivered, the Receivable Files to the Trustee, the
Trustee's agent or the Trustee's designee at such place or places as the Trustee
may reasonably designate. Notwithstanding any termination of the Servicer as
custodian hereunder (other than in connection with a termination resulting from
the termination of the Servicer, as such, pursuant to Section 9.1), the Trustee
agrees that, from and after the date of such termination, and for so long as the
Servicer is acting as such pursuant to this Agreement, the Trustee shall
provide, or cause the successor custodian to provide, access to the Receivable
Files to the Servicer, at the times as the Servicer shall request, for the
purpose of carrying out its duties and responsibilities with respect to the
servicing of the Receivables hereunder.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
Section 3.1 DUTIES OF THE SERVICER. (a) The Servicer, acting alone
and/or through subservicers as provided in this Section 3.1, shall administer
the Receivables serviced by it with reasonable care. The Servicer's duties
shall include, but not be limited to, the collection and posting of all
payments, responding to inquiries by Obligors on the Receivables, or by federal,
state, or local governmental authorities, investigating delinquencies, reporting
tax information to Obligors, furnishing monthly and annual statements to the
Trustee with respect to distributions, monitoring the status of the Insurance
Policies with respect to Financed Vehicles and providing collection and
repossession services in the event of Obligor default. The Servicer shall also
administer and enforce all rights and responsibilities of the holder of the
Receivables provided for in the Dealer Agreements, the Dealer Assignments and
the Insurance Policies, to the extent that such Dealer Agreements, Dealer
Assignments and Insurance Policies relate to the Receivables, the Financed
Vehicles or the Obligors. In performing its duties as Servicer hereunder, the
Servicer will exercise that degree of skill and care that the Servicer exercises
with respect to similar motor vehicle retail installment sale contracts or motor
vehicle retail installment loans owned and/or serviced by the Servicer and that
is consistent with prudent industry standards. Without limiting the generality
of the foregoing, the Servicer is hereby authorized and empowered by the Trustee
to execute and deliver, on behalf of itself, the Trust, the Trustee, and the
Certificateholders, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Receivables or to the Financed Vehicles, all in accordance
with this Agreement;
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PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive the
right to collect the unpaid balance (including accrued interest) of any
Receivable from the Obligor, except in connection with a DE MINIMIS deficiency
which the Servicer would not attempt to collect in accordance with its customary
procedures. If the Servicer shall commence a legal proceeding to enforce a
Receivable, the Trustee shall thereupon be deemed to have automatically assigned
such Receivable to the Servicer, which assignment shall be solely for purposes
of collection. The Trustee shall furnish the Servicer with any powers of
attorney and other documents or instruments necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder.
From time to time during the term of this Agreement, the Servicer may
enter into agreements with (i) one or more Affiliates for the servicing and
administration of certain of the Receivables; PROVIDED, HOWEVER, that any such
subservicer shall be and shall remain, for so long as it is acting as
subservicer, an Eligible Servicer, and any fees paid to such subservicer shall
be paid by the Servicer and not out of the proceeds of the Trust, and any such
subservicer shall agree to service the Receivables in a manner consistent with
the terms of this Agreement or (ii) subcontractors who are in the business of
performing specific duties delegated to it.
(b) References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken by the
Servicer in servicing the Receivables and other actions taken, to be taken,
permitted to be taken, or restrictions on actions to be taken with respect to
the Trust Property shall include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken by a subservicer or
subcontractor on behalf of the Servicer and references herein to payments or
Recoveries received by the Servicer shall include payments or Recoveries
received by a subservicer or subcontractor, irrespective of whether such
payments or Recoveries are actually deposited in the Certificate Account by such
subservicer or subcontractor. Any subservicing agreement will contain terms and
provisions substantially identical to the terms and provisions of this Agreement
and such other terms and provisions as are not inconsistent with this Agreement
and as the Servicer and the subservicer have agreed.
(c) The Servicer shall be entitled to terminate any subservicing
or subcontracting agreement in accordance with the terms and conditions of such
subservicing or subcontracting agreement and without any limitation by virtue of
this Agreement; PROVIDED, HOWEVER, that, in the event of termination of any
subservicing or subcontracting agreement by the Servicer, the Servicer shall
either act directly as servicer of the related Receivable or enter into a
subservicing or subcontracting agreement with a successor subservicer or
subcontractor which will be bound by the terms of the related subservicing or
subcontracting agreement.
(d) As a condition to the appointment of any subservicer other
than an Affiliate of the Seller, the Servicer shall notify the Trustee in
writing and the Rating Agencies before such assignment becomes effective and
such subservicer shall be required to execute and deliver an instrument in which
it agrees that, for so long as it acts as subservicer of the Receivables and the
other Trust Property being serviced by it, the covenants, conditions,
indemnities, duties, obligations and other terms and provisions of this
Agreement applicable to the Servicer hereunder shall be
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applicable to it as subservicer, that it shall be required to perform its
obligations as subservicer for the benefit of the Trust as if it were the
Servicer hereunder (subject, however, to the right of the Servicer to direct the
performance of such obligations in accordance with this Agreement) and that,
notwithstanding any provision of a subservicing agreement to the contrary, such
subservicer shall be directly liable to the Trustee and the Trust
(notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) for the failure by such subservicer to perform its
obligations hereunder or under any subservicing agreement, and that
(notwithstanding any failure by the Servicer to perform its respective duties
and obligations hereunder) the Trustee may enforce the provisions of this
Agreement and any subservicing agreement against the subservicer for the benefit
of the Trust and the Certificateholders, without diminution of such obligations
or liabilities by virtue of any subservicing agreement, by virtue of any
indemnification provided thereunder or by virtue of the fact that the Servicer
is primarily responsible hereunder for the performance of such duties and
obligations, as if a subservicer alone were servicing and administering, under
this Agreement, the Receivables and the other Trust Property being serviced by
it under the subservicing agreement.
(e) Notwithstanding any subservicing or subcontracting agreement,
any of the provisions of this Agreement relating to agreements or arrangements
between the Servicer or a subservicer or subcontractor or reference to actions
taken through such Persons or otherwise, the Servicer shall remain obligated and
liable to the Trust, the Trustee and the Certificateholders for the servicing
and administering of the Receivables and the other Trust Property serviced by it
in accordance with the provisions of this Agreement (including for the deposit
of payments and Recoveries received by a subservicer or subcontractor,
irrespective of whether such payments or Recoveries are actually remitted to the
Servicer or deposited in the Certificate Account by such subservicer or
subcontractor; PROVIDED that if such amounts are so deposited, the Servicer
shall have no further obligation to do so) without diminution of such obligation
or liability by virtue of such subservicing or subcontracting agreements or
arrangements or by virtue of indemnification from a subservicer or
subcontractor, to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Receivables and the
other Trust Property. The Servicer shall be entitled to enter into any
agreement with a subservicer or subcontractor for indemnification of the
Servicer, and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
(f) In the event the Servicer shall for any reason no longer be
acting as such (including by reason of the occurrence of an Event of Servicing
Termination), the successor servicer may, in its discretion, thereupon assume
all of the rights and obligations of the outgoing Servicer under a subservicing
agreement. In such event, the successor servicer shall be deemed to have
assumed all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to such subservicing agreement to the same extent
as if such subservicing agreement had been assigned to the successor servicer,
except that the outgoing Servicer shall not thereby be relieved of any liability
or obligation on the part of the outgoing Servicer to the subservicer under such
subservicing agreement. The outgoing Servicer shall, upon request of the
Trustee, but at the expense of the outgoing Servicer, deliver to the successor
servicer all documents and records relating to each such subservicing agreement
and the Receivables and the other Trust Property then being serviced thereunder
and an accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the subservicing
agreement to the successor
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servicer. In the event that the successor servicer elects not to assume a
subservicing agreement, the outgoing Servicer, at its expense, shall cause the
subservicer to deliver to the successor servicer all documents and records
relating to the Receivables and the other Trust Property being serviced
thereunder and all amounts held (or thereafter received) by such subservicer
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of servicing of the
Receivables and the other Trust Property being serviced by such subservicer to
the successor servicer. The relationship of the Servicer (and of any successor
to the Servicer as servicers under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of independent contractors and
not that of joint venturers, partners or agents.
Section 3.2 COLLECTION OF RECEIVABLE PAYMENTS; CREDIT DEFERRALS;
OPTIONAL PAYMENT DEFERRALS. (a) The Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and otherwise act with
respect to the Receivables, the Dealer Agreements, the Dealer Assignments, the
Insurance Policies and the other Trust Property in such manner as will, in the
reasonable judgment of the Servicer, maximize the amount to be received by the
Trust with respect thereto, in accordance with the standard of care required by
Section 3.1. Other than as explicitly permitted in Section 3.2(b) or Section
3.2(c) below, the Servicer will not increase or decrease the number or amount of
any Scheduled Payment, or the Amount Financed under a Receivable or the Contract
Rate of a Receivable, or extend, rewrite or otherwise modify the payment terms
of a Receivable, release collateral securing a Receivable, or otherwise modify
or waive any material term of a Receivable.
(b) Notwithstanding the foregoing, the Servicer may grant to an
Obligor one or more payment deferrals (each, a "CREDIT DEFERRAL") if (i) the
Servicer determines that, absent such deferral, a payment default by the Obligor
is reasonably foreseeable; (ii) the Servicer would grant such Credit Deferral if
the Receivable were serviced by it for its own account and in accordance with
its customary standards; (iii) the cumulative extensions with respect to any
Receivable shall not cause the term of such Receivable to extend beyond the last
day of the Collection Period immediately preceding the Final Scheduled
Distribution Date; (iv) such extensions in the aggregate do not exceed two
months for each twelve months of the original term of the Receivable; and (v)
interest continues to accrue on the outstanding Principal Balance of the
Receivable during the term of such Credit Deferral. The Servicer may charge a
fee in connection with the grant of Credit Deferrals in accordance with its
customary practices and procedures, which fee shall be added to the Principal
Balance of the related Receivable. In the event that the Servicer fails to
comply with the provisions of the first sentence of this Section 3.2(b), the
Servicer shall be required to purchase the Receivable or Receivables affected
thereby, for the Purchase Amount, in the manner specified in Section 3.7 as of
the close of the Collection Period in which such failure occurs.
(c) On or after the Closing Date, the Servicer shall notify each
Obligor meeting the requirements set forth below, in writing, at least three
weeks prior to the first month with respect to which such Obligor would be
entitled to an optional extension pursuant to this Section 3.2(c), that such
qualifying Obligor, at such Obligor's option during the remaining term of the
Receivable, shall be entitled to a non-credit related extension of any regularly
scheduled payment due under a Receivable (each, an "OPTIONAL PAYMENT DEFERRAL")
if such qualifying Obligor satisfies the following conditions:
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(i) at the time of such extension, such Receivable
shall not have been the subject of two such Optional Payment Deferrals in
the related fiscal year of the Trust;
(ii) such Receivable shall (x) not have been the
subject of any Credit Deferral within 90 days of the related Optional
Payment Deferral, or (y) not have been the subject of more than two Credit
Deferrals since its date of origination;
(iii) at the time of such Optional Payment Deferral,
the Receivable shall not have been more than 30 days past due twice or
more;
(iv) at the time of such Optional Payment Deferral,
the Receivable shall not be more than 15 days or more delinquent;
(v) at the time of such Optional Payment Deferral,
the remaining term of the Receivable at such time shall be greater than
20%, but not more than 95%, of the original specified term of such
Receivable; and
(vi) in the reasonable judgment of the Servicer,
the Receivable is not likely to become a Defaulted Receivable following
such Optional Payment Deferral.
The Servicer may charge a fee in connection with the grant of Optional
Payment Deferrals in accordance with its customary practices and procedures,
which fee shall be added to the Principal Balance of the related Receivable.
If, as an inadvertent result of any extension granted pursuant to this Section
3.2(c), such extension breached any of the terms of the preceding criteria (i)
through (vi) or caused the term of such Receivable to extend beyond the last day
of the Collection Period immediately preceding the Final Scheduled Distribution
Date, then the Servicer shall be obligated to purchase such Receivable pursuant
to Section 3.7. For the purpose of such purchases pursuant to Section 3.7,
notice shall be deemed to have been received by the Servicer at such time as
shall make such purchase mandatory as of the Record Date immediately following
the discovery of such breach.
Section 3.3 REALIZATION UPON RECEIVABLES. On behalf of the Trust,
the Servicer shall charge off a Receivable as a Defaulted Receivable in
accordance with its customary servicing procedures and shall use its best
efforts to repossess and liquidate the Financed Vehicle securing any Defaulted
Receivable as soon as feasible after default, in accordance with the standard of
care required by Section 3.1. In taking such action, the Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of motor vehicle retail installment sale contracts,
and as are otherwise consistent with the standard of care required under Section
3.1, which shall include the exercise of any rights of recourse to Dealers under
the Dealer Agreements and Dealer Assignments (or rights to compel repurchase
against third Persons) and selling the Financed Vehicle at public or private
sale. The Servicer shall be entitled to recover all reasonable expenses
incurred by it in the course of repossessing and liquidating a Financed Vehicle
into cash proceeds, but only out of the cash proceeds of such Financed Vehicle,
any deficiency obtained from the Obligor or any amounts received from the
related Dealer. The
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foregoing shall be subject to the provision that, in any case in which a
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
will increase the Liquidation Proceeds or Recoveries of the related Receivable
by an amount equal to or greater than the amount of such expenses (which, in any
event, shall not be unreasonable).
If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed
to be an automatic assignment from the Trustee to the Servicer of the rights of
recourse under such Dealer Agreement and Dealer Assignment. If, however, in any
enforcement suit or legal proceeding, it is held that the Servicer may not
enforce a Dealer Agreement or Dealer Assignment on the grounds that it is not a
real party in interest or a Person entitled to enforce the Dealer Agreement or
Dealer Assignment, the Trustee, at the Servicer's expense, or the Seller, at the
Seller's expense, shall take such steps as the Servicer deems necessary to
enforce the Dealer Agreement or Dealer Assignment, including bringing suit in
its name or the names of the Certificateholders.
Section 3.4 PHYSICAL DAMAGE INSURANCE. (a) The Servicer, in
accordance with the standard of care required by Section 3.1, shall require that
each Financed Vehicle be insured under an Insurance Policy naming the Seller as
loss payee. In the event that an Insurance Policy shall lapse or shall be
otherwise terminated and the Principal Balance of the Receivable related thereto
is in excess of $2,000, the Servicer, at its expense (and not at the expense of
the Trust), shall procure a substitute policy of insurance, issued by an insurer
having a claims-paying ability the same as, or better than, that of the insurer
under the terminated Insurance Policy and naming the Servicer or the Seller as
loss payee. Any substitute Insurance Policy procured hereunder shall provide
coverage against similar risks, shall be subject to the same, or a lower,
deductible and shall contain loss payable clauses and other provisions no less
favorable to the named insured than those contained in the terminated Insurance
Policy. The cost of such Insurance Policy may, to the extent consistent with
applicable law and the terms of the applicable Receivable, be added to the
amount owing by an Obligor, but shall be treated as a separate receivable not
owned by the Trust for all purposes hereunder and, in furtherance of the
foregoing, shall not be included in the definition of Principal Balance or Pool
Balance and collections with respect thereto shall not be part of Available
Interest or Available Principal. In the event that any payment by an Obligor is
insufficient to pay the payment currently due on the Receivable and the amount
due on the receivable arising from the cost of such Insurance Policy, the
payment shall be divided PRO RATA based on the amount currently due on each.
(b) The Servicer may sue to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent for the Trust. If the
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Trust under such Insurance Policy to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce an Insurance Policy on the grounds that
it is not a real party in interest or a holder entitled to enforce the Insurance
Policy, the Trustee, on behalf of the Trust, at the Servicer's expense, or the
Seller, at Servicer's expense, shall take such steps as the Servicer deems
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necessary to enforce such Insurance Policy, including bringing suit in its name
or the names of the Certificateholders.
Section 3.5 MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer, in accordance with the standard of care required under Section
3.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle for
the benefit of the Trust. The Trustee, on behalf of the Trust, hereby
authorizes the Servicer, and the Servicer hereby agrees, to take such steps as
are necessary to re-perfect such security interest on behalf of the Trust in the
event the Servicer receives notice of the relocation of a Financed Vehicle. If
there has been an Event of Servicing Termination (or the occurrence of an event
specified in clause (iii) or (iv) of Section 9.1(a) with respect to the Seller),
upon the request of the Trustee, the Servicer, at its expense, shall promptly
and duly execute and deliver such documents and instruments, and take such other
actions as may be necessary, as evidenced by an Opinion of Counsel delivered to
the Trustee, to perfect the Trust's interest in the Trust Property against all
other Persons, including the delivery of the Receivables and the Receivable
Files to the Trustee, its agent, or its designee, the endorsement and delivery
of the Insurance Policies or the notification of the insurers thereunder, the
execution of transfer instruments, and the endorsement to the Trustee and the
delivery of the certificates of title to the Financed Vehicles to the
appropriate department or departments of motor vehicles (or other appropriate
governmental agency).
Section 3.6 COVENANTS OF THE SERVICER. The Servicer makes the
following covenants upon which the Trustee relies in accepting the Trust
Property in trust and in executing (on behalf of the Trust) and authenticating
the Certificates:
(i) SECURITY INTEREST TO REMAIN IN FORCE. The Financed
Vehicle securing each Receivable will not be released from the security
interest granted by the Receivable in whole or in part, except as
contemplated herein.
(ii) NO IMPAIRMENT. The Servicer will not (nor will it
permit any subservicer to) impair in any material respect the rights of the
Certificateholders in the Receivables, the Dealer Agreements, the Dealer
Assignments or the Insurance Policies or, subject to clause (iii) below,
otherwise amend or alter the terms thereof if, as a result of such
amendment or alteration, the interests of the Trust and the
Certificateholders hereunder would be materially adversely affected.
(iii) AMENDMENTS. The Servicer will not increase or decrease
the number or amount of Scheduled Payments or the Amount Financed under a
Receivable, or extend, rewrite or otherwise waive, amend, or modify any
material term of a Receivable, except in accordance with Section 3.2.
Section 3.7 PURCHASES BY THE SERVICER. The Seller, the Servicer or
the Trustee, as the case may be, shall inform the other parties promptly, in
writing, upon the discovery (which, in the case of the Trustee, shall occur only
upon the actual knowledge of an Authorized Officer of the Trustee) of any breach
by the Servicer of its covenants under Section 3.6. Unless the breach shall have
been cured by the last day of the Collection Period which includes the 60th day
after the date
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on which the Servicer becomes aware of, or receives written notice of, such
breach, the Servicer shall purchase the Receivable or Receivables from the
Trust, without recourse, representation or warranty, other than that the
Trustee, on behalf of the Trust, has not imposed any liens on the Receivable or
Receivables to be repurchased materially and adversely affected thereby on the
related Deposit Date; PROVIDED, HOWEVER, that in the case of a breach of the
covenant contained in Section 3.6(iii), the Servicer shall be obligated to
purchase the affected Receivable or Receivables on the Deposit Date related to
the Collection Period during which the Servicer becomes aware of, or receives
written notice of, such breach (which in all cases shall be deemed to have a
material adverse effect on the Certificateholders). If the Servicer grants an
Optional Payment Deferral pursuant to Section 3.2(c) and such deferral causes
the term of the applicable Receivable to extend beyond the last day of the
Collection Period immediately preceding the Final Scheduled Distribution Date,
the Servicer shall be obligated to purchase the applicable Receivable on the
Deposit Date related to the Collection Period during which the Servicer grants
such Optional Payment Deferral. Such purchase shall occur as of the last day of
the related Collection Period. In consideration of the purchase of a Receivable
hereunder, the Servicer shall remit the Purchase Amount of such Receivable in
the manner specified in Section 4.3. Except as provided in Section 8.2, the
sole remedy of the Trust, the Trustee, or the Certificateholders against the
Servicer with respect to a breach pursuant to Section 3.6 shall be to require
the Servicer to purchase Receivables pursuant to this Section 3.7.
Section 3.8 SERVICING COMPENSATION. On each Distribution Date, the
Servicer shall be paid the Basic Servicing Fee for such Distribution Date and
any unpaid Basic Servicing Fees related to it from prior Distribution Dates to
the extent of funds available therefor in accordance with the provisions of
Section 4.5, but solely from Interest Collections. If it is acceptable to each
Rating Agency without a reduction in the rating of the Certificates, the Basic
Servicing Fee in respect of a Collection Period (together with any portion of a
Basic Servicing Fee that remains unpaid from prior Distribution Dates) at the
option of the Servicer may be paid at or as soon as possible after the beginning
of such Collection Period out of the first collections of interest received on
the Receivables serviced by the Servicer for such Collection Period. In
addition, the Servicer shall retain any late fees, prepayment charges (other
than Deferral Fees) or other fees and charges collected during the Collection
Period and the Servicer shall be paid any interest earned during the Collection
Period on deposits in the Accounts of Collections on the Receivables
(collectively, the "SUPPLEMENTAL SERVICING FEE"). The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder (including fees and expenses of the Trustee (and any custodian
appointed by the Trustee) and independent accountants, any subservicer, taxes
imposed on the Servicer or any subservicer, and expenses incurred in connection
with distributions and reports to Certificateholders) except expenses incurred
in connection with realizing upon Receivables under Section 3.3. No transfer,
sale, pledge or other disposition of the Servicer's right to receive all or any
portion of the Basic Servicing Fee shall be made, and any such attempted
transfer, sale, pledge or other disposition shall be void, unless such transfer
is made to one or more successor servicers in connection with the assumption by
any such successor servicer of the duties hereunder pursuant to Section 9.2 and
all (and not a portion) of the Basic Servicing Fee is transferred to any such
successor servicer.
Section 3.9 SERVICER'S CERTIFICATE. On or before the Determination
Date immediately preceding each Distribution Date, the Servicer shall deliver to
the Trustee and
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Collateral Agent a report of a Servicing Officer substantially in the form of
EXHIBIT C hereto, as certified by such officer (each, a "SERVICER'S
CERTIFICATE") containing all information necessary to make the distributions
pursuant to Section 4.5, and all information necessary for the Trustee to send
statements to Certificateholders pursuant to Section 4.7. The Servicer also
shall separately identify (by account number of the Receivable as it appears in
the related Schedule of Receivables) in a written notice to the Trustee the
Receivables to be repurchased by the Seller or to be purchased by the Servicer,
as the case may be, on the related Deposit Date, and each Receivable which
became a Defaulted Receivable during the related Collection Period.
Section 3.10 ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Servicer
shall deliver to the Trustee, on or before March 15 of each year, commencing
March 15, ____, an Officer's Certificate, stating that (i) a review of the
activities of the Servicer during the preceding calendar year (or shorter
period, in the case of the first such Officer's Certificate) and of its
performance of its obligations under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year (or shorter period, in the case of the first such
certificate), or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Trustee, promptly upon
having knowledge thereof, but in no event later than five Business Days
thereafter, written notice in an Officer's Certificate of any event which
constitutes or, with the giving of notice or lapse of time, or both, would
become, an Event of Servicing Termination under Section 9.1.
Section 3.11 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS. The
Servicer shall cause a firm of independent certified public accountants (who may
also render audit and other services to the Servicer and the Seller) to deliver
to the Trustee on or before March 15 of each year, commencing March 15, 1998, a
report of examination addressed to the Board of Directors of the Servicer and to
the Trustee to the effect that such firm has examined the automobile and
light-duty truck receivable servicing functions of the Servicer over the
previous calendar year (or shorter period, in the case of the first such report)
and that such examination (i) included tests relating to automobile and
light-duty truck loans serviced for others and such other auditing procedures as
such firm considered necessary under the circumstances and (ii) except as
described in such report, disclosed no exceptions or errors in the records
relating to automobile and light-duty truck loans serviced for others that in
such firm's opinion, requires such firm to report. In the event such firm
requires the Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee in writing to so agree; it being understood
and agreed that the Trustee will deliver such letter of agreement in conclusive
reliance upon the written direction of the Servicer, and the Trustee makes no
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
Section 3.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide the Trustee and the
Certificateholders with access to the Receivable Files (in the case of the
Certificateholders, where the Certificateholder shall be required by applicable
statutes or regulations to have access to such documentation). Such access
shall be
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afforded without charge, but only upon reasonable request and during normal
business hours at the office of the Servicer. Nothing in this Section 3.12
shall affect the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
the Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section. Any Certificateholder, by its
acceptance of a Certificate, shall be deemed to have agreed to keep any
information obtained by it pursuant to this Section confidential, except as may
be required by applicable law.
Section 3.13 REPORTS TO THE COMMISSION. The Servicer shall, on
behalf of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
Section 3.14 REPORTS TO THE RATING AGENCIES. The Servicer shall
deliver to each Rating Agency, at such address as each Rating Agency may
request, a copy of all reports or notices furnished or delivered pursuant to
this Article and a copy of any amendments, supplements or modifications to this
Agreement and, if any subservicer is not an Affiliate of the Seller, any
subservicing agreement and any other information reasonably requested by such
Rating Agency to monitor this transaction.
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
Section 4.1 ESTABLISHMENT OF ACCOUNTS. (a) (i) The Trustee, on
behalf of the Trust and for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee one or more Eligible
Deposit Accounts (the "CERTIFICATE ACCOUNT"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. The Trustee, on behalf of the Trust and for the
benefit of the Class A Certificateholders, shall establish and maintain in
the name of the Trustee an Eligible Deposit Account (the "CLASS A
DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Class A
Certificateholders. The Trustee, on behalf of the Trust and for the
benefit of the Class B Certificateholders, shall establish and maintain in
the name of the Trustee an Eligible Deposit Account (the "CLASS B
DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Class B
Certificateholders.
(ii) Funds on deposit in the Accounts shall be invested by
the Trustee in Eligible Investments selected by the Servicer (as provided
in a writing signed by it); PROVIDED, HOWEVER, it is understood and agreed
that the Trustee shall not be liable for any loss arising from such
investment in Eligible Investments or incurred as a result of the
liquidation of any investment prior to its stated maturity or the failure
of the Servicer to provide timely written investment direction. In no
event shall the Trustee be liable for the
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selection of Eligible Investments. The Trustee shall have no obligation to
invest or reinvest any amounts held hereunder in the absence of written
investment direction. All such Eligible Investments shall be held by the
Trustee for the benefit of the beneficiaries of the applicable Account;
PROVIDED that on each Distribution Date, all interest and other investment
income (net of losses and investment expenses) on funds on deposit therein
shall be withdrawn from the Accounts at the direction of the Servicer and
shall be paid to the Seller. Funds on deposit in the Accounts shall be
invested in Eligible Investments that will mature so that such funds will
be available at the close of business (New York time) on the Transfer Date
preceding the following Distribution Date. Funds deposited in an Account
on a Transfer Date which immediately precedes a Distribution Date upon the
maturity of any Eligible Investments are not required to be (but may be)
invested overnight.
(iii) The Accounts shall initially be established at Bankers
Trust Company. The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Accounts and in all proceeds
thereof (including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Trust Property. The Accounts
shall be under the sole dominion and control of the Trustee. If, at any
time, any of the Accounts ceases to be an Eligible Deposit Account, the
Trustee (or the Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency shall consent) establish a new Account as an Eligible Deposit
Account and shall transfer any cash and/or any investments that are in the
existing Account which is no longer an Eligible Deposit Account to such new
Account.
(iv) With respect to the Account Property in respect of any
Account:
(A) any Account Property that is held in deposit
accounts shall be held solely in an Eligible Deposit Account; and each
such Eligible Deposit Account shall be subject to the exclusive
custody and control of the Trustee, and the Trustee shall have sole
signature authority with respect thereto;
(B) prior to the Revised Article 8 Effective Date,
any Account Property that constitutes Physical Property shall be
delivered to the Trustee in accordance with paragraph (a) of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee or a financial intermediary (as
such term is defined in Section 8-313(4) of the Relevant UCC) acting
solely for the Trustee;
(C) prior to the Revised Article 8 Effective Date,
any Account Property that is an "uncertificated security" under
Article 8 of the Relevant UCC and that is not a Federal Book-Entry
Security shall be delivered to the Trustee in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominee's) ownership of such
security;
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(D) prior to the TRADES Effective Date, any
Account Property that is a Federal Book-Entry Security shall be
delivered in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Collateral Agent, pending
maturity or disposition, through continued book-entry registration of
such Account Property as described in such paragraph;
(E) on and after the Revised Article 8 Effective
Date (with respect to any Account Property that constitutes a Security
Entitlement or an Uncertificated Security) and on and after the TRADES
Effective Date (with respect to any Account Property that constitutes
a Federal Book-Entry Security), the Collateral Agent shall maintain
Control over each Account in which any such Account Property is held;
and
(F) on and after the Revised Article 8 Effective
Date (with respect to any Account Property that constitutes either a
Security Certificate or any other Account Property that constitutes
Physical Property and that is not a Security Entitlement), such
Security Certificate or other Account Property shall be transferred to
the Collateral Agent or its nominee or custodian by physical delivery
to the Collateral Agent or its nominee or custodian endorsed to, or
registered in the name of, the Collateral Agent or its nominee or
custodian or endorsed in blank.
(v) The Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee to make withdrawals and payments from the
Accounts for the purpose of permitting the Servicer to carry out its duties
hereunder or permitting the Trustee to carry out its duties.
(b) (i) The Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the name of Bankers
Trust Company, as Collateral Agent, an Eligible Deposit Account (the
"RESERVE ACCOUNT"), which account shall bear a designation clearly
indicating that such account has been pledged to the Collateral Agent for
the benefit of the Certificateholders. The Reserve Account and any amounts
therein shall not be property of the Trust, but will be pledged to and held
by the Collateral Agent, as secured party for the benefit of the
Certificateholders.
(ii) Funds on deposit in the Reserve Account shall be
invested by the Collateral Agent in Eligible Investments selected by the
Servicer (as provided in writing signed by it); PROVIDED, HOWEVER, it is
understood and agreed that the Collateral Agent shall not be liable for any
loss arising from such investment in Eligible Investments or incurred as a
result of the liquidation of any investment prior to its stated maturity or
the failure of the Servicer to provide timely, written investment
direction. In no event shall the Collateral Agent be liable for the
selection of Eligible Investments. The Collateral Agent shall have no
obligation to invest or reinvest any amounts held hereunder in the absence
of written investment direction. All such Eligible Investments shall be
held by the Collateral Agent for the benefit of the Certificateholders;
PROVIDED that on each Distribution Date all interest and other investment
income (net of losses and investment expenses) on funds on deposit therein
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shall be withdrawn from the Reserve Account at the direction of the
Servicer and shall be paid to the Seller. Funds on deposit in the Reserve
Account shall be invested in Eligible Investments that will mature so that
such funds will be available at the opening of business on the next
following Transfer Date; PROVIDED, HOWEVER, that to the extent permitted by
the Rating Agencies, funds on deposit in the Reserve Account may be
invested in Eligible Investments that mature later than the next Transfer
Date.
(iii) The Reserve Account shall be under the sole dominion
and control of the Collateral Agent. If, at any time, the Reserve Account
ceases to be an Eligible Deposit Account, the Servicer shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Reserve Account as an
Eligible Deposit Account and shall transfer any cash and/or any investments
that are in the existing Account which is no longer an Eligible Deposit
Account to such new Reserve Account.
(iv) With respect to the Account Property in respect of the
Reserve Account:
(A) any Account Property that is held in deposit
accounts shall be held solely in an Eligible Deposit Account; and each
such Eligible Deposit Account shall be subject to the exclusive
custody and control of the Collateral Agent and the Collateral Agent
shall have sole signature authority with respect thereto;
(B) prior to the Revised Article 8 Effective Date,
any Account Property that constitutes Physical Property shall be
delivered to the Collateral Agent in accordance with paragraph (a) of
the definition of "Delivery" (except that all references therein to
the "Trustee" shall be deemed to be references to the Collateral
Agent) and shall be held, pending maturity or disposition, solely by
the Collateral Agent or a financial intermediary (as such term is
defined in Section 8-313(4) of the Relevant UCC) acting solely for the
benefit of the Certificateholders;
(C) prior to the Revised Article 8 Effective Date,
any Account Property that is an "uncertificated security" under
Article 8 of the Relevant UCC and that is not a Federal Book-Entry
Security shall be delivered to the Collateral Agent in accordance with
paragraph (b) of the definition of "Delivery" (except that all
references therein to the "Trustee" shall be deemed to be references
to the Collateral Agent) and shall be maintained by the Collateral
Agent, pending maturity or disposition, through continued registration
of the Collateral Agent's (or its nominee's) ownership of such
security;
(D) prior to the TRADES Effective Date, any
Account Property that is a Federal Book-Entry Security shall be
delivered in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Trustee, pending maturity or
disposition, through continued book-entry registration of such Account
Property as described in such paragraph;
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(E) on and after the Revised Article 8 Effective
Date (with respect to any Account Property that constitutes a Security
Entitlement or an Uncertificated Security) and on and after the TRADES
Effective Date (with respect to any Account Property that constitutes
a Federal Book-Entry Security), the Trustee shall maintain Control
over each Account in which any such Account Property is held; and
(F) on and after the Revised Article 8 Effective
Date (with respect to any Account Property that constitutes either a
Security Certificate or any other Account Property that constitutes
Physical Property and that is not a Security Entitlement), transfer of
such Security Certificate or other Account Property to the Trustee or
its nominee or custodian by physical delivery to the Trustee or its
nominee or custodian endorsed to, or registered in the name of, the
Trustee or its nominee or custodian or endorsed in blank.
(v) The Servicer shall have the power, revocable by the
Collateral Agent, to instruct the Collateral Agent to make withdrawals and
payments from the Reserve Account for the purpose of permitting the
Servicer to carry out its duties hereunder or permitting the Collateral
Agent to carry out its duties.
(vi) The Seller (and any successor to the Seller in
accordance with Section 7.3) and the Servicer agree to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments
(including, without limitation, any financing statements under the Relevant
UCC or this Agreement) as may be determined to be necessary, in order to
perfect the interests created by this Section 4.1 and otherwise fully to
effectuate the purposes, terms and conditions of this Section 4.1(b). The
Seller (and any successor to the Seller in accordance with Section 7.3) and
the Servicer shall:
(A) promptly execute, deliver and file any
financing statements, amendments, continuation statements,
assignments, certificates and other documents with respect to such
interests and perform all such other acts as may be necessary in order
to perfect or to maintain the perfection of the Collateral Agent's
security interest; and
(B) make the necessary filings of financing
statements or amendments thereto within five days after the occurrence
of any of the following: (1) any change in their respective names or
any trade names; (2) any change in the location of their respective
chief executive offices or principal places of business and (3) any
merger or consolidation or other change in their respective identities
or corporate structures; and shall promptly notify the Collateral
Agent of any such filings.
Section 4.2 COLLECTIONS. (a) Subject to the provisions of
subsections (b) and (c) below, the Servicer shall remit to the Certificate
Account all payments by or on behalf of the Obligors on the Receivables,
including all Liquidation Proceeds and Recoveries received by the
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Servicer during any Collection Period, as soon as practicable, but in no event
after the close of business (New York time) on the second Business Day after
receipt thereof. Subject to the provisions of subsection (c) hereof, on the
Closing Date, the Servicer shall deposit in the Certificate Account all payments
by or on behalf of the Obligors on the Receivables received by the Servicer
after the close of business of the Servicer on the Cutoff Date and on or prior
to the second Business Day immediately preceding the Closing Date.
(b) Notwithstanding the provisions of Section 4.2(a), if (i) the
Servicer shall have the Required Rating or (ii) (a) the Servicer shall have
obtained a letter of credit or surety bond (or similar form of performance
guaranty) in favor of the Trustee, on behalf of the Trust for the benefit of the
Certificateholders, providing that the Trustee may demand payment (up to the
amount then available thereunder) in the event that the Servicer fails to make
any payment or deposit required hereunder (other than with respect to Advances)
and (b) the Trustee shall have received written notice from each of the Rating
Agencies that the then outstanding rating on the Class A Certificates and the
Class B Certificates would not be lowered or withdrawn as a result, the Servicer
may deposit the amounts referred to in subsection (a) above into the Certificate
Account not later than the close of business on the Deposit Date immediately
succeeding the last day of the related Collection Period, for so long as the
Servicer shall have the Required Rating or such letter of credit, surety bond or
similar form of performance guaranty is in full force and effect, as the case
may be; PROVIDED, HOWEVER, that (i) if an Event of Servicing Termination has
occurred and is continuing, (ii) the Servicer has been terminated as such
pursuant to Section 9.1 or (iii) the Servicer ceases to have the Required Rating
(and the Servicer has not obtained a letter of credit (or similar form of
performance guaranty) satisfying the conditions specified above), the Servicer
shall deposit such amounts (including any amounts then being held by the
Servicer) into the Certificate Account as provided in Section 4.2(a).
Notwithstanding the foregoing, the provisions of the proviso to the preceding
sentence shall not be applicable to a successor servicer solely by reason of the
occurrence of an event specified in clauses (i), (ii) and (iii) of such proviso
with respect to the outgoing Servicer. Following the occurrence of an event
specified in clauses (i), (ii) or (iii) in the preceding proviso, on a monthly
basis, all Collections shall be segregated by book-entry or similar form of
identification on the Servicer's books and records and identified as the
property of the Trust. The Servicer shall promptly notify the Trustee in
writing if it shall obtain or lose the Required Rating or the benefit of such
letter of credit, surety bond, or similar form of performance guaranty.
(c) Notwithstanding the provisions of subsections (a) and (b)
hereof, the Servicer may retain, or will be entitled to be reimbursed, from
amounts otherwise payable into, or on deposit in, the Certificate Account with
respect to a Collection Period and the Receivables originated by it any amounts
previously deposited in the Certificate Account but later determined to have
resulted from mistaken deposits or postings or checks returned for insufficient
funds, in each case, with respect to which the Servicer has not been previously
reimbursed hereunder. The amount to be retained or reimbursed hereunder shall
not be included in Collections with respect to the related Distribution Date.
(d) In those cases where a subservicer is servicing a Receivable,
the Servicer shall cause the subservicer to remit to the Certificate Account as
soon as practicable, but in no event later than the close of business (New York
time) on the second Business Day after receipt thereof by the
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subservicer (but subject to the provisions of Section 4.2 (b) and the
limitations contained in Section 4.2(c) of this Agreement) the amounts referred
to in Section 4.2(a) in respect of a Receivable being serviced by the
subservicer.
Section 4.3 ADVANCES. (a) On each Deposit Date, the Servicer may
make a payment with respect to each Receivable serviced by it (other than a
Defaulted Receivable) equal to the excess, if any, of (i) the product of the
Principal Balance of such Receivable as of the first day of the related
Collection Period and one twelfth of its Contract Rate (calculated on the basis
of a 360-day year comprised of twelve 30-day months) over (ii) Interest
Collections actually received by the Servicer as of the last day of such
Collection Period with respect to such Receivable (each such payment, an
"ADVANCE"). With respect to each Receivable, the Advance shall increase
Outstanding Advances. If such calculation results in a negative number, (i)
Outstanding Advances shall be reduced by such amount or (ii) if Outstanding
Advances is equal to zero, such amount shall be paid to the Servicer. The
Servicer may elect not to make any Advance of due and unpaid interest with
respect to a Receivable to the extent that the Servicer, in its sole discretion,
determines that such Advance is not recoverable from subsequent payments on such
Receivable or from funds in the Reserve Account. The Servicer shall not make
any advance with respect to principal of Receivables.
(b) The Servicer shall deposit in the Certificate Account the
aggregate Advances on Receivables serviced by the Servicer pursuant to Section
4.3(a). To the extent that the Servicer does not make an Advance pursuant to
Section 4.3(a) on the date required, the Servicer shall so notify the Collateral
Agent, and the Collateral Agent shall withdraw such amount (or, if determinable,
such portion of such amount as does not represent advances for delinquent
interest) from the Reserve Account and deposit such amount in the Certificate
Account. The Servicer and the Seller shall deposit or cause to be deposited in
the Certificate Account the aggregate Purchase Amount with respect to Purchased
Receivables. All such deposits shall be made in immediately available funds on
the Distribution Date. The Trustee shall deposit in the Certificate Account the
aggregate of any amounts received pursuant to the Yield Supplement Agreement on
the date of receipt thereof.
(c) On each Distribution Date, prior to making any of the
distributions set forth in Section 4.5, the Servicer shall be reimbursed for all
Outstanding Advances with respect to prior Distribution Dates to the extent of
the Interest Collections for such Distribution Date and, to the extent such
Interest Collections are insufficient, to the extent of the funds in the Reserve
Account. If it is acceptable to each Rating Agency without reduction in the
rating of the Certificates, the Outstanding Advances at the option of the
Servicer may be paid at or as soon as possible after the beginning of the
related Collection Period out of the first collections of interest received on
the Receivables for such Collection Period.
Section 4.4 ADDITIONAL DEPOSITS; NET DEPOSITS. The Servicer may
make the remittances to be made by it pursuant to Section 4.2 net of amounts to
be distributed to it pursuant to Section 4.5 (but subject to the priorities set
forth therein), for so long as (i) no Event of Servicing Termination has
occurred and is continuing and (ii) the Servicer has not been terminated as such
pursuant to Section 9.1 hereof; PROVIDED, HOWEVER, that the Servicer shall
account for all of such amounts in the related Servicer's Certificate as if such
amounts were deposited and distributed
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separately; and PROVIDED FURTHER that, if an error is made by the Servicer in
calculating the amount to be deposited or retained by it and a shortfall in the
amount deposited into the Certificate Account results, the Servicer shall make a
payment of the deficiency to the Certificate Account, immediately upon becoming
aware, or receiving notice from the Trustee, of such shortfall.
Section 4.5 DISTRIBUTIONS. (a) On or before each Determination
Date, the Servicer shall calculate all amounts to be deposited in the Class A
Distribution Account and the Class B Distribution Account, which calculations
shall be set forth in the Servicer's Certificate delivered to the Trustee on or
before such Determination Date.
(b) On each Distribution Date, after making the reimbursements to
the Servicer of Outstanding Advances to the extent provided in Section 4.3(c),
the Trustee will make the following deposits and distributions from the
Certificate Account to the extent of the sum of Available Interest and any
Available Reserve Amount remaining after such reimbursements (and, in the case
of shortfalls occurring under clause (ii) below in the Class A Interest
Distribution, the Class B Percentage of Available Principal to the extent of
such shortfalls), in the following priority, all in accordance with the
direction contained in the Servicer's Certificate:
(i) to the Servicer, any unpaid Basic Servicing Fee owing
to the Servicer for the related Collection Period and all unpaid Basic
Servicing Fees from prior Collection Periods, but only from Interest
Collections;
(ii) to the Class A Distribution Account, the Class A
Interest Distribution for such Distribution Date; and
(iii) to the Class B Distribution Account, the Class B
Interest Distribution for such Distribution Date.
On each Distribution Date, the Trustee will make the following deposits and
distributions, to the extent of the portion of Available Principal, Available
Interest and Available Reserve Amount remaining after the application of clauses
(i), (ii) and (iii) above, in the following priority:
(iv) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(v) to the Class B Distribution Account, the Class B
Principal Distribution for such Distribution Date;
(vi) to the Collateral Agent for deposit in the Reserve
Account, any amounts remaining, until the amount on deposit in the Reserve
Account equals the Specified Reserve Account Balance; and
(vii) to the Collateral Agent for distribution to the Seller,
any amounts remaining.
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(c) On each Distribution Date, all amounts on deposit in the Class
A Distribution Account will be distributed to the Class A Certificateholders by
the Trustee, all amounts on deposit in the Class B Distribution Account will be
distributed to the Class B Certificateholders by the Trustee and all amounts on
deposit in the Reserve Account in excess of the Specified Reserve Account
Balance will be distributed to the Seller by the Collateral Agent; provided
however that upon distribution with respect to the Class A Certificates of an
amount, together with all prior distributions with respect to the Class A
Certificates, equal to the Original Class A Certificate Balance plus interest
thereon, the Class A Certificateholders shall have no right to any additional
distribution and the Trustee shall make no distributions with respect to the
Class A Certificates, and upon distribution with respect to the Class B
Certificates of an amount, together with all prior distributions with respect to
the Class B Certificates, equal to the Original Class B Certificate Balance plus
interest thereon, the Class B Certificateholders shall have no right to any
additional distributions and the Trustee shall make no distributions with
respect to the Class B Certificates. Except as provided in Section 11.1,
payments under this subsection (c) shall be made to the Certificateholders by
check mailed by the Trustee to each Certificateholder's respective address of
record (or, in the case of Certificates registered in the name of a Clearing
Agency or its nominee, by wire transfer of immediately available funds). To the
extent that the Trustee is required to wire funds to the Certificateholders from
the Class A Distribution Account or the Class B Distribution Account, as
applicable, it shall request the bank maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable, to make a wire
transfer of the amount to be distributed and the bank maintaining the Class A
Distribution Account or the Class B Distribution Account, as applicable, shall
promptly deliver to the Trustee a confirmation of such wire transfer. To the
extent that the Trustee is required to make payments to Certificateholders by
check hereunder, it shall request the bank maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable, to provide it with a
supply of checks to make such payments. The bank shall, if a request is made by
the Trustee for a wire transfer by 9:00 a.m. (New York time) on any Distribution
Date, wire such funds to the Trustee in accordance with such instructions by
10:00 a.m. (New York time) on such Distribution Date, and it will otherwise act
in compliance with the provisions of this Section and the other provisions of
this Agreement applicable to it as the bank maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable. The Servicer shall
take all necessary action (including requiring an agreement to such effect) to
ensure that any bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, agrees to comply, and complies, with the
provisions of this Section and the other provisions of this Agreement applicable
to it as the bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable.
Section 4.6 RESERVE ACCOUNT. On the Closing Date, the Seller shall
deposit the Reserve Account Initial Deposit into the Reserve Account. The
Seller hereby grants to the Collateral Agent for the benefit of the
Certificateholders a security interest in and to the Reserve Account and any and
all property credited thereto from time to time, including, but not limited to,
Eligible Investments, to secure payment of the Certificates according to their
terms. Amounts held from time to time in the Reserve Account will continue to
be held by the Collateral Agent for the benefit of Class A Certificateholders
and the Class B Certificateholders, but the Reserve Account shall not be an
asset of the Trust and upon any distribution to the Seller of amounts from the
Reserve Account, the Certificateholders will not have any rights in, or claims
to, such amounts. By acceptance of their
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Certificates, Certificateholders shall be deemed to have appointed Bankers Trust
Company as Collateral Agent. Bankers Trust Company hereby accepts such
appointment as Collateral Agent.
Section 4.7 STATEMENTS TO CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Servicer shall provide to the Trustee (with a copy to the
Rating Agencies) for the Trustee to forward on such date to each
Certificateholder of record a statement substantially in the form of EXHIBIT C
setting forth at least the following information as to the Certificates for the
related Collection Period, to the extent applicable:
(i) the amount of the distribution allocable to principal
on the Class A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on
the Class A Certificates and the Class B Certificates;
(iii) the Yield Supplement Amount;
(iv) the amount of the Basic Servicing Fee paid to the
Servicer with respect to the related Collection Period;
(v) the Class A Certificate Balance, the Class A Pool
Factor, the Class B Certificate Balance and the Class B Pool Factor as of
such Distribution Date, after giving effect to payments allocated to
principal reported pursuant to clause (i) above;
(vi) the Pool Balance as of the close of business of the
Servicer on the last day of the related Collection Period;
(vii) the amount of the aggregate Realized Losses, if any,
for such Collection Period;
(viii) the amount of the aggregate Defaulted Receivables, if
any, for such Collection Period;
(ix) the amount otherwise distributable to the Class B
Certificateholders that is distributed to the Class A Certificateholders
for the related Collection Period;
(x) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer during the related
Collection Period;
(xi) the amount of Advances made in respect of such
Collection Period and the amount of unreimbursed Advances on such
Distribution Date;
(xii) the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such Distribution Date;
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(xiii) (x) the excess, if any, of the Class A Certificate
Balance over the Pool Balance and (y) the excess, if any, of the Class B
Certificate Balance over the amount by which the Pool Balance exceeds the
Class A Certificate Balance; and
(xiv) the aggregate outstanding balances of the Receivables
which were delinquent 30-59 days, 60-89 days, 90 or more days,
respectively, as of the close of business on the last day of the related
Collection Period.
Each amount set forth pursuant to clauses (i) through (iv) above shall be
expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of the Certificates.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the Servicer
shall furnish a report to the Trust and the Trustee shall furnish, or cause to
be furnished, to each Person who at any time during such calendar year shall
have been a Certificateholder, a statement based upon such report as to the sum
of the amounts determined in clauses (i) through (iv) above for such calendar
year, or, in the event such Person shall have been a Certificateholder during a
portion of such calendar year, for the applicable portion of such year, and such
other information as is available to the Servicer as the Servicer deems
necessary or desirable to enable the Certificateholders to prepare their federal
income tax returns.
ARTICLE V
YIELD SUPPLEMENT ACCOUNT
Section 5.1 YIELD SUPPLEMENT AGREEMENT. Simultaneously with the
execution of this Agreement, the Seller conveyed the Yield Supplement Agreement
to the Trust as part of the Trust Property and has deposited the Yield
Supplement Initial Deposit into the Yield Supplement Account. The Yield
Supplement Agreement, with respect to each Receivable (other than Purchased
Receivables and Defaulted Receivables), provides for the payment by the Seller
on or prior to each Deposit Date of an amount (if positive) calculated by the
Servicer equal to one-twelfth of the difference between (i) the sum of interest
on the Class A Percentage of such Receivable's Principal Balance as of the first
day of the related Collection Period at a rate equal to the sum of the Class A
Pass-Through Rate and the Basic Servicing Fee Rate and interest on the Class B
Percentage of such Receivable's Principal Balance as of the first day of the
related Collection Period at a rate equal to the sum of the Class B Pass-Through
Rate and the Basic Servicing Fee Rate and (ii) interest on such Receivable's
Principal Balance as of the first day of the related Collection Period at a rate
equal to the Contract Rate (in the aggregate for all Receivables with respect to
any Distribution Date, the "YIELD SUPPLEMENT AMOUNT").
Section 5.2 YIELD SUPPLEMENT ACCOUNT. (a) The Seller shall
establish and maintain in the name of the Collateral Agent an Eligible Deposit
Account to secure the Seller's obligations under the Yield Supplement Agreement
(the "YIELD SUPPLEMENT ACCOUNT"). The Yield Supplement Account and any amounts
therein shall not be property of the Trust, but shall be pledged to the
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Collateral Agent for the benefit of Certificateholders. The Yield Supplement
Account shall initially be maintained at Bankers Trust Company.
(b) In order to provide for the prompt payment by the Seller of
the Yield Supplement Amount, to assure availability of the amounts maintained in
the Yield Supplement Account and as security for the performance by the Seller
of its obligations under the Yield Supplement Agreement the Seller, on behalf of
itself and its successors and assigns, hereby pledges to the Collateral Agent
and its successors and assigns for the benefit of the Certificateholders, all of
its right, title and interest in and to the Yield Supplement Account, and all
proceeds of the foregoing, including, without limitation, all other amounts and
investments held from time to time in the Yield Supplement Account (whether in
the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise) including, without limitation, the Yield
Supplement Initial Deposit, subject, however, to the limitations set forth
below, and solely for the purpose of securing payment of the Yield Supplement
Amount (all of the foregoing, subject to the limitations set forth in this
Section, the "YIELD SUPPLEMENT ACCOUNT PROPERTY"), to have and to hold all the
aforesaid property, rights and privileges unto the Collateral Agent, its
successors and assigns, in trust for the uses and purposes, and subject to the
terms and provisions, set forth in this Section. The Collateral Agent hereby
acknowledges such transfer and accepts the trust hereunder and shall hold and
distribute the Yield Supplement Account Property in accordance with the terms
and provisions of this Section.
(c) Funds on deposit in the Yield Supplement Account shall be
invested by the Collateral Agent in Eligible Investments selected by the Seller
and designated in writing by the Seller to the Collateral Agent; PROVIDED,
HOWEVER, it is understood and agreed that the Collateral Agent shall not be
liable for any loss arising from such investment in Eligible Investments or
incurred as a result of the liquidation of any investment prior to its stated
maturity or the failure of the Servicer to provide timely, written direction.
In no event shall the Collateral Agent be liable for the selection of Eligible
Investments. The Collateral Agent shall have no obligation to invest or
reinvest any amounts held hereunder in the absence of written investment
direction. Funds on deposit in the Yield Supplement Account shall be invested
in Eligible Investments that will mature so that all such funds will be
available at the opening of business on each Deposit Date; PROVIDED, HOWEVER,
that to the extent permitted by the Rating Agencies, funds on deposit in the
Yield Supplement Account may be invested in Eligible Investments that mature
later than the next Deposit Date. Funds deposited in the Yield Supplement
Account on a Deposit Date upon the maturity of any Eligible Investments are not
required to be (but may be) invested overnight. The Seller will treat the
funds, Eligible Investments and other assets in the Yield Supplement Account as
its own for Federal, state and local income tax and franchise tax purposes and
will report on its tax returns all income, gain and loss from the Yield
Supplement Account.
(d) No later than 11:00 a.m. (New York time) on each Deposit Date,
the Seller shall deposit to the Certificate Account an amount equal to the Yield
Supplement Amount for the related Collection Period; PROVIDED that if, on any
Distribution Date, the Seller fails to pay the Yield Supplement Amount, then, in
such event, the Trustee shall direct the Collateral Agent to withdraw from the
Yield Supplement Account an amount equal to such deficiency and deposit such
amount into the Certificate Account.
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(e) The Yield Supplement Account shall be under the sole custody
and control of the Collateral Agent. If, at any time, the Yield Supplement
Account ceases to be an Eligible Deposit Account, the Collateral Agent shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Yield Supplement
Account as an Eligible Deposit Account and shall transfer any cash and/or any
investments that are in the existing Yield Supplement Account which is no longer
an Eligible Deposit Account to such new Yield Supplement Account.
(f) Amounts on deposit in the Yield Supplement Account will be
released to the Seller on each Distribution Date to the extent that the amount
on deposit in the Yield Supplement Account would exceed the Specified Yield
Supplement Balance. Upon a distribution to the Seller of amounts from the Yield
Supplement Account, the Certificateholders will not have any rights in, or
claims to, such amounts. Amounts properly distributed to the Seller from the
Yield Supplement Account or otherwise shall not be available under any
circumstances to the Trust, the Trustee, the Collateral Agent or the
Certificateholders and the Seller shall in no event thereafter be required to
refund any such distributed amounts.
(g) With respect to the Yield Supplement Account Property:
(i) any Yield Supplement Account Property that is held in
deposit accounts shall be held solely in the name of the Collateral Agent
at one or more depository institutions having the Required Rating; each
such deposit account shall be subject to the exclusive custody and control
of the Collateral Agent, and the Collateral Agent shall have sole signature
authority with respect thereto;
(ii) prior to the Revised Article 8 Effective Date, any
Yield Supplement Account Property that constitutes Physical Property shall
be delivered to the Collateral Agent in accordance with paragraph (a) of
the definition of "Delivery" (except that all references therein to the
"Trustee," shall be deemed to be references to the Collateral Agent) and
shall be held, pending maturity or disposition, solely by the Collateral
Agent or a financial intermediary (as such term is defined in the Relevant
UCC) acting solely for the benefit of Certificateholders;
(iii) prior to the Revised Article 8 Effective Date, any
Yield Supplement Account Property that is an "uncertificated security"
under Article 8 of the Relevant UCC and that is not a Federal Book-Entry
Security shall be delivered to the Collateral Agent in accordance with
paragraph (b) of the definition of "Delivery (except that all references
therein to the "Trustee" shall be deemed to be references to the Collateral
Agent) and shall be maintained by the Collateral Agent, pending maturity or
disposition, through continued registration of the Collateral Agent's (or
its nominee's) ownership of such security;
(iv) prior to the TRADES Effective Date, any Yield
Supplement Account Property that is a Federal Book-Entry Security shall be
delivered in accordance with paragraph (c) of the definition of "Delivery"
and shall be maintained by the Collateral Agent,
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pending maturity or disposition, through continued book-entry registration
of such Yield Supplement Account Property as described in such paragraph;
(v) on and after the Revised Article 8 Effective Date (with
respect to any Yield Supplement Account Property that constitutes a
Security Entitlement or an Uncertificated Security) and on and after the
TRADES Effective Date (with respect to any Yield Supplement Account
Property that constitutes a Federal Book-Entry Security), the Collateral
Agent shall maintain Control over each Account in which any such Yield
Supplement Account Property is held; and
(vi) on and after the Revised Article 8 Effective Date (with
respect to any Yield Supplement Account Property that constitutes either a
Security Certificate or any other Yield Supplement Account Property that
constitutes Physical Property and that is not a Security Entitlement),
transfer of such Security Certificate or other Yield Supplement Account
Property to the Collateral Agent or its nominee or custodian by physical
delivery to the Collateral Agent or its nominee or custodian endorsed to,
or registered in the name of, the Collateral Agent or its nominee or
custodian endorsed in blank.
Effective upon Delivery of any Yield Supplement Account Property in the form of
Physical Property, book-entry securities or uncertificated securities, the
Collateral Agent shall be deemed to have represented that it has purchased such
Yield Supplement Account Property for value, in good faith and without notice of
any adverse claim thereto.
(h) The Seller (and any successor to the Seller in accordance with
Section 7.3) and the Servicer agree to take or cause to be taken such further
actions, to execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments (including, without limitation, any
financing statements under the Relevant UCC or this Agreement) as may be
determined to be necessary, in order to perfect the interests created by this
Section 5.2 and otherwise fully to effectuate the purposes, terms and conditions
of this Section 5.2. The Seller (and any successor to the Seller in accordance
with Section 7.3) and the Servicer shall:
(i) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments, certificates
and other documents with respect to such interests and perform all such
other acts as may be necessary in order to perfect or to maintain the
perfection of the Collateral Agent's security interest; and
(ii) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of the
following: (A) any change in their respective names or any trade names, (B)
any change in the location of their respective chief executive offices or
principal places of business and (C) any merger or consolidation or other
change in their respective identities or corporate structures; and shall
promptly notify the Collateral Agent of any such filings.
(i) Investment earnings attributable to the Yield Supplement
Account Property and proceeds therefrom shall be held by the Collateral Agent
for the benefit of the Seller.
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Investment earnings attributable to the Yield Supplement Account Property shall
not be available to pay the Yield Supplement Amount and shall not otherwise be
subject to any claims or rights of the Certificateholders or the Servicer. The
Collateral Agent shall cause all investment earnings attributable to the Yield
Supplement Account to be distributed on each Distribution Date to the Seller.
ARTICLE VI
THE CERTIFICATES
Section 6.1 THE CERTIFICATES. The Trustee shall, upon written order
or request signed in the name of the Seller by one of its officers authorized to
do so and delivered to an Authorized Officer of the Trustee, execute on behalf
of the Trust, authenticate and deliver the Certificates to or upon the order of
the Seller in the aggregate principal amount and denominations as set forth in
such written order or request. The Certificates shall be issuable in
denominations of $1,000 and integral multiples thereof; PROVIDED, HOWEVER, that
one Class A Certificate and one Class B Certificate may be issued in a
denomination that represents the residual amount of the Original Class A
Certificate Balance and the Original Class B Certificate Balance, respectively.
Upon initial issuance, the Class A Certificates and the Class B Certificates
shall be in the form of EXHIBIT A and EXHIBIT B, respectively, which are
incorporated by reference herein, and shall be issued as provided in Section
6.8, in an aggregate amount equal to the Original Class A Certificate Balance
and the Original Class B Certificate Balance, respectively. The Certificates
shall be executed by the Trustee on behalf of the Trust by manual signature of
an Authorized Officer of the Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
valid and binding obligations of the Trust, notwithstanding that such
individuals shall have ceased to be so authorized prior to the authentication
and delivery of such Certificates or did not hold such offices at the date of
such Certificates.
Section 6.2 AUTHENTICATION OF CERTIFICATES. No Certificate shall
entitle the Certificateholders thereof to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially in the form set forth in the form
of Certificates attached hereto as EXHIBIT A and EXHIBIT B, executed by the
Trustee by manual signature. Such authentication shall constitute conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
Section 6.3 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
The Trustee shall maintain, or cause to be maintained, at the office or agency
to be maintained by it in accordance with Section 6.7, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration
of transfer of any Class A Certificate or Class B Certificate at such office or
agency, the Trustee shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Class A Certificates
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or Class B Certificates, as the case may be, in authorized denominations of a
like aggregate amount. At the option of a Certificateholder, Class A
Certificates or Class B Certificates may be exchanged for other Class A
Certificates or Class B Certificates, as the case may be, of authorized
denominations of a like aggregate amount at the office or agency maintained by
the Trustee in accordance with Section 6.7. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer duly executed by the Certificateholder and in a
form satisfactory to the Trustee. No service charge shall be made for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for registration of transfer or exchange shall be
cancelled and disposed of in a commercially reasonable manner approved by the
Trustee.
The Class B Certificates and any beneficial interest in such Class B
Certificates may not be acquired by (a) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title 1 of ERISA,
(b) a plan described in Section 4975(e)(1) of the Code or (c) any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity (each, a "BENEFIT PLAN"). By accepting and holding a Class B Certificate
or an interest therein, the Certificateholder thereof or Class B Certificate
Owner thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan.
Section 6.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If
(a) any mutilated Class A Certificate or Class B Certificate shall be
surrendered to the Trustee, or if the Trustee shall receive evidence to its
satisfaction of the destruction, loss, or theft of any Class A Certificate or
Class B Certificate and (b) there shall be delivered to the Trustee such
security or indemnity as it may require to save it harmless, then in the absence
of notice that such Class A Certificate or Class B Certificate shall have been
acquired by a bona fide purchaser, the Trustee shall execute on behalf of the
Trust, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost, or stolen Class A Certificate or Class B
Certificate, a new Class A Certificate or Class B Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 6.4, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection herewith.
Any replacement Certificate issued pursuant to this Section 6.4 shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen, or destroyed Certificate shall be found at any time.
Section 6.5 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee may treat the Person in
whose name any Certificate shall be registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 4.5 and for all
other purposes, and the Trustee shall not be bound by any notice to the
contrary.
Section 6.6 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Trustee shall furnish or cause to be furnished to the Servicer,
within 15 days after receipt by the Trustee of a request therefor from the
Servicer in writing, a list of the names and addresses of the
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Certificateholders as of the most recent Record Date. If Definitive
Certificates have been issued, the Trustee, upon written request of the holders
of Class A Certificates or Class B Certificates evidencing not less than 25% of
the aggregate outstanding principal balance of either the Class A Certificates
or the Class B Certificates, as the case may be, will, within five Business Days
after the receipt of such request, afford such Class A Certificateholders or
Class B Certificateholders access during normal business hours to the most
current list of Certificateholders for purposes of communicating with other
Certificateholders with respect to their rights under the Agreement. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed to hold neither the Seller, the Servicer nor the Trustee accountable
by reason of the disclosure of its name and address, regardless of the source
from which such information was derived.
Section 6.7 MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain, or cause to be maintained, at its expense, in New York, New York, an
office or agency where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and this Agreement may be served. The Trustee
initially designates the Corporate Trust Office as its office for such purposes.
The Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of any such office or agency.
Section 6.8 BOOK-ENTRY CERTIFICATES. Upon original issuance, the
Class A Certificates and the Class B Certificates, other than the Class A
Certificate and the Class B Certificate representing the residual amount of the
Original Class A Certificate Balance and the Original Class B Certificate
Balance, respectively, which shall be issued upon the written order of the
Seller, shall be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to the initial
Clearing Agency, by, or on behalf of, the Seller. Such Certificates shall
initially be registered on the Certificate Register in the name of CEDE & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Class A Certificates or the Class B Certificates, as the case may be,
except as provided in Section 6.10. Unless and until definitive, fully
registered Certificates (collectively, "DEFINITIVE CERTIFICATES") have been
issued to Class A Certificate Owners or Class B Certificate Owners, as the case
may be, pursuant to Section 6.10:
(i) the provisions of this Section 6.8 shall be in full
force and effect;
(ii) the Seller, the Servicer, the Trustee and their
officers, directors, employees and agents may deal with the Clearing Agency
for all purposes (including the making of distributions on the Certificates
and the taking of actions by the Certificateholders) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.8
conflict with any other provisions of this Agreement, the provisions of
this Section 6.8 shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those established
by law, the rules, regulations and procedures of the Clearing Agency and
agreements between such Certificate Owners and the
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Clearing Agency and all references in this Agreement to actions by
Certificateholders shall refer to actions taken by the Clearing Agency upon
instructions from the Clearing Agency Participants, and all references in
this Agreement to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and
statements to the Clearing Agency or its nominee, as registered holder of
the Certificates, as the case may be, for distribution to Certificate
Owners in accordance with the rules, regulations and procedures of the
Clearing Agency; and
(v) pursuant to the Depository Agreement, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Certificates to the Clearing Agency Participants, for
distribution by such Clearing Agency Participants to the Certificate Owners
or their nominees.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, holders of
Certificates evidencing specified percentages of the aggregate outstanding
principal balance of such Certificates, such direction or consent may be given
by Certificate Owners having interests in the requisite percentage, acting
through the Clearing Agency.
Section 6.9 NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Certificateholders is required under this Agreement unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 6.10, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency.
Section 6.10 DEFINITIVE CERTIFICATES. If (i) (A) the Seller advises
the Trustee in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement and (B)
the Trustee or the Seller is unable to locate a qualified successor, (ii) the
Seller, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Servicing Termination, with respect to the Class A
Certificates, Class A Certificate Owners representing in the aggregate not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates or, with respect to the Class B Certificates, Class B Certificate
Owners representing in the aggregate not less than a majority of the aggregate
outstanding principal balance of the Class B Certificates, advise the Trustee
and the Clearing Agency through the Clearing Agency Participants in writing, and
the Clearing Agency shall so notify the Trustee, that the continuation of a
book-entry system through the Clearing Agency is no longer in the Class A
Certificate Owners' or the Class B Certificate Owners', as the case may be, best
interests, the Trustee shall notify the Clearing Agency, which shall be
responsible to notify the Class A Certificate Owners or the Class B Certificate
Owners or both, as the case may be, of the occurrence of any such event and of
the availability of Definitive Certificates to Class A Certificate Owners or
Class B Certificate Owners or both, as the case may be, requesting the same.
Upon surrender to the Trustee by the Clearing Agency of the Class A Certificates
or the Class B Certificates or both, as the case may be, registered in the name
of the nominee of the Clearing Agency, accompanied by re-registration
instructions from the
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Clearing Agency for registration, the Trustee shall execute, on behalf of the
Trust, authenticate and deliver Definitive Certificates in accordance with such
instructions. The Seller shall arrange for, and will bear all costs of, the
printing and issuance of such Definitive Certificates. Neither the Seller, the
Servicer nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, the Trustee
shall recognize the holders of the Definitive Certificates as Certificateholders
hereunder.
ARTICLE VII
THE SELLER
Section 7.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller makes the following representations and warranties, on which the Trustee
relies in accepting the Receivables and the other Trust Property in trust and
executing and authenticating the Certificates. These representations are made
as of the Closing Date, but shall survive the sale, transfer and assignment of
the Receivables and the other Trust Property to the Trust.
(i) ORGANIZATION AND GOOD STANDING. The Seller has been
duly incorporated and is validly existing as a national banking
association, with the power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted, and had at all relevant times, and has,
full power, authority and legal right to acquire, own and sell its
Receivables.
(ii) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the ownership or servicing of
the Receivables or render any of the Receivables unenforceable.
(iii) POWER AND AUTHORITY. The Seller has the power,
authority and legal right to execute and deliver this Agreement and to
carry out its terms and to sell and assign the property to be sold and
assigned to and deposited with the Trustee as Trust Property; and the
execution, delivery, and performance of this Agreement and all of the
documents required pursuant hereto have been duly authorized by the Seller
by all necessary action.
(iv) NO CONSENT REQUIRED. The Seller is not required to
obtain the consent of any other Person, or any consent, license, approval
or authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement, other than as may be required under the blue
sky or securities laws of any State or the Securities Act of 1933, as
amended, under state laws governing the perfection of the interests created
under this Agreement and under ERISA.
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(v) VALID SALE; BINDING OBLIGATION. This Agreement effects
a valid sale, transfer and assignment of the Receivables and the other
Trust Property conveyed by the Seller to the Trust hereunder, enforceable
against creditors of and purchasers from the Seller; and this Agreement
constitutes a legal, valid, and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(vi) NO VIOLATION. The execution, delivery and performance
by the Seller of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof will not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of the Seller, or conflict with,
or breach any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party
or by which the Seller is bound or any of its properties are subject, or
result in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument (other than this Agreement), or violate any law,
order, rule, or regulation, applicable to the Seller or its properties, of
any federal or state regulatory body, any court, administrative agency, or
other governmental instrumentality having jurisdiction over the Seller or
any of its properties.
(vii) NO PROCEEDINGS. There are no proceedings or
investigations pending, or, to the knowledge of the Seller, threatened,
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality having jurisdiction over the Seller or its
properties: (a) asserting the invalidity of this Agreement or the
Certificates, (b) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this Agreement,
(c) seeking any determination or ruling that might materially and adversely
affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or the Certificates, or (d)
that may adversely affect the federal or state income, excise, franchise or
similar tax attributes of the Certificates.
Section 7.2 LIABILITY OF THE SELLER; INDEMNITIES. (a) The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement and shall have no
other obligations or liabilities hereunder.
(b) The Seller shall indemnify, defend and hold harmless the
Trustee, its directors, officers, employees and agents, the Trust and the
Certificateholders from and against any taxes that may at any time be asserted
against the Trustee, its directors, officers, employees and agents, the Trust or
a Certificateholder with respect to, and as of the date of, the sale, transfer
and assignment of the Trust Property to the Trust or the issuance and original
sale of the Certificates, including any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or
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license taxes (but not, except as provided below, including any taxes asserted
with respect to ownership of the Trust Property or federal or other income
taxes, including franchise taxes measured by net income, arising out of the
transactions contemplated by this Agreement or transfer taxes arising in
connection with the transfer of the Certificates), and reasonable costs and
expenses in defending against the same.
(c) The Seller shall indemnify, defend and hold harmless the
Trustee, its directors, officers, employees and agents, the Trust and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith, or negligence in the
performance of its duties hereunder, or by reason of reckless disregard of the
obligations and duties hereunder; or (ii) any action taken, or failed to be
taken, by the Seller in respect of any portion of the Trust Property.
(d) The Seller shall indemnify, defend and hold harmless the
Trustee, its directors, officers, employees and agents, the Trust and the
Certificateholders from and against any loss, liability or expense incurred by
reason of the violation by the Seller of federal or state securities laws in
connection with the registration or the sale of the Certificates.
(e) The Seller shall indemnify, defend and hold harmless the
Trustee, its directors, officers, employees and agents, the Trust and the
Certificateholders from and against any loss, liability or expense imposed upon,
or incurred by, the Trustee, the Trust or the Certificateholders as the result
of the failure of any Receivable conveyed by it to the Trust hereunder, or the
sale of the related Financed Vehicle, to comply with all requirements of
applicable law.
(f) Indemnification under this Section 7.2 shall include
reasonable fees and expenses of counsel and expenses of litigation and shall
survive termination of the Trust or the earlier resignation or removal of the
Trustee. If the Seller shall have made any indemnity payments to the Trustee
pursuant to this Section 7.2 and the Trustee thereafter shall collect any of
such amounts from Persons other than the Seller, the Trustee shall immediately
upon receipt thereof repay such amounts to the Seller, without interest.
Section 7.3 MERGER OR CONSOLIDATION OF THE SELLER. Any corporation
or other entity (i) into which the Seller may be merged or consolidated, (ii)
that may result from any merger, conversion, or consolidation to which the
Seller is a party, or (iii) that may succeed by purchase and assumption to all
or substantially all of the business of the Seller, where the Seller is not the
surviving entity, which corporation or other entity shall execute an agreement
of assumption to perform every obligation of the Seller under this Agreement,
shall be the successor to the Seller hereunder without the execution or filing
of any document or any further act by any of the parties to this Agreement. The
Seller shall promptly inform the Trustee and the Rating Agency of any such
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merger, conversion, consolidation or purchase and assumption, where the Seller
is not the surviving entity.
Section 7.4 LIMITATION ON LIABILITY OF THE SELLER AND OTHERS. The
Seller, and any of its directors, officers, employees or agents may rely in good
faith on any document of any kind, believed by it to be genuine and properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller shall be under no obligation under this Agreement to appear in,
prosecute or defend any legal action that shall be unrelated to its obligations
under this Agreement and that in its opinion may involve it in any expense or
liability.
Section 7.5 SELLER MAY OWN CERTIFICATES. The Seller, and any
Affiliate of the Seller, may in its individual or any other capacity become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as otherwise provided in the
definition of "Certificateholder," "Class A Certificateholder" and "Class B
Certificateholder" in Section 1.1. Certificates so owned by or pledged to the
Seller or such controlling, controlled or commonly controlled Person shall have
an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority, or distinction as among all of the Certificates.
ARTICLE VIII
THE SERVICER
Section 8.1 REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The
Servicer makes the following representations and warranties on which the Trustee
relies in accepting the Receivables and the other Trust Property in trust and in
authenticating the Certificates. These representations are made as of the
Closing Date, but shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trust.
(i) ORGANIZATION AND GOOD STANDING. The Servicer has been
duly incorporated and is validly existing as a national banking
association, with the power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted, and had at all relevant times, and shall
have, the power, authority and legal right to service the Receivables.
(ii) DUE QUALIFICATION. The Servicer is duly qualified to
do business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the ability of the Servicer to
service, or the enforceability of, the Receivables.
(iii) POWER AND AUTHORITY. The Servicer has the power,
authority and legal right to execute and deliver this Agreement and to
carry out its terms; and the execution, delivery and performance of this
Agreement has been duly authorized by the Servicer by all necessary
corporate action.
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(iv) NO CONSENT REQUIRED. The Servicer is not required to
obtain the consent of any other Person, or any consent, license, approval
or authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement other than as may be required under ERISA.
(v) BINDING OBLIGATION. This Agreement constitutes a
legal, valid, and binding obligation of the Servicer, enforceable against
the Servicer in accordance with its terms, subject, as to enforceability,
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).
(vi) NO VIOLATION. The execution, delivery and performance
of this Agreement, the consummation of the transactions contemplated hereby
and the fulfillment of the terms hereof will not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or bylaws of the Servicer, or conflict with or breach any of
the terms or provisions of, or constitute (with or without notice or lapse
of time) a default under, any indenture, agreement, mortgage, deed of trust
or other instrument to which the Servicer is a party or by which the
Servicer is bound or to which any of its properties are subject, or result
in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument (other than this Agreement), or violate any law,
order, rule, or regulation applicable to the Servicer or its properties of
any federal or state regulatory body, any court, administrative agency, or
other governmental instrumentality having jurisdiction over the Servicer or
any of its properties.
(vii) NO PROCEEDINGS. There are no proceedings or
investigations pending, or, to the Servicer's knowledge, threatened, before
any court, regulatory body, administrative agency, or tribunal or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (a) asserting the invalidity of this Agreement or the
Certificates, (b) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this Agreement,
(c) seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement or the Certificates, or (d)
that may adversely affect the federal or state income, excise, franchise or
similar tax attributes of the Certificates.
Section 8.2 LIABILITY OF THE SERVICER; INDEMNITIES. (a)The
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Servicer under this Agreement and
shall have no other obligations or liabilities hereunder.
(b) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Collateral Agent, their directors, officers, employees and agents,
the Trust, and the Certificateholders
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from and against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation, arising out of or resulting from the use, ownership, or operation by
the Servicer or any Affiliate thereof of any Financed Vehicle or in respect of
any action taken, or failed to be taken, by the Servicer with respect to any
Receivable or other portion of the Trust Property.
(c) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Collateral Agent, their directors, officers, employees and agents,
the Trust and the Certificateholders from and against any taxes that may at any
time be asserted against the Trustee, the Trust or the Certificateholders with
respect to the transactions contemplated hereby, including any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale, transfer and assignment of the Trust
Property to the Trust or the issuance and original sale of the Certificates, or
asserted with respect to ownership of the Receivables or other Trust Property,
federal or other income taxes, including franchise taxes measured by net income,
arising out of distributions on the Certificates or any other transactions
contemplated by this Agreement or transfer taxes arising in connection with
transfers of the Certificates) and reasonable costs and expenses in defending
against the same.
(d) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Collateral Agent, their directors, officers, employees and agents,
the Trust and the Certificateholders from and against any and all costs,
expenses, losses, claims, damages, and liabilities, to the extent that such
cost, expense, loss, claim, damage, or liability arose out of, or was imposed
upon, or incurred by, the Trust, the Trustee or the Certificateholders as a
result of the willful misfeasance, negligence, or bad faith of the Servicer in
the performance of its duties under this Agreement.
(e) The Servicer, or, in the event that the Trustee is also a
servicer, a predecessor Servicer, shall indemnify, defend and hold harmless the
Trustee, the Collateral Agent and their directors, officers, employees and
agents, from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance or
performance of the Trust and the duties herein contained, except to the extent
that such costs, expenses, losses, claims, damages or liabilities: (i) shall be
due to the willful misfeasance, negligence or bad faith of the Trustee; (ii)
relates to any tax other than the taxes with respect to which either the Seller
or the Servicer shall be required to indemnify the Trustee; (iii) shall arise
from the Trustee's breach of any of its representations or warranties set forth
in Section 10.15; (iv) shall be one as to which the Seller is required to
indemnify the Trustee; or (v) shall arise out of, or be incurred in connection
with, the acceptance or performance by the Trustee of its duties as a successor
servicer hereunder.
(f) Indemnification under this Section 8.2 shall include
reasonable fees and expenses of counsel and expenses of litigation. The
indemnity obligations of the Servicer hereunder shall survive any termination of
the Servicer pursuant to Section 9.1, but only with respect to obligations
arising prior thereto, and any payment of the amount owing under, or the
Purchase Amount with respect to, any Receivable and shall survive the
termination of the Trust or the earlier removal or resignation of the Trustee.
If the Servicer shall have made any indemnity payments pursuant to this Section
8.2 and the Trustee thereafter collects any of such amounts from others, the
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Trustee shall, as soon as practicable upon receipt thereof, repay such amounts
to the Servicer, without interest.
Section 8.3 MERGER OR CONSOLIDATION OF THE SERVICER. Any
corporation or other entity (i) into which the Servicer may be merged or
consolidated, (ii) that may result from any merger, conversion, or consolidation
to which the Servicer is a party, or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Servicer, where
the Servicer is not the surviving entity, which corporation or other entity
shall be an Eligible Servicer and shall execute an agreement of assumption to
perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer under this Agreement (without relieving the outgoing
Servicer of its responsibilities hereunder, if it survives such merger,
conversion or consolidation) without any further act on the part of any of the
parties to this Agreement. The Servicer shall promptly inform the Trustee and
the Rating Agencies of any such merger, conversion, consolidation or purchase
and assumption where the Servicer is not the surviving entity.
Section 8.4 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. (a)
Except as provided in this Agreement, the Servicer shall be under no obligation
to appear in, prosecute or defend any legal action that shall not be incidental
to its duties to service the Receivables in accordance with this Agreement and
that in its opinion may cause it to incur any expense or liability; PROVIDED,
HOWEVER, that the Servicer may undertake, at its expense, any reasonable action
that it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties to this Agreement and the interests of the
Certificateholders under this Agreement.
(b) The Servicer, and any director or officer or employee or agent
of the Servicer, may rely in good faith on any document of any kind, believed by
it to be genuine and properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 8.5 SERVICER NOT TO RESIGN. The Servicer shall not resign
from its obligations and duties under this Agreement except upon a determination
that the performance of its duties is no longer permissible under applicable
law. Any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel (which counsel shall be outside counsel to
the Servicer) to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or a successor servicer shall have
assumed the responsibilities and obligations of the outgoing Servicer in
accordance with Section 9.2.
Section 8.6 SERVICER MAY OWN CERTIFICATES. The Servicer, and any
Affiliate of the Servicer, may, in its individual or any other capacity, become
the owner or pledgee of Certificates with the same rights as it would have if it
were not the Servicer or an Affiliate thereof, except as otherwise provided in
the definition of "Certificateholder," "Class A Certificateholder" and "Class B
Certificateholder" in Section 1.1. Certificates so owned by or pledged to the
Servicer or such Affiliate shall have an equal and proportionate benefit under
the provisions of this Agreement, without preference, priority or distinction as
among all of the Certificates.
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ARTICLE IX
SERVICING TERMINATION
Section 9.1 EVENTS OF SERVICING TERMINATION. (a) If any one of the
following events ("EVENTS OF SERVICING TERMINATION") shall occur and be
continuing:
(i) Any failure by the Servicer to deliver to the Trustee
the Servicer's Certificate for any Collection Period, which shall continue
beyond the earlier of three Business Days from the date the Servicer's
Certificate was due to be delivered and the related Deposit Date, or any
failure by the Servicer to deliver to any of the Accounts, the Reserve
Account or the Yield Supplement Account any proceeds or payment required to
be so delivered under the terms of the Certificates and this Agreement,
which shall continue unremedied for a period of five Business Days
following the due date therefor (or, in the case of a payment or deposit to
be made no later than a Deposit Date immediately preceding a Distribution
Date, the failure to make such payment or deposit by such Distribution
Date); or
(ii) Any failure on the part of the Servicer duly to observe
or to perform in any material respect any other covenants or agreements set
forth in the Certificates or in this Agreement (which determination shall
be made without regard to whether funds are available to the
Certificateholders pursuant to the Reserve Account), which failure shall
(a) materially and adversely affect the rights of Certificateholders and
(b) continue unremedied for a period of 90 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given (1) to the Servicer by the Trustee, or (2) to the Trustee
and the Servicer by the holders of Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class;
or
(iii) The entry of a decree or order by a court or agency or
supervisory authority of competent jurisdiction for the appointment of a
conservator, receiver, liquidator or trustee for the Servicer in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation
of its affairs, and any such decree or order continues unstayed and in
effect for a period of 60 consecutive days; or
(iv) The consent by the Servicer to the appointment of a
conservator, receiver, liquidator or trustee in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities, or similar
proceedings of or relating to the Servicer or relating to substantially all
of its property, the admission in writing by the Servicer of its inability
to pay its debts generally as they become due, the filing by the Servicer
of a petition to take advantage of any applicable bankruptcy, insolvency or
reorganization statute, the making by the Servicer of an assignment for the
benefit of its creditors or the voluntary suspension by the Servicer of
payment of its obligations; or
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(v) The failure by the Servicer to be an Eligible Servicer;
then, and in each and every case and so long as an Event of Servicing
Termination shall not have been cured or waived, either the Trustee, or the
holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, by notice then given in writing
to the Servicer, may terminate all of the rights and obligations of the Servicer
under this Agreement. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Trust Property or otherwise, shall pass
to and be vested in the Trustee or successor servicer appointed by the Trustee
pursuant to Section 9.2; and thereupon the Trustee shall be authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivable Files or the Insurance Policies, the certificates
of title to the Financed Vehicles, or otherwise. The Servicer shall cooperate
with the Trustee or such successor servicer in effecting the termination of the
Servicer's responsibilities and rights as Servicer under this Agreement,
including the transfer to the Trustee or such successor servicer for
administration of all cash amounts that are at the time held by the Servicer for
deposit, shall have been deposited by the Servicer in the Certificate Account,
or thereafter shall be received with respect to a Receivable, all Receivable
Files and all information or documents that the Trustee or such successor
servicer may require. In addition, the Servicer shall transfer its electronic
records relating to the Receivables to the successor servicer in such electronic
form as the successor servicer may reasonably request. All reasonable costs and
expenses incurred by the successor servicer, including allowable compensation of
employees and overhead costs, in connection with the transfer of servicing shall
be paid by the outgoing Servicer upon presentation of reasonable documentation
of such costs and expenses.
(b) If any of the foregoing Events of Servicing Termination occur,
the Trustee shall have no obligation to notify Certificateholders or any other
Person of such occurrence prior to the continuance of such event through the end
of any cure period specified in Section 9.1(a).
Section 9.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR SERVICER.
Upon the Servicer's resignation pursuant to Section 8.5, or upon the Servicer's
receipt of notice of termination as Servicer pursuant to Section 9.1, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as Servicer under this Agreement, and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions of this Agreement, except that the Trustee, when
acting as a successor servicer, shall not be obligated to purchase Receivables
pursuant to Section 3.7 unless the obligation to purchase arose after the date
of the notice of termination given to the Servicer pursuant to Section 9.1, and
the Trustee shall not be liable for any acts or omissions of such terminated
Servicer or for any breach by the terminated Servicer of any of its
representations or warranties contained herein or in any related documents or
agreements. As compensation therefor, the Trustee shall be entitled to such
compensation (whether payable out of the Certificate Account or otherwise) as
the Servicer would have been entitled to under this Agreement if no such notice
of termination or resignation had been given. Notwithstanding the above, the
Trustee may, if it shall be unwilling or legally unable so to act,
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appoint, or petition a court of competent jurisdiction to appoint, an Eligible
Servicer as the successor to the terminated Servicer under this Agreement. In
connection with such appointment, the Trustee may make such arrangements for the
compensation of such successor servicer out of payments on Receivables as it and
such successor shall agree, which, in no event, shall be greater than that
payable to First Security Bank, N.A. in its capacity as the Servicer hereunder.
The Trustee or such successor servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. No
Servicer shall resign or be relieved of its duties under this Agreement until a
newly appointed servicer shall have assumed the responsibilities and obligations
of the terminated Servicer under this Agreement.
Section 9.3 EFFECT OF SERVICING TRANSFER.(a) After the transfer of
servicing hereunder, the Trustee or the successor servicer shall notify Obligors
to make directly to the successor servicer payments that are due under the
Receivables after the effective date of such transfer.
(b) Except as provided in Sections 8.2 and 10.8 after the transfer
of servicing hereunder, the outgoing Servicer shall have no further obligations
with respect to the management, administration, servicing, custody or collection
of the Receivables and the successor servicer shall have all of such
obligations, except that the outgoing Servicer will transmit or cause to be
transmitted directly to the successor servicer for its own account, promptly on
receipt and in the same form in which received, any amounts held by the outgoing
Servicer (properly endorsed where required for the successor servicer to collect
any such items) received as payments upon or otherwise in connection with the
Receivables and the outgoing Servicer shall continue to cooperate with the
successor servicer by providing information and in the enforcement of the Dealer
Agreements, the Dealer Assignments and the Insurance Policies.
(c) A transfer of servicing hereunder shall not affect the rights
and duties of the parties hereunder (including the obligations and indemnities
of the Seller pursuant to Sections 2.4, 3.3, 7.1 and 7.2 or, with respect to
obligations and indemnities arising prior to, or concurrently with, a transfer
of servicing hereunder, the outgoing Servicer pursuant to Section 3.7, 8.1 or
8.2) other than those relating to the management, administration, servicing,
custody or collection of the Receivables and the other Trust Property. The
successor servicer shall, upon its appointment pursuant to Section 9.2 and as
part of its duties and responsibilities under this Agreement, promptly take all
action it deems necessary or appropriate so that the outgoing Servicer (in
whatever capacity) is paid or reimbursed all amounts it is entitled to receive
under this Agreement on each Distribution Date subsequent to the date on which
it is terminated as Servicer hereunder.
(d) Any successor servicer shall provide the Seller with access to
the Receivable Files and to the successor servicer's records (whether written or
automated) with respect to the Receivable Files. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the successor servicer. Nothing in this Section 9.3
shall affect the obligation of the successor servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors, and the
failure of the successor servicer to provide access to information as a result
of such obligation shall not constitute a breach of this Section 9.3.
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Section 9.4 NOTIFICATION TO CERTIFICATEHOLDERS. Upon any notice of
an Event of Servicing Termination or upon any termination of, or appointment of
a successor to, the Servicer pursuant to this Article IX, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses of record, and to the Rating Agencies at the following addresses:
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: ABS Monitoring Department, 4th Floor; Standard & Poor's Ratings
Group, 26 Broadway, New York, New York 10004-1064, Attention: Asset Backed
Surveillance Group.
Section 9.5 WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The
holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, may, on behalf of all holders of
Certificates waive any Event of Servicing Termination hereunder and its
consequences, except an event resulting from the failure to make any required
deposits to, or payments from, any of the Accounts or the Reserve Account in
accordance with this Agreement. Upon any such waiver of a past Event of
Servicing Termination, such event shall cease to exist, and shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other event or impair any right arising therefrom,
except to the extent expressly so waived.
Section 9.6 TRANSFER OF ACCOUNTS. Notwithstanding the provisions
of Section 9.1, if any of the Accounts, the Yield Supplement Account or the
Reserve Account is maintained with the Servicer or any Affiliate of the Servicer
and an Event of Servicing Termination shall occur and be continuing, the
Servicer shall promptly, and in any event within five Business Days, give notice
to the Trustee and the Seller of such Event of Servicing Termination, and the
Trustee or the Seller, as the case may be, within five days after the receipt of
such notice, shall establish new Eligible Deposit Accounts conforming with the
requirements of this Agreement and promptly shall transfer all funds in any such
Accounts, the Yield Supplement Account or the Reserve Account to such new
Eligible Deposit Accounts.
ARTICLE X
THE TRUSTEE
Section 10.1 ACCEPTANCE BY TRUSTEE. The Trustee, by its execution
of this Agreement, accepts all consideration conveyed by the Seller pursuant to
Section 2.1 and the Trust created hereunder and declares that it shall hold such
consideration in trust upon the terms hereof set forth for the benefit of the
Certificateholders.
Section 10.2 DUTIES OF TRUSTEE. (a) The Trustee, both prior to and
after the curing or waiver of an Event of Servicing Termination, undertakes to
perform only such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Trustee. If an Event of Servicing Termination shall have occurred and shall not
have been cured (the appointment of a successor servicer (including the Trustee)
to constitute a cure for the purposes of this Article X) or otherwise waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and shall use the same degree of care
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and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs; PROVIDED, HOWEVER, that if the
Trustee assumes the duties of the Servicer pursuant to Section 9.2, the Trustee
in performing such duties shall use the degree of skill and attention required
by Section 3.1.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders, or other instruments furnished
to the Trustee that are required specifically to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, its own willful misconduct or its own bad faith; PROVIDED,
HOWEVER, that:
(i) prior to the occurrence of an Event of Servicing
Termination, and after the curing or waiver of all such Events of Servicing
Termination that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee, the permissible right of the Trustee (solely
in its capacity as such) to do things enumerated in this Agreement shall
not be construed as a duty and, in the absence of bad faith on the part of
the Trustee, or manifest error, the Trustee (solely in its capacity as
such) may conclusively rely on the truth of the statements and the
correctness of the computations and opinions expressed upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) the Trustee shall not be liable for an error of
judgment made in good faith by an officer of the Trustee, unless it shall
be proved that the Trustee shall have been negligent in performing its
duties in accordance with the terms of this Agreement; and
(iii) the Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in accordance
with the direction of the holders of Certificates evidencing not less than
a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class,
as set forth in Section 9.1, relating to the time, method and place of
conducting any proceeding or any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that the repayment of such funds or
indemnity satisfactory to it against such risk or liability shall not be assured
to it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this
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Agreement except during such time, if any, as the Trustee shall be the successor
to, and be vested with the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the security interests
created or existing under any Receivable or Financed Vehicle or to impair the
value of any Receivable or Financed Vehicle.
(f) The Trustee shall have no power to vary the corpus of the
Trust including (i) accepting any substitute obligation for a Receivable
initially assigned to the Trustee under this Agreement, (ii) adding any other
investment, obligation or security, or (iii) withdrawing any Receivable, except
for a withdrawal permitted under this Agreement.
Section 10.3 TRUSTEE'S CERTIFICATE. As soon as practicable after
each Deposit Date on which Receivables shall be assigned to the Seller pursuant
to Section 2.4 or to the Servicer pursuant to Section 3.7 or 11.2, as
applicable, the Trustee shall execute a certificate, prepared by the Servicer,
including its date and the date of the Agreement, and accompanied by a copy of
the Servicer's Certificate for the related Collection Period. The Trustee's
certificate shall operate, as of such Deposit Date, as an assignment pursuant to
Section 10.4.
Section 10.4 TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With
respect to all Receivables repurchased by the Seller pursuant to Section 2.4, or
purchased by the Servicer pursuant to Section 3.7 or 11.2, the Trustee shall
assign, without recourse, representation, or warranty, to the Seller or the
Servicer, as the case may be, all the Trustee's right, title, and interest in,
to and under such Receivables, and all security and documents and all other
Trust Property conveyed pursuant to Section 2.1 with respect to such
Receivables. Such assignment shall be a sale and assignment outright, and not
for security. If, in any enforcement suit or legal proceeding, it is held that
the Seller or the Servicer, as the case may be, may not enforce any such
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Receivable, the Trustee shall, at the expense of
the Seller or the Servicer, as the case may be, take such steps as the Seller or
the Servicer, as the case may be, deems necessary to enforce the Receivable,
including bringing suit in the Trustee's name or the names of the
Certificateholders.
Section 10.5 CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 10.2:
(i) The Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate of auditors or accountants or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
(ii) The Trustee may consult with counsel and any Opinion of
Counsel or any advice of such counsel shall be full and complete
authorization and protection in respect
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of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such Opinion of Counsel or any advice of
such counsel.
(iii) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of any of
the Certificateholders pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses, and liabilities
that may be incurred therein or thereby. Nothing contained in this
Agreement, however, shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Servicing Termination that is not timely cured or
waived pursuant to Section 9.5, to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion, rights or powers conferred upon it
by this Agreement.
(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing or waiver of all Events of Servicing
Termination that may have occurred, the Trustee shall not be bound to make
any investigation into the facts of any matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, direction, order, approval, bond, note or other paper or document,
unless requested in writing so to do by holders of Certificates evidencing
not less than a majority of the aggregate outstanding principal balance of
the Class A Certificates and the Class B Certificates taken together as a
single class; PROVIDED, HOWEVER, that if the payment within a reasonable
time to the Trustee of the costs, expenses, or liabilities likely to be
incurred by it in the making of an investigation requested by the
Certificateholders is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require indemnity satisfactory to it against
such cost, expense, or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the Servicer,
or, if paid by the Trustee, shall be reimbursed by the Servicer upon
demand. Nothing in this clause (v) shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors; provided, further, that the Trustee
shall be entitled to make such further inquiry or investigation into such
facts or matters as it may reasonably see fit, and if the Trustee shall
determine to make such further inquiry or investigation it shall be
entitled to examine the books and records of the Servicer or the Seller,
personally or by agent or attorney, at the sole cost and expense of the
Servicer or the Seller, as the case may be.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or by
or through agents, attorneys, nominees or a custodian, and shall not be
liable for the acts of, or for the supervision of, such
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agents, attorneys, nominees or custodians, PROVIDED that they have been
appointed with due care.
(vii) The Trustee shall not be required to make any initial
or periodic examination of any documents or records related to the
Receivables or Financed Vehicles for the purpose of establishing the
presence or absence of defects, the compliance by the Seller with their
representations and warranties or for any other purpose.
Section 10.6 TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as expressly provided herein, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the Trustee's execution of, and the
certificate of authentication on, the Certificates), or of any Receivable or
related document, or for the validity of the execution by the Seller and the
Servicer of this Agreement or of any supplements hereto or instruments of
further assurance, or for the sufficiency of the Trust Property hereunder, and
the Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any covenants, conditions or agreements on the part of the Seller
or the Servicer under this Agreement except as herein set forth; but the Trustee
may require the Seller or the Servicer to provide full information and advice as
to the performance of the aforesaid covenants, conditions and agreements. The
Trustee (solely in its capacity as such) shall have no obligation under any
circumstance to perform any of the duties of the Seller or of the Servicer
except as explicitly set forth in this Agreement. The Trustee shall have no
liability in connection with compliance of the Servicer or the Seller with
statutory or regulatory requirements related to the Receivables. The Trustee
shall not make or be deemed to have made any representations or warranties with
respect to the Receivables or the validity or sufficiency of any assignment of
the Receivables to the Trust or the Trustee. The Trustee (solely in its
capacity as such) shall at no time have any responsibility or liability for, or
with respect to, the legality, validity or enforceability of any security
interest in any Financed Vehicle or (prior to the time, if any, that the
Servicer is terminated as custodian hereunder) any Receivable, or the perfection
and priority of such a security interest or the maintenance of any such
perfection and priority, the efficacy of the Trust or its ability to generate
funds sufficient to provide for the payments to be distributed to
Certificateholders under this Agreement, the existence, condition, location, and
ownership of any Financed Vehicle, the existence and enforceability of any
Insurance Policy, the existence and contents of any Receivable or any computer
or other record thereof, the validity of the assignment of any Receivable to the
Trust or of any intervening assignment, the completeness of any Receivable, the
performance or enforcement of any Receivable, the compliance by the Seller with
any warranty or representation made by it under this Agreement or in any related
document and the accuracy of any such warranty or representation, prior to the
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof, any investment of monies by the Servicer or any loss
resulting therefrom (it being understood that the Trustee shall remain
responsible for any Trust Property that it may hold), the acts or omissions of
the Seller, the Servicer, or any Obligor, any action of the Servicer taken in
the name of the Trustee, or any action by the Trustee taken at the instruction
of the Servicer in the absence of bad faith on the part of the Trustee or
manifest error in such instruction; PROVIDED, HOWEVER, that the foregoing shall
not relieve the Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of
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the Trustee to perform its duties under this Agreement (whether in its capacity
as Trustee or as successor servicer) or based on the Trustee's willful
misconduct, negligence, or bad faith, or based on the Trustee's breach of a
representation and warranty contained in Section 10.15, no recourse shall be had
to the Trustee (whether in its individual capacity or as a Trustee) for any
claim based on any provision of this Agreement, the Certificates, or any
Receivable or assignment thereof against the Trustee in its individual capacity;
the Trustee shall not have any personal obligation, liability, or duty
whatsoever to any Certificateholder or any other Person with respect to any such
claim. The Trustee shall not be accountable for the use or application by the
Seller of the proceeds of such Certificates, or for the use or application of
any funds paid to the Servicer in respect of the Receivables prior to the time
such amounts are deposited in the Certificate Account (whether or not the
Certificate Account is maintained with the Trustee). The Trustee shall have no
liability for any losses from the investment or reinvestment in Eligible
Investments made in accordance with Section 4.1.
Section 10.7 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and may transact banking business with the Seller, the Servicer and their
respective Affiliates with the same rights as it would have if it were not
Trustee.
Section 10.8 TRUSTEE'S AND COLLATERAL AGENT'S FEES AND EXPENSES.
The Servicer agrees to pay to the Trustee and the Collateral Agent, and the
Trustee and the Collateral Agent shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by this Agreement and in the exercise and
performance of any of the powers and duties under this Agreement as the Trustee
or the Collateral Agent, as applicable, and the Servicer shall pay or reimburse
the Trustee or the Collateral Agent, as applicable, upon its request for all
reasonable expenses (including, without limitation, expenses incurred in
connection with notices or other communications to Certificateholders),
disbursements, and advances (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all persons not
regularly in its employ) incurred or made by the Trustee or the Collateral Agent
in accordance with any of the provisions of this Agreement (including the
reasonable fees and expenses of its agents, any co-trustee and counsel) or in
defense of any action brought against it in connection with this Agreement
except any such expense, disbursement, or advance as may arise from its
negligence, willful misfeasance, or bad faith. The Servicer's covenant to pay
the expenses, disbursements and advances provided for in the preceding sentence
shall survive the termination of this Agreement or the earlier resignation or
removal of the Trustee or the Collateral Agent, as applicable. When the Trustee
incurs expenses or renders services in connection with an Event or Servicing
Termination described in Sections 9.1(a)(iii) or 9.1(a)(iv), such expenses
(including the fees and expenses of its counsel) and the compensation for such
services are intended to constitute expenses of administration under any
bankruptcy law or law relating to creditor's rights generally.
Section 10.9 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the
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reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been obtained.
Section 10.10 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
under this Agreement shall at all times have an office in the same state as the
Corporate Trust Office is located on the date of this Agreement or which is
otherwise consented to by the Seller. The Trustee shall be organized and doing
business under the banking laws of such state or of the United States, shall be
authorized under such laws to exercise corporate trust powers, shall have a
consolidated net worth of at least $50,000,000, shall have a credit rating of at
least Baa3 from Moody's and shall be subject to supervision or examination by
federal or state banking authorities. If such corporation shall publish reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.10, the consolidated net worth of such corporation shall be deemed to
be its consolidated capital and surplus as set forth in its most recent
consolidated report of condition so published. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
10.10, the Trustee shall resign immediately in the manner and with the effect
specified in Section 10.11.
Section 10.11 RESIGNATION OR REMOVAL OF TRUSTEE AND COLLATERAL AGENT.
(a) The Trustee may at any time resign and be discharged from the Trust hereby
created by giving 30 days' prior written notice thereof to the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.10 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver, conservator or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Trustee. If the Trustee is
removed under the authority of the immediately preceding sentence, the Servicer
shall promptly appoint a successor trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the Trustee so removed, the
successor trustee, the Certificateholders at their respective addresses of
record and the Rating Agencies.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 10.11 shall
not become effective until acceptance of appointment by the successor trustee
pursuant to Section 10.12.
(d) The respective obligations of the Seller and the Servicer
described in this Agreement shall survive the removal or resignation of the
Trustee as provided in this Agreement.
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(e) Upon the removal or termination of the Trustee for any reason,
the Collateral Agent shall also be removed or terminated and the successor
trustee appointed pursuant to Section 10.12 shall be appointed and become the
successor collateral agent so that the Trustee and the Collateral Agent remain
the same Person.
Section 10.12 SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed
pursuant to Section 10.11 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all rights,
powers, duties, and obligations of its predecessor under this Agreement, with
like effect as if originally named as Trustee. The predecessor Trustee shall
deliver to the successor Trustee all documents and statements held by it under
this Agreement, and the Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties, and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 10.12 unless at the time of such acceptance such successor trustee
shall be eligible pursuant to Section 10.10.
(c) Upon acceptance of appointment by a successor trustee pursuant
to this Section 10.12, the Servicer shall mail notice of such acceptance by the
successor trustee under this Agreement to all Certificateholders at their
respective addresses of record and to the Rating Agencies. If the Servicer
shall fail to mail such notice within 10 days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
mailed at the expense of the Servicer. No Trustee hereunder shall be liable for
the acts or omissions of any successor trustee.
Section 10.13 MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation or
banking association which is eligible to be a successor trustee under Section
10.10 (i) into which the Trustee may be merged or consolidated, (ii) that may
result from any merger, conversion, or consolidation to which the Trustee shall
be a party, or (iii) that may succeed by purchase and assumption to the business
of the Trustee, where the Trustee is not the surviving entity, which corporation
or banking association executes an agreement of assumption to perform every
obligation of the Trustee under this Agreement, shall be the successor of the
Trustee hereunder, without the execution or filing of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall promptly notify the Servicer and
the Rating Agencies of any such merger, conversion, consolidation or purchase
and assumption where the Trustee is not the surviving entity.
Section 10.14 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Property or any Financed Vehicle may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall
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execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee, jointly with the Trustee, or separate trustee
or separate trustees, of all or any part of the Trust, and to vest in such
Person, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 10.14, such powers, duties, obligations, rights, and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Servicing Termination shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.10 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.12.
Notwithstanding the appointment of a co-trustee or separate trustee hereunder,
the Trustee shall not be relieved of any of its obligations under this
Agreement.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties, and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee under this
Agreement or as successor to the Servicer under this Agreement), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties, and obligations (including the
holding of title to the Trust Property or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee.
(ii) No co-trustee or separate trustee under this Article
shall be personally liable by reason of any act or omission of any other
trustee under this Agreement.
(iii) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
in particular to the provisions of this Article X. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Each such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer.
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(d) Any separate trustee or co-trustee may, at any time, appoint
the Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of the Trustee
as a new or successor trustee. The Trustee shall promptly notify the Servicer
and the Rating Agencies of any appointment made pursuant to this Section 10.14.
Section 10.15 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
makes the following representations and warranties on which the Seller, the
Servicer, and Certificateholders may rely:
(i) ORGANIZATION AND GOOD STANDING. The Trustee is a
banking corporation duly organized, validly existing, and in good standing
under the laws of the State of New York;
(ii) POWER AND AUTHORITY. The Trustee has full power,
authority and legal right to execute, deliver, and perform this Agreement
and has taken all necessary action to authorize the execution, delivery,
and performance by it of this Agreement; and
(iii) ENFORCEABILITY. This Agreement has been duly executed
and delivered by the Trustee and this Agreement constitutes a legal, valid
and binding obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, subject as to enforceability, to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
Section 10.16 REPORTS BY TRUSTEE. The Trustee shall provide to any
Certificateholder or Certificate Owner who so requests in writing (addressed to
the Corporate Trust Office) a copy of any Servicer's Certificate, the annual
statement described in Section 3.10, and the annual accountant's examination
described in Section 3.11. The Trustee may require any Certificateholder or
Certificate Owner requesting such report to pay a reasonable sum to cover the
cost of the Trustee's complying with such request.
Section 10.17 TAX ACCOUNTING. The Servicer shall prepare or shall
cause to be prepared any tax returns required to be filed by the Trust and shall
remit such returns to the Trustee for signature at least five days before such
returns are due to be filed. The Trustee, upon request, will furnish the
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust, and
shall, upon request, execute such returns. The Servicer shall prepare the tax
returns of the Trust in accordance with (i) the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder or (ii) any applicable state or local statute or regulation.
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ARTICLE XI
TERMINATION
Section 11.1 TERMINATION OF THE TRUST. (a) The Trust, and the
respective obligations and responsibilities of the Seller, the Servicer, and the
Trustee hereunder shall terminate (except as otherwise expressly provided
herein) upon the earliest of: (i) the Distribution Date next succeeding the
purchase by the Servicer at its option, pursuant to Section 11.2, of the
Receivables (other than Defaulted Receivables) remaining in the Trust, (ii) the
payment to Certificateholders, the Trustee and the Collateral Agent of all
amounts required to be paid to them pursuant to this Agreement or (iii) the
Distribution Date next succeeding the month which is six months after the
maturity or the liquidation of the last Receivable held in the Trust and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust; PROVIDED, HOWEVER, that in no event shall the Trust created by
this Agreement continue beyond the expiration of 21 years from the date hereof.
The Servicer shall promptly notify the Trustee of any prospective termination
pursuant to this Section 11.1, which notice shall contain the information
required by the Trustee to give its notice thereunder.
(b) Notice of any termination, specifying the Distribution Date
upon which the Certificateholders may surrender the Certificates to the Trustee
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders of record and the Rating Agencies
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the specified Distribution Date stating the amount of any
such final payment and that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the Trustee therein
specified. Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders amounts distributable on
such Distribution Date pursuant to Section 4.5. Amounts remaining after
distribution, or providing for distribution, to the Certificateholders shall be
distributed to the Seller.
(c) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. The Trustee shall after giving such notice deliver or cause to be
delivered to the Servicer a list of those Certificateholders who have not
surrendered Certificates for cancellation. If, within one year after the second
notice, all the Certificates shall not have been surrendered for cancellation,
the Servicer may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that shall remain subject to this Agreement. Any funds
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Trustee to the Seller and the Certificateholders shall thereafter look
solely to the Seller for such payment.
Section 11.2 OPTIONAL PURCHASE OF ALL RECEIVABLES. In the event
that (i) the Pool Balance shall be 10% or less of the Original Pool Balance as
of the last day of any Collection Period
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and (ii) the aggregate Purchase Amount for the Receivables is greater than or
equal to the sum of the Class A Certificate Balance and the Class B Certificate
Balance, the Servicer shall have the option to purchase the corpus of the Trust
on any Distribution Date occurring in a subsequent Collection Period. To
exercise such option, the Servicer shall notify the Trustee no later than the
10th day of the month in which such purchase is to be effected and deposit the
aggregate Purchase Amount for the Receivables (other than Defaulted Receivables)
into the Certificate Account on the Deposit Date occurring in the month in which
such purchase is to be effected. The payment shall be made in the manner
specified in Section 4.3, and shall be distributed pursuant to Section 4.5. Upon
such payment the Servicer shall succeed to and own all interests in and to the
Trust and the Trust Property.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 AMENDMENT. (a) This Agreement may be amended by the
Seller, the Servicer and the Trustee, without the consent of any of the
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or modifying
in any manner the rights of the Certificateholders; PROVIDED, HOWEVER, that such
action shall not, as evidenced by an Opinion of Counsel to the Seller delivered
to the Trustee, materially and adversely affect the interests of any
Certificateholder or cause the Trust to be classified for federal tax purposes
as an association taxable as a corporation.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Trustee, with the consent of the holders of
Certificates evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A Certificates and the Class B Certificates taken
together as a single class, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Certificateholders; PROVIDED,
HOWEVER, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, or change the allocation or
priority of, collections of payments on Receivables or distributions that are
required to be made on any Certificate, without the consent of all adversely
affected Certificateholders, (ii) reduce the percentage of the aggregate
outstanding principal balance of the Certificates, the holders of which are
required to consent to any such amendment, without the consent of all
Certificateholders, (iii) materially and adversely affect the interests of
either the Class A Certificateholders or the Class B Certificateholders without
the consent of the holders of Class A Certificates or Class B Certificates, as
the case may be, evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates or the Class B
Certificates, as the case may be, (iv) adversely affect the rating of the Class
A Certificates or the Class B Certificates by the Rating Agencies without the
consent of holders of Class A Certificates or Class B Certificates, as the case
may be, evidencing not less than two-thirds of the aggregate outstanding
principal balance of the Class A Certificates or the Class B Certificates, as
the case may be, or (v) cause the Trust to be classified as an association
taxable as a corporation. Promptly after the execution of any such amendment or
consent, the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder.
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<PAGE>
(c) It shall not be necessary for the consent of
Certificateholders pursuant to this Section 12.1 to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
(d) Notice of any amendment of this Agreement shall be sent by the
Servicer to the Rating Agencies, at such address as the Rating Agencies may from
time to time specify in writing.
(e) The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties, indemnities or
immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section
12.1, the Trustee shall be entitled to receive an Opinion of Counsel to the
effect that such amendment is authorized or permitted by the Agreement.
Section 12.2 PROTECTION OF TITLE TO TRUST. (a) The Servicer shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Certificateholders and the Trustee under this Agreement in the Trust Property
and in the proceeds thereof. The Servicer shall deliver (or cause to be
delivered) to the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
In the event the Servicer fails to perform its obligations under this
subsection, the Trustee may (but shall not be obligated to) do so, at the
expense of the Servicer.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Servicer in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the Relevant UCC, unless it shall have given the Trustee at
least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Trustee at least 60
days' prior written notice of any relocation of their principal executive
offices if, as a result of such relocation, the applicable provisions of the
Relevant UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement. The
Seller and the Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know, as of the most recent monthly calculation, the status of such
Receivable, including payments, Liquidation Proceeds and Recoveries made and
payments owing (and the nature of each), and (ii) reconciliation between
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<PAGE>
payments or Recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Certificate Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including archives) that shall
refer to a Receivable indicate clearly that such Receivable is owned by the
Trust. Indication of the Trust's ownership of a Receivable shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
Receivable shall be paid or shall become a Purchased Receivable.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in motor
vehicle retail installment sale contracts to any prospective purchaser, lender
or other transferee, the Seller or the Servicer, as the case may be, shall give
to such prospective purchaser, lender, or other transferee computer tapes,
records, or print-outs (including any restored from archives) that, if they
shall refer in any manner whatsoever to any Receivable, shall indicate clearly
that such Receivable has been sold and is owned by the Trust.
(g) Upon request, the Servicer, at its expense, shall furnish to
the Trustee, within 10 Business Days, a list of all Receivables then held as
part of the Trust, together with a reconciliation of such list to each Schedule
of Receivables and to the Servicer's Certificate furnished pursuant to Section
3.9 indicating removal of Receivables from the Trust.
(h) The Servicer shall deliver to the Trustee upon the Closing
Date, upon the date which is 60 months after the initial filings required
hereunder to perfect the security interest of the Trustee and upon the execution
and delivery of each amendment, if any, of this Agreement, an Opinion of Counsel
to the Servicer either (x) stating that, in the opinion of such counsel, no
filings or other action, other than the filings required in the appropriate
filing offices as described in such opinion, are necessary to perfect and
maintain (i) the security interest of the Trustee in the Financed Vehicles,
subject to certain exceptions stated therein, and (ii) the interest of the
Trustee in the Receivables, the Dealer Agreements or the Dealer Assignments and
in each case the proceeds thereof against third parties, subject to certain
exceptions stated therein, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (y) stating
that, in the opinion of such counsel, no such action shall be necessary to
perfect or continue the perfected status of such interest.
Section 12.3 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, or entitle the Certificateholder's legal representatives
or heirs to claim an accounting or to take any action or commence any proceeding
in any court for a partition or winding up of the Trust, or otherwise affect the
rights, obligations, and liabilities of the parties to this Agreement or any of
them.
(b) No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to this Agreement,
nor shall anything set forth in this Agreement, or contained in the terms of the
Certificates, be construed so as to constitute the holders as partners or
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<PAGE>
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken pursuant to any
provision of this Agreement.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless the holders of the Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class shall
have made written request upon the Trustee to institute such action, suit, or
proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trustee such indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 30 days after its receipt of such notice, request, and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; no one or more holders of Certificates shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb or prejudice the rights of the holders of
any other Certificates, or to obtain or seek to obtain priority over or
preference to any other such holder or to enforce any right, under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Class A Certificateholders or Class B
Certificateholders, as the case may be. For the protection and enforcement of
the provisions of this Section 12.3, each Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 12.4 GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK.
Section 12.5 NOTICES. All demands, notices, directions and
communications under this Agreement shall be in writing, personally delivered,
or sent by telecopier, overnight courier or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of the Seller or the Servicer, to First Security Bank, N.A. at
Office of the General Counsel, 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Executive Vice President and General Counsel, Facsimile No.:
801-246-5422, or at such other address as shall be designated by the Seller or
the Servicer in a written notice to the Trustee, with a copy to David Cowley,
Vice President, Corporate Finance, First Security Bank, 41 East 100 South, 3rd
Floor, Salt Lake City, Utah 84111, Facsimile No.: 801-246-5973 and (b) in the
case of the Trustee, at the Corporate Trust Office, Facsimile No.: 212-250-6439.
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of record of such
holder. Any notice so mailed within the time prescribed in this Agreement shall
be conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
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<PAGE>
Section 12.6 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
holders thereof.
Section 12.7 ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.3, this Agreement may not be
assigned by the Servicer. This Agreement may not be assigned by the Trustee
except as provided by Sections 10.11 through 10.14 hereof.
Section 12.8 CERTIFICATES NONASSESSABLE AND FULLY PAID. The
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 6.1, each Certificate shall be deemed
fully paid.
Section 12.9 INTENTION OF PARTIES. (a) The execution and delivery of
this Agreement shall constitute an acknowledgment by the Seller and the Trustee,
on behalf of the Certificateholders, that it is intended that the assignment and
transfer herein contemplated constitute a sale and assignment outright, and not
for security, of the Receivables and the other Trust Property, conveying good
title thereto free and clear of any liens, from the Seller to the Trust, and
that the Receivables and the other Trust Property shall not be a part of the
Seller's estate in the event of the bankruptcy, insolvency, receivership,
conservatorship or the occurrence of another similar event of, or with respect
to, the Seller. In the event that such conveyance is determined to be made as
security for a loan made by the Trust or the Certificateholders to the Seller,
the parties intend that the Seller shall have granted to the Trustee a security
interest in all of the Seller's right, title and interest in, to and under the
Trust Property conveyed to the Trust pursuant to Section 2.1 in order to secure
the obligations under the Certificates, and that this Agreement shall constitute
a security agreement under applicable law.
(b) The execution and delivery of this Agreement shall constitute
an acknowledgment by the Seller and the Trustee on behalf of the
Certificateholders that they intend that the Trust be classified (for Federal
tax purposes) as a grantor trust under Subpart E, Part I of Subchapter J of the
Code of which the Certificateholders are owners, rather than as an association
taxable as a corporation. The powers granted and obligations undertaken in this
Agreement shall be construed so as to further such intent. The Seller, the
Trustee and the Certificateholders shall take no action that is inconsistent
with treating the Trust as a grantor trust for federal income tax purposes.
Section 12.10 COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed in one or more counterparts, and by different parties hereto on
separate counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute one and the same
instrument.
-80-
<PAGE>
Section 12.11 LIMITATION OF LIABILITY OF THE TRUSTEE AND THE
COLLATERAL AGENT. Notwithstanding anything contained herein to the contrary (i)
this Agreement has been accepted by Bankers Trust Company, not in its individual
capacity but solely as Trustee and as Collateral Agent with respect to the
Reserve Account and the Yield Supplement Account and in no event shall Bankers
Trust Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Seller hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Seller and (ii) under no
circumstances shall Bankers Trust Company be personally liable for the payment
of any indebtedness or expenses of the Trust; PROVIDED, HOWEVER, nothing
contained herein shall relieve Bankers Trust Company of its obligations
contained herein in its capacity as successor servicer. Notwithstanding
anything to the contrary contained herein, the Collateral Agent shall have the
same rights, protections, immunities and indemnities afforded to the Trustee
hereunder.
* * * * *
-81-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
FIRST SECURITY BANK, N.A.,
as Seller and Servicer
By:
--------------------------------
Name: Scott C. Ulbrich
Title: Authorized Officer
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Collateral Agent
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-82-
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF FIRST SECURITY BANK, N.A. OR
ANY AFFILIATE THEREOF. THIS CERTIFICATE AND THE RECEIVABLES ARE NOT DEPOSITS
AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FIRST SECURITY AUTO GRANTOR TRUST _____-____
____% ASSET BACKED CERTIFICATE, CLASS A
Evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of motor
vehicle retail installment sale contracts and motor vehicle
retail installment loans secured by the new and used automobiles
and light-duty trucks financed thereby and sold to the Trust by
First Security Bank, N.A.
NUMBER CUSIP
----------
$
- ------ -------------
Original Principal Amount
THIS CERTIFIES THAT CEDE & Co. is the registered owner of a
$_________, nonassessable, fully paid, fractional undivided interest in the
First Security Auto Grantor Trust _____-____ (the "Trust") formed by First
Security Bank, N.A., a national banking association, as seller (the "Seller").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
__________ (as amended, supplemented or otherwise modified and in effect from
time to time, the "Agreement"), by and among the Seller, First Security Bank,
N.A. as servicer (the "Servicer"), and Bankers Trust Company, as trustee (the
"Trustee") and as collateral agent, a summary of certain of the provisions of
which is set forth on the reverse hereof.
<PAGE>
To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "____% Asset Backed
Certificates, Class A" (herein called the "Certificates"). This Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The Trust Property includes
(as more fully described in the Agreement) a pool of retail installment sale
contracts and retail installment loans (the "Receivables") for the purchase of
the new and used automobiles and light-duty trucks financed thereby (the
"Financed Vehicles"), certain monies owing or received thereunder after the
close of business of the Servicer on _____________ (the "Cutoff Date"), the
Seller's security interests in the Financed Vehicles, certain of the Seller's
rights relating to the Receivables under certain agreements between the Seller
and the motor vehicle dealers, certain rights of the Trust under the related
Yield Supplement Agreement and all proceeds of the foregoing.
Subject to the terms and conditions of the Agreement (including the
availability of funds for distributions) and until the obligations created by
the Agreement shall have terminated in accordance therewith, there will be
distributed, but only from funds on deposit in the Class A Distribution Account,
on the 15th day of each month or, if such 15th day is not a Business Day, the
next succeeding Business Day (each such date, a "Distribution Date"), commencing
____________ to the Person in whose name this Certificate is registered at the
close of business of the Trustee on the day immediately preceding such
Distribution Date (or, if Definitive Certificates are issued, the last day of
the Collection Period immediately preceding such Distribution Date) (the "Record
Date"), such Certificateholder's fractional undivided interest in the amounts to
be distributed to Class A Certificateholders pursuant to the Agreement on such
Distribution Date.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Certificateholder of record at its address as it appears in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon, except that with respect to a Certificate
registered in the name of a Clearing Agency or its nominee, distributions will
be made by wire transfer of immediately available funds. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
This Certificate does not purport to summarize the Agreement and
reference is hereby made to the Agreement for information with respect to the
rights, benefits, obligations and duties evidenced thereby. A copy of the
Agreement may be examined during normal business hours at the Corporate Trust
Office of the Trustee, located at Bankers Trust Company, Four Albany Street,
10th Floor, New York, New York 10006 Attention: Corporate Trust and Agency
Group-Structured Finance, and at such other places, if any, designated by the
Trustee, by any Certificateholder upon request.
A-2
<PAGE>
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust, and not in
its individual capacity, has caused this Certificate to be duly executed.
FIRST SECURITY AUTO GRANTOR TRUST
_____-____
By: Bankers Trust Company,
not in its individual capacity, but
solely as Trustee
By:
-------------------------------
Authorized Officer
DATED:
----------------
Trustee's Certificate of
Authentication:
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
BANKERS TRUST COMPANY,
as Trustee
By:
-------------------------------
Authorized Officer
A-3
<PAGE>
REVERSE OF CERTIFICATE
FIRST SECURITY AUTO GRANTOR TRUST _____-____
____% ASSET BACKED CERTIFICATE, CLASS A
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement at any time by the Seller, the Servicer and the Trustee with
the consent of the holders of Certificates evidencing not less than a majority
of the aggregate outstanding principal balance of the Class A Certificates and
the Class B Certificates taken together as a single class. Any such consent by
the holder of this Certificate shall be conclusive and binding on such holder
and on all future holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain circumstances, without the consent of
the holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate interest in the Trust, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Seller, the Servicer, the Trustee, and any agent of the Seller,
the Servicer or the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Seller, the
Servicer, the Trustee, or any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby will terminate upon the earliest of (i) the Distribution
Date immediately succeeding the purchase by the Servicer, at its option, of the
Receivables (other than Defaulted Receivables) remaining in the Trust, as
described below, (ii) the payment to Certificateholders of all amounts required
to be paid to them pursuant to the Agreement, or (iii) the Distribution Date
which is six months after the maturity or the liquidation of the last Receivable
held in the Trust and the disposition of any amounts received upon liquidation
of any property remaining in the Trust. The Agreement provides that the
Servicer may, at its option, purchase the Receivables remaining in the Trust
(other than Defaulted Receivables) at a price equal to the aggregate Purchase
Amounts thereof,
A-4
<PAGE>
and such purchase of the Receivables will effect early retirement of the
Certificates; however, such right of purchase is exercisable only after the
first day of a Collection Period as of which the Pool Balance is 10% or less of
the original Pool Balance and the aggregate Purchase Amount for the Receivables
is greater than or equal to the sum of the Class A Certificate Balance and the
Class B Certificate Balance.
Notwithstanding anything contained in the Agreement to the contrary
(i) the Agreement has been accepted and this Certificate has been executed by
Bankers Trust Company not in its individual capacity but solely as Trustee and
as Collateral Agent with respect to the Reserve Account and the Yield Supplement
Account and in no event shall Bankers Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Seller thereunder or in any of the certificates, notices or agreements delivered
pursuant thereto, as to all of which recourse shall be had solely to the assets
of the Seller and (ii) except in its capacity as successor Servicer, under no
circumstances shall Bankers Trust Company be personally liable for the payment
of any indebtedness or expenses of the Trust.
A-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *
------------------ -----------------------------
Signature Guaranteed:
*
-----------------------------
- ------------------
*NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. The signature must be guaranteed
by an institution which is a member of one of the following recognized Signature
Guaranty Programs: (i) The Securities Transfer Agent Medallion Program; (ii)
The New York Stock Exchange Medallion Program; (iii) The Stock Exchange
Medallion Program; or (iv) in such other guarantee program acceptable to the
Trustee.
A-6
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF FIRST SECURITY BANK, N.A. OR
ANY AFFILIATE THEREOF. THIS CERTIFICATE AND THE RECEIVABLES ARE NOT DEPOSITS
AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE AND ANY BENEFICIAL INTEREST IN THIS CERTIFICATE MAY NOT BE
ACQUIRED BY (a) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")), THAT IS
SUBJECT TO THE PROVISIONS OF TITLE 1 OF ERISA, (b) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (c) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY (EACH A "BENEFIT PLAN"). BY ACCEPTING AND HOLDING THIS CERTIFICATE
OR AN INTEREST HEREIN, THE HOLDER HEREOF OR OWNER HEREOF SHALL BE DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN.
FIRST SECURITY AUTO GRANTOR TRUST _____-____
_____% ASSET BACKED CERTIFICATE, CLASS B
Evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of motor
vehicle retail installment sale contracts and motor vehicle
retail installment loans secured by the new and used automobiles
and light-duty trucks financed thereby and sold to the Trust by
First Security Bank, N.A.
NUMBER CUSIP
----------
$
- ------- -----------------
<PAGE>
Original Principal Amount
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a $________,
nonassessable, fully paid, fractional undivided interest in the First Security
Auto Grantor Trust _____-____ (the "Trust") formed by First Security Bank, N.A.,
a national banking association, as seller (the "Seller"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of ___________ (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Agreement") by and among the Seller, First Security Bank, N.A., as servicer (in
such capacity, the "Servicer"), and Bankers Trust Company, as trustee (the
"Trustee") and as collateral agent, a summary of certain of the provisions of
which is set forth an the reverse hereof.
To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "____% Asset Backed
Certificates, Class B" (herein called the "Certificates"). This Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The Trust Property includes
(as more fully described in the Agreement) a pool of retail installment sale
contracts and retail installment loans (the "Receivables") for the purchase of
the new and used automobiles and light-duty trucks financed thereby (the
"Financed Vehicles"), certain monies owing or received thereunder after the
close of business of the Servicer on ____________ (the "Cutoff Date"), the
Seller's security interests in the Financed Vehicles, certain of the Seller's
rights relating to the Receivables under certain agreements between the Seller
and the motor vehicle dealers, certain rights of the Trust under the related
Yield Supplement Agreement and all proceeds of the foregoing.
Subject to the terms and conditions of the Agreement (including the
availability of funds for distributions) and until the obligations created by
the Agreement shall have terminated in accordance therewith, there will be
distributed, but only from funds on deposit in the Class B Distribution Account,
on the 15th day of each month or, if such 15th day is not a Business Day, the
next succeeding Business Day (each such date, a "Distribution Date"), commencing
___________, to the Person in whose name this Certificate is registered at the
close of business of the Trustee on the day immediately preceding such
Distribution Date (or, if Definitive Certificates are issued, the last day of
the Collection Period immediately preceding such Distribution Date) (the "Record
Date"), such Certificateholder's fractional undivided interest in the amounts to
be distributed to Class B Certificateholders pursuant to the Agreement on such
Distribution Date.
Pursuant to the Agreement distributions of interest and principal on
the Class B Certificates will be subordinated in priority of payment to interest
and principal due on the Class A Certificates in the event of defaults and
delinquencies on the Receivables. The Class B Certificateholders will not
receive any distributions of interest with respect to a Collection Period until
the full amount of interest on the Class A Certificates relating to such
Collection Period has been deposited in the Class A Distribution Account, and
the Class B Certificateholders will not receive any distributions of principal
with respect to such Collection Period until the full amount of interest on and
principal of the Class A Certificates relating to such Collection Period has
been deposited in the Class A Distribution Account as set forth in the
Agreement.
B-2
<PAGE>
Distributions on this Certificate will be made by the Trustee by check
mailed to the Certificateholder of record at its address as it appears in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon, except that with respect to a Certificate
registered in the name of a Clearing Agency or its nominee, distributions will
be made by wire transfer of immediately available funds. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
This Certificate does not purport to summarize the Agreement and
reference is hereby made to the Agreement for information with respect to the
rights, benefits, obligations and duties evidenced thereby. A copy of the
Agreement may be examined during normal business hours at the Corporate Trust
Office of the Trustee, located at Bankers Trust Company, Four Albany Street,
10th Floor, New York, New York 10006, Attention: Corporate Trust and Agency
Group-Structured Finance, and at such other places, if any, designated by the
Trustee, by any Certificateholder upon request.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
B-3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust, and not in
its individual capacity, has caused this Certificate to be duly executed.
FIRST SECURITY AUTO GRANTOR
TRUST _____-____
By: Bankers Trust Company,
not in its individual capacity, but
solely as Trustee
By:
--------------------------
Authorized Officer
DATED:
-------------
Trustee's Certificate of
Authentication:
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
BANKERS TRUST COMPANY,
as Trustee
By:
--------------------------------
Authorized Officer
B-4
<PAGE>
REVERSE OF CERTIFICATE
FIRST SECURITY AUTO GRANTOR TRUST _____-____
_____% ASSET BACKED CERTIFICATE, CLASS B
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement at any time by the Seller, the Servicer and the Trustee with
the consent of the holders of Certificates evidencing not less than a majority
of the aggregate outstanding principal balance of the Class A Certificates and
the Class B Certificates taken together as a single class. Any such consent by
the holder of this Certificate shall be conclusive and binding on such Holder
and on all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain circumstances, without the consent of
the holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate interest in the Trust, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Seller, the Servicer, the Trustee, and any agent of the Seller,
the Servicer or the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Seller, the
Servicer, the Trustee, or any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby will terminate upon the earliest of (i) the Distribution
Date immediately succeeding the purchase by the Servicer, at its option, of the
Receivables (other than Defaulted Receivables) remaining in the Trust, as
described below, (ii) the payment to Certificateholders of all amounts required
to be paid to them pursuant to the Agreement, or (iii) the Distribution Date
which is six months after the maturity or the liquidation of the last Receivable
held in the Trust and the disposition of any amounts received upon liquidation
of any property remaining in the Trust. The Agreement provides that the
Servicer may, at its option, purchase the Receivables remaining in the Trust
(other than Defaulted Receivables) at a price equal to the aggregate Purchase
Amounts thereof,
B-5
<PAGE>
and such purchase of the Receivables will effect early retirement of the
Certificates; however, such right of purchase is exercisable only after the
first day of a Collection Period as of which the Pool Balance is 10% or less of
the Original Pool Balance and the aggregate Purchase Amount for the Receivables
is greater than or equal to the sum of the Class A Certificate Balance and the
Class B Certificate Balance.
Notwithstanding anything contained in the Agreement to the contrary
(i) the Agreement has been accepted and this Certificate has been executed by
Bankers Trust Company not in its individual capacity but solely as Trustee and
as Collateral Agent with respect to the Reserve Account and the Yield Supplement
Account, and in no event shall Bankers Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Seller thereunder or in any of the certificates, notices or agreements delivered
pursuant thereto, as to all of which recourse shall be had solely to the assets
of the Seller and (ii) except in its capacity as successor Servicer, under no
circumstances shall Bankers Trust Company be personally liable for the payment
of any indebtedness or expenses of the Trust.
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated: *
---------------- ----------------------------------
Signature Guaranteed:
*
----------------------------------
- --------------------------
*NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. The signature must be
guaranteed by an institution which is a member of one of the following
recognized Signature Guaranty Programs: (i) The Securities Transfer Agent
Medallion Program; (ii) The New York Stock Exchange Medallion Program; (iii) The
Stock Exchange Medallion Program; or (iv) in such other guarantee program
acceptable to the Trustee.
B-7
<PAGE>
EXHIBIT C
FORM OF SERVICER'S CERTIFICATE
The undersigned certifies that he is a duly authorized officer of
First Security Bank, N.A., a national banking association organized under the
laws of the United States (the "BANK"), and that he is duly authorized to
execute and deliver this certificate on behalf of the Bank pursuant to Section
3.9 of the Pooling and Servicing Agreement, dated as of ___________, by and
between the Bank, as seller and servicer, and Bankers Trust Company, as trustee
(the "POOLING AND SERVICING AGREEMENT"), and he further HEREBY CERTIFIES that:
1. the report for the period from ___________________ to
___________ attached to this certificate is complete and accurate and contains
all information required by Section 3.9 of the Pooling and Servicing Agreement;
and
2. as of the date hereof, no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination, has occurred.
Any capitalized terms used herein but not defined shall have the
meanings assigned to such term in the Pooling and Servicing Agreement.
IN WITNESS HEREOF, the undersigned has affixed hereunto his signature
and the corporate seal of the Bank as of this ___ day of ______________.
FIRST SECURITY BANK, N.A.
By:
-----------------------------
Name:
Title: Authorized Officer
<PAGE>
EXHIBIT D
FORM OF DEPOSITORY AGREEMENT
(See attached)
<PAGE>
EXHIBIT E
FORM OF YIELD SUPPLEMENT AGREEMENT
(See attached)
<PAGE>
FORM OF
YIELD SUPPLEMENT AGREEMENT
First Security Auto Grantor Trust _____-___
c/o Bankers Trust Company, as Trustee
and as Collateral Agent
Four Albany Street, 10th Floor
New York, New York 10006
Attn: Corporate Trust and Agency Group-Structured Finance
------------------
Ladies and Gentlemen:
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, we (the "SELLER") hereby confirm arrangements
made as of the date hereof with you (the "TRUST") to be effective upon receipt
by the Seller of the enclosed copy of this letter agreement (as amended,
supplemented or otherwise modified and in effect from time to time, the "YIELD
SUPPLEMENT AGREEMENT").
1. On or prior to the Determination Date preceding each
Distribution Date, the Servicer shall notify the Trust and the Seller of the
Yield Supplement Amount for such Distribution Date.
2. The Seller agrees to establish a Yield Supplement Account
pursuant to Article V of the Pooling and Servicing Agreement, dated as of
___________ (as amended, supplemented or otherwise modified and in effect from
time to time, the "POOLING AND SERVICING AGREEMENT") by and among the Seller, in
its individual capacity and as a servicer (the "SERVICER"), and Bankers Trust
Company, a New York banking corporation, as trustee thereunder (the "TRUSTEE")
and as collateral agent thereunder with respect to the Reserve Account and the
Yield Supplement Account (in such capacity, the "COLLATERAL AGENT"), and the
Seller hereby agrees to deposit to the Certificate Account an amount equal to
the Yield Supplement Amount prior to the close of business on each Deposit Date.
If and to the extent that such amounts shall not have been paid by the Seller in
full at such time, then, in such event, pursuant to Section 5.2(d) of the
Pooling and Servicing Agreement, the Trustee shall instruct the Collateral Agent
to withdraw the amount of any such insufficiency from the Yield Supplement
Account and deposit such funds into the Certificate Account.
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to the Certificate
Account (as the Trustee on behalf of the Trust designates in writing to the
Seller prior to the relevant Distribution Date).
4. Our agreements set forth in this Yield Supplement Agreement
are our primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to
<PAGE>
any counterclaim, setoff or defense (other than full and strict compliance by us
with our obligations hereunder) and shall remain in full force and effect
without regard to, and shall not be released, discharged or in any way affected
by, any circumstances or condition whatsoever.
5. This Yield Supplement Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
6. All demands, notices and communications under this Yield
Supplement Agreement shall be in writing, personally delivered, sent by
telecopier, Federal Express or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt. All
notices shall be directed as set forth below, or to such other address or to the
attention of such other Person as the relevant party shall have designated for
such purpose in a written notice.
The Trust:
First Security Auto Grantor Trust _____-___
c/o Bankers Trust Company, as Trustee
Four Albany Street, 10th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group-Structured Finance
Telecopy: 212-250-6439
The Seller:
First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Attention: Executive Vice President and General Counsel
Telecopy: (801) 246-5422
7. This Yield Supplement Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute one and the same document.
8. Capitalized terms used herein but not otherwise defined shall
have the meanings assigned thereto in the Pooling and Servicing Agreement.
-2-
<PAGE>
If the foregoing satisfactorily sets forth the terms and conditions of
our agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
FIRST SECURITY BANK, N.A.
By:
-----------------------------------
Name: Scott C. Ulbrich
Title: Authorized Officer
Agreed and accepted as of
the date first above written:
FIRST SECURITY AUTO GRANTOR TRUST _____-____
By: Bankers Trust Company,
not in its individual capacity, but solely
as Trustee and as Collateral Agent
By:
-------------------------------
Authorized Signatory
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
(See attached)
<PAGE>
SCHEDULE B
RECEIVABLE FILE LOCATIONS
On the date hereof, the Receivables and Receivable Files for the Servicer
are held by the Consumer Loan Servicing Department of First Security Service
Company, an affiliate of the Servicer, located at 3033 Elder Street, Boise,
Idaho 83705.
<PAGE>
EXHIBIT 5.1
<PAGE>
KIRKLAND & ELLIS
Partnerships Including Professional Corporations
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
(212) 446-4800
October __, 1997
First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Re: First Security Bank, N.A.
First Security-Registered Trademark- Auto Grantor Trusts
Registration Statement No. 333-35847
--------------------------------------------------------
We have acted as special counsel to First Security Bank, N.A., a
national banking association (the "BANK") in connection with the above-mentioned
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission (together with the exhibits and amendments thereto, the "REGISTRATION
STATEMENT") in connection with the registration by the Bank of certain Asset
Backed Certificates (the "CERTIFICATES") to be sold from time to time in one or
more series in amounts to be determined at the time of sale and to be set forth
in one or more Supplements (each, a "PROSPECTUS SUPPLEMENT") to the Prospectus
(the "PROSPECTUS") included in the Registration Statement.
As described in the Registration Statement, the Certificates will be
issued by grantor trusts (the "TRUSTS"). The Trusts will be formed by the Bank
pursuant to Pooling and Servicing Agreements (the "POOLING AND SERVICING
AGREEMENTS") by and among the Bank, as Seller and Servicer and the trustee for
each Trust specified in the related Prospectus Supplement (the "TRUSTEE").
In arriving at the opinion expressed below, among other things, we
have examined and relied, to the extent we deem proper on (i) the form of
Pooling and Servicing Agreement (including the form of Certificates included as
an exhibit thereto), (ii) the form of Yield Supplement Agreement and (iii) the
form of the Underwriting Agreement to be executed by the Bank and the
representative of the several underwriters (the "UNDERWRITERS) to be parties
thereto (the "UNDERWRITING AGREEMENT").
Subject to the assumptions, qualifications, and limitations identified
in this letter, and assuming the aforementioned documents are duly executed and
delivered in substantially the form we have examined, we hereby advise you that
in our opinion after the Requisite Preliminary Actions identified below have
been taken, the Certificates will have been validly issued and will be fully
paid and non-assessable.
<PAGE>
The term "Requisite Preliminary Actions" means: (i) the approval by
the Bank's Board of Directors of resolutions authorizing the Bank to execute and
deliver the Underwriting Agreement, to take the actions necessary to obtain
issuance of the Certificates under each Pooling and Servicing Agreement and to
sell the Certificates in accordance with the terms of the Underwriting Agreement
and to take the other actions contemplated by each Pooling and Servicing
Agreement and the Underwriting Agreement; (ii) the issuance by any committee,
group or executive of such authorization as may be required by the resolutions
contemplated in clause (i) as requisite to any of the actions cited in
clause (i); and (iii) the sale of the Certificates by the Bank in accordance
with the terms of the Underwriting Agreement and the payment to the Bank of the
consideration for the Certificates prescribed by the Underwriting Agreement.
For purposes of this letter, once the Underwriters have paid for the
Certificates pursuant to the Underwriting Agreement, the Certificates will be
considered "fully paid and nonassessable."
Our advice on every legal issue addressed in this letter is based
exclusively on the internal law of the State of Illinois. We advise you that
issues addressed by this letter may be governed in whole or in part by other
laws , but we express no opinion as to whether any relevant difference exists
between the laws upon which our opinions are based and any other laws which may
actually govern. For purposes of our opinions, we have assumed without
independent investigation that factual information supplied to us for purposes
of our opinions is complete and accurate.
We consent to the filing of both this letter and the letter filed as
Exhibit 8.1 of the Registration Statement as exhibits to the Registration
Statement and to the reference to this firm under the caption titled "Legal
Matters" in the prospectus which is part of the Registration Statement. In
giving this consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
KIRKLAND & ELLIS
<PAGE>
EXHIBIT 8.1
<PAGE>
KIRKLAND & ELLIS
Partnerships Including Professional Corporations
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
(212) 446-4800
October __, 1997
First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Re: First Security Bank, N.A.
First Security-Registered Trademark- Auto Grantor Trusts
Registration Statement No. 333-35847
--------------------------------------------------------
We have acted as special counsel to First Security Bank, N.A., a
national banking association (the "BANK") in connection with the above-mentioned
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission (together with the exhibits and amendments thereto, the "REGISTRATION
STATEMENT") in connection with the registration by the Bank of certain Asset
Backed Certificates (the "CERTIFICATES") to be sold from time to time in one or
more series in amounts to be determined at the time of sale and to be set forth
in one or more Supplements (each, a "PROSPECTUS SUPPLEMENT") to the Prospectus
(the "PROSPECTUS") included in the Registration Statement.
As described in the Registration Statement, each series of
Certificates will be issued by grantor trusts (the "TRUSTS"). The Trusts will
be formed by the Bank pursuant to Pooling and Servicing Agreements (the "POOLING
AND SERVICING AGREEMENTS") by and among the Bank, as Seller and Servicer and the
trustee for each Trust specified in the related Prospectus Supplement (the
"TRUSTEE").
In arriving at the opinion expressed below, among other things, we
have examined and relied, to the extent we deem proper on (i) the Registration
Statement, (ii) in each case as filed as an exhibit to the Registration
Statement, (a) the form of Underwriting Agreement, (b) the form of Pooling and
Servicing Agreement, (c) the form of the Yield Supplement Agreement and (d) the
form of the Prospectus Supplement, and (iii) copies of such other documents as
we have deemed necessary for the expression of the opinion contained herein.
<PAGE>
We have examined and relied, with your permission, as to factual
matters upon the representations and warranties contained in or made pursuant to
the documents referred to above and upon the originals or copies certified or
otherwise identified to our satisfaction of all such corporate records of the
Bank and such other instruments and certificates of public officials, officers
and representatives of the Bank and other persons, and we have made such
investigations of law as we have deemed appropriate. In such examination, we
have assumed, with your permission, the authenticity of all documents submitted
to us as originals, the conformity to the originals of all documents submitted
to us as copies, and the authenticity of the originals of all documents
submitted to us as copies. With your permission, we have further assumed the
genuineness of the signatures of persons signing all documents and instruments
and the authority of such persons signing on behalf of the parties thereto.
In rendering our opinion, we have also considered and relied upon the
Internal Revenue Code of 1986, as amended (the "CODE"), administrative rulings,
judicial decisions, regulations, and such other authorities (including Treasury
regulations) as we have deemed appropriate, all as in effect on the date hereof
and all of which are subject to change or different interpretation. However, we
will not seek a tax ruling from the Internal Revenue Service (the "IRS") with
respect to any of the matters discussed herein. Moreover, the statutory
provisions, regulations, interpretations and other authorities upon which our
opinion is based are subject to change, and such changes could apply
retroactively. In addition, there can be no assurance that positions contrary
to those stated in our opinion will not be taken by the IRS. Our opinion is in
no way binding on the IRS or any court, and it is possible that the IRS or a
court could, when presented with these facts, reach a different conclusion.
Based on the foregoing, and assuming the aforementioned documents are
duly executed and delivered in substantially the form we have examined, we are
of the opinion that the statements in the Prospectus under the heading "Federal
Income Tax Matters," to the extent that they constitute matters of law or legal
conclusions with respect thereto, have been prepared or reviewed by us and are
correct in all material respects.
Except for the opinion expressed above, we express no opinion as to
any other tax consequences of the transaction to any part under federal, state,
local, or foreign laws. In addition, we express no opinion as to the laws of
any jurisdiction other than the federal laws of the United States of America to
the extent specifically referred to herein.
Very truly yours,
KIRKLAND & ELLIS
<PAGE>
EXHIBIT 24.2
<PAGE>
RAY, QUINNEY & NEBEKER
Professional Corporation
Attorneys at Law
79 South Main Street
P.O. Box 4385
Salt Lake City, Utah 84145
October 23, 1997
First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
RE: Registration Statement on Form S-3
Registration No. 333-35847
Ladies and Gentlemen:
We are members of the Bar of the State of Utah and have acted as counsel to
First Security Bank, N.A. ("First Security") in connection with the registration
of Asset Backed Certificates to be issued by First Security-Registered
Trademark- Auto Grantor Trusts.
In connection with our engagement, we consent to the reference to Ray,
Quinney & Nebeker under the caption "Legal Matters" in the Prospectus included
in the above-referenced Registration Statement.
Very truly yours,
/s/ A. Robert Thorup
A. Robert Thorup
<PAGE>
EXHIBIT 24.3
<PAGE>
Law Office
MOFFATT, THOMAS, BARRETT, ROCK & FIELDS
CHARTERED
First Security Building
911 West Idaho
Post Office Box 829
Boise, Idaho 83701
October ___, 1997
First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
RE: Registration Statement on Form S-3
Registration No. 333-35847
Ladies and Gentlemen:
We are members of the Bar of the State of Idaho and have acted as counsel
to First Security Bank, N.A. ("First Security") in connection with the
registration of Asset Backed Certificates to be issued by First
Security-Registered Trademark- Auto Grantor Trusts.
In connection with our engagement, we consent to the reference to Moffatt,
Thomas, Barrett, Rock & Fields under the caption "Legal Matters" in the
Prospectus included in the above-referenced Registration Statement.
Very truly yours,
/s/ Michael E. Thomas
Michael E. Thomas
