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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1998
REGISTRATION NO. 333-35847
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
FIRST SECURITY AUTO GRANTOR TRUSTS
(Issuer with respect to the Certificates)
FIRST SECURITY AUTO OWNER TRUSTS
(Issuer with respect to the Notes)
FIRST SECURITY BANK,-Registered Trademark- N.A.
(Originator of the Trust described herein)
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<S> <C> <C>
UNITED STATES OF AMERICA 6025 87-0131890
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer Identification No.)
incorporation or organization) Classification Code No.)
</TABLE>
FIRST SECURITY BANK, N.A.
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Address, including zip code, and telephone number, including area code, of
the Registrant's principal executive office)
------------------
SCOTT C. ULBRICH
EXECUTIVE VICE PRESIDENT AND CASHIER
FIRST SECURITY CORPORATION
61 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 BUILDING 200 EAST RANDOLPH DRIVE
SALT LAKE CITY, UTAH 84145-0385 CHICAGO, ILLINOIS 60601
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box: /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / / _____
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: / /
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EXPLANATORY NOTE
The Bank has previously filed this Registration Statement with a base
prospectus registering securities to be issued by grantor trusts. This
Amendment No. 2 includes a separate base prospectus which provides for the
sale of securities to be issued by owner trusts. In addition, the grantor
trust base prospectus previously filed with the Securities and Exchange
Commission is amended herein.
<PAGE>
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
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SUBJECT TO COMPLETION, DATED ___________, 1998
BASE PROSPECTUS
FIRST SECURITY-Registered Trademark- AUTO OWNER TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
FIRST SECURITY BANK-Registered Trademark-, N.A.
SELLER AND SERVICER
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE __ IN THIS PROSPECTUS.
The Notes of any series represent the obligations of the related Trust only.
The Certificates of such series represent the beneficial interest in the related
Trust only. Neither the Notes nor the Certificates issued by any Trust
represent obligations of or interests in, and are not guaranteed by, First
Security Bank-Registered Trademark-, N.A. or any of its respective affiliates.
This Prospectus may be used to offer and sell any Securities only if accompanied
by an applicable Prospectus Supplement.
THE TRUSTS--
- - A new trust will be formed to issue each series of Securities.
- - The primary assets of each Trust will be:
- a pool of fixed rate retail motor vehicle installment sales contracts
and installment loans;
- monies received on such contracts and loans;
- a security or ownership interest in the automobiles and lights trucks
financed under such contracts and loans; and
- other related assets.
THE SECURITIES--
- will represent indebtedness of the related Trust (in the case of the
Notes) or beneficial interests in the related Trust (in the case of
the Certificates);
- will be paid only from the assets of the related Trust;
- will represent the right to payments in the amounts and at the times
described in the related Prospectus Supplement;
- may benefit from one or more forms of credit enhancement; and
- will be issued as part of a designated series, which will include one
or more classes of Notes and one or more classes of Certificates.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________ ___, 1998
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We tell you about the Securities in two separate documents that progressively
provide more detail: (a) this Prospectus, which provides general information,
some of which may not apply to particular Securities, including your Securities,
and (b) the accompanying supplement to this Prospectus (a "PROSPECTUS
SUPPLEMENT"), which will describe the specific terms of your Securities,
including:
- the timing of any interest and principal payments;
- the priority of any interest and principal payments;
- financial and other information about the property owned by the
related Trust;
- information about credit enhancement for each class;
- the ratings of each class; and
- the method for selling the Securities.
The terms of particular Securities may vary between this Prospectus and the
Prospectus Supplement, in which case you should rely on the information in the
Prospectus Supplement.
You should rely only on the information provided in this Prospectus and the
accompanying Prospectus Supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with other or different
information. We are not offering the Securities in any jurisdiction where the
offer is not permitted. We do not claim the accuracy of the information in this
Prospectus or the accompanying Prospectus Supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this Prospectus and in the accompanying
Prospectus Supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
included in the accompanying Prospectus Supplement provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
Prospectus are defined under the caption "Index of Terms" beginning on page 51
in this Prospectus.
_________
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TABLE OF CONTENTS
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PROSPECTUS SUMMARY
The Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
The Offered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
The Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Servicing and Administrative Arrangements . . . . . . . . . . . . . . . . . . . . .9
Optional Repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
The Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Potential Priority of Certain Liens. . . . . . . . . . . . . . . . . . . . . . . . 11
Possible Reductions and Delays in Payments Due to Bankruptcy and Insolvency. . . . 11
Maturity and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . 12
Limited Enforceability of the Receivables. . . . . . . . . . . . . . . . . . . . . 12
Limited Reliance on the Bank and its Affiliates. . . . . . . . . . . . . . . . . . 13
Extensions and Deferrals of Payments on Receivables. . . . . . . . . . . . . . . . 13
Limited Assets of Each Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Risk of Commingling of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Limited Ability to Resell Securities . . . . . . . . . . . . . . . . . . . . . . . 14
Absence of Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . 14
Limited Significance of Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . 14
FORMATION OF THE TRUSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TRUST PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE MOTOR VEHICLE LOAN PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Origination of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Servicing and Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Physical Damage Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Delinquency and Loss Experience. . . . . . . . . . . . . . . . . . . . . . . . . . 18
MATURITY AND PREPAYMENT ASSUMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 19
POOL FACTORS AND TRADING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 19
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Principal and Interest on the Notes. . . . . . . . . . . . . . . . . . . . . . . . 21
The Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
4
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DESCRIPTION OF THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Distributions of Interest and Certificate Balance. . . . . . . . . . . . . . . . . 26
The Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CERTAIN INFORMATION REGARDING THE SECURITIES . . . . . . . . . . . . . . . . . . . . . 27
Fixed Rate Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Book-Entry Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Definitive Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS . . . . . . . . . . . . . . . . . 34
Sale and Assignment of Receivables . . . . . . . . . . . . . . . . . . . . . . . . 34
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Servicing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Servicing Compensation and Payment of Expenses . . . . . . . . . . . . . . . . . . 38
Net Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Certain Matters Regarding the Servicer . . . . . . . . . . . . . . . . . . . . . . 38
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Statements to Trustees and Trust . . . . . . . . . . . . . . . . . . . . . . . . . 40
Evidence as to Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Events of Servicing Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Rights Upon Event of Servicing Termination . . . . . . . . . . . . . . . . . . . . 41
Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . 44
Rights in the Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Security Interests in the Financed Vehicles. . . . . . . . . . . . . . . . . . . . 44
Repossession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Notice of Sale; Redemption Rights. . . . . . . . . . . . . . . . . . . . . . . . . 46
Deficiency Judgments and Excess Proceeds . . . . . . . . . . . . . . . . . . . . . 47
Consumer Protection Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Other Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 50
INDEX OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
5
<PAGE>
PROSPECTUS SUMMARY
- - This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
Securities, read carefully this entire document and the accompanying
Prospectus Supplement.
- - This summary provides an overview of certain information to aid your
understanding and is qualified by the full description of this information
in this Prospectus and the accompanying Prospectus Supplement.
THE PARTIES
Issuer................... Each Series of Securities will be issued by a
separate Trust created pursuant to a Trust
Agreement.
Seller and Servicer...... First Security Bank-Registered Trademark-, N.A.
will be the Seller and the Servicer for each
Trust.
Owner Trustee............ Each Trust will have an Owner Trustee as specified
in the related Prospectus Supplement.
Indenture Trustee........ Each Trust will have an Indenture Trustee as
specified in the related Prospectus Supplement.
THE OFFERED SECURITIES We will describe in each Prospectus Supplement the
Securities we are offering at that time. The
offered Securities will include one or more
classes of asset-backed Notes and may include one
or more classes of asset-backed Certificates. We
sometimes refer to the Notes and Certificates
issued by the same Trust as a "SERIES." We may
not offer all classes of a Series pursuant to this
Prospectus. Instead, we may retain one or more
classes and we may sell one or more classes in
private placements.
THE NOTES
Each Note will represent the right to receive
payments of principal and interest as described in
the related Prospectus Supplement.
In general, each class of Notes will have a stated
principal amount and will bear interest at a
specified rate or rates (with respect to each
class of Notes, the "INTEREST RATE"). The
Interest Rate for each class of Notes, or the
method for determining the Interest Rate, will be
specified in the related Prospectus Supplement.
Each class of Notes may have a different Interest
Rate, which may be fixed, variable or adjustable,
or any combination of these. Each class of Notes
may also provide for principal payments to be made
at different times and in different amounts.
If a Series includes two or more classes of Notes,
each class may differ as to the timing and
priority of payments of principal and interest,
seniority and allocations of losses. Some classes
of Notes may be subordinated to other classes of
Notes of the same Series as described in the
related Prospectus Supplement.
THE CERTIFICATES
6
<PAGE>
The Certificates included in each Series may or
may not be offered under this Prospectus and the
related Prospectus Supplement. In general, each
class of Certificates will have a stated
Certificate Balance (the "CERTIFICATE BALANCE")
and will accrue interest on such Certificate
Balance at a specified rate (with respect to each
class of Certificates, the "PASS-THROUGH RATE").
Each Prospectus Supplement will specify the
Pass-Through Rate for each class of Certificates
offered by that Prospectus Supplement or the
method for determining the Pass-Through Rate.
Each Certificate offered hereby will represent the
right to receive payments of interest and with
respect to Certificate Balance as described in the
related Prospectus Supplement. Each class of
Certificates may also provide for payments in
respect of Certificate Balance to be made at
different times and in different amounts.
Payments on the Certificates issued by a Trust
will be subordinated in priority to payments on
the related Notes. The details of the
subordination will be specified in the related
Prospectus Supplement. In addition, if a Series
includes two or more classes of Certificates, each
class may differ as to timing and priority of
payments of interest and with respect to
Certificate Balance, seniority and allocations of
losses. Some classes of Certificates may be
subordinated to other classes of Certificates of
the same Series as described in the related
Prospectus Supplement.
REGISTRATION AND CLEARANCE
Unless otherwise provided, Securities offered
hereby will be registered in the name of Cede &
Co., as the nominee of the Depository Trust
Company in the United States or Cedel or Euroclear
in Europe. A holder of Securities will not
receive a definitive certificate representing its
interest, except in certain limited circumstances
when Securities in fully registered, certificated
form are issued.
DENOMINATIONS
Securities will be available for purchase in the
denominations specified in the related Prospectus
Supplement. If no denomination is specified, then
the Notes will be available for purchase in
minimum denominations of $1,000 and in greater
whole-dollar denominations and the Certificates
will be available for purchase in minimum
denominations of $20,000 and in greater
whole-dollar denominations.
RATINGS
Each Prospectus Supplement will specify the
ratings upon which the issuance of the related
Securities will be conditioned.
THE TRUST PROPERTY The primary assets of each Trust will be a pool of
fixed rate retail motor vehicle installment sales
contracts and installment loans made by the Seller
or through a Dealer that sold a motor vehicle.
The Receivables in each Trust will be sold by the
Seller to the Trust. The Trust Property will also
include:
- All monies due or received under the
Receivables after the Cutoff Date specified
in the related Prospectus Supplement;
7
<PAGE>
- A security or ownership interest in the new
and used automobiles and lights trucks
financed by the Receivables;
- Any proceeds from claims on certain related
insurance policies or from obligors under the
Receivables;
- Certain amounts on deposit in the Trust
Accounts as described herein and in the
related Prospectus Supplement;
- Certain rights of the Seller relating to
Receivables from agreements between the
Seller and the Dealers that sold the Financed
Vehicles and related documents; and
- All rights of the Trust under the Sale and
Servicing Agreement.
In addition, a Trust may have the right to
purchase additional Receivables (the "SUBSEQUENT
RECEIVABLES") from the Seller after the related
Securities are issued if certain conditions are
satisfied. In such case, a portion of the
proceeds from the sale of the related Securities
(referred to as the "PRE-FUNDED AMOUNT") will be
held in a Trust Account (referred to as the
"PRE-FUNDING ACCOUNT") and used to pay the
purchase price for Subsequent Receivables and
related purposes. The related Prospectus
Supplement will describe the right, if any, of a
Trust to purchase Subsequent Receivables.
The Trust Property will be assigned by each Trust
to the related Indenture Trustee for the benefit
of the Noteholders and the Certificateholders to
the extent provided in the related Indenture.
CREDIT ENHANCEMENT A holder of a class of Securities may benefit from
one or more features that provide additional
payment protection. These features are called
"CREDIT ENHANCEMENT" and may include any one or
more of the following, as specified in the related
Prospectus Supplement:
- subordination of one or more other classes of
Securities
- a Reserve Account
- a Yield Supplement Account
- Advances
- interest rate swaps or caps
- over collateralization
- letters of credit
- credit or liquidity facilities
- repurchase obligations
- third party payments or other support
- cash deposits
RESERVE ACCOUNT
If so specified in the related Prospectus
Supplement, the Trust will have a RESERVE ACCOUNT.
The Reserve Account will be funded as follows:
- On the Closing Date, the Seller will deposit
the Reserve Account Initial Deposit specified
in the related Prospectus Supplement.
8
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- To the extent provided in the related
Prospectus Supplement, additional amounts
will be deposited in the Reserve Account in
connection with the purchase of Subsequent
Receivables.
- To the extent specified in the related
Prospectus Supplement, the amount in the
Reserve Account will be supplemented by the
deposit of funds remaining after providing
for amounts to be distributed to the holders
of the Notes and the Certificates and the
payment to the Servicer of the Servicing Fee.
Funds on deposit in the Reserve Account will be
available on each Distribution Date to cover
shortfalls in distributions of interest and
principal on the Securities to the extent
described herein and in the related Prospectus
Supplement.
Unless otherwise specified in the related
Prospectus Supplement, amounts in the Reserve
Account (after giving effect to all distributions
to be made to or for the benefit of the
Noteholders, the Certificateholders and the
Servicer) in excess of the Specified Reserve
Account Balance (as defined in the related
Prospectus Supplement) will be paid to the Seller.
YIELD SUPPLEMENT AGREEMENT; YIELD SUPPLEMENT
ACCOUNT
If so specified in the related Prospectus
Supplement, the Seller or a third party will enter
into a yield supplement agreement for any Trust
and/or establish a yield supplement account for
the benefit of the holders of the related
Securities. A yield supplement agreement or
account is designed to provide for payments to
Securityholders where the interest rate of a
Receivable is less than the sum of the applicable
Interest Rate or Pass-Through Rate and the
Servicing Fee Rate.
SERVICING AND
ADMINISTRATIVE
ARRANGEMENTS With respect to each Series of Securities, the
Seller will transfer the Receivables to the
related Trust pursuant to a Sale and Servicing
Agreement between the Seller and the Trust (the
"SALE AND SERVICING AGREEMENT"). The Servicer
will service, manage, maintain custody of and make
collections on the Receivables. The Servicer will
receive a servicing fee from the related Trust. In
addition, the Bank, as the Administrator, will
undertake certain administrative duties with
respect to each Trust under an Administration
Agreement. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and
Payment of Expenses."
The Prospectus Supplement may provide that the
Servicer may make an Advance with respect to each
Receivable in an amount described in the related
Prospectus Supplement if payments are due and
unpaid on such Receivable. The Servicer will not
be obligated to make any Advance in respect of a
Receivable to the extent that it does not expect
to recover such Advance from subsequent
collections or recoveries on such Receivable. The
Servicer will be entitled to reimbursement of all
Advances.
OPTIONAL REPURCHASE Unless otherwise provided in the Prospectus
Supplement, the Servicer will have the option to
purchase the Receivables of a Trust in the manner
and on the terms and conditions described under
"Description of the Transfer and
9
<PAGE>
Servicing Agreements--Termination." Any such
purchase would result in the payment in full of
all outstanding Securities.
THE AGREEMENTS With respect to each Trust, we will enter into the
agreements described below. We may also enter
into other agreements to provide for Credit
Enhancement or other matters.
SALE AND SERVICING AGREEMENT
A Sale and Servicing Agreement between the Seller,
the Trust and the Indenture Trustee will provide
for the transfer of the Receivables by the Seller
to the related Trust. The Sale and Servicing
Agreement will also appoint the Servicer and set
forth servicing procedures, compensation and other
matters relating to the servicing of the
Receivables, as well as matters relating to
collections and distributions on the Securities.
THE TRUST AGREEMENT
A Trust Agreement between the Seller and the Owner
Trustee will provide for the formation of each
Trust and the issuance of the related
Certificates.
THE INDENTURE
For each Trust, the Notes will be issued pursuant
to the terms of an Indenture between the Trust and
the related Indenture Trustee. The Trust Property
will be pledged by each Trust to the related
Indenture Trustee for the benefit of the Notes and
Certificates to the extent provided in such
Indenture.
ADMINISTRATION AGREEMENT
Pursuant to an Administration Agreement between
the Bank, the Trust and the related Indenture
Trustee, the Bank will agree to act as
Administrator and provide notices and perform on
behalf of the related Trust and Owner Trustee
certain other administrative obligations required
by the related Indenture.
TAX STATUS For information concerning the application of the
federal income tax laws, including whether the
Notes will be characterized as debt for federal
income tax purposes, see the accompanying
Prospectus Supplement. We urge you to consult
your own tax counsel before you purchase any
Securities.
ERISA CONSIDERATIONS Subject to the considerations discussed under
"ERISA Considerations" herein and in the related
Prospectus Supplement, the Notes are eligible for
purchase by employee benefit plans.
No Certificates may be acquired by any employee
benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended, or by any
individual retirement account. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase any Securities.
POTENTIAL PRIORITY OF THE SELLER WILL FILE FINANCING STATEMENTS TO
CERTAIN LIENS perfect the interest of each Trust in its
Receivables as required by the Uniform Commercial
Code in the relevant states (the "UCC").
Similarly, financing statements will be filed as
required by the UCC to perfect the pledge of the
Receivables by the Trust to the Indenture
Trustee. For each Trust, the Servicer will
appoint First Security Service Company, an
affiliate of the Servicer, as the custodian to
hold the Receivables and the Receivable Files.
The Receivables Files will not be segregated,
stamped or otherwise marked to indicate that
they have been sold to the Trust or pledged to
the Indenture Trustee. However, the Servicer and
First Security Service Company will note in their
computer records that the Receivables have been
sold to the Trust and pledged to the Indenture
Trustee. If another party purchases or takes
a security interest in the Receivables (i) for
value, (ii) in the ordinary course of business
and (iii) without actual knowledge of the Trust's
and the Indenture Trustee's interest, such
purchaser or secured party will acquire an
interest in the Receivables superior to the
interest of the Trust and the Indenture Trustee.
The Seller will assign its security interest in
the Financed Vehicles to the Trust and the Trust
will pledge such security interest to the
Indenture Trustee. The certificates of title or
ownership of the Leased Vehicles will not identify
the Trust or the Indenture Trustee as the new
secured party. In Utah, Idaho and most other
states, in most cases, if (i) the Bank files an
application requesting the Bank's lien be noted on
the certificates of title or ownership, and/or
(ii) the Bank has possession of such certificates
with the notation within 20 days after the Obligor
takes possession of the Financed Vehicle, then the
security interest of the Trust and the Indenture
Trustee in the Financed Vehicle will be perfected
against other security interests. Idaho also has
procedures allowing for a paperless electronic
record of title. There is a risk, however, in
certain states that if the Trust or the Indenture
Trustee is not identified as the new secured party
on the certificate of title, its security interest
may not be perfected. In the event a Trust or the
Indenture Trustee does not have a perfected
security interest in a Financed Vehicle, its
security interest, and the security interest of
the Indenture Trustee, would be subordinate to 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 The Seller intends that the transfer of
DELAYS IN PAYMENTS DUE TO Receivables to each Trust be treated as a
BANKRUPTCY AND INSOLVENCY sale. If the Seller were to become insolvent, the
Federal Deposit Insurance Act ("FDIA"), as amended
by the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), gives certain
powers to the Federal Deposit Insurance
Corporation ("FDIC"), if it were approved as
receiver. FDIC staff positions taken prior to the
passage of FIRREA do not suggest that the FDIC
would interrupt the timely transfer to a Trust of
payments collected on the related Receivables.
Under FIRREA, if the transfer
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of the Receivables to the Trust were
characterized as a loan secured by a pledge of
Receivables rather than a sale, such Trust's
security interest in the Receivables should be
respected by the FDIC if --
- the Seller's transfer of the Receivables is
the grant of a valid security interest in the
Receivables to such Trust;
- the Seller becomes insolvent and the FDIC is
appointed conservator or receiver of the
Seller; and
- the security interest (a) is validly
perfected before the Seller's insolvency and
(b) was not taken in contemplation of the
Seller's insolvency or with the intent to
hinder, delay or defraud the Seller or its
creditors.
If the FDIC were to assert a different position,
your payments of outstanding principal and
interest could be delayed and possibly reduced or
the FDIC might have the right to repay the
Securities early and for an amount which may be
greater or less than their principal balance. For
example, under the FDIA, the FDIC could--
- require the Trust or the Indenture Trustee to
go through an administrative claims
procedure to establish its right to those
payments;
- request a stay of proceedings with respect to
the Seller; or
- reject the Seller's sales contract and limit
the Trust's resulting claim to "actual direct
compensatory damages."
See "Certain Legal Aspects of the Receivables--
Other Limitations" in this Prospectus.
MATURITY AND PREPAYMENT Obligors may prepay the Receivables in full or
CONSIDERATIONS in part. In addition, prepayment may result from
defaults or the receipt of proceeds from credit
life, disability or physical damage insurance.
Also, the Seller may be required to repurchase
Receivables from a Trust in certain circumstances,
and the Servicer may have the right to purchase
all remaining Receivables from a Trust pursuant to
its optional purchase right. See "Description of
the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" and "--Termination."
Each such prepayment, repurchase or purchase will
shorten the average life of the related
Securities. Prepayment rates may be influenced by
a variety of economic, social and other factors
and cannot be predicted with any assurance. For
example, decreases in interest rates and the fact
that the Obligor may not sell or transfer the
Financed Vehicle without the consent of the Seller
may affect the rate of prepayment. If
prepayments occurred after a decline in interest
rates, you may be required to reinvest your funds
at a return lower than the applicable Interest
Rate or Pass Through Rate. You will bear all
reinvestment risk resulting from a faster or
slower rate of prepayment, repurchase or extension
of the Receivables held by your Trust unless
otherwise provided in the related Prospectus
Supplement. See "Maturity and Prepayment
Assumptions."
LIMITED ENFORCEABILITY Federal and state consumer protection laws
OF THE RECEIVABLES regulate the creation and enforcement of consumer
loans such as the Receivables. Specific
statutory liabilities are imposed upon creditors
who fail to comply with these regulatory
provisions. In some cases, this liability could
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affect an assignee's ability to enforce secured
loans such as the Receivables. If an Obligor had
a claim against any Trust for violation of these
laws prior to the Cutoff Date, the Seller must
repurchase the Receivable unless the breach is
cured. If the Seller fails to repurchase such
Receivable, payments in respect of your Security
may be reduced or delayed.
LIMITED RELIANCE ON THE The Bank and its affiliates are generally not
BANK AND ITS AFFILIATES obligated to make any payments to you in respect
of your Securities and do not guarantee payments
on the Receivables or your Securities. However,
the Bank, as Seller will make representations and
warranties with respect to the characteristics of
the Receivables. In certain circumstances, the
Seller may be required to repurchase Receivables
with respect to which the representations and
warranties have been breached. If the Seller
fails to repurchase such Receivables, payments in
respect of your Security may be reduced or
delayed. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of
Receivables."
In addition, in certain circumstances, the
Servicer may be required to purchase Receivables.
If the Servicer fails to purchase Receivables,
payments in respect of your Security may be
reduced or delayed. See "Description of the
Transfer and Servicing Agreements--Servicing
Procedures." If the Bank were to stop acting as
the Servicer, delays in processing payments on the
Receivables and information in respect of the
Receivables could occur and result in delays in
payments to you.
EXTENSIONS AND DEFERRALS In certain circumstances, the Servicer may permit
OF PAYMENTS ON RECEIVABLES an extension on payments due on Receivables on a
case-by-case basis. In addition, the Servicer has
historically offered payment deferrals to all
Obligor's that meet the Bank's eligibility
requirements for such deferrals in June and in
December of each year. Any such deferrals or
extensions may extend the maturity of the
Receivables and increase the weighted average life
of the related Securities. Any fees received by
the Servicer associated with such deferrals or
extensions will increase the principal balance of
the related Receivable. Any reinvestment risk
resulting from extensions or deferrals of payments
on Receivables will be borne entirely by you as a
Securityholder. However, unless otherwise
provided in the related Prospectus Supplement, if
any payment deferral of a Receivable results in
extending the term beyond the latest Final
Scheduled Distribution Date (as defined in the
related Prospectus Supplement) for any class of
Securities, the Servicer will be required to
purchase the Receivable from the related Trust.
See "The Motor Vehicle Loan Portfolio--
Underwriting."
LIMITED ASSETS OF EACH Each Trust will not have any significant
TRUST assets or sources of funds other than the
Receivables and any Credit Enhancement provided
for in the related Prospectus Supplement. The
Notes will represent obligations solely of, and
the Certificates will represent interests in, the
related Trust. Except to the extent specifically
described in the related Prospectus Supplement,
the Notes and the Certificates will not be insured
or guaranteed by the Seller, any Owner Trustee,
any Indenture Trustee, any of their affiliates or
any other person or entity. You must rely on
payments on the related Receivables and, if
available, amounts on deposit in the Trust
Accounts and any Credit Enhancement to the extent
provided in the related Prospectus Supplement for
repayment of your Securities.
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SUBORDINATION To the extent provided in the related Prospectus
Supplement, payments of interest and/or principal
on the Securities of any class of Securities may
be subordinated in priority of payment to interest
and/or principal due on one or more other classes
of Securities in the same Series. As a result, if
your class of Securities is subordinated, you will
not receive any distributions on a Distribution
Date until the full amount of interest and/or
principal of senior classes has been allocated to
such senior Securities.
RISK OF COMMINGLING OF With respect to each Trust, the Servicer
ASSETS will generally be required to deposit all
collections and proceeds of the Receivables into
the Collection Account of such Trust within two
business days of receipt. However, if certain
conditions satisfactory to the Rating Agencies are
satisfied, the Servicer will not be required to
deposit such amounts in the Collection Account
until shortly before funds are needed to make
required distributions to the Securityholders.
Until these funds have been deposited in the
Collection Account, the Servicer may invest these
funds at its own risk and for its own benefit and
will not segregate them from its own funds. If
the Servicer cannot deposit the funds in the
Collection Account on the specified date, you
might incur a loss. See "Description of the
Transfer and Servicing Agreements--Collections on
the Receivables."
LIMITED ABILITY TO RESELL The related Underwriters may assist in resales
SECURITIES of the Securities but they are not required to do
so. A secondary market for any Securities may not
develop. If a secondary market does develop, it
might not continue or it might not be sufficiently
liquid to allow you to resell any of your
Securities.
ABSENCE OF DEFINITIVE Unless otherwise provided in the related
SECURITIES Prospectus Supplement, the Securities will
initially be represented by global securities
registered in the name of Cede, as nominee of DTC.
Except in certain limited circumstances, you will
not be entitled to receive a Definitive Security
representing your Note or Certificate. Under the
terms of the Indenture or the Trust Agreement, as
applicable, Securityholders will not be recognized
as Noteholders or Certificateholders, as
applicable, and may only exercise such rights
indirectly through DTC. See "Certain Information
Regarding the Securities--Book Entry Registration"
and "--Definitive Securities."
LIMITED SIGNIFICANCE OF Each class of Securities offered hereunder will
RATINGS be issued only if the rating specified in the
related Prospectus Supplement is received. A
security rating is not a recommendation to buy,
sell or hold the
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Securities. The ratings may be revised or
withdrawn at any time. Ratings on the Securities
do not address the timing of distributions of
principal and interest on the Securities prior to
the applicable Final Scheduled Distribution Date.
FORMATION OF THE TRUSTS
With respect to each Series of Securities, the Seller will establish a separate
trust (a "TRUST") by selling and assigning the Receivables and certain other
Trust Property to the related Trust in exchange for such Securities. The Notes
and Certificates of a Series are collectively referred to as "SECURITIES."
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 related Securities
and making payments on the related Securities.
The Servicer will service the Receivables of each Trust, either directly or
through subservicers, and will be paid the Servicing Fee out of collections from
the Receivables, prior to distributions to the Securityholders. The Servicer
will also be entitled to the Supplemental Servicing Fee. Certain other expenses
of each Trust will be paid by the Servicer or by the Seller as provided in the
applicable Sale and Servicing Agreement. See "Description of the Transfer and
Servicing Agreement--Servicing Compensation and Payment of Expenses."
For each Trust, the Servicer will appoint an affiliate, First Security Service
Company, to hold the Receivables and Receivable Files as custodian (the
"CUSTODIAN") for the Trust and the Indenture Trustee. Although the Receivables
will not be marked or stamped to indicate that they have been sold to a Trust or
pledged to an Indenture Trustee, and the certificates of title for the Financed
Vehicles will not be endorsed or otherwise amended to identify such Trust or
Indenture Trustee as the new secured party, the Servicer and the Custodian will
indicate in their computer records that the Receivables have been sold to that
Trust and pledged to the related Indenture Trustee. Under such circumstances
and in certain jurisdictions, a Trust's or an Indenture Trustee'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."
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 Securities and distributing payments on
the Securities, 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
The primary assets of each Trust (the "TRUST PROPERTY") will include (i) a pool
of fixed rate motor vehicle installment sales contracts and installment loans
made by the Seller or through a motor vehicle dealer (a "DEALER") that sold a
motor vehicle (collectively, for any Trust, the "RECEIVABLES"), (ii) all monies
due or received under such Receivables after a date which is specified in the
related Prospectus Supplement (a "CUTOFF DATE"), (iii) certain amounts from time
to time on deposit in the related Trust Accounts, including any Reserve Account,
(iv) security interests in the new and used automobiles and light trucks
financed by the Receivables (the "FINANCED VEHICLES"), (v) certain rights of
such Trust under the related Yield Supplement Agreement (if any), (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 under the Receivables (each, an "OBLIGOR"),
(vii) the Seller's right to all documents and information contained in the
Receivable Files, (viii) the rights of such Trust under the related Sale and
Servicing Agreement, (ix) certain of the Seller's rights relating to such
Receivables under agreements between the Seller and the Dealers that sold the
Financed Vehicles and related documents (the "DEALER AGREEMENTS"), (x) the
rights under any applicable Credit
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Enhancement to the extent specified in the applicable Prospectus Supplement
and (xi) all proceeds (within the meaning of the UCC) of the foregoing.
THE MOTOR VEHICLE LOAN PORTFOLIO
GENERAL
The Bank originates retail motor vehicles installment sales 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.
Historically, a substantial portion of the Bank's portfolio of Motor Vehicle
Loans are located in Utah and Idaho, and that area of the country generally.
Detailed information relating to the geographic distribution of Motor Vehicle
Loans will be set forth in the related Prospectus Supplement.
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
The Bank's direct loans are referred to, and approved at, the Direct Loan Center
located 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.
Bank wide consumer loan collections are performed by the Consumer Collection
Center located in Salt Lake City.
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 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.
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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
amounts 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 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
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.
The information for an applicant is evaluated by the Bank's experienced credit
officers as a package; no one factor is determinative to the analysis. As a
result, certain Motor Vehicle Loans 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. Each such Dealer has made representations and warranties to the Bank
with respect to the contracts originated through it and the security
interests in the Financed Vehicles relating thereto, although such
representations and warranties do not relate to the creditworthiness of any
applicant or the collectibility of any loans. However, as to a generally
small percentage of the 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 a Dealer with respect to a retail
installment sale contract originated through it, the Bank has a right 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.
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SERVICING AND COLLECTIONS
Collection activities with respect to delinquent Motor Vehicle Loans are
performed by the Bank's collection personnel. Under current practices,
collection personnel generally initiate contact, by mail, with obligors whose
Motor Vehicle Loans 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 Motor Vehicle Loan becomes
13 days delinquent. Generally, after a Motor Vehicle Loan continues delinquent
for 90 days, the Financed Vehicle is repossessed; however, under certain
circumstances, the Financed Vehicle may be repossessed immediately after a Motor
Vehicle Loan has become delinquent. After repossession, the Bank is required to
give reasonable notice of any proposed sale of the Financed Vehicle, and the
Bank's practice is to give the obligor 10 days' notice. Losses may occur in
connection with delinquent Motor Vehicle Loans 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 collection practices of the Bank may
change over time in accordance with the Bank's business judgment. Upon
repossession and disposition of the Financed Vehicle, any deficiency remaining
will be pursued to the extent deemed practical.
The Bank, as Servicer, 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, as Servicer, has historically offered payment
deferrals to a broader population of qualifying applicants in June and in
December of each year. 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. Any deferral or
extension could also result in delays of payments on the related Securities.
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 (or such
other amount as the Servicer determines, consistent with the standard of care
required by the applicable Sale and Servicing Agreement) 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 $3,500 (or such other
amount as the Servicer determines, consistent with the standard of care required
by the applicable Sale and Servicing Agreement) 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. Insurance on the Motor
Vehicle Loans is currently written through Balboa Life and Casualty Company.
Balboa Life and Casualty Company also currently 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, 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. No
assurance can be made that the performance of the Receivables in any Trust will
be similar to historical experience.
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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 Securities, 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 Securities. 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 Liquidating Receivable. If a Prospectus
Supplement provides that the property of the related Trust will include a
Pre-Funding Account, the related Securities will be subject to partial
redemption on or immediately following the end of the Funding Period (as
defined in the related Prospectus Supplement) in an amount and in the manner
specified in the related Prospectus Supplement. 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 Interest Rate or
Pass-Through Rate. Securityholders 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 Securityholders. See "Description of the Transfer and
Servicing Agreements--Termination" regarding the Servicer's option to
purchase all of the Receivables in a Trust in certain circumstances.
The Bank maintains certain records of the historical prepayment experience of
its portfolio of 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.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit decimal
which the Servicer will compute prior to each distribution with respect to
such class of Notes expressing the remaining outstanding principal balance of
such class of Notes, as of the close of such date (after giving effect to
payments to be made on such date), as a fraction of the initial outstanding
principal balance of such class of Notes. The "Certificate Pool Factor" for
each class of Certificates, if any, will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to such class
of Certificates, as of the close of such date (after giving effect to
distributions to be made on such date), as a fraction of the initial
Certificate Balance of such class of Certificates. Each Note Pool Factor and
each Certificate Pool Factor will be 1.0000000 as of the date of the initial
issuance of the Securities (the "CLOSING DATE") and thereafter will decline
to reflect reductions in the outstanding principal balance of the applicable
class of Notes or the reduction of the Certificate Balance of the applicable
class of Certificates, as the case may be. A Noteholder's portion of the
aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of such Noteholder's Note and (ii)
the applicable Note Pool Factor. A Certificateholder's portion of the
aggregate outstanding Certificate Balance for the related class of
Certificates is the product of (a) the original denomination of such
Certificateholder's Certificate and (b) the applicable Certificate Pool
Factor.
Securityholders will receive periodic reports concerning payments received on
the Receivables, the Aggregate Receivables Balance, each Certificate Pool
Factor or Note Pool Factor, as applicable, in each case related to such
Trust, and various other items of information specified in the related
Prospectus Supplement. In addition, Securityholders of record during any
calendar year will be furnished information for tax reporting purposes not
later than the latest date permitted by law. See "Certain Information
Regarding the Securities--Reports to Securityholders."
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USE OF PROCEEDS
Unless the related Prospectus Supplement provides for other applications, the
net proceeds from the sale of the Securities of a given Series (after making
the initial deposit in the related Reserve Account, if any, Yield Supplement
Account, if any, or the deposit of the Pre-Funded Amount into the related
Pre-Funding Account, if any) will be added to the Seller's general funds.
THE BANK
First Security Bank-Registered Trademark-, N.A., a national banking
association (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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DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust, one or more classes of asset-backed notes (the
"NOTES") will be issued pursuant to the terms of an Indenture (each, an
"INDENTURE"), a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. With respect
to each Series, the rights and benefits of the Trust in the Trust Property
will be assigned to the Indenture Trustee as collateral for the related Notes
and Certificates to the extent provided in the related Indenture. The
following, as well as other pertinent information included elsewhere in this
Prospectus and in the related Prospectus Supplement, describes the material
terms of the Notes of any Series, but does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the provisions
of such Notes and the related Indenture.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by one or more Notes, in each case
registered in the name of a nominee of DTC (together with any successor
depository selected by the Trust (the "DEPOSITORY"), except as set forth
below.
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, Interest Rate and amount of or
method of determining payments of principal and interest on each class of
Notes will be described in the related Prospectus Supplement. Each
Prospectus Supplement will specify the Distribution Dates on which payments
will be made (each, a "PAYMENT DATE"), which may be monthly, quarterly or
otherwise. The right of holders of any class of Notes to receive payments of
principal and interest may be senior or subordinate to the rights of holders
of any other class or classes of Notes of such Series, as described in the
related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, payments of interest on the Notes of each Series will
be made prior to payments of principal thereon. To the extent provided in
the related Prospectus Supplement, a Series may include one or more classes
of Notes ("STRIP NOTES") entitled to (i) principal payments with
disproportionate, nominal or no interest payments or (ii) interest payments
with disproportionate, nominal or no principal payments. Each class of Notes
may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain classes of Strip
Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate or the method for determining the
Interest Rate for each class of Notes of a given Series. One or more classes
of Notes of a Series may be redeemable in whole or in part under the
circumstances specified in the related Prospectus Supplement, including at
the end of any applicable Funding Period or as a result of the Servicer's
exercise of its purchase option.
In the case of a Series of Notes which includes two or more classes of Notes,
the sequential order and priority of payment in respect of principal and
interest of each such class, and any schedule or formula or other provisions
applicable to the determination thereof, will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
Unless the related Prospectus Supplement specifies that Notes of different
classes within a Series will have different priorities, payments to
Noteholders of all classes within a Series in respect of interest will have
the same priority. Under certain circumstances, the amount available could
be less than the amount of total interest required with respect to the Notes
on any of the Payment Dates; in which case each class of Noteholders will
receive its ratable share (based upon the aggregate amount of interest due to
each such class of Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Notes of such Series. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Credit Enhancement" herein.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related Series of Notes may be entitled to receive principal
payments prior to the receipt of principal payments by other classes of such
Series. If so provided in the related Prospectus Supplement, a class or
classes of Notes may have a Final Scheduled Distribution Date of less than
397 days from the applicable Closing Date and such class or classes may have
received a short-term rating by a Rating Agency that is in one of the two
highest short-term rating
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categories. The failure to pay such a class of Notes on or prior to the
related Final Scheduled Distribution Date would constitute an Event of
Default under the related Indenture.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related Series of Notes may have principal payment schedules
which are fixed or based on targeted schedules derived by assuming differing
prepayment rates. One or more classes of the related Series of Notes may be
designated to receive principal payments on a Payment Date only if principal
payments have been made to another class of Notes, and to receive any excess
payments over the amount required to be paid to another class of Notes on
such Payment Date. Noteholders of such Notes would be entitled to receive as
payments of principal on any given Payment Date the applicable amounts set
forth on such schedule with respect to such Notes, in the manner and to the
extent set forth in the related Prospectus Supplement.
If the Servicer exercises its option, if any, to purchase the Receivables of
a Trust in the manner and on the respective terms and conditions described
under "Description of the Transfer and Servicing Agreements--Termination"
herein, the related outstanding Notes will be prepaid as set forth in the
related Prospectus Supplement. In addition, if the related Prospectus
Supplement provides that the property of a Trust will include a Pre-Funding
Account, the related outstanding Notes may be subject to partial prepayment
on or immediately following the end of the related Funding Period in an
amount and manner specified in the related Prospectus Supplement. In the
event of such partial prepayment, the Noteholders of the related Series may
be entitled to receive a prepayment premium, in the amount and to the extent
provided in the related Prospectus Supplement.
THE INDENTURE
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT. Each Trust and related
Indenture Trustee (on behalf of such Trust) may, without consent of the
related Noteholders, enter into one or more supplemental indentures for any
of the following purposes: (i) to correct or amplify the description of the
collateral or add additional collateral; (ii) to provide for the assumption
of the Notes and the Indenture obligations by a permitted successor to the
Trust; (iii) to add additional covenants for the benefit of the related
Noteholders, or to surrender any rights or power therein conferred upon the
Trust; (iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee; (v) to cure any ambiguity or correct or
supplement any provision in the Indenture or in any supplemental indenture
which may be inconsistent with any other provision of the Indenture or in any
supplemental indenture; (vi) to provide for the acceptance of the appointment
of a successor Indenture Trustee or to add to or change any of the provisions
of the Indenture as shall be necessary and permitted to facilitate the
administration by more than one trustee; (vii) to modify, eliminate or add to
the provisions of the Indenture in order to comply with the Trustee Indenture
Act of 1939, as amended; and (viii) to add any provisions to, change in any
manner, or eliminate any of the provisions of, the Indenture or to modify in
any manner the rights of Noteholders under such Indenture; provided that any
action specified in this clause (viii) shall not, as evidenced by an opinion
of counsel, adversely affect in any material respect the interests of any
related Noteholder unless Noteholder consent is otherwise obtained as
described below.
MODIFICATION OF INDENTURE WITH NOTEHOLDER CONSENT. With respect to each
Trust, such Trust and the related Indenture Trustee may, with the consent of
the holders of a majority of the outstanding Notes of the related Series,
execute a supplemental indenture to add provisions to, change in any manner
or eliminate any provisions of, the related Indenture, or modify (except as
provided below) in any manner the rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with respect
to a Series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, no supplemental indenture will: (i)
change the date of payment of any installment of principal of or interest on
any such Note or reduce the principal amount thereof, the Interest Rate
specified thereon or the redemption price with respect thereto or change any
place of payment where, or the coin or currency in which, any such Note or
any interest thereon is payable; (ii) impair the right to institute suit for
the enforcement of certain provisions of the related Indenture regarding
payment; (iii) reduce the percentage of the aggregate amount of the
outstanding Notes of such Series, the consent of the holders of which is
required (a) for any such supplemental indenture or (b) for any waiver of
compliance with certain provisions of the related Indenture or of certain
defaults thereunder and their consequences as provided for in such Indenture;
(iv) modify or alter the provisions of the related Indenture
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regarding the voting of Notes held by the related Trust, any other obligor on
such Notes, the Seller or an affiliate of any of them; (v) reduce the
percentage of the aggregate outstanding amount of such Notes required to
direct the related Indenture Trustee to sell or liquidate the Receivables,
the consent of the holders of which is required if the proceeds of such sale
or liquidation would be insufficient to pay the principal amount and accrued
but unpaid interest on the outstanding Notes of such Series; (vi) decrease
the percentage of the aggregate principal amount of such Notes required to
amend the sections of the related Indenture that specify the applicable
percentage of aggregate principal amount of the Notes of such Series
necessary to amend such Indenture or certain other related agreements; (vii)
modify any provisions of the Indenture in such a manner as to affect the
calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date (including the calculation of any of the individual
components of such calculation); or (viii) permit the creation of any lien
ranking prior to or on a parity with the lien of the related Indenture with
respect to any of the collateral for such Notes or, except as otherwise
permitted or contemplated in such Indenture, terminate the lien of such
Indenture on any such collateral or deprive the holder of any such Note of
the security afforded by the lien of such Indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the Notes
of a given Series, unless otherwise specified in the related Prospectus
Supplement, "EVENTS OF DEFAULT" under the related Indenture will consist of:
(i) a default in the payment of any interest on any such Note for a period of
five days; (ii) a default in the payment of the principal of or any
installment of the principal of any such Note when the same becomes due and
payable; (iii) a default in the observance or performance of any covenant or
agreement of the related Trust made in the related Indenture which default
materially and adversely affects the rights of the related Noteholders, and
which default continues for a period of 30 days after written notice thereof
is given to such Trust by the related Indenture Trustee or to such Trust and
such Indenture Trustee by the holders of at least a majority in principal
amount of such Notes then outstanding (or for such longer period, not in
excess of 90 days, as may be reasonably necessary to remedy such default;
provided that such default is capable of remedy within 90 days or less); or
(iv) certain events of bankruptcy, insolvency, receivership or liquidation of
the related Trust. However, the amount of principal required to be paid to
Noteholders of such Series under the related Indenture will generally be
limited to amounts available to be deposited in the related Note Distribution
Account (absent acceleration of the Notes). Therefore, unless otherwise
specified in the related Prospectus Supplement, the failure to pay principal
on a class of Notes on any Payment Date generally will not result in the
occurrence of an Event of Default until the Final Scheduled Distribution Date
for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any Series, unless otherwise specified in the related Prospectus
Supplement, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in
the related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such Notes then outstanding.
If the Notes of any Series are declared to be due and payable following an
Event of Default with respect thereto, the related Indenture Trustee may
institute proceedings to collect amounts due or foreclose on the related
Trust Property, exercise remedies as a secured party, sell the related
Receivables or elect to have the related Trust maintain possession of such
Receivables and continue to apply collections on such Receivables as if there
had been no declaration of acceleration. Unless otherwise specified in the
related Prospectus Supplement, however, the related Indenture Trustee is
prohibited from selling the related Receivables following an Event of
Default, unless (i) the holders of all such outstanding Notes consent to such
sale, (ii) the proceeds of such sale are sufficient to pay in full the
principal and the accrued interest on such outstanding Notes at the date of
such sale, or (iii) there has been an Event of Default arising from a failure
to make a required payment of principal or interest on any such Notes, and
such Indenture Trustee determines that the proceeds of Receivables would not
be sufficient on an ongoing basis to make all payments on such Notes as such
payments would have become due if such obligations had not been declared due
and payable, and such Indenture Trustee obtains the consent of the holders of
sixty-six and two-thirds percent of the aggregate outstanding principal
amount of such Notes.
If an Event of Default occurs and is continuing with respect to a Series of
Notes, the related Indenture Trustee will be under no obligation to exercise
any of the rights or powers under the related Indenture at the request or
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direction of any of the holders of such Notes, if such Indenture Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain
limitations contained in the related Indenture, the holders of a majority in
principal amount of the outstanding Notes of a given Series will have the
right to direct the time, method and place of conducting any proceeding or
any remedy available to the related Indenture Trustee, and the holders of a
majority in principal amount of such Notes then outstanding may, in certain
cases, waive any default with respect thereto, except a default in the
payment of principal or interest or a default in respect of a covenant or
provision of such Indenture that cannot be modified without the waiver or
consent of all of the holders of such outstanding Notes.
Unless and to the extent the related Prospectus Supplement specifies other
circumstances in which a holder of a Note of a Series will have the right to
institute the proceedings described below, no holder of such a Note will have
the right to institute any proceeding with respect to the related Indenture
unless (i) such holder has previously given written notice to the related
Indenture Trustee of a continuing Event of Default, (ii) the holders of not
less than a majority in principal amount of the outstanding Notes of such
Series have made written request to such Indenture Trustee to institute such
proceeding in its own name as Indenture Trustee, (iii) such holder or holders
have offered such Indenture Trustee indemnity reasonably satisfactory to it
against the costs, expenses and liabilities to be incurred in complying with
such request, (iv) such Indenture Trustee has for 60 days after receipt of
such notice, request and offer of indemnity failed to institute such
proceeding, and (v) no direction inconsistent with such written request has
been given to such Indenture Trustee during such 60-day period by the holders
of a majority in principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by accepting
the related Notes, will covenant that they will not, for a period of one year
after the termination of the Indenture, institute against the related Trust
any bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of the
principal of or interest on the related Notes or for the agreements of such
Trust contained in the related Indenture.
CERTAIN COVENANTS
Each Indenture will provide that the related Trust may not consolidate with
or merge into any other entity, unless (i) the entity formed by or surviving
such consolidation or merger is organized under the laws of the United
States, any state or the District of Columbia, (ii) such entity expressly
assumes such Trust's obligation to make due and punctual payments of
principal and interest on the related Notes and the performance or observance
of every agreement and covenant of such Trust under the Indenture, (iii) no
Event of Default with respect to such Series shall have occurred and be
continuing immediately after such merger or consolidation, (iv) such Trust
has been advised that the ratings, if any, of the Notes and the Certificates,
if any, then in effect would not be downgraded or withdrawn by the related
Rating Agencies as a result of such merger or consolidation, (v) such action
as was necessary to maintain the lien and security interest created by such
Indenture shall have been taken, and (vi) such Trust has received an opinion
of counsel to the effect that such consolidation or merger would have no
material adverse tax consequence to such Trust or to any related Noteholder
or Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted by
the related Indenture, the related Transfer and Servicing Agreements and the
related documents with respect to such Trust (collectively, the "RELATED
DOCUMENTS"), sell, transfer, exchange or otherwise dispose of any of the
properties or assets of such Trust, (ii) claim any credit on or make any
deduction from the principal or interest payable in respect of the Notes of
the related Series (other than amounts withheld under the Code or applicable
state law) or assert any claim against any present or former holder of such
Notes because of the payment of taxes levied or assessed upon such Trust,
(iii) permit the validity or effectiveness of the related Indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to such Notes under such Indenture except
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as may be expressly permitted thereby, (iv) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the assets of such Trust or any
part thereof, or any interest therein or the proceeds thereof, or (v) permit
any lien of such Indenture not to constitute a valid first priority security
interest in the related Receivables (other than with respect to any such tax,
mechanics' or other lien).
No Trust may engage in any activity other than as specified herein or in the
related Prospectus Supplement. No Trust will incur, assume or guarantee any
indebtedness other than indebtedness incurred pursuant to the related Notes
and the related Indenture, pursuant to any Advances made to it by the
Servicer or otherwise in accordance with the Related Documents.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment
of its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust will
be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced by it under the
related Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the related Indenture Trustee in its
individual capacity, the property and funds physically held by such Indenture
Trustee as such and any action taken by it that materially affects the
related Notes and that has not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be discharged
with respect to the related Notes upon the delivery to the related Indenture
Trustee for cancellation of all such Notes or, with certain limitations, upon
deposit with such Indenture Trustee of funds sufficient for the payment in
full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a Series of Notes will be specified in the related
Prospectus Supplement. The Indenture Trustee for any Series may resign at
any time. The Administrator of the related Trust may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to continue
as such under the related Indenture or if such Indenture Trustee becomes
insolvent. In such circumstances, the Administrator of the related Trust
will be obligated to appoint a successor indenture trustee for the related
Series of Notes. If an Event of Default occurs under an Indenture and the
related Prospectus Supplement provides that a given class of Notes of the
related Series is subordinated to one or more other classes of Notes of such
Series, pursuant to the Trust Indenture Act of 1939, as amended, the related
Indenture Trustee may be deemed to have a conflict of interest and be
required to resign as trustee for one or more of such classes of Notes. In
any such case, the related Indenture will provide for a successor trustee to
be appointed for one or more of such classes of Notes and may provide for
rights of senior Noteholders to consent to or direct actions by the related
Indenture Trustee which are different from those of subordinated Noteholders.
Any resignation or removal of the Indenture Trustee and appointment of a
successor indenture trustee for any Series of Notes will not become effective
until acceptance of the appointment by the successor indenture trustee for
such Series.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of asset-backed certificates
(the "CERTIFICATES") of the related Series may be issued pursuant to the
terms of a Trust Agreement (each, a "TRUST AGREEMENT"), a form of which has
been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following, as well as other pertinent
information included elsewhere in this Prospectus and in the related
Prospectus Supplement, describes the material terms of the Certificates of
any Series, but does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of such
Certificates and the related Trust Agreement.
The related Prospectus Supplement will specify whether each class of
Certificates of the related Series offered thereby will initially be
represented by one or more Certificates, in each case registered in the name
of the Depository or its nominee (except as set forth below) or will be
issued in fully registered, certificated form.
DISTRIBUTIONS OF INTEREST AND CERTIFICATE BALANCE
The timing and priority of distributions, seniority, allocations of losses,
Pass-Through Rate and amount of or method of determining distributions with
respect to Certificate Balance and interest of each class of Certificates
with respect to any Series will be described in the related Prospectus
Supplement. Distributions of interest on such Certificates will be made on
the Distribution Dates and will be made prior to distributions with respect
to principal of such Certificates. To the extent provided in the related
Prospectus Supplement, a Series may include one or more classes of
Certificates ("STRIP CERTIFICATES") entitled to (i) distributions in respect
of principal with disproportionate, nominal or no interest distributions, or
(ii) interest distributions with disproportionate, nominal or no
distributions in respect of principal. Each class of Certificates may have a
different Pass-Through Rate (which may be zero for certain classes of Strip
Certificates). The related Prospectus Supplement will specify the
Pass-Through Rate for each class of Certificates of a given Series. Unless
otherwise provided in the related Prospectus Supplement, distributions in
respect of the Certificates of a given Series will be subordinate to payments
in respect of the Notes of such Series as more fully described in the related
Prospectus Supplement. Distributions in respect of interest on and principal
of any class of Certificates will be made on a pro rata basis among all the
Certificateholders of such class.
In the case of a Series of Certificates that includes two or more classes of
Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal on each such class, and
any schedule or formula or other provisions applicable to the determination
thereof, shall be as set forth in the related Prospectus Supplement.
If the Servicer exercises its option to purchase the Receivables of a Trust
in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements--Termination" herein,
related Certificateholders will receive as prepayment an amount in respect of
such Certificates as specified in the related Prospectus Supplement. In
addition, if the related Prospectus Supplement provides that the property of
a Trust will include a Pre-Funding Account, related Certificateholders may
receive a partial prepayment of principal on or immediately following the end
of the Funding Period in an amount and manner specified in the related
Prospectus Supplement. In the event of such partial prepayment, the
Certificateholders may be entitled to receive a prepayment premium, in the
amount and to the extent provided in the related Prospectus Supplement.
THE OWNER TRUSTEE
The Owner Trustee for each Trust will be specified in the related Prospectus
Supplement. The Owner Trustee's liability in connection with the issuance
and sale of the related Securities is limited solely to the express
obligations of such Owner Trustee set forth in the related Trust Agreement.
The Owner Trustee under each Trust Agreement will perform administrative
functions including, if specified in the related Prospectus Supplement,
making distributions from the related Certificate Distribution Account. An
Owner Trustee may
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resign at any time by giving written notice thereof to the Administrator
under the related Trust Agreement, in which event the Administrator or its
successor, will be obligated to appoint a successor trustee. The
Administrator may also remove the Owner Trustee if such Owner Trustee ceases
to be eligible to continue as Owner Trustee under the related Trust
Agreement, becomes legally unable to act or if such Owner Trustee becomes
insolvent. In such circumstances, the Administrator will be obligated to
appoint a successor trustee. Any resignation or removal of an Owner Trustee
and appointment of a successor trustee will not become effective until
acceptance of the appointment by the successor trustee.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or Strip
Certificates) may bear interest at a fixed rate per annum ("FIXED RATE
SECURITIES") or at a variable or adjustable rate per annum ("FLOATING RATE
SECURITIES"), as more fully described below and in the related Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass-Through Rate, as the case may be,
specified in the related Prospectus Supplement. Unless otherwise set forth
in the related Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes--Principal and Interest on the Notes"
and "Description of the Certificates--Distributions of Interest and
Certificate Balance" herein.
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each related
Interest Reset Period (as such term is defined in the related Prospectus
Supplement with respect to a class of Floating Rate Securities, an "INTEREST
RESET PERIOD") at a rate per annum determined by reference to an interest
rate basis (the "BASE RATE"), plus or minus the Spread, if any, or multiplied
by the Spread Multiplier, if any, in each case as specified in the related
Prospectus Supplement. The "SPREAD" is the number of basis points (one basis
point equals one one-hundredth of a percentage point) that may be specified
in the related Prospectus Supplement as being applicable to such class, and
the "SPREAD MULTIPLIER" is the percentage that may be specified in the
related Prospectus Supplement as being applicable to such class.
The related Prospectus Supplement will designate a Base Rate for a given
Floating Rate Security based on the London interbank offered rate ("LIBOR"),
commercial paper rates, Federal funds rates, U.S. Government treasury
securities rates, negotiable certificates of deposit rates or another rate as
set forth in such Prospectus Supplement.
As specified in the related Prospectus Supplement, Floating Rate Securities
of a given class may also have either or both of the following (in each case
expressed as a rate per annum): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be
higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will be
issued will appoint, and enter into agreements with, a calculation agent
(each a "CALCULATION AGENT") to calculate interest rates on each such class
of Floating Rate Securities issued with respect thereto. The related
Prospectus Supplement will set forth the identity of the Calculation Agent
for each such class of Floating Rate Securities of a given Series, which may
be either the Owner Trustee or any Indenture Trustee with respect to such
Series. All determinations of interest by the Calculation Agent shall, in
the absence of manifest error, be conclusive for all purposes and binding on
the holders of Floating Rate Securities of a given class. Unless otherwise
specified in the related Prospectus Supplement, all percentages resulting
from any calculation of the rate of interest on a Floating Rate Security will
be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with
five one-millionths of a percentage point rounded upward.
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INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given Series may consist of Securities ("INDEXED SECURITIES")
in which the principal amount payable at the Final Scheduled Distribution
Date for such class (the "INDEXED PRINCIPAL AMOUNT") is determined by
reference to a measure (the "INDEX") which will be related to (i) the
difference in the rate of exchange between United States dollars and a
currency or composite currency (the "INDEXED CURRENCY") specified in the
related Prospectus Supplement (such Indexed Securities, "CURRENCY INDEXED
SECURITIES"); (ii) the difference in the price of a specified commodity (the
"INDEXED COMMODITY") on specified dates (such Indexed Securities, "COMMODITY
INDEXED SECURITIES"); (iii) the difference in the level of a specified stock
index (the "STOCK INDEX"), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, "STOCK INDEXED SECURITIES"); or
(iv) such other objective price or economic measures as are described in the
related Prospectus Supplement. The manner of determining the Indexed
Principal Amount of an Indexed Security and historical and other information
concerning the Indexed Currency, the Indexed Commodity, the Stock Index or
other price or economic measures used in such determination will be set forth
in the related Prospectus Supplement, together with information concerning
tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was
issued and permitted changes described in the related Prospectus Supplement),
then such Index shall be calculated for purposes of such Indexed Security by
an independent calculation agent named in the related Prospectus Supplement
on the same basis, and subject to the same conditions and controls, as
applied to the original third party. If for any reason such Index cannot be
calculated on the same basis and subject to the same conditions and controls
as applied to the original third party, then the Indexed Principal Amount of
such Indexed Security shall be calculated in the manner set forth in the
related Prospectus Supplement. Any determination of such independent
calculation agent shall in the absence of manifest error be binding on all
parties.
Unless otherwise specified in the related Prospectus Supplement, interest on
an Indexed Security will be payable based on the amount designated in the
related Prospectus Supplement as the "FACE AMOUNT" of such Indexed Security.
The related Prospectus Supplement will describe whether the principal amount
of the related Indexed Security, if any, that would be payable upon
redemption or repayment prior to the applicable Final Scheduled Distribution
Date will be the Face Amount of such Indexed Security, the Indexed Principal
Amount of such Indexed Security at the time of redemption or repayment or
another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
Securityholders may hold their Securities through the Depository Trust
Company ("DTC") (in the United States) or Cedel or Euroclear (in Europe),
which in turn hold through DTC, if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
DTC's nominee will be Cede & Co. ("CEDE"), unless another nominee is
specified in the related Prospectus Supplement. Accordingly, such nominee is
expected to be the holder of record of any book-entry securities of any class
or Series. Unless and until Definitive Securities are issued under the
limited circumstances described therein or in the related Prospectus
Supplement, no Securityholder will be entitled to receive a physical
certificate representing its interest in such Security. All references
herein and in the related Prospectus Supplement to actions by Securityholders
refer to actions taken by DTC upon instructions from its Participants and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Securityholders of book-entry securities
refer to distributions, notices, reports and statements to DTC or its
nominee, as the registered holder of the applicable Securities, for
distribution to Securityholders in accordance with DTC's procedures with
respect thereto. See "--Definitive Securities" herein.
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Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the "DEPOSITARIES") which in turn will
hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.
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 the provisions of Section 17A of the Exchange
Act. DTC was created to hold securities for its Participants and facilitate
the clearance and settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants,
thereby eliminating the need for physical movement of certificates.
"PARTICIPANTS" include securities brokers and dealers (who may include an
underwriter with respect to any series), banks, trust companies and clearing
corporations and may include certain other organizations, including Cedel and
Euroclear. Indirect access to the DTC system also is available to "INDIRECT
PARTICIPANTS" such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly through
DTC in the United States, on the one hand, and directly or indirectly through
Cedel Participants or Euroclear Participants, on the other, will be effected
in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will,
if the transaction meets its settlement requirements, deliver instructions to
its Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits or securities in Cedel or Euroclear
as a result of a transaction with a Participant will be made during the
subsequent securities settlement processing, dated the business day following
the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Cedel Participant or Euroclear Participant on such business day. Cash
received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or Euroclear Participant to a Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC.
A "SECURITYHOLDER," as used herein, shall mean a holder of a beneficial
interest in a book-entry security. Unless otherwise provided in the related
Prospectus Supplement, Securityholders that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interest in, Securities may do so only through Participants and
Indirect Participants. In addition, Securityholders will receive all
distributions of principal of and interest on Securities from the related
Owner Trustee or Indenture Trustee, as applicable (the "APPLICABLE TRUSTEE"),
through the Participants, who in turn will receive them from DTC. Under a
book-entry format, Securityholders may experience some delay in their receipt
of payments, since such payments will be forwarded by the Applicable Trustee
to Cede, as nominee for DTC. DTC will forward such payments to its
Participants which thereafter will forward them to Indirect Participants or
Securityholders. It is anticipated that the only "Noteholder" and
"Certificateholder" will be Cede, as nominee of DTC. Securityholders will
not be recognized by the Trustee as Noteholders ("NOTEHOLDERS") or
Certificateholders ("CERTIFICATEHOLDERS"), as such term is used in the
related Trust Agreement and Indenture, as applicable, and Securityholders
will only be permitted to exercise the rights of Securityholders indirectly
through DTC, Cedel or Euroclear and their respective participants or
organizations.
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Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "RULES"), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with
which Securityholders have accounts with respect to the Securities similarly
are required to make book-entry transfers and receive and transmit such
payments on behalf of their respective Securityholders. Accordingly,
although Securityholders will not physically possess Securities, the Rules
provide a mechanism by which Participants will receive payments and will be
able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants and certain banks, the ability of a Securityholder
to pledge Securities to persons or entities that do not participate in the
DTC system, or to otherwise act with respect to such Securities, may be
limited due to the lack of physical certificates for such Securities.
DTC has advised the Seller that it will take any action permitted to be taken
by a Noteholder under the related Indenture or a Certificateholder under the
related Trust Agreement, only at the direction of one or more Participants to
whose accounts with DTC the applicable Notes or Certificates are credited.
DTC may take conflicting actions with respect to other undivided interests to
the extent that such actions are taken on behalf of Participants whose
holdings include such undivided interests.
Cedel Bank, societe anonyme ("CEDEL") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("CEDEL PARTICIPANTS") and facilitates the
clearance and settlement of securities transactions between Cedel
Participants through electronic book-entry changes in accounts of Cedel
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled by Cedel in any of 28 currencies,
including United States dollars. Cedel provides to its Cedel Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedel interfaces with domestic markets in several countries. As
a professional depository, Cedel is subject to regulations by the Luxembourg
Monetary Institute. Cedel Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
and may include an underwriter of any series. Indirect access to Cedel is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System ("EUROCLEAR") was created in 1968 to hold securities for
participants of Euroclear ("EUROCLEAR PARTICIPANTS") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of
27 currencies, including United States dollars. Euroclear includes various
other services, including securities lending and borrowing and interfaces
with domestic markets in several countries generally similar to the
arrangement for cross-market transfers with DTC described above. Euroclear
is operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium
office (the "EUROCLEAR OPERATOR"), under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "COOPERATIVE"). All
operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include an
underwriter of any series. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
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Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear and applicable Belgian law
(collectively, the "TERMS AND CONDITIONS"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawal of securities
and cash from Euroclear, and receipts of payments with respect to securities
in Euroclear. All securities in Euroclear are held on a fungible basis
without attribution of specific certificates to specific securities clearance
accounts. The Euroclear Operator acts under the Terms and Conditions only on
behalf of Euroclear Participants and has no record of or relationship with
persons holding through Euroclear Participants.
Distributions with respect to Securities held through Cedel or Euroclear will
be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures,
to the extent received by its Depositary. Such distributions will be subject
to tax reporting in accordance with relevant United States tax laws and
regulations. Cedel or the Euroclear Operator, as the case may be, will take
any other action permitted to be taken by a Securityholder under the related
Indenture or Trust Agreement, as applicable, on behalf of a Cedel Participant
or a Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depositary's ability to effect such actions on
its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of certificates among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Except as required by law, neither the Owner Trustee nor the Indenture
Trustee will have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Securities
of any series held by DTC, Cedel or Euroclear or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, any Notes or
Certificates of a given Series will be issued in fully registered,
certificated form ("DEFINITIVE CERTIFICATES" or "DEFINITIVE NOTES," together,
the "DEFINITIVE SECURITIES") to Noteholders or Certificateholders or their
respective nominees, rather than to the Depository or its nominee, only if
(i) the related Administrator notifies the Applicable Trustee in writing that
it has been advised that the Depository is no longer willing or able to
discharge properly its responsibilities as depository with respect to the
Notes or the Certificates and the Administrator is unable to locate a
qualified successor, (ii) the Administrator, at its option, elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default or an Event of Servicing Termination, with
respect to such Securities, the holders representing at least a majority of
the outstanding principal amount of the related Notes or the Certificates, as
applicable, of such Series advise the Applicable Trustee and DTC through
Participants in writing that they have determined that the continuation of a
book-entry system through the Depository (or successor thereto) with respect
to such Notes or Certificates is no longer in the best interest of the
holders of such Securities.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Securities. Upon
surrender by DTC to the Applicable Trustee of the global certificates
representing the corresponding Securities and receipt by the Applicable
Trustee of instructions for re-registration, the Applicable Trustee will
reissue such Securities as Definitive Securities and thereafter the
Applicable Trustee will recognize the holders of such Definitive Securities
as Noteholders or Certificateholders under the related Indenture or Trust
Agreement ("HOLDERS").
Distributions of principal with respect to, and interest on, such Definitive
Securities will thereafter be made in accordance with the procedures set
forth in the related Indenture or Trust Agreement, as applicable, directly to
the Holders of Definitive Securities in whose names the Definitive Securities
were registered at the close of business on the applicable record date
specified for such Securities in the related Prospectus Supplement. Such
distributions will be made by check mailed to the address of such Holder as
it appears on the register
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maintained by the related Applicable Trustee. The final payment on any
Definitive Security, however, will be made only upon presentation and
surrender of the Definitive Security at the office or agency specified in the
related notice of final distribution mailed to Holders.
Definitive Securities will be transferable and exchangeable subject to such
reasonable regulations as the Applicable Trustee may prescribe. No service
charge will be imposed for any registration of transfer or exchange, but the
Applicable Trustee may require payment of a sum sufficient to cover any tax
or other government charge imposed in connection therewith.
REPORTS TO SECURITYHOLDERS
With respect to each Series of Securities, on each Distribution Date, the
Paying Agent will include with each distribution to each Noteholder and/or
Certificateholder a statement prepared by the Servicer, which will include
(to the extent applicable), among other things, the following information
(and any other information so specified in the related Prospectus Supplement)
as to the Notes or Certificates of such Series with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to principal with
respect to each class of such Notes and to the Certificate Balance of each
class of such Certificates and the derivation of such amounts;
(ii) the amount of the distribution allocable to interest on or
with respect to each class of Notes and each class of Certificates of such
Series;
(iii) amount of the Servicing Fee paid to the Servicer in respect
of the related Collection Period;
(iv) the amount of the Administration Fee paid to the
Administrator in respect of the related Collection Period;
(v) the aggregate unreimbursed Advances (if any) as of the last
day of the preceding Collection Period and the change in such amount from
the previous Collection Period;
(vi) the Aggregate Receivables Balance as of the close of business
on the last day of the preceding Collection Period;
(vii) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, in each case
after giving effect to all payments reported under clause (i) above on such
date;
(viii) the Interest Rate or Pass-Through Rate for the next period
with respect to any class of Notes or any class of Certificates of such
Series with variable or adjustable rates;
(ix) the amount of the aggregate realized losses, if any, for the
preceding Collection Period;
(x) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus Supplement),
if any, in each case as applicable to each class of Securities and the
change in such amounts from the preceding statement;
(xi) the aggregate Repurchase Amounts with respect to the
Receivables, if any, that were repurchased by the Seller or purchased by
the Servicer in such Collection Period;
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(xii) the balance of the Reserve Account (if any) or any other
enhancement account, as of such date, after giving effect to changes
therein on such date, the Specified Reserve Account Balance on such date
(as defined in the related Prospectus Supplement) or any other required
enhancement account balance on such date, and the components of calculating
any such required balance;
(xiii) for each date during the Funding Period, if any, the
remaining Pre-Funded Amount; and
(xiv) for the first such date that is on or immediately following
the end of the Funding Period, if any, the amount of any remaining
Pre-Funded Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such Series.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and (iv) with
respect to the Notes or the Certificates of any Series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
"INITIAL RECEIVABLE BALANCE" means, with respect to a Receivable, the
aggregate amount advanced toward the purchase price of all Financed Vehicles
related to such Receivable, including insurance premiums, federal excise
taxes, sales taxes and other items customarily financed as part of Motor
Vehicle Loans and related costs, less payments received from the Obligor
prior to the related Cutoff Date allocable to principal in accordance with
the terms of the Receivable.
"RECEIVABLE BALANCE" means, as of the last day of the related Collection
Period, with respect to any Receivable, the Initial Receivable Balance minus
the sum, in each case computed in accordance with the terms of the
Receivable, of (i) that portion of payments due on and after the Cutoff Date
and on or prior to the last day of the related Collection Period allocated to
principal, (ii) any prepayments applied by the Servicer to reduce the
Receivable Balance and (iii) that portion of the following received and
allocated to principal by the Servicer: proceeds from any insurance policies
covering the Financed Vehicle or Financed Vehicles, Liquidation Proceeds and
proceeds from any Dealer Agreement. The Obligor on a Receivable secured by
multiple Financed Vehicles may prepay an amount corresponding to the
outstanding principal balance for one or more of such Financed Vehicles and
the security interest in such vehicles will generally be released.
"AGGREGATE RECEIVABLES BALANCE" means, as of any date, the sum of the
Receivable Balances of all outstanding Receivables (other than Liquidating
Receivables) held by the Trust on such date.
Unless otherwise specified in the related Prospectus Supplement, the
statements for each Collection Period will be delivered to DTC for further
distribution to Securityholders in accordance with DTC procedures. See
"Certain Information Regarding the Securities--Book-Entry Registration"
herein. The Servicer, on behalf of each Trust, will file with the Commission
such periodic reports with respect to each Trust as required under the
Exchange Act and the rules and regulations of the Commission thereunder.
Within the prescribed period of time for tax reporting purposes after the end
of each calendar year during the term of each Trust, the Owner Trustee or the
Paying Agent will furnish to each person who at any time during such calendar
year has been a Noteholder or Certificateholder with respect to such Trust
and received any payment thereon a statement containing certain information
for the purposes of such Securityholder's preparation of federal income tax
returns. See "Certain Federal Income Tax Consequences" in the related
Prospectus Supplement.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of (i) the Sale and Servicing
Agreement pursuant to which each Trust will acquire Receivables from the
Seller and the Servicer will agree to service such Receivables; (ii) the
Trust Agreement pursuant to which each Trust will be created and (iii) the
Administration Agreement pursuant to which the Bank will undertake certain
administrative duties with respect to each Trust (collectively, the "TRANSFER
AND SERVICING AGREEMENTS"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part. The following summary, as well as other pertinent
information included elsewhere in this Prospectus and in the related
Prospectus Supplement, describes the material terms of the Transfer and
Servicing Agreements related to any Series. This summary does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, the provisions of such Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or before the Closing Date specified with respect to any given Trust in
the related Prospectus Supplement, the Seller will transfer and assign in
consideration of the receipt of the related Securities, without recourse, to
the related Trust pursuant to a Sale and Servicing Agreement its entire
interest in the Receivables, if any, certain related property and the
proceeds thereof, including, among other things, its security interests in
the related Financed Vehicles. Each such Receivable will be identified in a
schedule appearing as an exhibit to such Sale and Servicing Agreement (a
"SCHEDULE OF RECEIVABLES"). The Seller will sell the related Securities
offered hereby (which may or may not include all Securities of such Series)
to the respective underwriters set forth in the Prospectus Supplement. See
"Plan of Distribution." To the extent specified in the related Prospectus
Supplement, a portion of the net proceeds received from the sale of the
Securities of a given Series will be applied to the deposit of the Pre-Funded
Amount into the Pre-Funding Account and/or to the initial deposit into a
Reserve Account, if any, or a Yield Supplement Account, if any. The related
Prospectus Supplement for each Trust will specify whether, and the terms,
conditions and manner under which, Subsequent Receivables will be sold by the
Seller to the related Trust from time to time during any Funding Period on
each date specified as a transfer date in the related Prospectus Supplement
(each, a "SUBSEQUENT TRANSFER DATE").
Each Sale and Servicing Agreement will set forth criteria that must be
satisfied by each Receivable. Unless the related Prospectus Supplement
specifies that certain of the criteria set forth below are not required to be
satisfied, the criteria will include, among others, the following: (i) the
Receivable has been fully and properly executed by the parties thereto and
(a) has been originated by the Seller in the ordinary course of its business
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 related
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
Trust, (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) in the event of a prepayment,
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 interest 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 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
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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 Sale and Servicing 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 $3,500 (or
such other amount as is specified in the related Prospectus Supplement or as
determined by the Servicer, consistent with the standard of care required by
the Sale and Servicing Agreement), 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
under the related Sale and Servicing Agreement, 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 Receivables are "chattel paper" as
defined in the UCC; (xii) the Seller has duly fulfilled all obligations on
its part to be fulfilled under, or in connection with, the Receivable; and
(xiii) 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.
Unless otherwise provided in the related Prospectus Supplement, as of the
last day of the month following the date (or, if the Seller elects, the last
day of the month including such date) on which the Seller discovers or
receives written notice from the Indenture Trustee that a Receivable does not
meet any of the criteria set forth in the related Sale and Servicing
Agreement and such failure materially and adversely affects the interests of
the related Securityholders in such Receivable, the Seller, unless it has
cured the failed criterion, will repurchase such Receivable from the related
Trust at a price equal to the unpaid principal balance owed by the Obligor
thereof plus interest thereon at the respective contract rate of interest
through the last day of the month of repurchase (the "REPURCHASE AMOUNT").
The repurchase obligation will constitute the sole remedy available to any
Securityholder, the Owner Trustee or the Indenture Trustee for the failure of
a Receivable to meet any of the criteria set forth in the related Sale and
Servicing Agreement.
Pursuant to each Sale and Servicing Agreement, to assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trust will
appoint the Servicer and the Servicer will appoint the Custodian to hold such
Receivables and the motor vehicle certificates of title relating thereto
(each a "RECEIVABLE FILE") on behalf of the Trust and the related Indenture
Trustee for the benefit of the Noteholders and Certificateholders to the
extent set forth in the related Indenture. Receivables will not be stamped
or otherwise marked to reflect the transfer of the Receivables to a Trust or
the pledge to the Indenture Trustee and will not be segregated from the other
Motor Vehicle Loans owned or serviced by the Servicer. The Obligors under
the Receivables will not be notified of the transfer of the Receivables to a
Trust or the pledge of the Receivables to the related Indenture Trustee, but
the Seller's accounting records and computer systems will reflect the sale
and assignment of the Receivables to such Trust and the pledge to the related
Indenture Trustee. See "Certain Legal Aspects of the Receivables."
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ACCOUNTS
With respect to each Trust, the Indenture Trustee will establish one or more
segregated accounts in the name of the Indenture Trustee on behalf of the
related Trust and for the benefit of the related Noteholders and any
Certificateholders, into which all payments made on or with respect to the
Receivables will be deposited (the "COLLECTION ACCOUNT"). The Servicer will
also establish and maintain an account, in the name of such Indenture Trustee
on behalf of such Noteholders, into which, to the extent and in the manner
described in the related Prospectus Supplement, amounts released from the
Collection Account and any Pre-Funding Account, Yield Supplement Account,
Reserve Account or other credit or cash flow enhancement for payment to such
Noteholder will be deposited and from which all distributions to such
Noteholders will be made (the "NOTE DISTRIBUTION ACCOUNT"). The Servicer
will establish and maintain with the related Owner Trustee an account, in the
name of such Owner Trustee on behalf of such Certificateholders, into which
amounts released from the Collection Account and any Pre-Funding Account,
Yield Supplement Account, Reserve Account or other credit or cash flow
enhancement for distribution to such Certificateholders will be deposited and
from which all distributions to such Certificateholders will be made (the
"CERTIFICATE DISTRIBUTION ACCOUNT").
The Collection Account, Note Distribution Account, Certificate Distribution
Account, Pre-Funding Account, if any, Reserve Account, if any, Yield
Supplement Account, if any, and any other accounts identified as such in a
related Prospectus Supplement for a Series are collectively referred to as
the "TRUST ACCOUNTS."
Each Trust Account will be at all times an Eligible Deposit Account, unless
otherwise provided in the related Prospectus Supplement. If any Trust
Account held by the Indenture Trustee in its own trust department ceases to
be an Eligible Deposit Account, the Indenture 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 Owner 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 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. ("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 Trust 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 Trust
Accounts meet the eligibility criteria described in the preceding paragraphs.
Funds in the Trust Accounts will be invested in Eligible Investments.
"ELIGIBLE INVESTMENTS" will generally be limited to investments acceptable to
the Rating Agencies as being consistent with the rating of the Securities and
may include, if otherwise eligible, debt securities of the Owner Trustees,
the Bank or any of their affiliates and money market funds for which the
Owner Trustees, the Indenture Trustees, the Bank or any of their affiliates
is an investment manager or investment advisor. Investments of amounts on
deposit in the Trust Accounts with respect to any Collection Period or
Distribution Date are limited to obligations or securities that mature not
later than the business day preceding the related Distribution Date or, with
respect to the Note Distribution Account, the next Payment Date (each, a
"DEPOSIT DATE"). However, to the extent permitted by each Rating Agency,
funds on deposit in any Reserve Account may be invested in securities that
will not mature prior to the date of the next distribution with respect to
the Securities. Unless otherwise provided in the related Prospectus
Supplement, any earnings (net of losses and investment expenses) on amounts
on deposit in the Trust Accounts will be paid to the Servicer and will not be
available to Securityholders.
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The Bank, in its capacity as the initial paying agent (the "PAYING AGENT")
under each Indenture, will have the revocable right to withdraw funds from a
Trust Account for the purpose of making distributions to the Noteholders in
the manner provided therein.
SERVICING PROCEDURES
The Servicer will service the Receivables of each Trust and will make
reasonable efforts to collect all payments due with respect to such
Receivables and, in a manner consistent with the related Sale and Servicing
Agreement and with the terms of the Receivables, will follow such collection
and servicing procedures as it follows with respect to comparable new or used
automobile Receivables that it services for itself and that are consistent
with prudent industry standards. See "The Motor Vehicle Loan
Portfolio--Servicing and Collections." The Servicer is authorized to grant
certain rebates, adjustments or extensions with respect to a Receivable.
However, unless otherwise provided in the related Prospectus Supplement, if
any such modification of a Receivable alters the initial principal amount of
such Receivable, the interest rate or the total number of payments such that
the term is extended beyond the latest Final Scheduled Distribution Date for
any class of Securities, the Servicer will be obligated to purchase the
Receivable. Any such required purchase will constitute the sole remedy
available to the Securityholders, the related Indenture Trustee or the
related Owner Trustee for any such uncured breach.
Each Sale and Servicing Agreement will provide that the Servicer, on behalf
of the related Trust, shall use reasonable efforts, consistent with its
customary servicing procedures, to repossess or otherwise take possession of
the Financed Vehicle securing any Receivable which the Servicer has
determined to charge off during any Collection Period in accordance with its
customary servicing practices (each such Receivable, a "LIQUIDATING
RECEIVABLE"). Proceeds of any Liquidating Receivable are "LIQUIDATION
PROCEEDS." See "The Motor Vehicle Loan Portfolio--Servicing and Collections."
The Servicer shall follow such customary and usual practices and procedures
as it shall deem necessary or advisable in its servicing of new or used
automobile Receivables, which may include reasonable efforts to realize upon
any recourse to Dealers, consigning the Financed Vehicle to a Dealer for
resale and selling the Financed Vehicle at public or private sale. See
"Certain Legal Aspects of the Receivables." The Servicer will be entitled to
receive an amount specified in the applicable Sale and Servicing Agreement as
an allowance for amounts charged to the account of the Obligor, in keeping
with the Servicer's customary procedures, for repossession, refurbishing and
disposition of any Financed Vehicle and other out-of-pocket costs related to
the liquidation (collectively, "LIQUIDATION EXPENSES").
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "COLLECTION PERIOD") into the related
Collection Account on a daily basis within forty-eight hours of receipt.
However, at any time that and for so long as each condition to making
deposits less frequently than daily as may be required by the related Rating
Agencies or any enhancement provider or as set forth in the related
Prospectus Supplement is satisfied, the Servicer will not be required to
deposit such amounts into the Collection Account until on or before the
Deposit Date preceding the related day in each month specified in the related
Prospectus Supplement (each, a "DISTRIBUTION DATE"). Pending deposit into
the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own
funds. If the Servicer were unable to remit such funds, Securityholders
might incur a loss. The Servicer may, in order to satisfy the requirements
described above, obtain letters of credit or other security for the benefit
of the related Trust to secure timely remittances of collections on the
related Receivables.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement with respect
to any Trust, the Servicer will be entitled to receive a fee (the "SERVICING
FEE") for each Collection Period payable on the related Distribution Date in
an amount equal to the sum of (i) the product of one-twelfth of the specified
percentage per annum (as set forth in the related Prospectus Supplement, the
"SERVICING FEE RATE") and the Aggregate Receivables Balance as of the close
of business on the last day of the second Collection Period immediately
preceding the Collection Period in which such Distribution Date occurs and
(ii) unless otherwise specified in the related Prospectus Supplement with
respect to any Trust, any late fees, prepayment charges (other than deferral
fees) and other fees and charges collected during the related Collection
Period. The Servicing Fee will also include any interest earned during the
Collection Period on deposits in the Trust Accounts to the extent set forth
in the related Prospectus Supplement. The Servicing Fee (together with any
portion of the Servicing Fee that remains unpaid from prior Distribution
Dates, the "TOTAL SERVICING FEE") will be paid solely to the extent of
amounts allocable thereto as specified in the related Prospectus Supplement.
The Servicer will be entitled to reimbursement from each Trust for certain
liabilities.
The Servicing Fee will compensate the Servicer for performing the functions
of a third-party Servicer of motor vehicle Receivables as an agent for the
Securityholders, including collecting and posting all payments and responding
to inquiries of Obligors, investigating delinquencies, reporting tax
information to Obligors and paying costs of collection and disposition of
Financed Vehicles under Liquidating Receivables. The Servicing Fee also will
compensate the Servicer for administering the Receivables of a Trust,
accounting for collections and furnishing monthly and annual statements to
the related Owner Trustee and the related Indenture Trustee with respect to
distributions. The Servicing Fee will also compensate the Servicer for
certain taxes, accounting fees, outside auditor fees, the fees of the Paying
Agent, the Transfer Agent, the Registrar and the Owner Trustee and its
counsel, data processing costs and other costs incurred in connection with
administering the applicable Receivables.
NET DEPOSITS
As an administrative convenience, the Servicer, so long as (i) no Event of
Servicing Termination has occurred and is continuing and (ii) the Servicer
has not been terminated as such, will be permitted to deposit the
collections, aggregate Advances and Repurchase Amounts for any Trust for or
with respect to the related Collection Period net of distributions to be made
to the Servicer or the Seller for such Trust with respect to such Collection
Period (remitting amounts to the Seller directly).
ADVANCES
The Prospectus Supplement may provide that the Servicer may, in its sole
discretion, make a payment (an "ADVANCE") with respect to each delinquent
Receivable in an amount described in such Prospectus Supplement. The
Servicer may elect not to make any Advance with respect to a Receivable under
the circumstances described in the related Prospectus Supplement. The
Servicer will be entitled to be reimbursed for outstanding Advances in the
manner described in the related Prospectus Supplement. The Servicer will
deposit all Advances with respect to any Distribution Date on the related
Deposit Date.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing 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 related Indenture Trustee or a successor Servicer has assumed the
Servicer's servicing obligations and duties under the Sale and Servicing
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 a Sale and
Servicing Agreement, will be the successor to the Servicer under that Sale
and Servicing Agreement.
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Each Sale and Servicing Agreement will provide that the Servicer will be liable
only to the extent of the obligations specifically undertaken by it under such
Sale and Servicing Agreement and will have no other obligations or liabilities
thereunder. Each Sale and Servicing 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 Sale and Servicing Agreement and that, in its opinion, may cause it
to incur any expense or liability. The Servicer may, however, at its own
expense, undertake any reasonable action that it may deem necessary or desirable
in respect of the related Sale and Servicing Agreement and the rights and duties
of the parties thereto and the interests of the Securityholders thereunder.
DISTRIBUTIONS
With respect to each Trust, beginning on the Distribution Date or Payment Date,
as applicable, specified in the related Prospectus Supplement, distributions of
principal and interest (or, where applicable, in respect of principal or
interest only) on each class of such Securities entitled thereto will be made by
the applicable related Owner Trustee or Paying Agent to the Noteholders and the
Certificateholders of such Series. The timing (monthly, quarterly or
otherwise), calculation, allocation, order, source, priorities of and
requirements for all payments to any class of Noteholders of such Series and all
distributions to any class of Certificateholders of such Series will be set
forth in the related Prospectus Supplement.
With respect to each Trust, on each Distribution Date, collections on the
related Receivables will be transferred from the Collection Account directly to
the Note Distribution Account and the Certificate Distribution Account, if any,
for distribution to Noteholders and Certificateholders to the extent provided in
the related Prospectus Supplement. Credit Enhancement, such as a Reserve
Account or Yield Supplement Account, will be available to cover any shortfalls
in the amount available for distribution on such date to the extent specified in
the related Prospectus Supplement.
Except as otherwise provided in the related Prospectus Supplement, distributions
in respect of interest on the Notes will be made prior to distributions of
principal thereon. Distributions in respect of Certificates will be subordinate
to payments in respect of the Notes, as more fully described in the related
Prospectus Supplement.
CREDIT ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements, if any,
and the provider thereof, if applicable, with respect to each class of
Securities of a given Series will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus Supplement,
credit enhancement may be in the form of one or more subordinate classes of
Securities, a Reserve Account, a Yield Supplement Agreement, a Yield Supplement
Account, over collateralization, letters of credit, credit or liquidity
facilities, surety bonds, guaranteed investment contracts, swaps or other
interest rate protection agreements, repurchase obligations, other agreements
with respect to third party payments or other support, cash deposits or such
other arrangements as may be described in the related Prospectus Supplement.
Credit or cash flow enhancement for a class of Securities may cover one or more
other classes of Securities of the same Series, and credit or cash flow
enhancement for a Series of Securities may cover one or more other Series of
Securities.
The presence of a Yield Supplement Agreement, a Reserve Account, a Yield
Supplement Account and other forms of credit enhancement for the benefit of any
class or Series of Securities is intended to enhance the likelihood of receipt
by the Securityholders of such class or Series of the full amount of principal
and interest due thereon and to decrease the likelihood that such
Securityholders will experience losses. Unless otherwise specified in the
related Prospectus Supplement, the credit enhancement for a class or Series of
Securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur that exceed the amount covered by any credit enhancement or that
are not covered by any form of credit enhancement, Securityholders of any class
or Series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one Series of Securities, Securityholders of any such Series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other Series.
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The Seller may add to or supplement the Credit Enhancement for any class of
Securities with another form of Credit Enhancement without the consent of the
related Securityholders, provided that if any such addition shall affect any
class of Noteholders or Certificateholders differently from any other class of
Noteholders or Certificateholders, then such addition shall not, as evidenced by
an opinion of counsel, adversely affect in any material respect the interests of
any class of Noteholder or Certificateholder.
RESERVE ACCOUNT. If provided in the related Prospectus Supplement, pursuant to
the related Sale and Servicing Agreement, the Seller will establish a Reserve
Account which will be maintained in the name of the related Indenture Trustee.
Unless otherwise provided in the related Prospectus Supplement, the Reserve
Account will be included in the property of the related Trust. The Reserve
Account will be funded by an initial deposit on the Closing Date and, if the
related Series has a Funding Period, will also be funded on each Subsequent
Transfer Date. As described in the related Prospectus Supplement, the amount on
deposit in the Reserve Account will be increased on each Distribution Date up to
the Specified Reserve Account Balance (as defined in the related Prospectus
Supplement) by the deposit therein of the amount of collections on the related
Receivables remaining on each Distribution Date after the payment of all other
required payments and distributions on such date. The related Prospectus
Supplement will describe the circumstances and manner under which distributions
will be made out of the related Reserve Account (i) to holders of the Securities
covered thereby in the event of shortfalls and (ii) with respect to amounts, if
any, in excess of the Specified Reserve Account Balance, to the Seller or to a
third-party specified therein.
In the event the funds on deposit in a Reserve Account are reduced to zero, the
Securityholders 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 case, the amount available for distribution may
be less than that described in the related Prospectus Supplement and the
Securityholders may experience delays or suffer losses as a result, among other
things, of defaults and delinquencies by the Obligors or previous extensions
made by the Servicer.
YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT. If so provided in the
related Prospectus Supplement, the Seller or a third party will enter into a
Yield Supplement Agreement (each, a "YIELD SUPPLEMENT AGREEMENT") and/or
establish a Yield Supplement Account (each, a "YIELD SUPPLEMENT ACCOUNT") with
the related Indenture Trustee or related Owner Trustee for the benefit of the
holders of the related Securities. A Yield Supplement Agreement or a Yield
Supplement Account will be designed to provide payments to the Securityholders
in respect of Receivables the Contract Rate of which is less than the sum of the
applicable Interest Rate or Pass-Through Rate and the Servicing Fee Rate.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to the Securities, the Servicer
will provide to the related Owner Trustee and any Indenture Trustee a statement
setting forth substantially the same information for such date and the related
Collection Period as is required to be provided in the periodic reports provided
to Securityholders of such Series described herein under "Certain Information
Regarding the Securities--Reports to Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement will provide that a firm of independent public
accountants will annually furnish to the related Trust and related Indenture
Trustee a statement as to compliance by the Servicer during the preceding
twelve months (or, in the case of the first such certificate, from the
applicable Closing Date) with certain standards relating to the servicing of the
applicable Receivables, or as to the effectiveness of its processing and
reporting procedures and certain other matters.
Each Sale and Servicing Agreement will also provide for delivery to the related
Trust and the related Indenture Trustee on or before March 15 of each year,
beginning the first March 15 that is at least three months after the related
Closing Date, a certificate signed by an officer of the Servicer stating that
the Servicer has fulfilled its obligations in all material respects under such
Sale and Servicing Agreement throughout the preceding twelve
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months (or, in the case of the first such certificate, from the Closing Date)
or, if there has been a default in the fulfillment of any such obligation,
describing such default.
Copies of such statements and certificates may be obtained by Securityholders by
a request in writing addressed to the Indenture Trustee or Owner Trustee, as
applicable.
EVENTS OF SERVICING TERMINATION
Except as otherwise provided in the related Prospectus Supplement, "EVENTS OF
SERVICING TERMINATION" under each Sale and Servicing Agreement will consist of
(i) any failure by the Servicer to deliver to the related Owner Trustee or any
Indenture Trustee the Servicer's report for the related Collection Period or any
failure by the Servicer to deliver to the related Owner Trustee or Indenture
Trustee for deposit in any Trust Account any proceeds or payments required to be
delivered under the terms of such Securities or the related Sale and Servicing
Agreement (or, in the case of a payment or deposit to be made not later than the
Deposit Date, the failure to make such payment or deposit on such Deposit Date),
which failure continues unremedied for five business days after the due date;
(ii) any failure by the Servicer to duly observe or perform in any material
respect any other covenant or agreement of the Servicer set forth in the related
Sale and Servicing Agreement, which failure materially and adversely affects the
rights of the related Trust or the Securityholders (which determination shall be
made without regard to whether funds are available to the Securityholders
pursuant to any related Credit Enhancement) and which continues unremedied for
90 days after the date of written notice of such failure (A) to the Servicer by
the related Owner Trustee or the related Indenture Trustee or (B) to the related
Owner Trustee or the related Indenture Trustee and the Servicer by holders of
the related Notes (so long as Notes are outstanding) evidencing not less than a
majority of the principal amount of such Notes then outstanding (or, if no Notes
are outstanding, Certificates of the related Series evidencing not less than a
majority of the Certificate Balance then outstanding); or (iii) 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. The holders of the related Notes (so long as
Notes are outstanding) evidencing not less than a majority of the principal
amount of such Notes then outstanding (or, if no Notes are outstanding,
Certificates of the related Series evidencing not less than a majority of the
Certificate Balance then outstanding) may, with the written consent of any
provider of enhancement specified in the related Prospectus Supplement, waive
certain defaults by the Servicer in the performance of its obligations.
RIGHTS UPON EVENT OF SERVICING TERMINATION
Unless otherwise provided in the related Prospectus Supplement, as long as an
Event of Servicing Termination under a Sale and Servicing Agreement remains
unremedied, the related Indenture Trustee or holders of Notes of the related
Series evidencing not less than a majority of the principal amount of such Notes
then outstanding (or, if the Notes have been paid in full and the Indenture has
been discharged in accordance with its terms, by the related Owner Trustee or
holders of Certificates evidencing not less than a majority of the Certificate
Balance then outstanding) by notice given in writing to the Servicer (and to the
related Owner Trustee if given by the Certificateholders), may terminate all the
rights and obligations of the Servicer under such Sale and Servicing Agreement,
whereupon such Indenture Trustee or a successor Servicer appointed by such
Indenture Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Sale and Servicing Agreement and will be
entitled to similar compensation arrangements. If no Notes are outstanding, as
long as an Event of Servicing Termination under the related Sale and Servicing
Agreement remains unremedied, the related Owner Trustee or holders of
Certificates of the related Series evidencing not less than a majority of the
Certificate Balance then outstanding, by notice given in writing to the Servicer
(and to the related Owner Trustee if given by Certificateholders), may terminate
all of the rights, duties and liabilities of the Servicer under such Sale and
Servicing Agreement, whereupon such Owner Trustee or successor Servicer
appointed by such Owner Trustee will succeed to all of the rights, duties and
liabilities of the Servicer under such Sale and Servicing Agreement and will be
entitled to similar compensation arrangements. In the event that such Indenture
Trustee or Owner Trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
Servicer to act as successor to the outgoing Servicer.
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Such Indenture Trustee or Owner Trustee may make such arrangements for
compensation to be paid, which in no event may be greater than the Servicing
Fee payable under such Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
Unless otherwise provided in the related Prospectus Supplement, the holders of
Notes evidencing at least a majority in principal amount of the then outstanding
Notes of the related Series (or, the holders of any Certificates of such Series
evidencing not less than a majority of the Certificate Balance then outstanding,
in the case of any Event of Servicing Termination that does not adversely affect
the related Indenture Trustee or such Noteholders) may, on behalf of all such
Noteholders and Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Sale and Servicing Agreement
and its consequences, except an Event of Servicing Termination in making any
required deposits to or payments from any of the Trust Accounts in accordance
with such Sale and Servicing Agreement. No such waiver will impair such
Securityholder's rights with respect to subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be amended by the parties
thereto without the consent of the related Noteholders or Certificateholders
(i) to cure any ambiguity, (ii) to correct or supplement any provision
therein that may be defective or inconsistent with any other provision
therein or in the Related Documents, (iii) to add or supplement any credit
enhancement for the benefit of Noteholders or Certificateholders (provided
that if any such addition affects any class of Noteholders or
Certificateholders differently than any other class of Noteholders or
Certificateholders, then such addition will not, as evidenced by an opinion
of counsel, adversely affect in any material respect the interests of any
class of Noteholders or Certificateholders), (iv) to add to the covenants,
restrictions or obligations of the Seller, the Servicer, the Owner Trustee or
the Indenture Trustee, or (v) to add, change or eliminate any other provision
of such Agreement in any manner that will not, as evidenced by an opinion of
counsel, adversely affect in any material respect the interests of the
Noteholders or the Certificateholders. Each such Agreement may also be
amended by the parties thereto with the consent of the holders of at least a
majority in principal amount of such then outstanding Notes and the holders
of such Certificates evidencing at least a majority of the Certificate
Balance for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of such Agreement or modifying in any
manner the rights of such Noteholders or Certificateholders; except that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collection of payments on Receivables or
distributions that are required to be made on any Note or Certificate, any
Interest Rate, any Pass-Through Rate or the Specified Reserve Account Balance
or (ii) reduce the aforesaid percentage required of Noteholders or
Certificateholders to consent to any such amendment without the consent of
all of the Noteholders or Certificateholders, as the case may be.
PAYMENT OF NOTES
Upon payment in full of all outstanding Notes of a given Series and the
satisfaction and discharge of the related Indenture, the related Owner Trustee
will succeed to all the rights of the Indenture Trustee, and any
Certificateholders of such Series, will succeed to all the rights of the
Noteholders of such Series under the related Sale and Servicing Agreement,
except as otherwise provided therein.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Seller, the
related Owner Trustee and any related Indenture Trustee, if any, pursuant to the
Transfer and Servicing Agreements will terminate upon the earlier of (i) the
maturity or other liquidation of the last related Receivable and the disposition
of any amounts received upon liquidation of any property remaining in the
related Trust and (ii) the payment to Securityholders of the related Series of
all amounts required to be paid to them pursuant to the Transfer and Servicing
Agreements.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administrative expense, the Servicer will be permitted at its
option to purchase all remaining Trust Property at a purchase price
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equal to the aggregate of the Repurchase Amounts of the remaining Receivables
(other than Liquidating Receivables) from each Trust, as of the last day of
any applicable Collection Period in which (i) the outstanding Aggregate
Receivables Balance with respect to the Receivables held by such Trust is 10%
or less (or such other percentage as is specified in the related Prospectus
Supplement) of the Aggregate Starting Receivables Balance and (ii) the
Repurchase Amount for the Receivables (other than the Liquidating
Receivables) is greater than or equal to the sum of the outstanding principal
balance of all of the Securities, plus accrued and unpaid interest thereon.
The "AGGREGATE STARTING RECEIVABLES BALANCE" shall mean the sum of the
aggregate Starting Receivables Balance of all Receivables transferred to the
related Trust.
As more fully described in the related Prospectus Supplement, concurrently with
the purchase event specified above, any outstanding Notes of the related Series
will be redeemed and the subsequent distribution to any related
Certificateholders of all amounts required to be distributed to them pursuant to
the applicable Trust Agreement will effect early retirement of the Certificates
of such Series.
The related Owner Trustee and the related Indenture Trustee will give written
notice of termination to each Securityholder of the related Series of record,
which notice will specify the Distribution Date upon which such Securityholders
may surrender their Securities to the related Owner Trustee for final payment.
The Indenture Trustee will give written notice of redemption to each Noteholder
of record and the Owner Trustee will give written notice of redemption to each
related Certificateholder of record. The final distribution to any Noteholder
or Certificateholder will be made only upon surrender and cancellation of such
Noteholder's Note at an office or agency of the Indenture Trustee specified in
the notice of redemption or such Certificateholder's Certificate at an office or
agency of the Owner Trustee specified in the notice of termination.
Subject to applicable law and after the Indenture Trustee has taken certain
measures to notify Noteholders, any money held by the Indenture Trustee or any
Paying Agent in trust for payment on the Notes which remain unclaimed for two
years shall, upon request of such Trust, be paid to such Trust (or its
successor). Following any such payment, the Owner Trustee and any Paying Agent
shall no longer be liable to any Noteholder with respect to such unclaimed
amount, and any claim with respect to such amount shall be an unsecured claim
against such Trust. If, within 18 months after the first notice of final
payment on any Certificates, there remain Certificates which have not been
surrendered for cancellation, the related Owner Trustee may take appropriate
steps to notify the applicable Certificateholders (the cost thereof paid out of
the unclaimed amounts). Subject to applicable law, any funds that then remain
shall be paid to the Seller.
ADMINISTRATION AGREEMENT
With respect to each Trust, the Bank, in its capacity as administrator (the
"ADMINISTRATOR"), will enter into an agreement (as amended and supplemented from
time to time, the "ADMINISTRATION AGREEMENT") with such Trust and the related
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the notices and to perform
on behalf of the related Trust and Owner Trustee certain other administrative
obligations required by the related Indenture. As compensation for the
performance of the Administrator's obligations under the Administration
Agreement and as reimbursement for its expenses related thereto, the
Administrator will be entitled to a monthly administration fee in an amount to
be set forth in the related Prospectus Supplement (the "ADMINISTRATION FEE"),
which will be paid by the Servicer or as otherwise set forth in the related
Prospectus Supplement.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
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 each
Trust and related Indenture Trustee 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 each
Trust and related Indenture Trustee in the Receivables transferred to such Trust
and pledged to the related Indenture Trustee. First, the Seller will cause
appropriate financing statements to be filed with the appropriate governmental
authorities in the states of Utah and Idaho to evidence the sale to such Trust
and the pledge to the Indenture Trustee. Second, following the sale and
assignment of the Receivables to a Trust, pursuant to the related Sale and
Servicing Agreement, the Custodian will be appointed by the Servicer to have
physical possession of the Receivables and the Receivable Files as custodian for
the Trust and the related Indenture Trustee. The Receivables will not be
stamped, or otherwise marked to indicate that they have been sold to such Trust
or further pledged to the Indenture Trustee; however, the Servicer and the
Custodian will indicate in their computer records that the Receivables have been
sold to that Trust and pledged to the Indenture Trustee and both will have
notice of the interest of such Trust and the Indenture Trustee 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 or the Indenture Trustee's interests,
such purchaser (or secured party) will acquire an interest in the Receivables
superior to the interest of that Trust and the Indenture Trustee. Under the
related Sale and Servicing 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. Under the
Indenture, the Trust shall designate the Indenture Trustee as its agent to
assure that its security interest is maintained.
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
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.
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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 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 Sale and Servicing 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 Sale and Servicing Agreement, the Seller will assign its
security interests in the Financed Vehicles, along with the sale and assignment
of the Receivables, to the related Trust. The Trust will pledge such interest
to the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders to the extent provided in the related Indenture. The
certificates of title will not be endorsed or otherwise amended to identify the
Trust or Indenture 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 and Indenture
Trustee 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 Indenture Trustee as the
new secured party on the certificate of title that the security interest of the
Trust or the Indenture Trustee may not be enforceable. In the event the related
Trust or Indenture Trustee has failed to obtain or maintain a perfected
security interest in a Financed Vehicle, their 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.
With respect to each Trust, the Seller will warrant in the related Sale and
Servicing Agreement as to each Receivable conveyed by it to such 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. In the event of an uncured breach of such
warranty, the Seller will be required to repurchase such Receivable for its
Repurchase Amount. The repurchase obligation will constitute the sole remedy
available to the affected Trust, the related Indenture Trustee, the related
Owner Trustee and the related Securityholders 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 other
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
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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 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 Servicer would therefore have the opportunity to re-perfect the Seller's
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 Servicer, 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. For each Trust, the Seller will
warrant in the related Sale and Servicing 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 Securityholders. If
the Seller takes any such action, 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, Owner Trustee,
Indenture Trustee and Securityholders 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 other 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 a Trust or an Indenture
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 most 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 Trust 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 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 a Trust as a holder of the affected Receivable.
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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 Sale and Servicing 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 applicable 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 Trust, Indenture Trustee, Owner
Trustee and Securityholders against the Seller in respect of any such uncured
breach. See "Description of the Transfer and Servicing Agreements--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 Sale and
Servicing 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 a
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 such 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 Indenture Trustee, on behalf of the Trust, to establish its right to those
payments by submitting to and completing the administrative claims procedure
established under FIRREA, delays in distributions on the Securities and possible
reductions in the amount of those payments could occur. Alternatively, in such
circumstances, the FDIC might have the right to repay the Securities for an
amount which may be greater or less than the principal balance thereof and which
would shorten their weighted average life.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Internal Revenue Code of 1986, as amended (the
"CODE"), impose certain requirements on employee benefit plans and certain
other plans and arrangements, including individual retirement accounts and
annuities, Keogh plans and certain collective investment funds or insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively, "PLANS"),
and on persons who are fiduciaries with respect to Plans, in connection with
the investment of "plan assets" of any Plan ("PLAN ASSETS"). ERISA generally
imposes on Plan fiduciaries certain general fiduciary requirements, including
those of investment prudence and diversification and the requirement that a
Plan's investments be made in accordance with the documents governing the
Plan. Generally, any person who has discretionary authority or control
respecting the management or disposition of Plan Assets, and any person who
provides investment advice with respect to Plan Assets for a fee, is a
fiduciary with respect to such Plan Assets.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("PARTIES IN INTEREST" under ERISA and
"DISQUALIFIED PERSONS" under the Code) who have certain specified
relationships to a Plan or its Plan Assets, unless a statutory or
administrative exemption is available. Parties in Interest or Disqualified
Persons that participate in a prohibited transaction may be subject to a
penalty imposed under ERISA and/or an excise tax imposed pursuant to Section
4975 of the Code, unless a statutory or administrative exemption is
available. These prohibited transactions generally are set forth in Section
406 of ERISA and Section 4975 of the Code.
ANY FIDUCIARY OR OTHER PLAN INVESTOR CONSIDERING WHETHER TO PURCHASE ANY
SECURITIES ON BEHALF OF OR WITH PLAN ASSETS OF ANY PLAN SHOULD CONSULT WITH
ITS COUNSEL AND REFER TO THE RELATED PROSPECTUS SUPPLEMENT FOR GUIDANCE
REGARDING THE ERISA CONSIDERATIONS APPLICABLE TO THE SECURITIES OFFERED
THEREBY.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA), are not subject to the requirements of ERISA or Section 4975 of
the Code. Accordingly, assets of such plans may be invested in the
Securities without regard to the ERISA considerations described herein,
subject to the provisions of our applicable federal and state law. However,
any such plan that is qualified and exempt from taxation under Section 401(a)
and 501(a) of the Code is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement (the
"UNDERWRITING AGREEMENT") with respect to each Trust, the Seller will sell to
each of the underwriters named therein and in the related Prospectus
Supplement (each, an "UNDERWRITER"), and each of such Underwriters will
severally agree to purchase from the Seller, the principal amount of each
class of Securities of the related Series set forth therein and in the
related Prospectus Supplement. One or more classes of a Series may not be
subject to an Underwriting Agreement. Any such classes will be retained by
the Seller or sold in a private placement.
In each Underwriting Agreement, the Underwriters will agree, subject to the
terms and conditions set forth therein, to purchase all of the Securities
described therein which are offered hereby and by the related Prospectus
Supplement if any of such Securities are purchased. In the event of a
default by any such 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 either (i) set forth the price at which each
class of Securities being offered thereby will be offered to the public and
any concessions that may be offered to certain dealers participating in the
offering of such Securities, or (ii) specify that the related Securities are
to be resold by the Underwriters in negotiated transactions at varying prices
to be determined at the time of such sale. After the initial public offering
of any such Securities, such public offering prices and such concessions may
be changed.
49
<PAGE>
Each Underwriting Agreement will provide that the Seller will indemnify the
Underwriters against certain civil liabilities, including liabilities under
the Securities Act, or contribute to payments the several Underwriters may be
required to make in respect thereof.
Each Trust may, from time to time, invest funds in its Trust Accounts in
Eligible Investments acquired from such Underwriters or from the Seller or
any of its Affiliates.
Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect
to the Securities in accordance with Regulation M under the Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions
permit bids to purchase the Security so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve
purchases of the Securities in the open market after the distribution has
been completed in order to cover syndicate short positions. Penalty bids
permit such Underwriters to reclaim a selling concession from a syndicate
member when the Securities originally sold by such syndicate member are
purchased in a syndicate covering transaction. Such over-allotment
transactions, stabilizing transactions, syndicate covering transactions and
penalty bids may cause the prices of the Securities to be higher than they
would otherwise be in the absence of such transactions. Neither the Seller
nor any of the Underwriters will represent that they will engage in any such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
Pursuant to each of the Underwriting Agreements with respect to a given
Series of Securities, the closing of the sale of any class of Securities
subject to such Underwriting Agreement will be conditioned on the closing of
the sale of all other such classes of Securities of that Series.
The place and time of delivery for the Securities of any Series in respect of
which this Prospectus is delivered will be set forth in the related
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.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Securities with the SEC.
This Prospectus is part of the registration statement, but the registration
statement includes additional information.
The Servicer will file with the SEC all required annual, monthly and special
SEC reports and other information about the Trust.
You may read and copy any reports, statements or other information we file at
the SEC's public reference room in Washington, D.C., New York, New York or
Chicago, Illinois. You can request copies of these documents, upon payment of
a duplicating fee, by writing to the SEC. Please call the SEC at (800) SEC-
0330 for further information on the operation of the public reference rooms.
Our SEC filings are also available to the public over the Internet at the SEC
web site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information we file with it,
which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is
considered to be part of this Prospectus. Information that we file later with
the SEC will automatically update the information in this Prospectus. In all
cases, you should rely on the later information over different information
included in this Prospectus or the accompanying Prospectus Supplement.
50
<PAGE>
As a recipient of this Prospectus, you may request a copy of any document we
incorporate by reference, except exhibits to the documents (unless the exhibits
are specifically incorporated by reference), at no cost, by writing or calling
us at: _______________________________.
51
<PAGE>
INDEX OF TERMS
<TABLE>
<S> <C>
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Aggregate Receivables Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Aggregate Starting Receivables Balance . . . . . . . . . . . . . . . . . . . . . . 43
Applicable Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Base Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Calculation Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Cedel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Certificate Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . 36
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8, 19
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Collection Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Commodity Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Cooperative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Currency Indexed Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dealer Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Definitive Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Definitive Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
direct recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Disqualified Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Eligible Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Events of Servicing Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Face Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Final Scheduled Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . 13
Financed Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
52
<PAGE>
<TABLE>
<S> <C>
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fixed Rate Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
FTC Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indexed Commodity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indexed Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indexed Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Indirect Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Initial Receivable Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Interest Reset Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
LIBOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Liquidating Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Liquidation Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Moody's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Note Distribution Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Obligor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7, 15
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Pass-Through Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Plan Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Pre-Funded Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Pre-Funding Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Prospectus Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Receivable Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Receivable File. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Related Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Repurchase Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Reserve Account Initial Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . .8
Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Schedule of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
53
<PAGE>
<TABLE>
<S> <C>
Specified Reserve Account Balance. . . . . . . . . . . . . . . . . . . . . . . . . .9
Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Spread Multiplier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Starting Receivables Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Stock Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Stock Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Strip Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Strip Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Total Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Transfer and Servicing Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 34
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Trust Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Yield Supplement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Yield Supplement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
54
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE CERTIFICATES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE CERTIFICATES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE CERTIFICATES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED ___________, 1998
BASE PROSPECTUS
FIRST SECURITY AUTO GRANTOR TRUSTS
ASSET BACKED CERTIFICATES, CLASS A
ASSET BACKED CERTIFICATES, CLASS B
FIRST SECURITY BANK-Registered Trademark-, N.A.
SELLER AND SERVICER
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE __ IN THIS PROSPECTUS.
The Certificates of a series represent the beneficial interest in the related
Trust only. The Certificates issued by any Trust do not represent obligations
of or interests in, and are not guaranteed by, First Security Bank-Registered
Trademark-, N.A. or any of its respective affiliates.
This Prospectus may be used to offer and sell any Certificates only if
accompanied by an applicable Prospectus Supplement.THE TRUSTS--
- - A new trust will be formed to issue each series of Certificates. Each
series will include two classes of Certificates, the Class A Certificates
and the Class B Certificates.
- - The primary assets of each Trust will be:
- a pool of fixed rate retail motor vehicle installment sales contracts
and installment loans;
- monies received on such contracts and loans;
- a security or ownership interest in the automobiles and light trucks
financed under such contracts and loans;
- rights to amounts on deposit in the related Reserve Account and the
related Yield Supplement Account and under the related Yield
Supplement Agreement; and
- other related assets.
THE CERTIFICATES--
- will represent beneficial interests in the related Trust in the
percentages set forth in the related Prospectus Supplement;
- will be paid only from the assets of the related Trust and amounts on
deposit in the related Reserve Account;
- will represent the right to payments of principal and interest on a
monthly basis in the amounts described herein and in the related
Prospectus Supplement; and
- the Class B Certificates issued by any Trust will be subordinated to
the related Class A Certificates.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED
THESE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
______________ ___, 1998
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We tell you about the Certificates in two separate documents that progressively
provide more detail:
(a) this Prospectus, which provides general information and terms of the
Certificates.
(b) the accompanying supplement to this Prospectus (a "PROSPECTUS
SUPPLEMENT"), which will describe the specific terms of your Certificates and
the specific meanings the following terms will have:
- Original Pool Balance
- Cutoff Date
- Closing Date
- Collateral Agent
- Required Class A and B Ratings
- Class A Percentage, Class B Percentage
- Original Class A Certificate Balance, Original Class B Certificate
Balance
- Class A Pass-Through Rate, Class B Pass-Through Rate
- Interest Accrual Date
- Initial Distribution Date
- Final Scheduled Distribution Date
- Reserve Account Initial Deposit
- Basic Reserve Account Percentage
- Reserve Account Floor Amount
- Reserve Account Increase Percentage
- Reserve Account Trigger Starting Date
- Default Trigger
- Delinquency Trigger
- Yield Supplement Initial Deposit
The terms of particular Certificates may vary between this Prospectus and the
Prospectus Supplement, in which case you should rely on the information in the
Prospectus Supplement.
You should rely only on the information provided in this Prospectus and the
accompanying Prospectus Supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with other or different
information. We are not offering the Certificates in any jurisdiction where the
offer is not permitted. We do not claim the accuracy of the information in this
Prospectus or the accompanying Prospectus Supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this Prospectus and in the accompanying
Prospectus Supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
included in the accompanying Prospectus Supplement provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
Prospectus are defined under the caption "Index of Terms" beginning on page 58
in this Prospectus.
---------
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION> Page
----
<S> <C>
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
The Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
The Offered Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
The Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Yield Supplement Agreement; Yield Supplement Account . . . . . . . . . . . . . . . .9
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Servicing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Optional Repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Potential Priority of Certain Liens. . . . . . . . . . . . . . . . . . . . . . . . 11
Possible Reductions and Delays in Payments Due to Bankruptcy and Insolvency. . . . 11
Maturity and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . 12
Limited Enforceability of the Receivables. . . . . . . . . . . . . . . . . . . . . 12
Limited Reliance on the Bank and its Affiliates . . . . . . . . . . . . . . . . . 13
Extensions and Deferrals of Payments on Receivables. . . . . . . . . . . . . . . . 13
Limited Assets of Each Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Risk of Commingling of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal Income Taxation; Subordination of Class B Certificate Owners . . . . . . . 14
Absence of Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . 15
Limited Ability to Resell Certificates . . . . . . . . . . . . . . . . . . . . . . 15
Limited Significance of Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . 15
FORMATION OF THE TRUSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TRUST PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE MOTOR VEHICLE LOAN PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Origination of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicing and Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Physical Damage Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Delinquency and Loss Experience. . . . . . . . . . . . . . . . . . . . . . . . . . 19
MATURITY AND PREPAYMENT ASSUMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
YIELD CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
POOL FACTORS AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Book-Entry Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Definitive Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Sale and Assignment of the Receivables . . . . . . . . . . . . . . . . . . . . . . 26
Mandatory Repurchase of Receivables. . . . . . . . . . . . . . . . . . . . . . . . 27
Credit Deferrals and Optional Payment Deferrals. . . . . . . . . . . . . . . . . . 28
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Collections on the Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Servicing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Yield Supplement Account; Yield Supplement Agreement . . . . . . . . . . . . . . . 32
Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Distributions on Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 39
Evidence as to Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Certain Matters Regarding the Servicer . . . . . . . . . . . . . . . . . . . . . . 41
Events of Servicing Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Rights upon an Event of Servicing Termination. . . . . . . . . . . . . . . . . . . 42
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
List of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Duties of the Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . 45
Rights in the Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Security Interests in the Financed Vehicles. . . . . . . . . . . . . . . . . . . . 45
Repossession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Notice of Sale; Redemption Rights. . . . . . . . . . . . . . . . . . . . . . . . . 47
Deficiency Judgments and Excess Proceeds . . . . . . . . . . . . . . . . . . . . . 47
Consumer Protection Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Other Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Tax Status of the Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Treatment of Certificate Owners' Interest in Trust Property. . . . . . . . . . . . 50
Discount and Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Class B Certificate Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Yield Supplement Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Sale of a Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Foreign Certificate Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Backup Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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INDEX OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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PROSPECTUS SUMMARY
- - This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
Certificates, read carefully this entire document and the accompanying
Prospectus Supplement.
- - This summary provides an overview of certain information to aid your
understanding and is qualified by the full description of this information
in this Prospectus and the accompanying Prospectus Supplement.
THE PARTIES
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ISSUER................... Each Series of Certificates will be issued by a
separate Trust created pursuant to a Pooling and
Servicing Agreement.
SELLER AND SERVICER...... First Security Bank-Registered Trademark-, N.A.
will be the Seller and the Servicer for each
Trust.
TRUSTEE................... Each Trust will have a Trustee as specified in the
related Prospectus Supplement.
COLLATERAL AGENT......... Each Trust will have a Collateral Agent as
specified in the related Prospectus Supplement.
THE OFFERED
CERTIFICATES We will describe in each Prospectus Supplement the
Certificates we are offering at that time. The
offered Certificates will include two classes of
asset-backed Certificates, the Class A
Certificates and the Class B Certificates. We
sometimes refer to the Certificates issued by the
same Trust as a "SERIES." We may retain one or
more of the Certificates.
INTEREST
- Interest on the Class A Certificates will be
payable at the Class A Pass-Through Rate set
forth in the related Prospectus Supplement.
- Interest on the Class B Certificates will be
payable at the Class B Pass-Through Rate set
forth in the related Prospectus Supplement.
- Interest will be payable monthly on the
Distribution Dates set forth in the
Prospectus Supplement.
- Interest will be paid in any Distribution
Date only to the extent funds are available
therefor as described herein.
- Payment of interest on the of Class B
Certificates will be subordinated to payment
of interest on the Class A Certificates to
the extent described herein.
PRINCIPAL
- Payments of principal on the Certificates
will be made monthly on Distribution Dates.
- Principal payments will be in an amount based
on the amount of
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principal payments on the Receivables
received by the Servicer during the
related Collection Period and all
Liquidation Proceeds, to the extent allocable
to principal. Principal will be paid on any
Distribution Date only to the extent funds
are available therefor as described herein.
- Principal payments will generally be made pro
rata to the holders of Class A Certificates
and Class B Certificates based on their
respective percentage interest in the Trust.
- Payments of principal on the Class B
Certificates will be subordinated to payments
of principal and interest on the Class A
Certificates to the extent described herein.
SUBORDINATION OF CLASS B CERTIFICATES
On each Distribution Date:
- The Class B Certificateholders will receive
distributions of interest only after the full
amount of interest on the Class A
Certificates has been provided for
- The Class B Certificateholders will receive
distributions of principal only after the
full amount of interest and principal on the
Class A Certificates has been provided for.
REGISTRATION AND CLEARANCE
Unless otherwise provided, the Certificates
offered hereby will be registered in the name of
Cede & Co., as the nominee of the Depository Trust
Company in the United States or Cedel or Euroclear
in Europe. A Certificate Owner will not receive a
definitive certificate representing its interest,
except in certain limited circumstances when
Certificates in fully registered, certificated
form are issued.
DENOMINATIONS
The Certificates will be available for purchase in
the denominations specified in the related
Prospectus Supplement. If no denomination is
specified, then the Certificates will be available
for purchase in denominations of $1,000 and
greater whole-dollar denominations.
RATINGS OF THE CERTIFICATES
We will not issue the Certificates unless (1) the
Class A Certificates be rated in the "AAA"
category or its equivalent and (2) the Class B
Certificates be rated at least in the "A" category
or its equivalent, in each case by at least two
nationally recognized statistical rating agencies.
There can be no assurance that such ratings will
not be lowered or withdrawn by the applicable
rating agency.
THE TRUST PROPERTY The primary assets of each Trust will be a pool of
fixed rate retail motor vehicle installment sales
contracts and installment loans made by the Seller
or through a Dealer that sold a motor vehicle.
The Receivables in each Trust will be sold by the
Seller to the Trust. The Trust Property will also
include:
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- All monies due or received under the
Receivables after a date which will be
specified in the related Prospectus
Supplement;
- A security or ownership interest in the new
and used automobiles and lights trucks
financed by the Receivables;
- Any proceeds from claims on certain related
insurance policies or from obligors under the
Receivables;
- Certain amounts on deposit in the Accounts as
described under "The Certificates--Accounts"
and in the related Prospectus Supplement;
- Certain rights of the Seller relating to
Receivables from agreements between the
Seller and the Dealers that sold the Financed
Vehicles and related documents; and
- All rights of the Trust under the related
Agreement.
RESERVE ACCOUNT Unless otherwise specified in the related
Prospectus Supplement, the Collateral Agent for
each Trust will hold a "RESERVE ACCOUNT." The
Reserve Account will be funded as follows:
- On the Closing Date, the Seller will deposit
the RESERVE ACCOUNT INITIAL DEPOSIT set forth
in the related Prospectus Supplement.
- For each Collection Period, the amount in
the Reserve Account will be supplemented by
the deposit of funds remaining in the
Certificate Account after providing for
amounts to be distributed to the holders of
the Certificates and the Servicer.
Funds on deposit in the Reserve Account will be
applied for each Collection Period in the
following priority:
- To reimburse the Servicer for Advances
previously made and not reimbursed;
- To the Servicer, in respect of accrued and
unpaid Basic Servicing Fees;
- To the Certificateholders, the extent the
amounts on deposit in the Certificate Account
are insufficient to pay amounts distributable
to the Certificateholders; and
- To the Seller, to the extent funds on deposit
in the Reserve Account exceed the Specified
Reserve Account Balance.
Unless otherwise specified in the related
Prospectus Supplement, the Specified Reserve
Account Balance will equal a percentage of the
Pool Balance as of the last day of the related
Collection Period. In no event will the Specified
Reserve Account Balance be less than the lesser
of:
- the Reserve Account Floor Amount set forth in
the related Prospectus Supplement; and
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<PAGE>
- the sum of the Pool Balance of the related
Trust and an amount sufficient to pay
interest on the Certificates and the Basic
Servicing Fee through the Final Scheduled
Distribution Date.
YIELD SUPPLEMENT
AGREEMENT; YIELD
SUPPLEMENT
ACCOUNT Unless otherwise specified in the related
Prospectus Supplement, with respect to each Series
of Certificates, the Seller will enter a Yield
Supplement Agreement with the related Trust if any
Receivable has a Contract Rate below the sum of
(i) the applicable Class A Pass-Through Rate or
the Class B Pass-Through Rate and (ii) the Basic
Servicing Fee Rate. The Yield Supplement
Agreement will provide funds to supplement the
interest collections on such Receivables.
Unless otherwise specified in the related
Prospectus Supplement, the Yield Supplement Amount
for all Receivables with respect to any Collection
Period, will equal one-twelfth of the difference,
if any, of (i) the sum of:
(A) 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 Class A Pass -Through
Rate and the Basic Servicing Fee Rate; and
(B) 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 MINUS (ii) interest at the Contract Rate
on such Receivable's principal balance of the
first day of the related Collection Period.
Under each Yield Supplement Agreement, the Seller
will be obligated to pay to the Trust the Yield
Supplement Amount for each Collection Period. The
Seller's obligation will be secured by funds on
deposit in an account to be maintained by the
Seller in the name of the Collateral Agent. The
amount on deposit in a Yield Supplement Account
and available for any Collection Period 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. Amounts in excess of this amount will be
paid to the Seller. If the amount on deposit is
less than the Specified Yield Supplement Balance,
funds will not be withdrawn from the Yield
Supplement Account.
On the Closing Date, the Seller will deposit the
YIELD SUPPLEMENT INITIAL DEPOSIT set forth in the
related Prospectus Supplement in the Yield
Supplement Account.
ADVANCES To the extent specified herein, the Servicer may
make an Advance with respect to each Receivable
serviced by it if payments are due and unpaid on
such Receivable. The Servicer will not be
obligated to make any Advance in respect of a
Receivable to the extent that it does not expect
to recover such Advance from subsequent
collections or recoveries on such Receivable. The
Servicer will be entitled to reimbursement of all
Advances. See "The Certificates--Advances."
SERVICING FEES With respect to each Series of Certificates, the
Servicer will receive, on a monthly basis, the
Basic Servicing Fee to compensate it for servicing
the Receivables. In addition, the Servicer will
also receive to the Supplemental Servicing Fee.
See "The Certificates--Servicing Compensation."
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OPTIONAL
REPURCHASE Unless otherwise provided in the Prospectus
Supplement, the Servicer will have the option to
purchase the Receivables of a Trust in the manner
and on the terms and conditions described under
"The Certificates--Termination." Any such
purchase would result in the payment in full of
all outstanding Certificates.
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. Subject to certain limitations
applicable to individuals, estates and trusts,
Certificate Owners 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. See
"Federal Income Tax Consequences."
ERISA
CONSIDERATIONS Subject to the considerations discussed under
"ERISA Considerations" herein and in the related
Prospectus Supplement, the Class A Certificates
are eligible for purchase by employee benefit
plans.
No Class B Certificates may be acquired by any
employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or by any individual retirement
account. See "ERISA Considerations" herein and in
the related Prospectus Supplement.
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase any Certificates.
POTENTIAL PRIORITY OF The Seller will file financing statements to
CERTAIN LIENS perfect the interest of each Trust in its
Receivables as required by the Uniform Commercial
Code in the relevant states (the "UCC"). For each
Trust, the Servicer will appoint First Security
Service Company, an affiliate of the Servicer, as
the custodian to hold the Receivables and the
Receivable Files. The Receivables Files will not
be segregated, stamped or otherwise marked to
indicate that they have been sold to the Trust.
However, the Servicer and First Security Service
Company will note in their computer records that
the Receivables have been sold to the Trust. If
another party purchases or takes a security
interest in the Receivables (i) for value, (ii) in
the ordinary course of business and (iii) without
actual knowledge of the Trust's interest, such
purchaser or secured party will acquire an
interest in the Receivables superior to the
interest of the Trust.
The Seller will assign its security interest in
the Financed Vehicles to the Trust. The
certificates of title or ownership of the Leased
Vehicles will not identify the Trust as the new
secured party. In Utah, Idaho and most other
states, in most cases, if (i) the Bank files an
application requesting the Bank's lien be noted on
the certificates of title or ownership, and/or
(ii) the Bank has possession of such certificates
with the notation within 20 days after the Obligor
takes possession of the Financed Vehicle, then the
security interest of the Trust in the Financed
Vehicle will be perfected against other security
interests. Idaho also has procedures allowing for
a paperless electronic record of title. There is
a risk, however, in certain states that if the
Trust is not identified as the new secured party
on the certificate of title, its security interest
may not be perfected. In the event a Trust does
not have a perfected security interest in a
Financed Vehicle, its security interest would be
subordinate to 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 The Seller intends that the transfer of
DELAYS IN PAYMENTS DUE TO Receivables to each Trust be treated
BANKRUPTCY AND INSOLVENCY as a sale. If the Seller were to become
insolvent, the Federal Deposit Insurance Act
("FDIA"), as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989
("FIRREA"), gives certain powers to the Federal
Deposit Insurance Corporation ("FDIC"), if it were
approved as receiver. FDIC staff positions taken
prior to the passage of FIRREA do not suggest that
the FDIC would interrupt the timely transfer to a
Trust of payments collected on the related
Receivables. Under FIRREA, if the transfer of the
Receivables to the Trust were characterized as a
loan secured by a pledge of Receivables rather
than a sale, such Trust's security interest in the
Receivables should be respected by the FDIC if --
- the Seller's transfer of the Receivables is
the grant of a valid security interest in the
Receivables to such Trust;
- the Seller becomes insolvent and the FDIC is
appointed
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conservator or receiver of the Seller; and
- the security interest (a) is validly
perfected before the Seller's insolvency and
(b) was not taken in contemplation of the
Seller's insolvency or with the intent to
hinder, delay or defraud the Seller or its
creditors.
If the FDIC were to assert a different position,
your payments of outstanding principal and
interest could be delayed and possibly reduced or
the FDIC might have the right to repay the
Certificates early and for an amount which may be
greater or less than their principal balance. For
example, under the FDIA, the FDIC could--
- require the Trust to go through an
administrative claims procedure to establish
its right to those payments;
- request a stay of proceedings with respect to
the Seller; or
- reject the Seller's sales contract and limit
the Trust's resulting claim to "actual direct
compensatory damages."
See "Certain Legal Aspects of the
Receivables--Other Limitations" in this
Prospectus.
MATURITY AND PREPAYMENT Obligors may prepay the Receivables in full
CONSIDERATIONS or in part. In addition, prepayment may result
from defaults or the receipt of proceeds from
credit life, disability or physical damage
insurance. Also, the Seller may be required to
repurchase Receivables from a Trust in certain
circumstances, and the Servicer may have the right
to purchase all remaining Receivables from a Trust
pursuant to its optional purchase right. See "The
Certificates--Sale and Assignment of Receivables"
and "--Termination." Each such prepayment,
repurchase or purchase will shorten the average
life of the related Certificates. Prepayment
rates may be influenced by a variety of economic,
social and other factors and cannot be predicted
with any assurance. For example, decreases in
interest rates and the fact that the Obligor may
not sell or transfer the Financed Vehicle without
the consent of the Seller may affect the rate of
prepayment. If prepayments occurred after a
decline in interest rates, you may be required to
reinvest your funds at a return lower than the
applicable Pass-Through Rate. You will bear all
reinvestment risk resulting from a faster or
slower rate of prepayment, repurchase or extension
of the Receivables held by your Trust unless
otherwise provided in the related Prospectus
Supplement. See "Maturity and Prepayment
Assumptions."
LIMITED ENFORCEABILITY Federal and state consumer protection laws
OF THE RECEIVABLES regulate the creation and enforcement of consumer
loans such as the Receivables. Specific
statutory liabilities are imposed upon creditors
who fail to comply with these regulatory
provisions. In some cases, this liability could
affect an assignee's ability to enforce secured
loans such as the Receivables. If an Obligor had
a claim against any Trust for violation of these
laws prior to the Cutoff Date, the Seller must
repurchase the Receivable unless the breach is
cured. If the Seller fails to repurchase such
Receivable, payments in respect of your
Certificate may be reduced or delayed.
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LIMITED RELIANCE ON THE The Bank and its affiliates are generally
BANK AND ITS AFFILIATES not obligated to make any payments to you in
respect of your Certificates and do not guarantee
payments on the Receivables or your Certificates.
However, the Bank, as Seller will make
representations and warranties with respect to the
characteristics of the Receivables. In certain
circumstances, the Seller may be required to
repurchase Receivables with respect to which the
representations and warranties have been breached.
If the Seller fails to repurchase such
Receivables, payments in respect of your
Certificate may be reduced or delayed. See "The
Certificates--Sale and Assignment of Receivables."
In addition, in certain circumstances, the
Servicer may be required to purchase Receivables.
If the Servicer fails to purchase Receivables,
payments in respect of your Certificate may be
reduced or delayed. See "The
Certificates--Servicing Procedures." If the Bank
were to stop acting as the Servicer, delays in
processing payments on the Receivables and
information in respect of the Receivables could
occur and result in delays in payments to you.
EXTENSIONS AND DEFERRALS In certain circumstances, the Servicer may
OF PAYMENTS ON RECEIVABLES permit an extension on payments due on Receivables
on a case-by-case basis. In addition, the
Servicer has historically offered payment
deferrals to all Obligor's that meet the Bank's
eligibility requirements for such deferrals in
June and in December of each year. Any such
deferrals or extensions may extend the maturity of
the Receivables and increase the weighted average
life of the related Certificates. Any fees
received by the Servicer associated with such
deferrals or extensions will increase the
principal balance of the related Receivable. Any
reinvestment risk resulting from extensions or
deferrals of payments on Receivables will be borne
entirely by you as a Certificateholder. However,
if any payment deferral of a Receivable results in
extending the term beyond the FINAL SCHEDULED
DISTRIBUTION DATE (as defined in the related
Prospectus Supplement) for any class of
Certificates, the Servicer will be required to
purchase the Receivable from the related Trust.
See "The Motor Vehicle Loan
Portfolio--Underwriting."
LIMITED ASSETS OF EACH Each Trust will not have any significant
TRUST assets or sources of funds other than the
Receivables and the right to receive payments in
certain circumstances from the Reserve Account and
the Yield Supplement Account and under the Yield
Supplement Agreement. The Certificates will
represent interests in the related Trust. The
Certificates will not be insured or guaranteed by
the Seller, any Trustee, any of their affiliates
or any other person or entity. You must rely on
payments on the related Receivables and, if
available, amounts on deposit in the Reserve
Account and the Yield Supplement Account and
payable under the Yield Supplement Agreement for
repayment of your Certificates.
SUBORDINATION 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. If you hold the
Class B Certificates on any Distribution Date, you
will not receive any distributions of interest
until the full amount of interest then due on the
Class A Certificates
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has been provided for and you will not receive
any distributions of principal until the full
amount of interest and principal then due on
the Class A Certificates has been provided for.
See "The Certificates--Distributions on
Certificates."
RISK OF COMMINGLING OF With respect to each Trust, the Servicer
ASSETS will generally be required to deposit all
collections and proceeds of the Receivables into
the Certificate Account of such Trust within two
business days of receipt. However, if certain
conditions satisfactory to the Rating Agencies are
satisfied, the Servicer will not be required to
deposit such amounts in the Certificate Account
until shortly before funds are needed to make
required distributions to the Certificateholders.
Until these funds have been deposited in the
Collection Account, the Servicer may invest these
funds at its own risk and for its own benefit and
will not segregate them from its own funds. If
the Servicer cannot deposit the funds in the
Certificate Account on the specified date, you
might incur a loss. See "The
Certificates--Collections on the Receivables."
FEDERAL INCOME TAXATION; If amounts otherwise payable on the
SUBORDINATION OF CLASS B Class B Certificates are paid on the Class A
CERTIFICATE OWNERS Certificates pursuant to the subordination
provisions described above, we expect that, for
federal income tax purposes, such amounts 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 receive less
than their share of the related Trust's receipts
of principal or interest (the "SHORTFALL AMOUNT"),
we expect that Class B Certificate Owners would,
for Federal income tax purposes, be treated as if
they had:
- received as distribution their full share of
such receipts;
- paid over to the Class A Certificate Owners
an amount equal to such Shortfall Amount; and
- retained the right to reimbursement of such
amounts to the extent of future Collections
otherwise available for deposit in the
Reserve Account.
Under this analysis,
- 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 they did
not receive such amount as it was in fact
paid to the Class A Certificate Owners,
- Class B Certificate Owners would only be
allowed a loss when their right to receive
reimbursement of such Shortfall Amount become
worthless (for example, when it becomes clear
that such amount will not be available from
any source to reimburse such loss), and
- Class B Certificate Owners would not have
taxable income for reimbursement of such
Shortfall Amount prior to such a
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claim of worthlessness because such amount
was previously included in income.
If you hold a Class B Certificate, these results
should not significantly affect the inclusion of
income to you if you are on the accrual method of
accounting. However, if you are on the cash
method of accounting, it could accelerate
inclusion of income by, in effect, placing you on
the accrual method
ABSENCE OF DEFINITIVE Unless otherwise provided in the related
CERTIFICATES Prospectus Supplement, the Certificates will
initially be represented by global securities
registered in the name of Cede, as nominee of DTC.
Except in certain limited circumstances, you will
not be entitled to receive a Definitive
Certificate representing your Certificate. Under
the terms of the related Agreement, you will not
be recognized as a Certificateholder and may only
exercise such rights indirectly through DTC. See
"The Certificates--Book Entry Registration" and
"--Definitive Certificates."
LIMITED ABILITY TO The related Underwriters may assist in
RESELL CERTIFICATES resales of the Certificates but they are not
required to do so. A secondary market for any
Certificates may not develop. If a secondary
market does develop, it might not continue or it
might not be sufficiently liquid to allow you to
resell any of your Certificates.
LIMITED SIGNIFICANCE OF Each class of Certificates offered hereunder
RATINGS will be issued only if the rating specified in the
related Prospectus Supplement is received. A
security rating is not a recommendation to buy,
sell or hold the Certificates. The ratings may be
revised or withdrawn at any time. Ratings on the
Certificates do not address the timing of
distributions of principal and interest on the
Certificates prior to the applicable Final
Scheduled Distribution Date.
</TABLE>
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FORMATION OF THE TRUSTS
With respect to each Series of Certificates, the Seller will establish a
trust (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 making 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. The Servicer will also be entitled to the Supplemental
Servicing Fee. Certain other expenses of each Trust will be paid by the
Servicer or by the Seller as provided in the applicable Agreement. See "The
Certificates--Servicing Procedures," "--Servicing Compensation" and
"--Distributions on Certificates."
For each Trust, the Servicer will appoint an affiliate, First Security
Service Company, to hold the Receivables and Receivable Files as custodian
(the "CUSTODIAN") for the Trust and 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 the Custodian 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."
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 primary assets of each Trust (the "Trust Property") will
include (i) a pool of fixed rate motor vehicle installment sales contracts
and installment loans made by the Seller or through a motor vehicle dealer (a
"DEALER") that sold a motor vehicle (collectively, for any Trust, the
"RECEIVABLES"), (ii) all monies due or received under such Receivables after
a date which will be specified in the related Prospectus Supplement (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 new and used automobiles
and light trucks financed by the Receivables (the "FINANCED VEHICLES"), (v)
certain rights of such Trust under the related Yield Supplement Agreement (if
any), (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 under the Receivables
(each, an "OBLIGOR"), (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 from agreements between the Seller and the
Dealers that sold the Financed Vehicles and related documents (the "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.
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<PAGE>
THE MOTOR VEHICLE LOAN PORTFOLIO
GENERAL
The Bank originates retail motor vehicles installment sales 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.
Historically, a substantial portion of the Bank's portfolio of Motor
Vehicle Loans are located in Utah and Idaho, and that area of the country
generally. Detailed information relating to the geographic distribution of
Motor Vehicle Loans will be set forth in the related Prospectus Supplement.
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
The Bank's direct loans are referred to, and approved at, the Direct
Loan Center located 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.
Bank wide consumer loan collections are performed by the Consumer
Collection Center located in Salt Lake City.
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 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
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<PAGE>
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 amounts 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 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 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.
The information for an applicant is evaluated by the Bank's experienced
credit officers as a package; no one factor is determinative to the analysis.
As a result, certain Motor Vehicle Loans 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. Each such Dealer has made representations and warranties to the
Bank with respect to the contracts originated through it and the security
interests in the Financed Vehicles relating thereto, although such
representations and warranties do not relate to the creditworthiness of any
applicant or the collectibility of any loans. However, as to a generally
small percentage of the 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 a Dealer with respect to a retail
installment sale contract originated through it, the Bank has a right 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.
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<PAGE>
SERVICING AND COLLECTIONS
Collection activities with respect to delinquent Motor Vehicle Loans are
performed by the Bank's collection personnel. Under current practices,
collection personnel generally initiate contact, by mail, with obligors whose
Motor Vehicle Loans 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 Motor Vehicle Loan
becomes 13 days delinquent. Generally, after a Motor Vehicle Loan continues
delinquent for 90 days, the Financed Vehicle is repossessed; however, under
certain circumstances, the Financed Vehicle may be repossessed immediately
after a Motor Vehicle Loan has become delinquent. After repossession, the
Bank is required to give reasonable notice of any proposed sale of the
Financed Vehicle, and the Bank's practice is to give the obligor 10 days'
notice. Losses may occur in connection with delinquent Motor Vehicle Loans
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
collection practices of the Bank may change over time in accordance with the
Bank's business judgment. Upon repossession and disposition of the Financed
Vehicle, any deficiency remaining will be pursued to the extent deemed
practical.
The Bank, as Servicer, 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, as Servicer, has historically offered
payment deferrals to a broader population of qualifying applicants in June
and in December of each year. 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. Any deferral or extension could also result in delays of
payments on the Certificates.
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 (or such other amount as the Servicer determines, consistent with the
standard of care required by the applicable Agreement) 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 $3,500
(or such other amount as the Servicer determines, consistent with the
standard of care required by the applicable Agreement) 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. Insurance on the Motor Vehicle Loans is currently written
through Balboa Life and Casualty Company. Balboa Life and Casualty Company
also currently 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, 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. No assurance can be made that the performance of the
Receivables in any Trust will be similar to historical experience.
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<PAGE>
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 Certificates, 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 (i) 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) and (ii) the Purchase Amount for the
Receivables (other than Defaulted Receivables) is greater than or equal to
the sum of the Class A Certificate Balance and the Class B Certificate
Balance.
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."
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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 which 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 (after giving effect to distributions made
on such 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 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. In addition,
Certificateholders of record during 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 the
related Prospectus Supplement provides for other applications, the net
proceeds from the sale of the Certificates will be added to its general
corporate funds and will be used for general corporate purposes.
THE BANK
First Security Bank-Registered Trademark-, N.A., a national banking
association (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
With respect to each Trust, asset-backed certificates (the
"CERTIFICATES") will be issued pursuant to the terms of a Pooling and
Servicing Agreement (an "AGREEMENT"). The Certificates will be issued in
Series. 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. 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 (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") of the
Trust. The Class B Certificates will evidence in the aggregate an undivided
ownership interest of the CLASS B PERCENTAGE (as defined in the related
Prospectus Supplement) of the Original Pool Balance of the Trust. 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"). On each Distribution Date, the
Trustee will distribute, to holders of record of the related Class A
Certificates (the "CLASS A CERTIFICATEHOLDERS ") or the Class B Certificates
(the "CLASS B CERTIFICATEHOLDERS" and, together with the Class A
Certificateholders, the "CERTIFICATEHOLDERS") as of the 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 a nominee of DTC (together with any
successor depository selected by the Trust (the "DEPOSITORY") except as set
forth below. 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 the
Depository 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 the Depository.
See "--Definitive Certificates."
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BOOK-ENTRY REGISTRATION
Certificate Owners may hold their Certificates through the Depository
Trust Company ("DTC") (in the United States) or Cedel or Euroclear (in
Europe), which in turn hold through DTC, if they are participants of such
systems, or indirectly through organizations that are participants in such
systems.
DTC's nominee will be Cede & Co. ("CEDE"), unless another nominee is
specified in the related Prospectus Supplement. Accordingly, such nominee is
expected to be the holder of record of any book-entry securities of any class
or Series. Unless and until Definitive Certificates are issued under the
limited circumstances described therein or in the related Prospectus
Supplement, no Certificate Owner will be entitled to receive a physical
certificate representing its interest in such Certificate. All references
herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from its
Participants and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders of book-entry securities refer to distributions, notices,
reports and statements to DTC or its nominee, as the registered holder of the
applicable Certificates, for distribution to Certificateholders in accordance
with DTC's procedures with respect thereto. See "--Definitive Certificates"
herein.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the "DEPOSITARIES") which in turn will
hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.
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 the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. "PARTICIPANTS" include securities brokers and dealers (who may
include an underwriter with respect to any series), banks, trust companies
and clearing corporations and may include certain other organizations,
including Cedel and Euroclear. Indirect access to the DTC system also is
available to "INDIRECT PARTICIPANTS" such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Participants or Euroclear Participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant
European international clearing system by its Depositary; however, such
cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing
system will, if the transaction meets its settlement requirements, deliver
instructions to its Depositary to take action to effect final settlement on
its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Cedel Participants and Euroclear Participants
may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits or securities in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day.
Cash received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or Euroclear Participant to a Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC.
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Certificate Owners that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interest in, Certificates may do so only through Participants and Indirect
Participants. 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 Participants to whose accounts with DTC the
Certificates are credited. DTC has advised the Seller that to the extent 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 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 Participants whose
holdings include such undivided interests.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "RULES"), DTC is required to make book-entry
transfers of Certificates among Participants on whose behalf it acts with
respect to the Certificates and to receive and transmit distributions of
principal of, and interest on, the Certificates. 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 Owner.
Accordingly, although Certificate Owners will not physically possess
Certificates, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of physical certificates for
such Certificates.
Cedel Bank, society anonyme ("CEDEL") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("CEDEL PARTICIPANTS") and facilitates the
clearance and settlement of securities transactions between Cedel
Participants through electronic book-entry changes in accounts of Cedel
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled by Cedel in any of 28 currencies,
including United States dollars. Cedel provides to its Cedel Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedel interfaces with domestic markets in several countries. As
a professional depository, Cedel is subject to regulations by the Luxembourg
Monetary Institute. Cedel Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
and may include an underwriter of any series. Indirect access to Cedel is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System ("EUROCLEAR") was created in 1968 to hold
securities for participants of Euroclear ("EUROCLEAR PARTICIPANTS") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now
be settled in any of 27 currencies, including United States dollars.
Euroclear includes various other services, including securities lending and
borrowing and interfaces with domestic markets in several countries generally
similar to the arrangement for cross-market transfers with DTC described
above. Euroclear is operated by Morgan Guaranty Trust Company of New York,
Brussels, Belgium office (the "EUROCLEAR OPERATOR"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"COOPERATIVE"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for Euroclear on behalf of Euroclear Participants.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include an underwriter of any series. Indirect access
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to Euroclear is also available to other firms that clear through or maintain
a custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of Euroclear and applicable Belgian law
(collectively, the "TERMS AND CONDITIONS"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawal of securities
and cash from Euroclear, and receipts of payments with respect to securities
in Euroclear. All securities in Euroclear are held on a fungible basis
without attribution of specific certificates to specific securities clearance
accounts. The Euroclear Operator acts under the Terms and Conditions only on
behalf of Euroclear Participants and has no record of or relationship with
persons holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions
will be subject to tax reporting in accordance with relevant United States
tax laws and regulations. Cedel or the Euroclear Operator, as the case may
be, will take any other action permitted to be taken by a Certificateholders
under the related Agreement on behalf of a Cedel Participant or a Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect such actions on its behalf
through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time.
Except as required by law, the Trustee will not have any liability for
any aspect of the records relating to or payments made on account of
beneficial ownership interests of the Certificates of any series held by DTC,
Cedel or Euroclear or for maintaining, supervising or reviewing any records
relating to such beneficial ownership 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 the Depository or its nominee, only if (i) the
Seller advises the related Trustee in writing that the Depository 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 the Depository 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 the Depository
through Direct Participants in writing that the continuation of a book-entry
system through the Depository (or successor 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, the Depository is required to notify all Direct
Participants of the availability through the Depository of Definitive
Certificates. Upon surrender by the Depository 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").
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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, certain related property and the proceeds
thereof, including, among other things, its security interests in the related
Financed Vehicles. Each such Receivable with respect to a Trust will be
identified in a schedule appearing as an exhibit to 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 the Depository. The Seller will sell the
related Certificates offered hereby (which may not include all Certificates
of such Series) to the respective underwriters set forth in the Prospectus
Supplement. See "Plan of Distribution."
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 in
the ordinary course of its business 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 related 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 Trust, (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) in the event of a prepayment,
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 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,
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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 $3,500 (or such other amount as is specified in the related
Prospectus Supplement or as determined by the Servicer, consistent with the
standard of care required by the Agreement), 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 under the related Agreement, 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 Receivables are "chattel paper" as
defined in the UCC; (xii) the Seller has duly fulfilled all obligations on
its part to be fulfilled under, or in connection with, the Receivable and
(xiii) 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 the Custodian to hold the
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 the Custodian. Documents
related to the Receivables that are not included in the original Receivable
Files will be maintained by the Custodian on behalf of the Servicer, in a
computer imaging system (but not in original form). The Seller's and the
Custodian'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
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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 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
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Optional Payment Deferrals, which fee is then added to the principal balance
of the related Receivable.
ACCOUNTS
With respect to each Trust, 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, unless
otherwise provided in the related Prospectus Supplement. 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 nationally recognized rating agency (each, a "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 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. ("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. Unless otherwise provided in the related Prospectus
Supplement, any earnings (net of losses and investment expenses) on amounts
on deposit in the Accounts will be paid to the Servicer and will not be
available to Certificateholders.
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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
representing monies due or received under the Receivables 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 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
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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 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, in its sole discretion, subject to the following and unless
otherwise specified in a Prospectus Supplement, 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 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),
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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 Advances previously made and not reimbursed
("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 ACCOUNT; YIELD SUPPLEMENT AGREEMENT
Unless otherwise provided in the related Prospectus Supplement, 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 (each, 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 the 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 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 (in the aggregate, for all Receivables with respect to a
Deposit Date, the "YIELD SUPPLEMENT AMOUNT").
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. 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").
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
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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.
If the amount on deposit in the Yield Supplement Account is less than the
Specified Yield Supplement Balance, funds will not be withdrawn from the
Yield Supplement Account.
RESERVE ACCOUNT.
Unless otherwise provided in the related Prospectus Supplement, 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.
Unless otherwise provided in the related Prospectus Supplement, 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
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.
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"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 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
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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 the Seller gives prior written notice of such reduction to the
Rating Agencies and 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.
DISTRIBUTIONS ON CERTIFICATES
DEPOSITS TO CERTIFICATE ACCOUNT. With respect to each Series of
Certificates, on or before 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.
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"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; (iii) all related
Recoveries, to the extent allocable to principal and (iv) 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.
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.
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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.
"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 Closing 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.
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"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 Closing 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 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 and defines a significant period and dates to a
hypothetical monthly distribution with respect to a Series of Certificates:
May 24-June 23 The COLLECTION PERIOD shall be the period from and
including the 24th day of a calendar month to and
including the 23rd day of the succeeding calendar
month. The Initial Collection Period will be the
period from but not including the Cutoff Date to and
including the 23rd day of the
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succeeding month. The Servicer receives monthly
payments, prepayments, and other proceeds in respect
of the Receivables.
July 10 The DETERMINATION DATE shall be the tenth calendar day
of each month. 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.
July 14 The RECORD DATE shall be the day immediately preceding
each Distribution 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 May 23).
July 14 The DEPOSIT DATE shall be the business day immediately
preceding each Distribution 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.
July 15 The DISTRIBUTION DATE shall be the 15th day of each
calendar month unless otherwise specified in the
related Prospectus Supplement. 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.
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;
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(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."
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.
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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
Except as otherwise provided in the related Prospectus Supplement, "EVENTS
OF SERVICING TERMINATION" under each Agreement will consist of: (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 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 of the Servicer in the
Certificates and the related Agreement, which failure materially and adversely
affects the rights of the Trust or the 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 Class A Certificates of a Series, for so long as Class A
Certificates of such Series are outstanding, evidencing not less than a majority
of the aggregate outstanding principal balance of the Class A Certificates of
such Series or, if no Class A Certificates of a Series are outstanding, the
holders of Class B Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class B Certificates of such
Series, (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.
For so long as Class A Certificates of a Series are outstanding, the
holders of Class A Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates of such
Series or, if no Class A Certificates of a Series are outstanding, the holders
of Class B Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class B Certificate of such Series may
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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
Unless otherwise provided in the related Prospectus Supplement, as long as
an Event of Servicing Termination under an Agreement remains unremedied, the
Trustee or, if Class A Certificates of a Series are outstanding, the holders of
Class A Certificates of such Series evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates or, if no
Class A Certificates of a Series are outstanding, the holders of Class B
Certificates evidencing not less than a majority of the aggregate outstanding
principal balance of Class B Certificates of such Series 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.
In the event that such Trustee is unwilling or unable to so act, it 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. The Trustee may make such arrangement for compensation to be paid to
such successor which in no event may 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.
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
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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.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administration expense, the Servicer will be permitted, at its
option, in the event that (i) 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) and (ii) the aggregate Purchase Amount for the Receivables (other
than Defaulted Receivables) is greater than or equal to the sum of the Class A
Certificate Balance and the Class B Certificate Balance, 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 (other than Defaulted
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.
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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 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, if there are Class A Certificates
of a Series outstanding, the holders of the Class A Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the
Class A Certificates of such Series or, if no Class A Certificates of a Series
are outstanding, the holders of Class B Certificates of such Series evidencing
not less than a majority of the aggregate outstanding principal balance of the
Class B Certificates of such Series, 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
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 the Custodian 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 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. Not
all states have similar relation-back rules. 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 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
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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. Of course, as provided above, actions to perfect
such assignment are also taken. 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.
With respect to each Trust, the Seller will warrant in the related
Agreement as to each Receivable conveyed by it to such 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 other 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 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 Servicer
would therefore have the opportunity to re-perfect the Seller's 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.
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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 Servicer, 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. For each Trust,
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.
If the Seller takes any such action, 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.
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 other 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 other applicable provisions of law, including the UCC).
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
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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 most 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 Trust 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 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 a Trust 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
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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 Trust, 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
such 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, on behalf of the Trust,
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 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.
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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 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
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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.
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
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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 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
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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 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
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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 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
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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."
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
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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
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 of 1933, as amended (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
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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.
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 offered to
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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.
The place and time of delivery for the Certificates 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.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Certificates with the
SEC. This Prospectus is part of the registration statement, but the
registration statement includes additional information.
The Servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the Trust.
You may read and copy any reports, statements or other information we
file at the SEC's public reference room in Washington, D.C., New York, New
York or Chicago, Illinois. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
(800) SEC- 0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public over the
Internet at the SEC web site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be part of this Prospectus. Information that we file later
with the SEC will automatically update the information in this Prospectus. In
all cases, you should rely on the later information over different
information included in this Prospectus or the accompanying Prospectus
Supplement.
As a recipient of this Prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents
(unless the exhibits are specifically incorporated by reference), at no cost,
by writing or calling us at: _______________________________.
60
<PAGE>
<TABLE>
<CAPTION>
INDEX OF TERMS
<S> <C>
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 32
Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Aggregate Net Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Available Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Available Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Available Reserve Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Average Delinquency Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Average Net Loss Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Basic Reserve Account Percentage . . . . . . . . . . . . . . . . . . . . . . . . . 33
Basic Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Basic Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Cedel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Certificate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class A Certificate Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class A Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . 37
Class A Interest Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Class A Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Class A Monthly Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class A Pool Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Class A Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . . . . 37
Class A Principal Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Class B Certificate Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Class B Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class B Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Class B Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . 38
Class B Interest Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Class B Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Class B Monthly Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class B Pool Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Class B Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . . . . 38
Class B Principal Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Collection Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Cooperative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Credit Deferral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
61
<PAGE>
<TABLE>
<S> <C>
Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Dealer Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Default Trigger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Defaulted Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Definitive Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Delinquency Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Delinquency Trigger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
direct recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
DOL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Eligible Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Eligible Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Events of Servicing Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Final Scheduled Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . 13
Financed Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FTC Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Full Payoff Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Indirect Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Interest Accrual Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Interest Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Moody's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Motor Vehicle Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Net Loss Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Obligor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
OID. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
OID Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Optional Payment Deferral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Original Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Original Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . 22
Original Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . 22
Original Pool Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Outstanding Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
</TABLE>
62
<PAGE>
<TABLE>
<S> <C>
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Prepayment Assumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Prospectus Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Purchase Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Purchased Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Rating Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Realized Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Receivable File. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Reserve Account Floor Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Reserve Account Increase Percentage. . . . . . . . . . . . . . . . . . . . . . . . 35
Reserve Account Initial Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . .8
Reserve Account Trigger Starting Date. . . . . . . . . . . . . . . . . . . . . . . 35
Restricted Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Retained Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Schedule of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 1286 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Shortfall Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Specified Reserve Account Balance. . . . . . . . . . . . . . . . . . . . . . . . . 33
stripped bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
stripped coupons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Stripped Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Supplemental Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Supplemented Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Yield Supplement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Yield Supplement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Yield Supplement Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9, 32
Yield Supplement Initial Deposit . . . . . . . . . . . . . . . . . . . . . . . . . .9
</TABLE>
63
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Inapplicable.
ITEM 14. 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 15. RECENT SALES OF UNREGISTERED SECURITIES
Inapplicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
Number Description
- ----- ------------
<S> <C>
II-1
<PAGE>
Number Description
- ----- ------------
<S> <C>
1.1* Form of Underwriting Agreement
3.1* Articles of Association, as amended, of First Security Bank, N.A.
3.2* Bylaws, as amended, of First Security Bank, N.A.
4.1 Form of Owner Trust Prospectus Supplement
4.2 Form of Grantor Trust Prospectus Supplement
4.3 Form of Indenture between the Owner Trustee and the Indenture
Trustee, including the form of Notes as exhibits thereto
4.4 Form of Owner Trust Agreement between First Security Bank, N.A.
and the Owner Trustee
4.5 Form of Owner Trust Sale and Servicing Agreement between First
Security Bank, N.A. and the Trust
4.6 Form of Administration Agreement
4.7 Form of Grantor Trust Pooling and Servicing Agreement between
First Security Bank, N.A. and the Trust, including the form of
Class A Certificate and the form of Class B Certificate and Yield
Supplement Agreement and exhibits thereto
5.1* Opinion of Kirkland & Ellis re Legality for Grantor Trusts
5.2 Opinion of Kirkland & Ellis re Legality for Owner Trusts
8.1* Opinion of Kirkland & Ellis re Tax Consequences for Grantor
Trusts
8.2 Opinion of Kirkland & Ellis re Tax Consequences for Owner Trusts
24.1* Consent of Kirkland & Ellis (contained in Exhibits 5.1 and 8.1)
24.2 Consent of Kirkland & Ellis (contained in Exhibits 5.2 and 8.2)
24.3* Consent of Ray, Quinney & Nebeker for Grantor Trusts
24.4 Consent of Ray, Quinney & Nebeker for Owner Trusts
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.
(b) Financial Statement Schedules.
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby agrees:
(a) To provide to the Underwriter, at the closings specified in the
Underwriting Agreement, Securities in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
II-2
<PAGE>
(b) 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 14
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.
(c) 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.
(d) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned thereto duly authorized, in Salt Lake City, State of Utah, on August
12, 1998.
FIRST SECURITY BANK, N.A.
as originator of the Trust, Registrant
By: *
---------------------------------------
Chairman and Chief Executive Officer
L. Scott Nelson
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman (a Principal Executive September 17, 1997
- ---------------------- Officer) and Director
L. Scott Nelson
* President (a Principal Executive September 17, 1997
- ---------------------- Officer) and Director
J. Patrick McMurray
* Executive Vice President and September 17, 1997
- ---------------------- Cashier (a Principal Financial and
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
The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 2 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.
By: /s/ A. Robert Thorup
----------------------
A. Robert Thorup
Attorney-in-Fact
INDEX TO EXHIBITS
EXHIBIT
II-4
<PAGE>
<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ------ -------
<S> <C>
1.1* Form of Underwriting Agreement
3.1* Articles of Association, as amended, of First Security Bank, N.A.
3.2* Bylaws, as amended, of First Security Bank, N.A.
4.1 Form of Owner Trust Prospectus Supplement
4.2 Form of Grantor Trust Prospectus Supplement
4.3 Form of Indenture between the Owner Trustee and the Indenture
Trustee, including the form of Notes as exhibits thereto
4.4 Form of Owner Trust Agreement between First Security Bank, N.A.
and the Owner Trustee
4.5 Form of Owner Trust Sale and Servicing Agreement between First
Security Bank, N.A. and the Trust
4.6 Form of Administration Agreement
4.7 Form of Grantor Trust Pooling and Servicing Agreement between
First Security Bank, N.A. and the Trust, including the form of
Class A Certificate and the form of Class B Certificate and Yield
Supplement Agreement and exhibits thereto
5.1* Opinion of Kirkland & Ellis re Legality for Grantor Trusts
5.2 Opinion of Kirkland & Ellis re Legality for Owner Trusts
8.1* Opinion of Kirkland & Ellis re Tax Consequences for Grantor
Trusts
8.2 Opinion of Kirkland & Ellis re Tax Consequences for Owner Trusts
24.1* Consent of Kirkland & Ellis (contained in Exhibits 5.1 and 8.1)
24.2 Consent of Kirkland & Ellis (contained in Exhibits 5.2 and 8.2)
24.3* Consent of Ray, Quinney & Nebeker for Grantor Trusts
24.4 Consent of Ray, Quinney & Nebeker for Owner Trusts
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-5
<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED _____________, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED ___________, 1998
FIRST SECURITY AUTO OWNER TRUST 19__-__
ASSET BACKED NOTES
FIRST SECURITY BANK-Registered Trademark-, N.A.
SELLER AND SERVICER
CONSIDER CAREFULLY THE RISK FACTOR ON PAGE __ IN THIS PROSPECTUS SUPPLEMENT AND
THE RISK FACTORS BEGINNING ON PAGE __ IN THE PROSPECTUS.
The Notes represent obligations of the Trust only and do not represent
obligations of or interests in, and are not guaranteed by, First Security
Bank-Registered Trademark-, N.A. or any of its affiliates.
This Prospectus Supplement may be used to offer and sell the Notes only if
accompanied by the Prospectus.
THE NOTES
The Trust will issue the following Notes:
<TABLE>
<CAPTION>
Class A Notes
------------------------------------------ Class B
A-1 Notes A-2 Notes A-3 Notes A-4 Notes Notes
--------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Initial Principal
Amount
Interest Rate
Final Scheduled
Distribution Date
Price to Public(1)
Underwriting
Discount(2)
Proceeds to
Seller(3)
</TABLE>
(1) Plus accrued interest, if any, from __________. Total price to public
(excluding such interest) = $_________.
(2) Total underwriting discount = $_________.
(3) Total proceeds to the Seller = $_______.
- - Principal and interest on all Notes will be payable on each monthly
Distribution Date. The first Distribution Date will be _________.
CREDIT ENHANCEMENT
- The Class B Notes are subordinated to the Class A Notes as
described herein.
- Reserve Account, with an initial balance of $___________.
- Yield Supplement Agreement and related Yield Supplement Account
provide funds to supplement interest collections on certain
Receivables. The initial balance of the Yield Supplement Account
will be $_______.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriters of the Class A Notes
Underwriters of the Class B Notes
[DATE]
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the Notes in two separate documents that progressively provide
more detail: (a) the accompanying Prospectus, which provides general
information, some of which may not apply to the Notes and (b) this Prospectus
Supplement, which describes the specific terms of your Notes.
If the terms of the Notes vary between this Prospectus Supplement and the
Prospectus, you should rely on the information in this Prospectus Supplement.
You should rely only on the information provided in this Prospectus Supplement
and the accompanying Prospectus, including the information incorporated by
reference. We have not authorized anyone to provide you with other or different
information. We are not offering the Notes in any jurisdiction where the offer
is not permitted. We do not claim the accuracy of the information in this
Prospectus Supplement or the accompanying Prospectus as of any date other than
the dates stated on their respective covers.
We include cross-references in this Prospectus Supplement and in the
accompanying Prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table of
Contents included in the accompanying Prospectus provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
Prospectus Supplement are defined under the caption "Index of Terms for
Prospectus Supplement" beginning on page S-32 in this Prospectus Supplement and
under the caption "Index of Terms for Prospectus" beginning on page 51 in the
accompanying Prospectus.
-----------------
-2-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-1
Offered Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-1
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . .S-4
Trust Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-5
The Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Collection Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Priority of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
ERISA Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Legal Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
RISK FACTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-7
Lack of Geographic Diversification. . . . . . . . . . . . . . . . . . . . .S-7
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-8
Capitalization of the Trust . . . . . . . . . . . . . . . . . . . . . . . .S-8
The Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-8
DELINQUENCY AND LOSS EXPERIENCE OF SELLER. . . . . . . . . . . . . . . . . . . . S-9
Delinquency Experience. . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Credit Loss/Repossession Experience . . . . . . . . . . . . . . . . . . . S-9
THE RECEIVABLES POOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
The Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Certain Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Composition of the Receivables. . . . . . . . . . . . . . . . . . . . . . S-10
Distribution by Contract Rate of the Receivables. . . . . . . . . . . . . S-10
Distribution by Remaining Term of the Receivables . . . . . . . . . . . . S-11
Geographic Distribution of the Receivables. . . . . . . . . . . . . . . . S-11
Payments on the Receivables . . . . . . . . . . . . . . . . . . . . . . . S-11
Weighted Average Life of the Notes. . . . . . . . . . . . . . . . . . . . S-12
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Payments of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Payments of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Monthly Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Parity and Priority of Notes. . . . . . . . . . . . . . . . . . . . . . . S-18
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
THE TRANSFER AND SERVICING AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . S-18
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
Servicing Compensation and Payment of Expenses. . . . . . . . . . . . . . S-22
Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Yield Supplement Account; Yield Supplement Agreement. . . . . . . . . . . S-23
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . S-25
Characterization as Debt. . . . . . . . . . . . . . . . . . . . . . . . . S-25
Characterization of the Trust . . . . . . . . . . . . . . . . . . . . . . S-25
Interest Income to Noteholders. . . . . . . . . . . . . . . . . . . . . . S-25
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Original Issue Discount . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Disposition of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Information Reporting and Backup Withholding. . . . . . . . . . . . . . . S-26
Certain Tax Consequences to Foreign Noteholders . . . . . . . . . . . . . S-27
STATE AND LOCAL TAX CONSEQUENCES . . . . . . . . . . . . . . . . . . . . . . . . S-27
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
</TABLE>
-ii-
<PAGE>
SUMMARY OF TERMS
- This summary highlights selected information from this document
and does not contain all of the information that you need to
consider in making your investment decision. To understand all of
the terms of an offering of the Notes read carefully this entire
document and the accompanying Prospectus.
- This summary provides an overview of certain calculations, cash
flows and other information to aid your understanding and is
qualified by the full description of these calculations, cash
flows and other information in this Prospectus Supplement and the
accompanying Prospectus.
THE PARTIES
ISSUER First Security Auto Owner Trust 19__-__, a Delaware
business trust.
SELLER AND SERVICER First Security Bank-Registered Trademark-, N.A. will
be the Seller and the Servicer.
INDENTURE TRUSTEE Bankers Trust Company.
OWNER TRUSTEE __________________________.
OFFERED SECURITIES THE NOTES
The Trust will issue the following Notes.
All of the Notes are being offered pursuant
to this Prospectus Supplement and the
accompanying Prospectus. The Notes will have
the benefit of the Credit Enhancements
described below.
- Class A Notes
- Class A-1 ____% Asset Backed
Notes in the aggregate
principal amount of $______;
- Class A-2 ____% Asset Backed
Notes in the aggregate
principal amount of $_______;
- Class A-3 ____% Asset Backed
Notes in the aggregate
principal amount of $_______;
and
- Class A-4 Asset Backed Notes in
the aggregate principal amount
of $___________.
- Class B ____% Asset Backed Notes in
the aggregate principal amount of
$__________.
RATINGS OF THE NOTES
We will not issue the Notes unless (1) the
Class A-1 Notes are rated in the highest
short-term rating category, (2) the Class A-2
Notes, the Class A-3 Notes and the Class A-4
are rated in the highest long-term rating
category and (3) the Class B Notes are rated
at least investment grade, in each case by at
least two nationally recognized statistical
rating agencies (the "RATING AGENCIES").
After the Notes are issued, any ratings may
be lowered or withdrawn by the applicable
Rating Agency.
S-1
<PAGE>
CLOSING DATE
The purchase of the Receivables and the
issuance of the Notes will take place on
_______________.
DISTRIBUTION DATES
The [15]th day of each calendar month (or, if
not a Business Day, the next Business Day),
beginning with _________, 199_.
INTEREST PAYMENTS
- The interest rate for each Class of
Notes is as specified on the cover
page of this Prospectus Supplement.
Interest will be payable on all Notes
on each Distribution Date.
- Interest on the Class A-1 Notes and
the Class A-2 Notes will be calculated
on the basis of the actual number of
days elapsed from the most recent
Distribution Date (or the Closing
Date, in the case of the initial
period) divided by 360.
- Interest on the Class A-3 Notes, the
Class A-4 Notes and the Class B Notes
will be calculated on the basis of a
360-day year of twelve 30-day months.
- Payments of interest on the Class B
Notes are subordinated to interest
payments on the Class A Notes.
- On any Distribution Date,
interest on the Class B Notes
will not be paid until all
accrued and unpaid interest on
the Class A Notes has been paid
in full.
- After an acceleration of the
Notes following an Event of
Default or if any Notes remain
outstanding following the
applicable Final Scheduled
Distribution Date, no interest
will be paid on the Class B
Notes until all principal and
interest on the Class A Notes
has been paid in full.
PRINCIPAL PAYMENTS
- Principal on the Notes will be payable
on each Distribution Date in an
aggregate amount based on the amount
of principal collected on the
Receivables during the related
Collection Period:
- first, 100% to the holders of
the Class A-1 Notes until the
Class A-1 Notes are paid in
full;
- second, 100% to the holders of
the Class B Notes until the
principal balance of the Class
B Notes has been reduced to
$____________, which is equal
to ___% of the aggregate
principal balance of all
outstanding Notes after giving
effect to such payment; and
- thereafter, unless the amount
on deposit in the Reserve
Account is less than
$__________,
S-2
<PAGE>
- ___% to the Class A
Notes, sequentially, so
that no principal will
be paid on any class of
Class A Notes until each
class of Class A Notes
with a lower numerical
designation has been
paid in full (e.g., no
principal will be paid
on the Class A-3 Notes
until the Class A-2
Notes have been paid in
full); and
- ___% to the Class B
Notes until paid in
full.
- Principal payments on the Class B
Notes are subordinated to principal
payments on the Class A Notes.
- If and so long as the amount on
deposit in the Reserve Account
is less than $________, 100% of
the amount available to make
principal payments will be
applied to principal payments
on the Class A Notes (with such
payments made sequentially as
described above).
- After an acceleration of the
Notes following an Event of
Default or if any Notes remain
outstanding following the
applicable Final Scheduled
Distribution Date, no principal
will be paid on the Class B
Notes until all principal and
interest has been paid on the
Class A Notes. In such event,
in lieu of the above, principal
payments will be made as
follows:
- first, to the Class A
Noteholders ratably
according to the amount
due and payable on each
class until all the
Class A Notes have been
paid in full; and
- then, to the Class B
Noteholders until the
Class B Notes have been
paid in full.
FINAL SCHEDULED DISTRIBUTION DATES
The outstanding principal amount, if any, of
each class of Notes will be payable in full
on the "FINAL SCHEDULED DISTRIBUTION DATE"
for such class as set forth below. If any
class of Notes is not repaid in full on or
prior to the applicable Final Scheduled
Distribution Date an Event of Default will
occur.
<TABLE>
<CAPTION>
Final Scheduled
Notes Distribution Date
----- ------------------
<S> <C>
Class A-1
Class A-2
Class A-3
Class A-4
Class B
</TABLE>
REDEMPTION
The Class A-4 Notes and the Class B Notes
will be redeemed in whole on any Distribution
Date if the Servicer exercises its option to
purchase from the Trust the Receivables and
other Trust Property. The Servicer may
exercise this option only if:
- the Aggregate Receivables Balance
declines to 10% or less of the
Aggregate Starting Receivables
Balance;
S-3
<PAGE>
- the aggregate of the Repurchase Amount
of the Receivables (other than
Liquidating Receivables) is greater
than or equal to the sum of the
outstanding principal balance of all
Notes, plus accrued and unpaid
interest thereon; and
- the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes have
been paid in full.
The redemption price will be equal to the
unpaid principal amount of such Notes, plus
accrued and unpaid interest thereon.
VOTING RIGHTS
If the Prospectus specifies certain
circumstances under which a specified
percentage in principal amount of the
outstanding Notes must consent, approve,
direct or request an action, such action
shall be valid only if:
(i) all outstanding Class A Notes and
Class B Notes voting together as a
single class; and
(ii) the outstanding Class A Notes voting
as a single class
have voted to give such consent, approval,
direction, request or notice, or take such
action.
CREDIT ENHANCEMENT SUBORDINATION
The Class B Notes are subordinated to the
Class A Notes. This provides additional
credit enhancement for the Class A Notes.
- No interest will be paid on the Class
B Notes on any Distribution Date until
all accrued and unpaid interest on the
Class A Notes has been paid in full.
- If and so long as the amount on
deposit in the Reserve Account is less
than a specified amount, no principal
payments will be made on the Class B
Notes.
- After an acceleration of the Notes
following an Event of Default, no
principal or interest will be paid on
the Class B Notes until all principal
and interest owed on the Class A Notes
has been paid in full.
- If any Notes remain outstanding on and
after the applicable Final Scheduled
Distribution Date, no principal or
interest will be paid on the Class B
Notes until all principal and interest
owed on the Class A Notes has been
paid in full.
RESERVE ACCOUNT
Funds on deposit in the Reserve Account will
be available on each Distribution Date to
cover shortfalls in distributions of interest
and principal on the Notes due to
delinquencies and defaults on the
Receivables. Amounts in the Reserve Account
will also be available to pay servicing fees
and reimburse Outstanding Advances.
The Reserve Account will be funded as
follows:
S-4
<PAGE>
- On the Closing Date, the Seller will
deposit the Reserve Account Initial
Deposit of $_____ into the Reserve
Account.
- On each Distribution Date, any
collections on the Receivables
remaining after providing for all
required payments to holders of the
Notes and the payment of the Total
Servicing Fee will be deposited in the
Reserve Account.
On each Distribution Date, any amount in the
Reserve Account in excess of the Specified
Reserve Account Balance will be paid to the
Certificateholders. The Noteholders will
have no further rights to any amounts paid to
the Certificateholders from the Reserve
Account.
The "SPECIFIED RESERVE ACCOUNT BALANCE" for
any Distribution Date will equal ____% of the
Aggregate Receivables Balance as of the last
day of the related Collection Period.
However, the Specified Reserve Account
Balance will be calculated as ___% of the
Aggregate Receivables Balance for any
Distribution Date (beginning on ________,
19__) on which the Average Net Loss Ratio
exceeds ___% or the Average Delinquency Ratio
exceeds ___%. In no event will the Specified
Reserve Account Balance be less than the
aggregate outstanding principal amount of the
Notes. We may change this definition without
your consent so long as the change does not
cause the ratings of the Notes to be reduced
or withdrawn.
YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT
AGREEMENT
Some of the Trust's Receivables have a
Contract Rate that is too low in relation to
the Trust's obligations to pay interest on
the Notes and the required fee to the
Servicer. Thus, the Seller and the Trust
will enter into the Yield Supplement
Agreement under which the Seller will agree
to provide funds to supplement the interest
collections on such Receivables. [Describe
calculation of amount.] The Seller will
deposit $________ in the Yield Supplement
Account to secure its obligations to provide
such funds. On any Distribution Date, funds
in the Yield Supplement Account in excess of
the Specified Yield Supplement Balance
described herein will be paid to the
Certificateholders. The Noteholders will
have no further rights in any amount paid to
the Seller from the Yield Supplement Account.
TRUST PROPERTY The primary assets of the Trust will be the
Receivables, which are a pool of fixed rate retail
motor vehicle installment sales contracts and
installment loans made by the Seller or through a
Dealer that sold a motor vehicle. The Receivables
in the Trust will be sold by the Seller to the
Trust. The Trust Property will also include:
- All monies due or received under the
Receivables after the ______, 19___ Cutoff
Date;
- A security or ownership interest in the new
and used automobiles and light trucks
financed by the Receivables;
- Any proceeds from claims on certain related
insurance policies or from Obligors under the
Receivables;
- Amounts on deposit in the Trust Accounts,
including the Reserve Account and the Yield
Supplement Account;
S-5
<PAGE>
- Certain rights of the Seller relating to
Receivables from agreements between the
Seller and the Dealers that sold the Financed
Vehicles and related documents; and
- All rights of the Trust under the Sale and
Servicing Agreement.
The Trust Property will be assigned by the Trust to
the Indenture Trustee for the benefit of the
Noteholders and the Certificateholders to the extent
provided in the Indenture.
THE RECEIVABLES On the Closing Date, the Trust will acquire Receivables
with an Aggregate Starting Receivables Balance of
approximately $_____________ as of the Cutoff Date. As of
the Cutoff Date:
- the weighted average Contract Rate of the
Receivables is approximately ___%,
- the weighted average remaining term (i.e.,
the period from but excluding the Cutoff Date
to and including each Receivable's maturity
date) of the Receivables is approximately
_____ months, and
- the weighted average original term of the
Receivables is approximately _____ months.
No Receivable has a scheduled maturity later than
the date that is six months prior to the Final
Scheduled Distribution Date for the Class B Notes.
COLLECTION ACCOUNT; Payments received on the Receivables will
PRIORITY OF deposited in the Collection Account until paid to
DISTRIBUTIONS the Noteholders or otherwise applied by the
Trust. On each Distribution Date, funds on
deposit in the Collection Account relating to the
prior Collection Period will be applied to the
following (in the priority indicated but subject
to the subordination provisions described above):
(i) reimbursement of Outstanding Advances and
payments in respect of Liquidation Expenses;
(ii) the Total Servicing Fee;
(iii) accrued and unpaid interest on the Class A
Notes;
(iv) accrued and unpaid interest on the Class B
Notes;
(v) principal on the Notes; and
(vi) the remaining balance, if any, to be
deposited in the Reserve Account.
TAX STATUS Kirkland & Ellis, special Federal tax counsel to
the Seller, will opine that for Federal income
tax purposes the Notes will be characterized as
debt and the Trust will not be characterized as
an association (or publicly traded partnership)
taxable as a corporation. See "Certain Federal
Income Tax Consequences" herein for additional
information concerning the application of Federal
tax laws to the Trust and the Notes. See also
"State and Local Tax Consequences."
ERISA CONSIDERATIONS Subject to the considerations discussed under
"ERISA Considerations," the Notes are eligible
for purchase by employee benefit plans. See
"ERISA Considerations" herein and "ERISA
Considerations" in the Prospectus.
LEGAL INVESTMENT The Class A-1 Notes will be eligible securities
for purchase by money market funds under
paragraph (a)(9) of Rule a-7 under the Investment
Company Act of 1940, as amended.
S-6
<PAGE>
RISK FACTOR
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT,
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTOR AND THE RISK FACTORS SET FORTH IN
THE PROSPECTUS IN DECIDING WHETHER TO PURCHASE THE NOTES.
LACK OF GEOGRAPHIC DIVERSIFICATION Economic conditions in states where Obligors
reside may affect the delinquency, loan loss
and repossession experience of the Trust with
respect to the Receivables. As of the Cutoff
Date, the mailing addresses of Obligors with
respect to ___% and ___% by Aggregate
Receivables Balance of the Receivables were
located in Utah and Idaho, respectively.
Adverse economic conditions in Utah and/or
Idaho, or that area of the country generally,
may have a disproportionate impact on the
performance of the Receivables. Economic
factors such as unemployment, interest rates,
the rate of inflation and consumer
perceptions may affect the rate of prepayment
and defaults on the Receivables and could
reduce or delay payments to you. See "The
Receivables Pool--Certain Geographic
Distribution of the Receivables."
S-7
<PAGE>
THE TRUST
The Issuer, First Security Auto Owner Trust 19__-__ (the "TRUST"), is a business
trust formed under the laws of the State of Delaware pursuant to a Trust
Agreement dated as of the Closing Date between the Seller and the Owner Trustee,
acting thereunder not in its individual capacity but solely as trustee of the
Trust (as amended and supplemented from time to time, the "TRUST AGREEMENT").
After its formation, the Trust will not engage in any activity other than (i)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (ii) issuing the Notes, (iii) making payments or
distributions on the Notes and (iv) engaging in other activities that are
necessary, suitable, desirable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith. The Trust will deliver the
Securities to the Seller in exchange for the Receivables and other assets
pursuant to the Sale and Servicing Agreement.
The Trust's principal offices are in _____________, in care of _____________, as
Owner Trustee, at the address listed in "--The Owner Trustee" below.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
_______________, as if the issuance and sale of the Notes offered hereby had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 ____% Asset Backed Notes . . . . . . . $
Class A-2 ____% Asset Backed Notes . . . . . . . $
Class A-3 ____% Asset Backed Notes . . . . . . . $
Class A-4 ____% Asset Backed Notes . . . . . . . $
Class B ____% Asset Backed Notes . . . . . . . $
-------------
Total $
</TABLE>
The Trust will also issue Certificates. The Certificates represent the equity
of the Trust and will be issued pursuant to the Trust Agreement. The
Certificates will initially be held by the Seller and/or one or more of its
affiliates and are not offered hereby.
THE OWNER TRUSTEE
________________ is the Owner Trustee under the Trust Agreement. _____________
is a __________________ and its principal offices are located at
_____________________________.
S-8
<PAGE>
DELINQUENCY AND LOSS EXPERIENCE OF SELLER
The tables set forth below indicate 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 (including Motor Vehicle Loans that it
previously sold but continues to service). The tables include both Mother
Vehicle Loans originated directly by the Bank and through Dealers in a relative
proportion substantially similar to the Motor Vehicle Loans to be transferred to
the Trust. 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.
No assurance can be made, that the delinquency and loss experience for the Motor
Vehicle Loans as a whole or those transferred to the Trust will be similar to
the historical experience set forth below.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
As of June 30, As of December 31,
------------------------------- ---------------------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------------- --------------- --------------- --------------- --------------- --------------- --------------
Number Number Number Number Number Number Number
of of of of of of of
Loans Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans Amount
-------- ------- -------- ------- -------- ------- ------- ------- ------- ------- -------- ------- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at
Period End
Delinquency(1)
30-59 Days...
60-89 Days...
90 Days
or More....
Total
Delinquencies.
Total
Delinquencies
as Percentage
of the
Portfolio.....
</TABLE>
___________________
(1) The period of delinquency is based on the number of days payments
are contractually past due for all Motor Vehicle Loans other than
Motor Vehicle Loans previously charged off.
CREDIT LOSS/REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------ ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----- ----- ----- ----- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Portfolio Balance at Period End . . . . . . . . . .
Average Portfolio Balance During Period . . . . . .
Average Number of Loans Outstanding During the
Period . . . . . . . . . . . . . . . . . . . . . .
Number of Repossessions During the Period . . . . .
Number of Repossessions as percentage of Average
Number of
Loans Outstanding . . . . . . . . . . . . . .
Gross Charge-offs(1) . . . . . . . . . . . . . . .
Recoveries on Loans Previously Charged Off(2) . . .
Net Charge-offs(3) . . . . . . . . . . . . . . . .
Net Charge-offs as a Percentage of Portfolio Balance
at Period
End . . . . . . . . . . . . . . . . . . . . .
Net Charge-offs as a Percentage of Average Balance
During
Period . . . . . . . . . . . . . . . . . . . .
</TABLE>
________________
(1) Gross Charge-offs are generally stated net of liquidation proceeds.
(2) Recoveries on Loans Previously Charged Off generally include amounts
received with respect to loans previously charged off, other than
liquidation proceeds, net of collection expenses. A portion of
recoveries has resulted from certain collection and recovery efforts used
by the Bank with respect to defaulted receivables acquired by the Bank
from other institutions as a result of mergers. Such defaulted
receivables are not being transferred to the Trust and such reported
recoveries may not be indicative of future results.
(3) Net Charge-offs equal Gross Charge-offs minus Recoveries on Loans
Previously Charged Off.
S-9
<PAGE>
THE RECEIVABLES POOL
THE RECEIVABLES
Approximately ___% of the Aggregate Receivables Balance of Motor Vehicle Loans
were originated by the Seller through Dealers in the ordinary course of the
Seller's business and in accordance with Seller's underwriting standards; the
remainder of the Motor Vehicle Loans were made directly by the Seller to the
Obligors in accordance with the Seller's underwriting standards. The Seller
will warrant in the Agreement that all the Receivables have the following
individual characteristics, among others: (i) the obligation of the related
Obligor under each Receivable is secured by a security interest in either a new
or used automobile or light truck; (ii) each Receivable has a contractual
interest rate ("CONTRACT RATE") of at least ___% and not more than ___%; (iii)
each Receivable had a remaining maturity, as of the Cutoff Date, of not less
than ___ months and not more than ___ months; (iv) each Receivable had a
remaining principal balance of not less than $_______ and not more than
$________ as of the Cutoff Date; (v) no Receivable was more than ___ days past
due as of the Cutoff Date; (vi) no Financed Vehicle had been repossessed as of
the Cutoff Date; (vii) each Receivable is a Simple Interest Receivable; (viii)
the Dealer of the Financed Vehicle, if any, has no participation in, or other
right to receive, any proceeds of the Receivable and (ix) each Receivable was
originated on or after __________. No procedures adverse to Noteholders were
used by the Seller in selecting the Receivables to be transferred to the Trust
on the Closing Date. All terms of the retail motor vehicle installment sale
contracts and installment loans constituting the Receivables which are material
to the Noteholders are described in the Prospectus.
CERTAIN CHARACTERISTICS
As of the Cutoff Date, approximately ___% of the Aggregate Receivables Balance
was attributable to loans for purchases of new Financed Vehicles and
approximately ___% of the Aggregate Receivables Balance was attributable to
loans for purchases of used Financed Vehicles.
The composition, distribution by Contract Rate and distribution by remaining
term of the Receivables as of the Cutoff Date are set forth in the following
tables. Due to rounding, the percentages shown in these tables may not add to
100.00%.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
Weighted Average
Contract Rate of Aggregate Number of Average Receivable Weighted Average Weighted Average
Receivables Receivables Balances Receivables in Pool Balance Original Term Remaining Term
<S> <C> <C> <C> <C> <C>
___________% $____________ _____________ $____________ ________ mos. ________ mos.
</TABLE>
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES
<TABLE>
<CAPTION>
Percentage of
Aggregate Receivables
Contract Rate Range Number of Receivables Receivables Balance Balance
-------------------- --------------------- ------------------- ---------------------
<S> <C> <C> <C>
6.00-6.99% . . . . . . . . . . . . . . . . . . . . . $ %
7.00-7.99% . . . . . . . . . . . . . . . . . . . . . $ %
8.00-8.99% . . . . . . . . . . . . . . . . . . . . . $ %
9.00-9.99% . . . . . . . . . . . . . . . . . . . . . $ %
10.00-10.99% . . . . . . . . . . . . . . . . . . . . $ %
11.00-11.99% . . . . . . . . . . . . . . . . . . . . $ %
12.00-12.99% . . . . . . . . . . . . . . . . . . . . $ %
13.00-13.99% . . . . . . . . . . . . . . . . . . . . $ %
14.00-14.99% . . . . . . . . . . . . . . . . . . . . $ %
15.00 and up . . . . . . . . . . . . . . . . . . . . $ %
</TABLE>
S-10
<PAGE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES
<TABLE>
<CAPTION>
Percentage of Aggregate
Remaining Term (Months) Number of Receivables Receivable Balance Receivables Balance
----------------------- ---------------------- ------------------ ------------------------
<S> <C> <C> <C>
6-12 . . . . . . . . . . . . . . . . . . . . . . . . $ %
13-24 . . . . . . . . . . . . . . . . . . . . . . . . $ %
25-36 . . . . . . . . . . . . . . . . . . . . . . . . $ %
37-48 . . . . . . . . . . . . . . . . . . . . . . . . $ %
49-60 . . . . . . . . . . . . . . . . . . . . . . . . $ %
61-66 . . . . . . . . . . . . . . . . . . . . . . . . $ %
---------------------- ------------------ ------------------------
Total . . . . . . . . . . . . . . . . . . . . . $ %
---------------------- ------------------ ------------------------
---------------------- ------------------ ------------------------
</TABLE>
The Receivables Pool includes Receivables originated in __ states. The
following table sets forth the percentage of the Aggregate Receivables Balance
of the Receivables in the states with the largest concentration of Receivables.
No other state accounts for more than 1.0% of the Aggregate Receivables Balance
of the Receivables.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES
<TABLE>
<CAPTION>
Percentage of
Aggregate
State Receivables Balance
------ --------------------
<S> <C>
Utah . . . . . . . . . . . . . . . . . . . . . . . %
Idaho . . . . . . . . . . . . . . . . . . . . . . %
Oregon . . . . . . . . . . . . . . . . . . . . . . %
Nevada . . . . . . . . . . . . . . . . . . . . . . %
Washington . . . . . . . . . . . . . . . . . . . . %
Montana . . . . . . . . . . . . . . . . . . . . . %
Wyoming . . . . . . . . . . . . . . . . . . . . . %
</TABLE>
PAYMENTS ON THE RECEIVABLES
All Receivables provide for the allocation of payments according to the "Simple
Interest" method (each a "SIMPLE INTEREST RECEIVABLE"). A Simple Interest
Receivable provides for the amortization of the amount financed under the
Receivable over a series of fixed level months payments (except that the last
such payment may be different). However, each monthly payment consists of an
installment of interest which is calculated on the basis of the Receivable
Balance multiplied by the stated Contract Rate and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment of
interest was made. As payments are received under a Simple Interest Receivable
the amount received is applied first to interest accrued and unpaid to the date
of payment and the balance is applied to reduce the unpaid Receivable Balance of
the Receivables. Accordingly, if an Obligor pays a fixed monthly installment
before its schedule date, the portion of the payment allocable to interest for
the period since the preceding payment was made will be less than it would have
been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly greater,
thereby having the effect of a prepayment. Conversely, if an Obligor pays a
fixed monthly installment after its scheduled due date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be greater than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid principal
balance will be correspondingly less. In either case, the Obligor pays a fixed
monthly installment until the final scheduled payment date, at which time the
amount of the final installment is increased or decreased as necessary to repay
the Receivable Balance as of such date.
S-11
<PAGE>
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 proceedings 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 Sale and Servicing Agreement with respect to the Receivables, purchases by
the Servicer as a result of certain uncured breaches of the covenants made by it
in the Sale and Servicing Agreement with respect to the Receivables, or the
Servicer exercising its option to purchase all of the remaining Receivables.
Prepayments on the Receivables may be influenced by a variety of economic,
social, and other factors, including decreases in interest rates and the fact
that an Obligor may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the Seller.
WEIGHTED AVERAGE LIFE OF THE NOTES
Prepayments on automotive receivables can be measured relative to a prepayment
standard or model. The model used in this Prospectus Supplement, the Absolute
Prepayment Model ("ABS"), represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and amortize at the
same rate and that each receivable in each month of its life will either be paid
as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
As the rate of payment of principal of each class of Notes will depend on the
rate of payment (including prepayments) of the principal balance of the
Receivables and the final distribution in respect of any class of Notes could
occur significantly earlier than the respective Final Scheduled Distribution
Dates. Reinvestment risk associated with early payment of the Notes will be
borne exclusively by the Noteholders.
The table captioned "Percent of Initial Principal Balance at Various ABS
Percentages" (the "ABS TABLE") has been prepared on the basis of the
characteristics of the Receivables. The ABS Table assumes that (i) the
Receivables prepay in full at the specified constant percentage of ABS monthly,
with no defaults, losses or repurchases, (ii) each scheduled monthly payment on
the Receivables is made on the last day of each month and each month has 30
days, (iii) distributions on the Notes are made on each Distribution Date (and
each such date is assumed to be the fifteenth day of each applicable month),
(iv) the balance in the Reserve Account on each Distribution Date is equal to
the Specified Reserve Balance and (v) the Servicer does not exercise its option
to purchase the Receivables. The pools have an assumed cutoff date of
___________. The ABS Table indicates the projected weighted average life of
each class of Notes and sets forth the percent of the initial principal balance
of each class of the Notes that is projected to be outstanding after each of the
Distribution Dates shown at various constant ABS percentages.
The ABS Table also assumes that the Receivables have been aggregated into
hypothetical pools with all of the Receivables within each such pool having the
following characteristics and that the level scheduled monthly payment for each
of the pools (which is based on its Aggregate Receivables Balance, Contract
Rate, original term to maturity and remaining term to maturity as of the Cutoff
Date) will be such that each pool will be fully amortized by the end of its
remaining term to maturity.
S-12
<PAGE>
<TABLE>
<CAPTION>
Original Term to Remaining Term to
Aggregate Maturity Maturity
Pool Receivables Balance Contract Rate (In Months) (In Months)
---- -------------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
1 . . . . . . . . . . . . . . . . . . . . $
2 . . . . . . . . . . . . . . . . . . . .
3 . . . . . . . . . . . . . . . . . . . .
4 . . . . . . . . . . . . . . . . . . . .
5 . . . . . . . . . . . . . . . . . . . .
6 . . . . . . . . . . . . . . . . . . . .
7 . . . . . . . . . . . . . . . . . . . .
8 . . . . . . . . . . . . . . . . . . . .
9 . . . . . . . . . . . . . . . . . . . .
10 . . . . . . . . . . . . . . . . . . .
11 . . . . . . . . . . . . . . . . . . .
12 . . . . . . . . . . . . . . . . . . .
--------------------
--------------------
--------------------
</TABLE>
The actual characteristics and performance of the Receivables will differ from
the assumptions used in constructing the ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of receivables within each of
the hypothetical pools could produce slower or faster principal distributions
than indicated in the ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial amounts outstanding over time
and the weighted average lives of each class of the Notes.
S-13
<PAGE>
PERCENT OF INITIAL PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A Notes
--------------------------------------------------------------------------------------------
Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes Class B Notes
---------------------- ---------------------- --------------------- -------------------- -------------------
Distribution
Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date...
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
</TABLE>
S-14
<PAGE>
PERCENT OF INITIAL PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A Notes
--------------------------------------------------------------------------------------------
Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes Class B Notes
---------------------- ---------------------- --------------------- -------------------- -------------------
Distribution
Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date...
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
__/__/__.......
Weighted Average Life
(Years)(1).....
</TABLE>
___________________
(1) The weighted average life of a Note is determined by (i)
multiplying the amount of each principal payment on a Note by the
number of years from the date of the issuance of the Note to the
related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the related principal balance of the
Note.
The ABS Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of the
Receivables which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
S-15
<PAGE>
THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of an Indenture to be dated as of
the Closing Date between the Trust and the Indenture Trustee (as amended and
supplemented from time to time, the "INDENTURE"), a form of which has been filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
and the Prospectus form a part. A copy of the Indenture will be available from
the Indenture Trustee upon request to holders of Notes and will be filed with
the Securities and Exchange Commission following the issuance of the Notes. The
following summary describes certain terms of the Notes and the Indenture. The
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 Notes, the Indenture
and the Prospectus. Where particular provisions or terms used in the Indenture
are referred to, the actual provisions (including definitions of terms) are
incorporated by reference as part of such summary.
For each class of Notes, the "INTEREST RATE" will be as set forth below:
<TABLE>
<CAPTION>
Interest Rate
(per annum)
<S> <C>
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . ____%
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . ____%
Class A-3 Notes . . . . . . . . . . . . . . . . . . . . ____%
Class A-4 Notes . . . . . . . . . . . . . . . . . . . . ____%
Class B Notes . . . . . . . . . . . . . . . . . . . . . ____%
</TABLE>
PAYMENTS OF INTEREST
Interest on the unpaid principal balance of each class of Notes will accrue at
the applicable Interest Rate and will be payable monthly on each Distribution
Date commencing with the Distribution Date on ______________; PROVIDED, HOWEVER,
that interest on the Class B Notes will not be paid on any Distribution Date
until all accrued interest due and payable on the Class A Notes on such
Distribution Date has been paid in full. In addition, after acceleration of the
Notes following an Event of Default and if any Notes remain outstanding
following the applicable Final Scheduled Distribution Date, no interest will be
payable on the Class B Notes until all principal of and interest on the Class A
Notes has been paid in full.
Interest on the Class A-1 Notes and the Class A-2 Notes will be calculated on
the basis of the actual number of days elapsed from the most recent Distribution
Date on which interest has been paid (or the Closing Date, in the case of the
initial period) divided by 360. Interest on the Class A-3 Notes, the Class A-4
Notes and the Class B Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. All references in the Prospectus to
"Payment Date" or "Payment Dates" shall be deemed references to "Distribution
Date" or "Distribution Dates," as applicable, for purposes of this Prospectus
Supplement.
On each Distribution Date, interest payments to all classes of Class A Notes
will have the same priority while interest on the Class B Notes will not be paid
until all accrued interest on the Class A Notes has been paid in full. Under
certain circumstances, the amount available for such payments could be less than
the amount of interest payable on the Class A Notes on any Distribution Date, in
which case Noteholders of each class of Class A Notes will receive their ratable
share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Class A Notes. See "The Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
PAYMENTS OF PRINCIPAL
On each Distribution Date, principal of the Notes will be payable in an
aggregate amount (the "PRINCIPAL PAYMENT AMOUNT") equal to the lesser of (x) the
Noteholders' Principal Distributable Amount and (y) the Total Available Amount
remaining after payment of the Total Servicing Fee, the Aggregate Class A
Noteholders' Interest Distributable Amount and the Class B Noteholders' Interest
Distributable Amount.
S-16
<PAGE>
The Principal Payment Amount will be applied on each Distribution Date as
follows:
(i) first, 100% to the Class A-1 Notes, until the Class A-1 Notes are
paid in full;
(ii) second, 100% to the Class B Notes, until the principal balance of
the Class B Notes has been reduced to $________, which represents
___% of the aggregate principal balance of all outstanding Notes
(following such payment); and
(iii) thereafter,___% to the Class A Notes (all of which shall be paid
to the Class A-2 Notes until paid in full, then to the Class A-3
Notes until paid in full, and then to the Class A-4 Notes until
paid in full) and ___% to the Class B Notes
(subject, in the case of clauses (ii) and (iii) above, to subordination of
principal payments on the Class B Notes under the circumstances described in the
two following paragraphs).
If the amount on deposit in the Reserve Account on any Distribution Date would
be, after giving effect to the distribution of the Principal Payment Amount in
accordance with the prior paragraph, less than ___% of the Aggregate Starting
Receivables Balance, then the Class A Notes will receive 100% of the Principal
Payment Amount (all of which shall be paid to the Class A-1 Notes until paid in
full, then to the Class A-2 Notes until paid in full, then to the Class A-3
Notes until paid in full, and then to the Class A-4 Notes until paid in full)
until either the Class A Notes are paid in full or the amount on deposit in the
Reserve Account equals or exceeds the Specified Reserve Account Balance. When
principal payments on the Class B Notes resume in accordance with the preceding
sentence, the Principal Payment Amount shall be distributed in accordance with
clause (iii) in the preceding paragraph until the Class A-4 Notes have been paid
in full, and thereafter 100% of the Principal Payment Amount shall be paid to
the Class B Notes until the Class B Notes are paid in full.
Also, if an Event of Default occurs as a result of which the Notes are declared
immediately due and payable or if any Notes remain outstanding after the
applicable Final Scheduled Distribution Date, the Class A Notes will be
allocated 100% of the Principal Payment Amount on each Distribution Date (with
each class of the Class A Notes being entitled to ratable repayment of principal
on the basis of their respective unpaid principal balances) until all Class A
Notes are paid in full. Upon repayment of the Class A Notes in full, the Class
B Notes will be allocated 100% of the Principal Payment Amount on each
Distribution Date until the Class B Notes are paid in full.
MONTHLY DATES
The following chart defines a Collection Period and certain related dates and
demonstrates the application of such terms to a hypothetical monthly
distribution with respect to the Notes:
May 24-June 23 A "COLLECTION PERIOD" shall be the period from and
including the 24th day of a calendar month to and including
the 23rd day of the succeeding calendar month. The Initial
Collection Period will be the period from but not including
____________________.
July 10 The "DETERMINATION DATE" shall be the tenth calendar day of
each month. On or before this date, the Servicer will
deliver to the Indenture Trustee and the Owner Trustee a
certificate specifying the amounts required to be
distributed and the amounts available for distribution on
the next Distribution Date.
July 14 The "RECORD DATE" shall be the day before each Distribution
Date. Distributions on the next Distribution Date are made
to Noteholders of record at the close of business of the
Indenture Trustee on this date (or, if Definitive
Securities are issued, the Record Date will be the last day
of the Collection Period, June 23 for a July 15
Distribution Date).
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July 14 The "DEPOSIT DATE" shall be the Business Day immediately
preceding each Distribution Date. All Collections, Advances
and any Yield Supplement Amount relating to the related
Collection Period are required to be deposited into the
Collection Account on or before this date. Funds will also
be transferred between the Reserve Account and the
Collection Account to the extent required as described
below.
July 15 The "DISTRIBUTION DATE" shall be the 15th day of each
calendar month (or the next Business Day). The Indenture
Trustee distributes to Noteholders amounts payable in
respect of the Notes, 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.
A "BUSINESS DAY" means a day on which the Indenture 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 Indenture 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.
REDEMPTION
The Class A-4 Notes and the Class B Notes will be redeemed in whole, but not in
part, on any Distribution Date after all of the other classes of Notes have been
paid in full if the Servicer exercises its option to purchase the Receivables
when (i) the Aggregate Receivables Balance of the Receivables on the last day of
the prior Collection Period shall have declined to 10% or less of the Aggregate
Starting Receivables Balance and (ii) the sum of the Repurchase Amount of the
Receivables (other than the Liquidating Receivables) is greater than or equal to
the sum of the outstanding principal balance of all of the Notes, plus accrued
and unpaid interest thereon, as described in the Prospectus under "Description
of the Transfer and Servicing Agreements--Termination." The redemption price
will be equal to the unpaid principal amount of the Class A-4 Notes and the
Class B Notes, plus accrued and unpaid interest thereon.
PARITY AND PRIORITY OF NOTES
Distribution of principal and interest payments on the Notes will be made in
accordance with the priorities described in "--Payments of Interest" and
"--Payments of Principal" above. Also see "The Transfer and Servicing
Agreements--Distributions."
VOTING RIGHTS
To the extent the Prospectus specifies certain circumstances under which the
consent, approval, direction, or request of a specified percentage in principal
amount of the outstanding Notes must be obtained, given or made, or under which
such a specified percentage are permitted to take an action or give a notice,
then such consent, approval, direction, request, action or notice shall be valid
only if the holders of such specified percentage in principal amount of (a) all
the outstanding Class A Notes and Class B Notes voting together as a single
class and (b) the outstanding Class A Notes voting as a single class have voted
to give such consent, approval, direction, request or notice, or take such
action.
THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Transfer and Servicing
Agreements. Forms of the Transfer and Servicing Agreements have been filed as
exhibits to the Registration Statement of which this Prospectus Supplement and
the Prospectus form a part. A copy of the Transfer and Servicing Agreements
will be available from the Servicer upon request to Noteholders. The summary
does not purport to be complete and is subject to, and
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qualified in its entirety by reference to, all of the provisions of the
Transfer and Servicing Agreements and the Prospectus. Where particular
provisions or terms used in the Transfer and Servicing Agreements are
referred to, the actual provisions (including definitions of terms) are
incorporated by reference as part of such summary.
DISTRIBUTIONS
Unless the Servicer satisfies the conditions for monthly remittances described
in "The Transfer and Servicing Agreements--Collections" in the Prospectus, it
will transfer all collections on the Receivables (including all prepayments) to
the Collection Account within two Business Days of receipt thereof. The
Indenture Trustee will make distributions to the Note Distribution Account out
of the amounts on deposit in the Collection Account. The amount to be
distributed to the Note Distribution Account will be determined in the manner
described below.
DETERMINATION OF AVAILABLE AMOUNTS. The "AVAILABLE AMOUNT" for each
Distribution Date will be the sum of the Available Interest and the Available
Principal. The "TOTAL AVAILABLE AMOUNT" for a Distribution Date will be the sum
of the Available Amount and all cash or other immediately available funds on
deposit in the Reserve Account immediately prior to such Distribution Date. See
"Description of the Transfer and Servicing Agreements--Determination of
Available Amount" in the Prospectus.
MONTHLY WITHDRAWALS AND DEPOSITS. On or before the Determination Date, the
Servicer will calculate, with respect to the preceding Collection Period and the
related Distribution Date, the Available Amount, the Total Available Amount,
Collected Interest, Collected Principal, the Total Servicing Fee, the Aggregate
Class A Noteholders' Interest Distributable Amount, the Class B Noteholders'
Interest Distributable Amount, the Noteholders' Principal Distributable Amount
and certain other items. Based on such calculations, the Servicer will deliver
to the Indenture Trustee a certificate specifying such amounts and instructing
the Indenture Trustee to make withdrawals, deposits and payments of the
following amounts on the Determination Date:
(i) the amount, if any, to be withdrawn from the Reserve Account and
deposited in the Collection Account;
(ii) the amounts to be withdrawn from the Collection Account and paid
to the Servicer in respect of reimbursement of Outstanding
Advances and payments in respect of Liquidation Expenses with
respect to Receivables which became Liquidating Receivables during
the related Collection Period (and any unpaid Liquidation Expenses
from prior periods);
(iii) the amount to be withdrawn from the Collection Account and paid to
the Servicer in respect of the Total Servicing Fee for such
Distribution Date;
(iv) the amounts to be withdrawn from the Collection Account in respect
of the Aggregate Class A Noteholders' Interest Distributable
Amount, the Class B Noteholders' Interest Distributable Amount and
the Noteholders' Principal Distributable Amount and deposited in
the Note Distribution Account for payment to Noteholders on such
Distribution Date;
(v) the amount, if any, to be withdrawn from the Collection Account
and deposited in the Reserve Account; and
(vi) the amount, if any, to be withdrawn from the Reserve Account and
paid to the Certificateholders.
The amount, if any, to be withdrawn from the Reserve Account and deposited to
the Collection Account on the Deposit Date as specified in clause (i) above will
be the lesser of (A) the amount of cash or other immediately available funds
therein on the Deposit Date and (B) the amount, if any, by which (x) the sum of
the Total Servicing Fee, the Aggregate Class A Noteholders' Interest
Distributable Amount, the Class B Noteholders' Interest Distributable Amount and
the Noteholders' Principal Distributable Amount exceeds (y) the Available Amount
for such Distribution Date.
The amount, if any, to be withdrawn from the Collection Account and deposited in
the Reserve Account on the Deposit Date as specified in clause (v) above will
equal the amount, if any, by which the Available Amount for such Distribution
Date exceeds the amount described in subclause (x) of clause (B) of the
preceding sentence.
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The amount, if any, to be withdrawn from the Reserve Account and paid to the
Certificateholders as specified in clause (vi) above will equal the amount, if
any, by which the amount on deposit in the Reserve Account after all other
deposits (including the deposit pursuant to clause (v) above) and withdrawals on
the Deposit Date exceeds the Specified Reserve Account Balance for such
Distribution Date.
On each Distribution Date, all amounts on deposit in the Note Distribution
Account will be distributed to the Noteholders.
PRIORITIES FOR WITHDRAWALS FROM COLLECTION ACCOUNT. Withdrawals of funds from
the Collection Account on each Deposit Date will be made first for
reimbursements of Outstanding Advances and payments in respect of Liquidation
Expenses. Thereafter, withdrawals of funds from the Collection Account will be
made for application as described in clauses (iii) and (iv) under
"Distributions--Monthly Withdrawals and Deposits" above, but only to the extent
of the Total Available Amount allocated to such application for such
Distribution Date. In calculating the amounts which can be withdrawn from the
Collection Account and applied as specified in such clauses (iii) and (iv), the
Indenture Trustee, at the direction of the Servicer, will allocate the Total
Available Amount in the following order of priority:
(i) the Total Servicing Fee;
(ii) the Aggregate Class A Noteholders' Interest Distributable Amount;
(iii) the Class B Noteholders' Interest Distributable Amount; and
(iv) the Noteholders' Principal Distributable Amount.
Notwithstanding the foregoing, at any time that the Class A Notes have not been
paid in full and the principal balance of the Notes has been declared due and
payable following the occurrence of an Event of Default, until such time as the
Class A Notes have been paid in full or such declaration has been rescinded and
any continuing Events of Default have been waived pursuant to the Indenture, no
amounts will be distributed to the Class B Noteholders. Similarly, if any Notes
remain outstanding after the applicable Final Scheduled Distribution Date, no
amounts will be distributed to the Class B Noteholders until the Class A Notes
have been paid in full. Any such amounts otherwise distributable to the Class B
Noteholders will be distributed instead as payments of principal on the Class A
Notes. Amounts allocated to the Noteholders Principal Distributable Amount will
be applied as described above under "The Notes--Payment of Principal."
CERTAIN DEFINITIONS.
"AGGREGATE CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the Class A Noteholders' Interest
Distributable Amounts for all classes of Class A Notes and the Class A
Noteholders' Interest Carryover Shortfall as of the preceding Distribution Date.
"AVAILABLE INTEREST" means, 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, 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 Repurchase 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;
(iii) all related Recoveries, to the extent allocable to principal and (iv) 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 Repurchase Amount of which has been distributed on a prior
Distribution Date.
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"CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess of the Aggregate Class A Noteholders' Interest
Distributable Amount for such Distribution Date over the amount that was
actually deposited in the Note Distribution Account on the related Deposit Date
in respect of interest on the Class A Notes.
"CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to the
Class A-1 Notes and the Class A-2 Notes and any Distribution Date, the product
of (1) the outstanding principal balance of such class of Class A Notes on the
preceding Distribution Date after giving effect to all payments of principal in
respect of such class of Class A Notes on such preceding Distribution Date (or,
in the case of the first Distribution Date, the outstanding principal balance on
the Closing Date) and (2) the product of the Interest Rate for such class of
Class A Notes and a fraction, the numerator of which is the actual number of
days elapsed from the most recent Distribution Date on which interest has been
paid (or the Closing Date, in the case of the initial period), and the
denominator of which is 360, and with respect to the Class A-3 Notes and the
Class A-4 Notes and any Distribution Date, the product of (i) the outstanding
principal balance of such class of Class A Notes on the preceding Distribution
Date after giving effect to all payments of principal in respect of such class
of Class A Notes on such preceding Distribution Date (or, in the case of the
first Distribution Date, the outstanding principal balance on the Closing Date)
and (ii) the product of the Interest Rate for such class and 1/12 (multiplied
by, in the case of the first Distribution Date, a fraction, the numerator of
which the number of days elapsed from the Closing Date and the denominator of
which is 30).
"CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess of the Class B Noteholders' Interest
Distributable Amount for such Distribution Date over the amount that was
actually deposited in the Note Distribution Account on the related Deposit Date
in respect of payments of interest on the Class B Notes.
"CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Class B Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (ii) the Class B
Noteholders' Interest Carryover Shortfall as of the preceding Distribution Date.
"CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the product of (i) the outstanding principal balance
of the Class B Notes on the preceding Distribution Date after giving effect to
all payments of principal in respect of the Class B Notes on such preceding
Distribution Date (or, in the case of the first Distribution Date, the
outstanding principal balance on the Closing Date) and (ii) the product of the
Interest Rate for the Class B Notes and a 1/12 (multiplied by, in the case of
the first Distribution Date, a fraction, the numerator of which is the number of
days elapsed from the Closing Date and the denominator of which is 30).
"COLLECTIONS" means all collections on the Receivables.
"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 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
Repurchase 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 Repurchase Amount of which has been distributed
on a prior Distribution Date.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, on a Distribution Date, the
excess, if any, of the Noteholders' Principal Distributable Amount over the
Principal Payment Amount on such Distribution Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, for any Distribution Date,
the sum of (i) the Principal Distributable Amount, (ii) the Noteholders'
Principal Carryover Shortfall for the prior Distribution Date and (iii) without
duplication, on the Final Scheduled Distribution Date for a class of Notes, the
amount necessary to reduce the outstanding principal balance of such class of
Notes to zero.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Distribution Date,
Available Principal for such Distribution Date plus Realized Losses with respect
to the related Collection Period.
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"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.
"REALIZED LOSSES" means, with respect to any Distribution Date and a Receivable
that became a Liquidating Receivable during the related Collection Period, the
excess of (i) the Receivable 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.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
On each Distribution Date, the Servicer will be entitled to receive the "TOTAL
SERVICING FEE," which consists of the Servicing Fee for the related Collection
Period and any unpaid Servicing Fees from prior Distribution Dates. The
Servicing Fee Rate will be __% per annum. On each Distribution Date, the
Servicer will receive a payment in respect of Liquidation Expenses (in an amount
equal to $________ (or such greater amount as the Servicer determines necessary
in accordance with its customary procedures to refurbish and dispose of a
repossessed Financed Vehicle) for each Liquidating Receivable) with respect to
Receivables which became Liquidating Receivables during the related Collected
Period (and any unpaid Liquidation Expenses from prior periods) as described
above.
ADVANCES
On each Deposit Date, the Servicer may, subject to the following, make an
Advance with respect to each Receivable serviced by it (other than a Liquidating
Receivable) equal to the excess, if any, of (x) the product of the Receivables
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 (in each case for
the related Collection Period) during or with respect to such Collection Period.
The Servicer may elect not to make an Advance of interest due and unpaid 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. On each Distribution Date, the Servicer will be reimbursed
for all Outstanding Advances as described above.
RESERVE ACCOUNT
Pursuant to the Sale and Servicing Agreement, the Seller will establish the
Reserve Account with the Indenture Trustee. The Reserve Account will be funded
by a deposit by the Seller of $________ of cash on the Closing Date (the
"RESERVE ACCOUNT INITIAL DEPOSIT"). On each Deposit Date, an amount equal to
the Available Amount remaining with respect to such Distribution Date after the
payment of the Total Servicing Fee and the deposit of the Aggregate Class A
Noteholders' Interest Distributable Amount, the Class B Noteholders' Interest
Distributable Amount and the Noteholders' Principal Distributable Amount in the
Note Distribution Account (see "Distributions--Monthly Withdrawals and
Deposits") shall be deposited in the Reserve Account. The amount to be
withdrawn from the Reserve Account and paid to the Certificateholders will equal
the amount, if any, by which the amount on deposit in the Reserve Account after
all other deposits (including the deposit pursuant to the preceding sentence)
exceeds the Specified Reserve Account Balance for such Distribution Date.
"SPECIFIED RESERVE ACCOUNT BALANCE" with respect to any Distribution Date will
equal ___% of the Aggregate Receivables Balance, except that the Specified
Reserve Account Balance will never exceed the aggregate outstanding principal
amount of the Notes. The Specified Reserve Account Balance will be calculated
as ___% of the Aggregate Receivables Balance for any Distribution Date
(beginning on ________, 19__) on which the Average Net Loss Ratio exceeds __% or
the Average Delinquency Ratio exceeds __%. The Specified Reserve Account
Balance may be reduced or the definition thereof otherwise modified without the
consent of the Noteholders if the Rating Agencies confirm in writing, after
having received notice thereof, that such reduction or modification will not
result in a reduction or withdrawal of the rating of the Notes.
If the amount on deposit in the Reserve Account on any Distribution Date (after
giving effect to all deposits or withdrawals therefrom on the related Deposit
Date) is greater than the Specified Reserve Account Balance for such
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Distribution Date, the Servicer will instruct the Indenture Trustee to
distribute the amount of the excess to the Certificateholders. Upon any
distribution to the Certificateholders of amounts from the Reserve Account, the
Noteholders will not have any rights in, or claims to, such amounts. The
initial Certificateholders may at any time, without consent of the Noteholders,
sell, transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account, including interest earnings thereon,
provided that certain conditions are satisfied, including: (i) such action will
not result in a reduction or withdrawal of the rating of any class of the Notes,
(ii) the Certificateholders provide to the Owner Trustee and the Indenture
Trustee an opinion of independent counsel that such action will not cause the
Trust to be treated as an association (or publicly traded partnership) taxable
as a corporation for Federal income tax purposes, and (iii) such transferee or
assignee agrees to take positions for tax purposes consistent with the tax
positions agreed to be taken by the Certificateholders.
"AGGREGATE NET LOSSES" means, for any Collection Period, the aggregate amount
allocable to principal of all Receivables newly designated during such
Collection Period as Liquidating Receivables minus all Liquidation Proceeds to
the extent allocable to principal collected during such Collection Period with
respect to all Liquidating Receivables (whether or not newly designated as
such).
"AVERAGE DELINQUENCY RATIO" means, as of any Distribution Date, the average of
the Delinquency Ratios for the preceding three Collection Periods.
"AVERAGE NEW LOSS RATIO" means, as of any Distribution Date, the average of the
Net Loss Ratios for the preceding three Collection Periods.
"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 Liquidating 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 (i) the Aggregate
Receivables Balance as of the last day of such Collection Period.
"CERTIFICATES RATIO" means, for any Collection Period, an amount, expressed as
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 Aggregate Receivables Balance on each of the first day of such
Collection Period and 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 Liquidating Receivable during the related
Collection Period if such Collection Period follows the Collection Period in
which such Receivable became a Liquidating Receivable, net of any payments
required by law to be remitted to the Obligor but, in any event, not less than
zero.
YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
Simultaneously with the sale and assignment of the Receivables by the Seller to
the Trust, the 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 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 [describe calculation of Yield
Supplement Amount].
The Seller's obligations under the 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 Owner Trustee (the "YIELD SUPPLEMENT ACCOUNT"). The
Seller will deposit the Yield Supplement Initial Deposit of $___________, and
the amount on deposit in the Yield Supplement Account and available on any
Distribution Date will be the Specified Yield Supplement Balance. [Describe
calculation of Specified Yield Supplement Balance.]
Funds on deposit in each 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 Owner Trustee, as
secured party for the benefit of the Certificateholders.
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Amounts on deposit in a Yield Supplement Account will be released to the
Certificateholders on each Distribution Date to the extent the amount on deposit
in such Yield Supplement Account exceeds the Specified Yield Supplement Balance.
All investment earnings attributable to any Yield Supplement Account will be
distributed on each Distribution Date to the Seller. Upon distribution to the
Certificateholders of amounts from the Yield Supplement Account, the Noteholders
will not have any rights in, or claims to, such amounts.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain material U.S. federal income tax
consequences of the acquisition, ownership and disposition of the Notes. This
discussion does not purport to deal with all aspects of federal income taxation
that may be relevant to the Noteholders in light of their personal investment
circumstances nor, except for certain limited discussions of particular topics,
to certain types of holders subject to special treatment under the federal
income tax laws (e.g., financial institutions, broker-dealers, life insurance
companies and tax-exempt organizations). This information is directed to
prospective purchasers who purchase Notes in the initial distribution thereof,
who are citizens or residents of the United States (except as set forth under
"Certain Material Tax Consequences to Foreign Noteholders"), including domestic
corporations and partnerships, and who hold the Notes as "capital assets" within
the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "CODE"). Taxpayers and preparers of tax returns (including those filed by
any partnership or other issuer) should be aware that under applicable Treasury
regulations a provider of advice on specific issues of law is not considered an
income tax return preparer unless the advice is (i) given with respect to events
that have occurred at the time the advice is rendered and is not given with
respect to the consequences of contemplated actions, and (ii) is directly
relevant to the determination of an entry on a tax return. ACCORDINGLY,
TAXPAYERS SHOULD CONSULT THEIR OWN TAX ADVISORS AND TAX RETURN PREPARERS
REGARDING THE PREPARATION OF ANY ITEM ON A TAX RETURN, EVEN WHERE THE
ANTICIPATED TAX TREATMENT HAS BEEN DISCUSSED HEREIN. THIS DISCUSSION IS FOR
GENERAL INFORMATION PURPOSES ONLY AND DOES NOT CONSIDER ALL ASPECTS OF U.S.
FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES BY A PROSPECTIVE INVESTOR, ESPECIALLY IN LIGHT OF SUCH
INVESTOR'S PERSONAL CIRCUMSTANCES. PROSPECTIVE INVESTORS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS AS TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES.
This discussion is based upon the Code, existing regulations thereunder, and
current administrative rulings and court decisions. The discussion below under
"Original Issue Discount" takes into consideration the rules governing original
issue discount ("OID") that are set forth in Sections 1271-1275 of the Code and
in Treasury regulations issued under the OID provisions of the Code. All of the
foregoing are subject to change, possibly on a retroactive basis, and any such
change could affect the continuing validity of this discussion.
CHARACTERIZATION AS DEBT
With respect to the Notes, Kirkland & Ellis, special tax counsel to the Seller
("TAX COUNSEL"), will deliver its opinion to the effect that, although no
specific authority exists with respect to the characterization for federal
income tax purposes of securities having the same terms as the Notes, based on
the terms of the Notes and the transactions relating to the Receivables as set
forth herein, the Notes will be treated as debt for federal income tax purposes.
The Seller, the Servicer and each Noteholder, by acquiring an interest in a
Note, will agree to treat the Notes as indebtedness for federal, state and local
income and franchise tax purposes.
CHARACTERIZATION OF THE TRUST
With respect to the Trust, Tax Counsel will deliver its opinion to the effect
that the Trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation.
INTEREST INCOME TO NOTEHOLDERS
If the Notes do not have OID, interest payments on the Notes will be taxable as
ordinary income for Federal income tax purposes when received by Noteholders
utilizing the cash method of accounting and when accrued by Noteholders
utilizing the accrual method of accounting. Interest received on the Notes may
constitute "investment income" for purposes of certain limitations of the Code
concerning the deductibility of investment interest expense.
ORIGINAL ISSUE DISCOUNT
Although it is not anticipated that the Notes will be issued at a greater than
DE MINIMIS discount and therefore should not have OID, the Notes may
nevertheless be deemed to have been issued with OID. For example, the IRS could
S-25
<PAGE>
take the position that the Notes have OID pursuant to section 1272(a)(6) of the
Code because prepayments of the Receivables could accelerate the Notes. In
addition, the IRS could take the position that the Notes have OID because
interest payments on the Notes are not "unconditionally payable" and thus do not
constitute "qualified stated interest" (as defined below).
The total amount of OID, if any, with respect to a Note will be equal to the
excess of the "stated redemption price at maturity" of such Note over its "issue
price." The "stated redemption price at maturity" of a Note will be the sum of
all payments, whether denominated as interest or principal, required to be made
on such Note other than payments of "qualified stated interest." "Qualified
stated interest" is stated interest that is unconditionally payable at least
annually at a single fixed rate that appropriately takes into account the length
of the interval between payments. It is anticipated that the "issue price" will
be the face amount of the Notes.
The holder of a Note that is treated as having OID (including a cash method
holder) would be required to include OID on that Note in his or her income for
Federal income tax purposes on a constant yield basis, resulting in the
inclusion of income in advance of the receipt of cash attributable to that
income. This treatment may not significantly affect an accrual method holder of
Notes, although such treatment would accelerate taxable income to a cash method
holder by in effect requiring such holder to report interest income on the
accrual method. Finally, even if a Note has OID falling within the DE MINIMIS
exception, the holder must include such DE MINIMIS OID in income proportionately
as principal payments are made on such Note.
DISPOSITION OF NOTES
Upon the sale, exchange, redemption, retirement or other disposition of a Note,
the holder will recognize gain or loss in an amount equal to the difference
between the amount realized on the disposition and the holder's adjusted tax
basis in the Note. The adjusted tax basis of the Note to a particular
Noteholder will equal the holder's cost for the Note, increased by any OID,
market discount and gain previously included by such Noteholder in income with
respect to the Note and decreased by any cash payments previously received by
such Noteholder with respect to such Note. Subject to the market discount rules
of the Code, any such gain or loss will be capital gain or loss if the Note was
held as a capital asset. Capital gain or loss will be long-term if the Note was
held by the holder for more than one year and otherwise will be short-term. Any
capital losses realized generally may be used by a corporate taxpayer only to
offset capital gains, and by an individual taxpayer only to the extent of
capital gains plus $3,000 of other income.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Seller will be required to report annually to the IRS, and to each related
Noteholder of record, the amount of interest paid on the Notes (and the amount
of interest withheld for federal income taxes, if any) for each calendar year,
except as to exempt holders (generally, corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status). Each holder
(other than holders who are not subject to the reporting requirements) will be
required to provide to the Seller, under penalties of perjury, a certificate
containing the holder's name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification, the
Seller will be required to withhold, from interest otherwise payable to the
holder, 31% of such interest and remit the withheld amount to the IRS as a
credit against the holder's federal income tax liability. Noteholders should
consult their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
S-26
<PAGE>
CERTAIN TAX CONSEQUENCES TO FOREIGN NOTEHOLDERS
The following discussion does not deal with all aspects of U.S. federal income
taxation that may be relevant to the purchase, ownership or disposition of the
Notes by any particular non-U.S. Noteholder in light of such holder's personal
circumstances, including holding the Notes through a partnership. For example,
persons who are partners in foreign partnerships or beneficiaries of foreign
trusts or estates and who are subject to U.S. federal income tax because of
their own status, such as United States residents or foreign persons engaged in
a trade or business in the United States, may be subject to U.S. federal income
tax even though the entity is not subject to income tax on disposition of its
Note.
If interest paid (or accrued) to a Noteholder who is a nonresident alien,
foreign corporation or other non-United States person (a"FOREIGN PERSON") is not
effectively connected with the conduct of a trade or business within the United
States by the foreign person, the interest generally will be considered
"portfolio interest," and generally will not be subject to United States federal
income tax and withholding tax, as long as the foreign person (i) is not
actually or constructively a "10 percent shareholder" of the Seller or the
Seller (including a holder of 10% of the outstanding Certificates) or a
"controlled foreign corporation" with respect to which the Seller is a "related
person" within the meaning of the Code, and (ii) provides an appropriate
statement, signed under penalties of perjury, certifying that the beneficial
owner of the Note is a foreign person and providing that foreign person's name
and address. If the information provided in this statement changes, the foreign
person must so inform the Tax Partnership within 30 days of such change. The
statement generally must be provided in the year a payment occurs or in either
of the two preceding years. If such interest were not portfolio interest, then
it would be subject to United States federal income and withholding tax at a
rate of 30% unless reduced or eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other taxable
disposition of a Note by a foreign person will be exempt from United States
federal income and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person, the holder (although exempt from the withholding
tax previously discussed if an appropriate statement is furnished) generally
will be subject to United States federal income tax on the interest, gain or
income at regular federal income tax rates. In addition, if the foreign person
is a foreign corporation, it may be subject to a branch profits tax equal to 30%
of its "effectively connected earnings and profits" within the meaning of the
Code for the taxable year, as adjusted for certain items, unless it qualifies
for a lower rate under an applicable tax treaty.
STATE AND LOCAL TAX CONSEQUENCES
The above discussion does not address the tax treatment of the Trust or the
Notes under any state or local tax laws. Prospective investors are urged to
consult with their own tax advisors regarding the state and local tax treatment
of the Trust, as well as any state and local tax consequences to them of
purchasing, holding and disposing of the Notes.
ERISA CONSIDERATIONS
Although there is little guidance on the subject, the Seller believes the Notes
should be treated as indebtedness without substantial equity features for
purposes of the Plan Assets Regulation. Therefore, the Notes are available for
investment by a Benefit Plan, subject to a determination by such Benefit Plan's
fiduciary that the Notes are suitable investments for such Benefit Plan under
ERISA and the Code. For additional information regarding treatment of the Notes
under ERISA, see "ERISA Considerations" in the Prospectus.
S-27
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement, the
Seller has agreed to sell to each of the underwriters (each, an "UNDERWRITER")
named below, and each of the Underwriters has severally agreed to purchase from
the Seller, the principal amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
Aggregate Principal Amount to be Purchased
---------------------------------------------------
Class A-1 Class A-2 Class A-3 Class A-4 Class B
Notes Notes Notes Notes Notes
--------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
__________________________
__________________________
__________________________
__________________________
Total
</TABLE>
The Seller has been advised by the Underwriters that they propose initially to
offer the Notes to the public at the prices set forth on the cover page hereof,
and to certain dealers at such prices less a selling concession not in excess of
the percentage set forth below for each class of Notes. The Underwriters may
allow, and such dealers may reallow to certain other dealers, a subsequent
concession not in excess of the percentage set forth below for each class of
securities. After the initial public offering, the public offering price and
such concessions may be changed.
<TABLE>
<CAPTION>
Selling
Concession Reallowance
----------- ------------
<S> <C> <C>
Class A-1 Notes . . . . . . . . . . . . . .
Class A-2 Notes . . . . . . . . . . . . . .
Class A-3 Notes . . . . . . . . . . . . . .
Class A-4 Notes . . . . . . . . . . . . . .
Class B Notes . . . . . . . . . . . . . . .
</TABLE>
The Seller has agreed not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for, or
announce any offering of, any securities collateralized by, or evidencing an
ownership interest in, a pool of Motor Vehicle Loans (other than the Securities)
for a period of 30 days from the date of this Prospectus Supplement, without the
prior written consent of the Underwriters.
_______________, on behalf of the Underwriters, may engage in over-allotment
transactions, stabilizing transactions, syndicate covering transactions and
penalty bids with respect to the Notes in accordance with Regulation M under the
Exchange Act. Over-allotment transactions involve syndicate sales in excess of
the offering size which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the Notes so long as the stabilizing bids
do not exceed a specified maximum. Syndicate covering transactions involve
purchases of the Notes in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit
______ to reclaim a selling concession from a syndicate member when the Notes
originally sold by such syndicate member are purchased in a syndicate covering
transaction. Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause prices of the Notes
to be higher than they would otherwise be in the absence of such transactions.
Neither the Trust nor any of the Underwriters represent that ______ will engage
in any such transactions nor that such transactions, once commenced, will not be
discontinued without notice.
In the ordinary course of their respective businesses, the Underwriters and
their respective affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with affiliates of the
Seller.
S-28
<PAGE>
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain legal
matters relating to the Notes will be passed upon for the Underwriters by
________________.
S-29
<PAGE>
INDEX OF TERMS
<TABLE>
<S> <C>
ABS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ABS Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Aggregate Class A Noteholders' Interest Distributable Amount . . . . . . . . . . . 22
Aggregate Net Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Available Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Available Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Average Delinquency Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Average New Loss Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Class A Noteholders' Interest Carryover Shortfall. . . . . . . . . . . . . . . . . 23
Class A Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . . . 23
Class A-2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Class A-3 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Class A-4 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Class B Noteholders' Interest Carryover Shortfall. . . . . . . . . . . . . . . . . 23
Class B Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . . . 23
Class B Noteholders' Monthly Interest Distributable Amount . . . . . . . . . . . . 23
Class B Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Collection Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Contract Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Delinquency Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Final Scheduled Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . .3
foreign person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interest Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . . . 24
Noteholders' Principal Distributable Amount. . . . . . . . . . . . . . . . . . . . 24
OID. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Principal Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Purchased Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Rating Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Realized Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reserve Account Initial Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Simple Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Specified Reserve Account Balance. . . . . . . . . . . . . . . . . . . . . . . .5, 24
Tax Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Total Available Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Total Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Yield Supplement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
S-30
<PAGE>
EXHIBIT 4.2
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED _____________, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED ___________, 1998
$__________
FIRST SECURITY AUTO GRANTOR TRUST 19__-__
$___________ __% ASSET BACKED CERTIFICATES, CLASS A
$___________ __% ASSET BACKED CERTIFICATES, CLASS B
FIRST SECURITY BANK-Registered Trademark-, N.A.
SELLER AND SERVICER
CONSIDER CAREFULLY THE RISK FACTOR ON PAGE __ IN THIS PROSPECTUS SUPPLEMENT AND
THE RISK FACTORS BEGINNING ON PAGE __ IN THE PROSPECTUS.
The Certificates represent the beneficial interest in the related Trust only.
The Certificates issued by any Trust do not represent obligations of or
interests in, and are not guaranteed by, First Security Bank-Registered
Trademark-, N.A. or any of its affiliates.
This Prospectus Supplement may be used to offer and sell the Certificates only
if accompanied by the Prospectus.
THE CERTIFICATES
The Trust will issue the following Certificates:
<TABLE>
<S> <C> <C>
Class A Certificates Class B Certificates
-------------------- --------------------
Principal Amount
Price to Public(1)
Underwriting Discount(2)
Proceeds to Seller(3)
</TABLE>
(1) Plus accrued interest, if any, from __________. Total price to public
(excluding such interest) = $_________.
(2) Total underwriting discount = $_________.
(3) Total proceeds to the Seller = $_______.
Principal and interest on the Certificates will be payable on each monthly
Distribution Date. Interest will begin accruing on _____________, 19__. The
first Distribution Date will be _________________.
CREDIT ENHANCEMENT
- The Class B Certificates are subordinated to the Class A Certificates
as described in the related Prospectus.
- Reserve Account, with an initial balance of $___________.
- Yield Supplement Agreement and the related Yield Supplement Account
provide funds to supplement interest collections on certain
Receivables. The initial balance in the Yield Supplement Account will
be $___________.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriters of the Class A Certificates
Underwriters of the Class B Certificates
[DATE]
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the Certificates in two separate documents that
progressively provide more detail:
(a) the accompanying Prospectus, which provides general information.
(b) this Prospectus Supplement, which describes the specific terms of
your Certificates and the specific meanings certain terms will have.
If the terms of the Certificates vary between this Prospectus Supplement and
the Prospectus, you should rely on the information in this Prospectus
Supplement.
You should rely only on the information provided in this Prospectus
Supplement and the accompanying Prospectus, including the information
incorporated by reference. We have not authorized anyone to provide you with
other or different information. We are not offering the Certificates in any
jurisdiction where the offer is not permitted. We do not claim the accuracy
of the information in this Prospectus Supplement or the accompanying
Prospectus as of any date other than the dates stated on their respective
covers.
We include cross-references in this Prospectus Supplement and in the
accompanying Prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table
of Contents included in the accompanying Prospectus provide the pages on
which these captions are located.
Capitalized terms used in this Prospectus Supplement but not otherwise
defined shall have the meanings given such terms in the Prospectus. You can
find a listing of the pages where capitalized terms are defined under the
caption "Index of Terms for Prospectus" beginning on page 59 in the
accompanying Prospectus.
-2-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE CERTIFICATES............................................................ S-1
RISK FACTOR................................................................. S-1
Lack of Geographic Diversification....................................... S-2
DELINQUENCY AND LOSS EXPERIENCE OF SELLER................................... S-3
Delinquency Experience................................................... S-3
Credit Loss/Repossession Experience...................................... S-3
THE RECEIVABLES POOL........................................................ S-4
The Receivables.......................................................... S-4
Certain Characteristics.................................................. S-4
Composition of the Receivables........................................... S-4
Distribution by Contract Rate of the Receivables......................... S-4
Geographic Distribution of the Receivables............................... S-4
Payments on the Receivables.............................................. S-5
Weighted Average Life of the Certificates................................ S-5
THE TRUSTEE................................................................. S-8
ERISA CONSIDERATIONS........................................................ S-8
UNDERWRITING................................................................ S-9
</TABLE>
-i-
<PAGE>
THE CERTIFICATES
The First Security Auto Grantor Trust 19__-__ will issue the following
Certificates. This series of Certificates consists of two classes, entitled
____% Asset Backed Certificates, Class A and ___% Asset Backed Certificates,
Class B. The initial Collection Period will be the period from but not
including the Cutoff Date to and including ____, 19__.
<TABLE>
<S> <C>
GENERAL
Original Pool Balance.................................. $_____________________
Cutoff Date............................................ _______________, 19__
Closing Date........................................... _______________, 19__
Collateral Agent....................................... Bankers Trust Company
Required Class A Rating................................ AAA
Required Class B Rating................................ Investment Grade
CERTIFICATE TERMS
Class A Percentage..................................... _____%
Class B Percentage..................................... _____%
Original Class A Certificate Balance................... $______________
Original Class B Certificate Balance................... $______________
Class A Pass-Through Rate.............................. ___%
Class B Pass-Through Rate.............................. ___%
Interest Accrual Date.................................. _______________, 19__
Initial Distribution Date.............................. _______________, 19__
Final Scheduled Distribution Date...................... _______________, 20__
RESERVE ACCOUNT AND YIELD SUPPLEMENT ACCOUNT
Reserve Account Initial Deposit........................ $______________
Basic Reserve Account Percentage....................... ____%
Reserve Account Floor Amount........................... $______________
Reserve Account Increase Percentage.................... ____%
Reserve Account Trigger Starting Date.................. _______________, 19__
Default Trigger........................................ ____%
Delinquency Trigger.................................... ____%
Yield Supplement Initial Deposit....................... $______________
</TABLE>
RISK FACTOR
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT,
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTOR AND THE RISK FACTORS SET FORTH IN
THE PROSPECTUS IN DECIDING WHETHER TO PURCHASE THE CERTIFICATES.
S-1
<PAGE>
LACK OF GEOGRAPHIC DIVERSIFICATION Economic conditions in states where
Obligors reside may affect the
delinquency, loan loss and repossession
experience of the Trust with respect to
the Receivables. As of the Cutoff Date,
the mailing addresses of Obligors with
respect to ___% and ___% of the Original
Pool Balance were located in Utah and
Idaho, respectively. Adverse economic
conditions in Utah and/or Idaho, or that
area of the country generally, may have
a disproportionate impact on the
performance of the Receivables.
Economic factors such as unemployment,
interest rates, the rate of inflation
and consumer perceptions may affect the
rate of prepayment and defaults on the
Receivables and could reduce or delay
payments to you. See "The Receivables
Pool--Certain Geographic Distribution of
the Receivables."
S-2
<PAGE>
DELINQUENCY AND LOSS EXPERIENCE OF SELLER
The tables set forth below indicate 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 (including Motor Vehicle Loans that it
previously sold but continues to service). The tables include both Mother
Vehicle Loans originated directly by the Bank and through Dealers in a relative
proportion substantially similar to the Motor Vehicle Loans to be transferred to
the Trust. 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.
No assurance can be made, that the delinquency and loss experience for the Motor
Vehicle Loans as a whole or those transferred to the Trust will be similar to
the historical experience set forth below.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
As of June 30,
-------------------------------------
1998 1997
----------------- -----------------
Number Number
of Loans Amount of Loans Amount
-------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Portfolio at Period End
Delinquency(1)
30-59 Days...................
60-89 Days...................
90 Days or More..............
Total Delinquencies...............
Total Delinquencies as
Percentage of the Portfolio..
As of December 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------- ---------------- --------------- ---------------- ----------------
Number Number Number Number Number
of Loans Amount of Loans Amount of Loans Amount of Loans Amount of Loans Amount
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at Period End
Delinquency(1)
30-59 Days...................
60-89 Days...................
90 Days or More..............
Total Delinquencies...............
Total Delinquencies as
Percentage of the Portfolio..
</TABLE>
- --------------
(1) The period of delinquency is based on the number of days payments are
contractually past due for all Motor Vehicle Loans under than Motor
Vehicle Loans previously charged off.
CREDIT LOSS/REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------- ----------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Portfolio Balance at Period End..................................
Average Portfolio Balance During Period..........................
Average Number of Loans Outstanding During the Period............
Number of Repossessions During the Period........................
Number of Repossessions as percentage of Average Number of
Loans Outstanding..........................................
Gross Charge-offs(1).............................................
Recoveries on Loans Previously Charged Off(2)....................
Net Charge-offs(3)...............................................
Net Charge-offs as a Percentage of Portfolio Balance at Period
End........................................................
Net Charge-offs as a Percentage of Average Balance During
Period......................................................
</TABLE>
- -----------
(1) Gross Charge-offs are generally stated net of liquidation proceeds.
(2) Recoveries on Loans Previously Charged Off generally include amounts
received with respect to loans previously charged off, other than
liquidation proceeds, net of collection expenses. A portion of recoveries
has resulted from certain collection and recovery efforts used by the Bank
with respect to defaulted receivables acquired by the Bank from other
institutions as a result of mergers. Such defaulted receivables are not
being transferred to the Trust and such reported recoveries may not be
indicative of future results.
(3) Net Charge-offs equal Gross Charge-offs minus Recoveries on Loans
Previously Charged Off.
S-3
<PAGE>
THE RECEIVABLES POOL
THE RECEIVABLES
Approximately ___% of the Original Pool Balance of Motor Vehicle Loans were
originated by the Seller through Dealers in the ordinary course of the
Seller's business and in accordance with Seller's underwriting standards; the
remainder of the Motor Vehicle Loans were made directly by the Seller to the
Obligors in accordance with the Seller's underwriting standards. The Seller
will warrant in the Agreement that all the Receivables have the following
individual characteristics, among others: (i) the obligation of the related
Obligor under each Receivable is secured by a security interest in either a
new or used automobile or light truck; (ii) each Receivable has a contractual
interest rate ("CONTRACT RATE") of at least ___% and not more than ___%;
(iii) each Receivable had a remaining maturity, as of the Cutoff Date, of not
less than ___ months and not more than ___ months; (iv) each Receivable had a
remaining principal balance of not less than $_______ and not more than
$________ as of the Cutoff Date; (v) no Receivable was more than ___ days
past due as of the Cutoff Date; (vi) no Financed Vehicle had been repossessed
as of the Cutoff Date; (vii) each Receivable is a Simple Interest Receivable;
(viii) the Dealer of the Financed Vehicle, if any, has no participation in,
or other right to receive, any proceeds of the Receivable and (ix) each
Receivable was originated on or after __________. No procedures adverse to
Certificateholders were used by the Seller in selecting the Receivables to be
transferred to the Trust on the Closing Date. All terms of the retail motor
vehicle installment sale contracts and installment loans constituting the
Receivables which are material to the Certificateholders are described in the
Prospectus.
CERTAIN CHARACTERISTICS
As of the Cutoff Date, 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.
The composition, distribution by Contract Rate and distribution by remaining
term of the Receivables as of the Cutoff Date are set forth in the following
tables. Due to rounding, the percentages shown in these tables may not add
to 100.00%.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
Weighted Average Number of
Contract Rate of Original Pool Receivables in Average Principal Weighted Average Weighted Average
Receivables Balances Pool Balance Original Term Remaining Term
- ----------------- ------------- -------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
___________% $____________ _____________ $____________ ________ mos. ________ mos.
</TABLE>
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES
<TABLE>
<CAPTION>
Percentage of
Contract Rate Range Number of Aggregate Principal Original Pool
Receivables Balance Balance
----------- ------------------- --------------
<S> <C> <C> <C>
6.00-6.99%................................... $ %
7.00-7.99%................................... $ %
8.00-8.99%................................... $ %
9.00-9.99%................................... $ %
10.00-10.99%................................. $ %
11.00-11.99%................................. $ %
12.00-12.99%................................. $ %
13.00-13.99%................................. $ %
14.00-14.99%................................. $ %
15.00 and up................................. $ %
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES
The following table sets forth the percentage of the Original:
S-4
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Aggregate
State Receivables Balance
----- -------------------
<S> <C>
Utah. . . . . . . . . . . . . . . . . . . . . . . . . %
Idaho . . . . . . . . . . . . . . . . . . . . . . . . %
Oregon. . . . . . . . . . . . . . . . . . . . . . . . %
Nevada. . . . . . . . . . . . . . . . . . . . . . . . %
Washington. . . . . . . . . . . . . . . . . . . . . . %
Montana . . . . . . . . . . . . . . . . . . . . . . . %
Wyoming . . . . . . . . . . . . . . . . . . . . . . . %
</TABLE>
PAYMENTS ON THE RECEIVABLES
All Receivables provide for the allocation of payments according to the
"Simple Interest" method (each a "SIMPLE INTEREST RECEIVABLE"). A Simple
Interest Receivable provides for the amortization of the amount financed
under the Receivable over a series of fixed level months payments (except
that the last such payment may be different). However, each monthly payment
consists of an installment of interest which is calculated on the basis of
the outstanding principal balance of the Receivable multiplied by the stated
Contract Rate and further multiplied by the period elapsed (as a fraction of
a calendar year) since the preceding payment of interest was made. As
payments are received under a Simple Interest Receivable the amount received
is applied first to interest accrued and unpaid to the date of payment and
the balance is applied to reduce the unpaid principal balance. Accordingly,
if an Obligor pays a fixed monthly installment before its schedule date, the
portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the
payment been made as scheduled, and the portion of the payment applied to
reduce the unpaid principal balance will be correspondingly greater, thereby
having the effect of a prepayment. Conversely, if an Obligor pays a fixed
monthly installment after its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made
will be greater than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the Obligor
pays a fixed monthly installment until the final scheduled payment date, at
which time the amount of the final installment is increased or decreased as
necessary to repay the then outstanding principal balance.
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 proceedings
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 Agreement with respect to the Receivables,
purchases by the Servicer as a result of certain uncured breaches of the
covenants made by it in the Agreement with respect to the Receivables, or the
Servicer exercising its option to purchase all of the remaining Receivables.
Prepayments on the Receivables may be influenced by a variety of economic,
social, and other factors, including decreases in interest rates and the fact
that an Obligor may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the Seller.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement,
the Absolute Prepayment Model ("ABS"), represents an assumed rate of
prepayment each month relative to the original number of receivables in a
pool of receivables. ABS further assumes that all the receivables are the
same size and amortize at the same rate and that each receivable in each
month of its life will either be paid as scheduled or be prepaid in full.
For example, in a pool of receivables originally containing 10,000
receivables, a 1% ABS rate means that 100 receivables prepay each month. ABS
does not purport to be an historical description of prepayment experience or
a prediction of the anticipated rate of prepayment of any pool of
receivables, including the Receivables.
As the rate of payment of principal of each class of Certificates will depend
on the rate of payment (including prepayments) of the principal balance of
the Receivables and the final distribution in respect of either class of
S-5
<PAGE>
Certificates could occur significantly earlier than the respective Final
Scheduled Distribution Dates. Reinvestment risk associated with early
payment of the Certificates will be borne exclusively by the
Certificateholders.
The table captioned "Percent of Original Certificate Balance at Various ABS
Percentages" (the "ABS TABLE") has been prepared on the basis of the
characteristics of the Receivables. The ABS Table assumes that (i) the
Receivables prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases, (ii) each scheduled monthly
payment on the Receivables is made on the last day of each month and each
month has 30 days, (iii) distributions on the Certificates are made on each
Distribution Date (and each such date is assumed to be the fifteenth day of
each applicable month), (iv) the balance in the Reserve Account on each
Distribution Date is equal to the Specified Reserve Balance and (v) the
Servicer does not exercise its option to purchase the Receivables. The pools
have an assumed cutoff date of ___________. The ABS Table indicates the
projected weighted average life of each class of Certificates and sets forth
the percent of the Original Certificate Balance of each class of the
Certificates that is projected to be outstanding after each of the
Distribution Dates shown at various constant ABS percentages.
The ABS Table also assumes that the Receivables have been aggregated into
hypothetical pools with all of the Receivables within each such pool having
the following characteristics and that the level scheduled monthly payment
for each of the pools (which is based on its aggregate principal balance,
Contract Rate, original term to maturity and remaining term to maturity as of
the Cutoff Date) will be such that each pool will be fully amortized by the
end of its remaining term to maturity.
<TABLE>
<CAPTION>
Original Term Remaining Term
Aggregate to Maturity to Maturity
Pool Principal Balance Contract Rate (In Months) (In Months)
- ---- ----------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
1. . . . . . . . . . . . . . . $
2. . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . .
4. . . . . . . . . . . . . . .
5. . . . . . . . . . . . . . .
6. . . . . . . . . . . . . . .
7. . . . . . . . . . . . . . .
8. . . . . . . . . . . . . . .
9. . . . . . . . . . . . . . .
10 . . . . . . . . . . . . . .
11 . . . . . . . . . . . . . .
12 . . . . . . . . . . . . . .
------------------
------------------
------------------
</TABLE>
The actual characteristics and performance of the Receivables will differ
from the assumptions used in constructing the ABS Table. The assumptions
used are hypothetical and have been provided only to give a general sense of
how the principal cash flows might behave under varying prepayment scenarios.
For example, it is very unlikely that the Receivables will prepay at a
constant level of ABS until maturity or that all of the Receivables will
prepay at the same level of ABS. Moreover, the diverse terms of receivables
within each of the hypothetical pools could produce slower or faster
principal distributions than indicated in the ABS Table at the various
constant percentages of ABS specified, even if the original and remaining
terms to maturity of the Receivables are as assumed. Any difference between
such assumptions and the actual characteristics and performance of the
Receivables, or actual prepayment experience, will affect the percentages of
initial amounts outstanding over time and the weighted average lives of each
class of the Certificates.
PERCENT OF ORIGINAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A Certificates Class B Certificates
---------------------------------- ------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..... 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
__/__/__.........
__/__/__.........
__/__/__.........
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Class A Certificates Class B Certificates
---------------------------------- ------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
__/__/__.........
Weighted Average
Life (years)(1).
</TABLE>
- --------------------
(1) The weighted average life of a Certificate is determined by (i) multiplying
the amount of each principal payment on a Certificate by the number of
years from the date of the issuance of the Certificate to the related
Distribution Date, (ii) adding the results and (iii) dividing the sum by
the related Original Certificate Balance of the Certificate.
The ABS Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of the
Receivables which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
S-7
<PAGE>
THE TRUSTEE
The Trustee will be Bankers Trust Company. The Trustee's Corporate Trust
Office is located at Corporate Trust and Agency Group--Structured Finance,
Four Albany Street, 10th Floor, New York, New York 10006.
ERISA CONSIDERATIONS
The Exemption described under "ERISA Considerations" in the Prospectus refers
to the exemption granted to J.P. Morgan Securities Inc. (Prohibited
Transaction Exemption 90-23).
S-8
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement, the
Seller has agreed to sell to each of the Underwriters named below, and each of
the Underwriters has severally agreed to purchase from the Seller, the principal
amount of Class A Certificates and Class B Certificates set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF CLASS A OF CLASS B
CERTIFICATES CERTIFICATES
------------------- ----------------------
<S> <C> <C>
_________________________ $ $
_________________________
_________________________
_________________________
Total $ $
</TABLE>
The Seller has been advised that the Underwriters propose initially to offer
the Certificates to the public at the prices set forth herein and to certain
dealers at such prices less a concession not in excess of ___% of the Class A
Certificate denominations or ___% of the Class B Certificate denominations,
and that the Underwriters may allow, and such dealers may reallow, a discount
not in excess of ___% of the Class A Certificate denominations or ___% of the
Class B Certificate denominations to certain other dealers. After the
initial public offering, the public offering price, concessions, and
discounts to dealers may be changed by the Underwriters.
The Seller has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act, or to contribute
to payments which the Underwriters may be required to make in respect
thereof. The Seller has also agreed to reimburse the Underwriters for
certain of their expenses.
In the ordinary course of its business, the Underwriters and their affiliates
have engaged and may engage in investment banking and/or commercial banking
transactions with the seller and its affiliates.
The Seller will retain a Class A Certificate in the principal amount of
$___________. First Security Capital Markets, Inc. ("FSCM") is an affiliate
of the Seller. Any obligations of FSCM are the sole obligations of FSCM and
do not create any obligations on the part of any affiliate of FSCM.
S-9
<PAGE>
EXHIBIT 4.3
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
FIRST SECURITY AUTO OWNER TRUST 19-___
CLASS A-1 _____% ASSET BACKED NOTES
CLASS A-2 _____% ASSET BACKED NOTES
CLASS A-3 _____% ASSET BACKED NOTES
CLASS A-4 _____% ASSET BACKED NOTES
CLASS B ______% ASSET BACKED NOTES
-------------------------------
INDENTURE
DATED AS OF ___________, ____
--------------------------------
_____________________,
A _______________________,
INDENTURE TRUSTEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
@@
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TIA | | INDENTURE
SECTION | | SECTION
- -------------------------------------------------------------------------------
310(a)(1) 6.11
(a)(2) 6.11
(a)(3) 6.10
(a)(4) 6.14
(b) 6.11
(c) N.A.
311(a) 6.12
(b) 6.12
(c) N.A.
312(a) 7.1, 7.2
(b) 7.2
(c) 7.2
313(a) 7.4(a), 7.4(b)
(b)(1) 7.4(a)
(b)(2) 7.4(a)
(c) 7.4(a)
(d) 7.4(a)
314(a) 7.3(a), 3.9
(b) 3.6
(c)(1) 2.2, 2.9, 4.1, 11.1(a)
(c)(2) 11.1(a)
(c)(3) 11.1(a)
(d) 2.9, 11.1(b)
(e) 11.1(a)
(f) 11.1(a)
315(a) 6.1(b)
(b) 6.5
(c) 6.1(a)
(d) 6.2, 6.1(c)
(e) 5.13
316(a)last
sentence 1.1
(a)(1)(A) 5.11
(a)(1)(B) 5.12
(a)(2) Omitted
316(b), (c) 5.7
317(a)(1) 5.3(b)
(a)(2) 5.3(d)
(b) 3.3
318(a) 11.7
N.A. means Not Applicable.
Note: This cross reference table shall not, for any purpose, be deemed to be
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act . . . . . . . 2
ARTICLE II
THE NOTES
SECTION 2.1 Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Execution, Authentication and Delivery. . . . . . . . . . . . . 3
SECTION 2.3 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Registration; Registration of Transfer and Exchange of Notes. . 4
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. . . . . . . . . . . 5
SECTION 2.6 Persons Deemed Noteholders. . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Payment of Principal and Interest . . . . . . . . . . . . . . . 7
SECTION 2.8 Cancellation of Notes . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.9 Release of Collateral . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.10 Book-Entry Notes. . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.11 Notices to Clearing Agency. . . . . . . . . . . . . . . . . . . 9
SECTION 2.12 Definitive Notes. . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.13 Seller as Noteholder. . . . . . . . . . . . . . . . . . . . . .10
SECTION 2.14 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. . . . . . . . . . . . . . . 10
SECTION 3.2 Maintenance of Agency Office . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Money for Payments To Be Held in Trust . . . . . . . . . . . . 10
SECTION 3.4 Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge . . . . . 12
SECTION 3.6 Opinions as to Trust Estate. . . . . . . . . . . . . . . . . . 13
SECTION 3.7 Performance of Obligations; Servicing of Receivables . . . . . 13
SECTION 3.8 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.9 Annual Statement as to Compliance. . . . . . . . . . . . . . . 15
SECTION 3.10 Consolidation, Merger, etc., of Issuer; Disposition of Trust
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 3.11 Successor or Transferee . . . . . . . . . . . . . . . . . . . .18
SECTION 3.12 No Other Business . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 3.13 No Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities . . . . . . .18
SECTION 3.15 Servicer's Obligations. . . . . . . . . . . . . . . . . . . . .18
SECTION 3.16 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . .18
<PAGE>
SECTION 3.17 Restricted Payments . . . . . . . . . . . . . . . . . . . . . .19
SECTION 3.18 Notice of Events of Default . . . . . . . . . . . . . . . . . .19
SECTION 3.19 Further Instruments and Acts. . . . . . . . . . . . . . . . . .19
SECTION 3.20 Indenture Trustee's Assignment of Purchased Receivables . . . .19
SECTION 3.21 Representations and Warranties by the Issuer to the Indenture
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. . . . . . . . . . . . 20
SECTION 4.2 Application of Trust Money . . . . . . . . . . . . . . . . . . 21
SECTION 4.3 Repayment of Monies Held by Paying Agent . . . . . . . . . . . 21
SECTION 4.4 Duration of Position of Indenture Trustee for Benefit of
Certificateholders . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
DEFAULT AND REMEDIES
SECTION 5.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment . . . . . . 23
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.4 Remedies; Priorities . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.5 Optional Preservation of the Trust Estate. . . . . . . . . . . 27
SECTION 5.6 Limitation of Suits. . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.8 Restoration of Rights and Remedies . . . . . . . . . . . . . . 28
SECTION 5.9 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 28
SECTION 5.10 Delay or Omission Not a Waiver. . . . . . . . . . . . . . . . .28
SECTION 5.11 Control by Noteholders. . . . . . . . . . . . . . . . . . . . .28
SECTION 5.12 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . .29
SECTION 5.13 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . .29
SECTION 5.14 Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . .30
SECTION 5.15 Action on Notes . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 5.16 Performance and Enforcement of Certain Obligations. . . . . . .30
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee. . . . . . . . . . . . . . . . . . 31
SECTION 6.2 Rights of Indenture Trustee. . . . . . . . . . . . . . . . . . 32
SECTION 6.3 Indenture Trustee May Own Notes. . . . . . . . . . . . . . . . 33
SECTION 6.4 Indenture Trustee's Disclaimer . . . . . . . . . . . . . . . . 33
SECTION 6.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.6 Reports by Indenture Trustee to Holders. . . . . . . . . . . . 33
SECTION 6.7 Compensation; Indemnity. . . . . . . . . . . . . . . . . . . . 33
<PAGE>
SECTION 6.8 Replacement of Indenture Trustee . . . . . . . . . . . . . . . 34
SECTION 6.9 Merger or Consolidation of Indenture Trustee . . . . . . . . . 35
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
SECTION 6.11 Eligibility; Disqualification . . . . . . . . . . . . . . . . .36
SECTION 6.12 Preferential Collection of Claims Against Issuer. . . . . . . .37
SECTION 6.13 Representations and Warranties of Indenture Trustee . . . . . .38
SECTION 6.14 Indenture Trustee May Enforce Claims Without Possession
of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 6.15 Suit for Enforcement. . . . . . . . . . . . . . . . . . . . . .39
SECTION 6.16 Rights of Noteholders to Direct Indenture Trustee . . . . . . .39
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . .39
SECTION 7.2 Preservation of Information, Communications to
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.3 Reports by Issuer. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.4 Reports by Indenture Trustee . . . . . . . . . . . . . . . . . 40
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money. . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.2 Accounts; Payments . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.3 General Provisions Regarding Accounts. . . . . . . . . . . . . 43
SECTION 8.4 Release of Trust Estate. . . . . . . . . . . . . . . . . . . . 43
SECTION 8.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent
of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.2 Supplemental Indentures With Consent of Noteholders. . . . . . 45
SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . 47
SECTION 9.4 Effect of Supplemental Indenture . . . . . . . . . . . . . . . 47
SECTION 9.5 Conformity with Trust Indenture Act. . . . . . . . . . . . . . 47
SECTION 9.6 Reference in Notes to Supplemental Indentures. . . . . . . . . 47
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.2 Form of Redemption Notice. . . . . . . . . . . . . . . . . . . 48
SECTION 10.3 Notes Payable on Redemption Date . . . . . . . . . . . . . . . 48
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc. . . . . . . . . . . 49
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. . . . . . . .50
SECTION 11.3 Acts of Noteholders . . . . . . . . . . . . . . . . . . . . . .51
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . .52
<PAGE>
SECTION 11.5 Notices to Noteholders; Waiver. . . . . . . . . . . . . . . . .52
SECTION 11.6 Alternate Payment and Notice Provisions . . . . . . . . . . . .52
SECTION 11.7 Conflict with Trust Indenture Act . . . . . . . . . . . . . . .53
SECTION 11.8 Effect of Headings and Table of Contents. . . . . . . . . . . .53
SECTION 11.9 Successors and Assigns. . . . . . . . . . . . . . . . . . . . .53
SECTION 11.10 Separability. . . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 11.11 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . .53
SECTION 11.12 Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 11.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 11.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .54
SECTION 11.15 Recording of Indenture. . . . . . . . . . . . . . . . . . . . .54
SECTION 11.16 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . .54
SECTION 11.17 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . .54
SECTION 11.18 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . .55
Exhibit A - Locations of SCHEDULE OF RECEIVABLES
Exhibit B - Form of Class A-1 and Class A-2 Asset Backed Note
Exhibit C - Form of Class A-3, Class A-4 and Class B Asset Backed Note
Exhibit D - Form of Note Depository Agreement
<PAGE>
INDENTURE, dated as of ___________, ____ between FIRST SECURITY AUTO
OWNER TRUST 19-__, a Delaware business trust (the "ISSUER"), and
____________________, a ___________________, as trustee and not in its
individual capacity (the "INDENTURE TRUSTEE").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Notes and (only to the
extent expressly provided herein) the Certificateholders:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Noteholders and (only to the extent
expressly provided herein) the Certificateholders, all of the Issuer's right,
title and interest in, to and under (a) the Receivables listed on the
SCHEDULE OF RECEIVABLES which is on file at the locations listed on EXHIBIT A
hereto and all monies due or received under the Receivables after the close
of business of the Servicer on the Cutoff Date; (b) 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); (c) the security interests in the Financed
Vehicles; (d) all rights of the Trust under the Yield Supplement Agreement;
(e) the Seller's rights (if any) to receive proceeds from claims on Insurance
Policies covering the Financed Vehicles or the Obligors; (f) the Seller's
rights relating to the Receivables under the Dealer Agreements and Dealer
Assignments; (g) the Seller's rights to all documents and information
contained in the Receivable Files; (h) the rights of the Trust under this
Agreement (including the right to receive payments under the circumstances
specified herein from the Reserve Account); and (i) all proceeds (within the
meaning of the Relevant UCC) of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure (a) first, the payment
of principal of and interest on, and any other amounts owing in respect of, the
Class A Notes, equally and ratably without prejudice, priority or distinction,
and (b) second, the payment of principal of and interest on, and any other
amounts owing in respect of, the Class B Notes, equally and ratably without
prejudice, priority or distinction, and to secure compliance with the provisions
of this Indenture, all as provided in this Indenture. This Indenture
constitutes a security agreement under the UCC.
The foregoing Grant includes all rights, powers and options (but none
of the Obligations, if any) of the Issuer under any agreement or instrument
included in the Collateral, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Receivables included in the Collateral and all
<PAGE>
other monies payable under the Collateral, to give and receive notices and
other communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Issuer or
otherwise and generally to do and receive anything that the Issuer is or may
be entitled to do or receive under or with respect to the Collateral.
The Indenture Trustee, as trustee on behalf of the Noteholders and
(only to the extent expressly provided herein) the Certificateholders,
acknowledges such Grant and accepts the trusts under this Indenture in
accordance with the provisions of this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS. Certain capitalized terms used in this
Indenture shall have the respective meanings assigned them in Section 1.1 of the
Sale and Servicing Agreement of even date herewith among the Issuer and Seller
(as it may be amended, supplemented or modified from time to time, the "Sale and
Servicing Agreement"). All references herein to "the Indenture" or "this
Indenture" are to this Indenture as it may be amended, supplemented or modified
from time to time, the exhibits hereto and the capitalized terms used herein
which are defined in such Section 1.1 of the Sale and Servicing Agreement. All
references herein to Articles, Sections, subsections and exhibits are to
Articles, Sections, subsections and exhibits contained in or attached to this
Indenture unless otherwise specified. All terms defined in this Indenture shall
have the defined meanings when used in any certificate, notice, Note or other
document made or delivered pursuant hereto unless otherwise defined therein.
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the Securities and Exchange Commission.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" means the Indenture Trustee.
"OBLIGOR" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
<PAGE>
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by a Commission rule
have the respective meanings assigned to them by such definitions.
ARTICLE II
THE NOTES
SECTION 2.1 FORM.
(a) Each of the Class A-1 Notes and Class A-2 Notes, and each of the
Class A-3 Notes, Class A-4 Notes and Class B Notes, with the Indenture Trustee's
certificate of authentication, shall be substantially in the form set forth in
EXHIBIT B and EXHIBIT C, respectively, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and each such class may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The
terms of each class of Notes as provided for in EXHIBIT B and EXHIBIT C hereto
are part of the terms of this Indenture.
SECTION 2.2 EXECUTION, AUTHENTICATION AND DELIVERY.
(a) Each Note shall be dated the date of its authentication, and
shall be issuable as a registered Note in the minimum denomination of $1,000 and
in integral multiples thereof.
(b) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized Officer on the Notes
may be manual or facsimile.
(c) Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
office prior to the authentication and delivery of such Notes or did not hold
such office at the date of such Notes.
<PAGE>
(d) The Indenture Trustee shall upon Issuer Order authenticate and
deliver to or upon the order of the Issuer, the Notes for original issue in
aggregate principal amount of $____________, comprised of (i) Class A-1 Notes in
the aggregate principal amount of $____________, (ii) Class A-2 Notes in the
aggregate principal amount of $_____________, (iii) Class A-3 Notes in the
aggregate principal amount of $______________, (iv) Class A-4 Notes in the
aggregate principal amount of $____________ and (v) Class B Notes in the
aggregate principal amount of $_____________. The aggregate principal amount of
all Notes outstanding at any time may not exceed $____________ except as
provided in Section 2.5.
(e) No Notes shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form set forth, in the case
of the Class A-1 Notes and Class A-2 Notes, in EXHIBIT B, and in the case of the
Class A-3 Notes, Class A-4 Notes and Class B Notes, in EXHIBIT C, executed by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 TEMPORARY NOTES.
(a) Pending the preparation of Definitive Notes, if any, the Issuer
may execute, and upon receipt of an Issuer Order the Indenture Trustee shall
authenticate and deliver, such Temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations as are
consistent with the terms of this Indenture as the officers executing such Notes
may determine, as evidenced by their execution of such Notes.
(b) If Temporary Notes are issued, the Issuer shall cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the Temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the Temporary Notes at the Agency Office of the Issuer to be
maintained as provided in Section 3.2, without charge to the Noteholder. Upon
surrender for cancellation of any one or more Temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so delivered in exchange, the Temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Notes.
SECTION 2.4 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE OF
NOTES.
(a) The Issuer shall cause to be kept the Note Register, comprising
separate registers for each class of Notes, in which, subject to such reasonable
regulations as the Issuer may prescribe, the Issuer shall provide for the
registration of the Notes and the registration of transfers and exchanges of the
Notes. The Indenture Trustee shall initially be the Note Registrar for the
purpose of registering the Notes and transfers of the Notes as herein provided.
Upon any
<PAGE>
resignation of any Note Registrar, the Issuer shall promptly appoint a
successor Note Registrar or, if it elects not to make such an appointment,
assume the duties of the Note Registrar.
(b) If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register. The Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon
a certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Noteholders and the principal
amounts and number of such Notes.
(c) Upon surrender for registration of transfer of any Note at the
Corporate Trust Office of the Indenture Trustee or the Agency Office of the
Issuer (and following the delivery, in the former case, of such Notes to the
Issuer by the Indenture Trustee), the Issuer shall execute, the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or transferees, one or more
new Notes in any authorized denominations, of a like aggregate principal amount.
(d) At the option of the Noteholder, Notes may be exchanged for other
Notes of the same class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at the Corporate
Trust Office of the Indenture Trustee or the Agency Office of the Issuer (and
following the delivery, in the former case, of such Notes to the Issuer by the
Indenture Trustee), the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee and the Note
Registrar, duly executed by the Holder thereof or such Holder's attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in the City of New
York or the city in which the Corporate Trust Office of the Indenture Trustee is
located, or by a member firm of a national securities exchange, and such other
documents as the Indenture Trustee may require.
<PAGE>
(g) No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Issuer or Indenture
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration
of transfer or exchange of Notes, other than exchanges pursuant to Sections
2.3 or 9.6 not involving any transfer.
(h) The preceding provisions of this Section 2.4 notwithstanding, the
Issuer shall not be required to transfer or make exchanges, and the Note
Registrar need not register transfers or exchanges, of Notes that: (i) have
been selected for redemption pursuant to Article X, if applicable; or (ii) are
due for repayment in full within 15 days of submission to the Corporate Trust
Office or the Agency Office.
SECTION 2.5 MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
(a) If (i) any mutilated Note is surrendered to the Indenture
Trustee, or the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, and (ii) there is delivered to the
Indenture Trustee such security or indemnity as may be required by it to hold
the Issuer and the Indenture Trustee harmless, then, in the absence of notice to
the Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, the Issuer shall execute and upon the
Issuer's request the Indenture Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note of a like class and aggregate principal amount; PROVIDED,
HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable in full,
or shall have been called for redemption, instead of issuing a replacement Note,
the Issuer may make payment to the Holder of such destroyed, lost or stolen Note
when so due or payable or upon the Redemption Date, if applicable, without
surrender thereof.
(b) If, after the delivery of a replacement Note or payment in
respect of a destroyed, lost or stolen Note pursuant to subsection (a), any bona
fide purchaser of the original Note in lieu of which such replacement Note was
issued presents for payment such original Note, the Issuer and the Indenture
Trustee shall be entitled to recover such replacement Note (or such payment)
from (i) any Person to whom it was delivered, (ii) the Person taking such
replacement Note from the Person to whom such replacement Note was delivered or
(iii) any assignee of such Person, except any bona fide purchaser, and the
Issuer and the Indenture Trustee shall be entitled to recover upon the security
or indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Issuer or the Indenture Trustee in connection therewith.
(c) In connection with the issuance of any replacement Note under
this Section 2.5, the Issuer may require the payment by the Holder of such Note
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including all
fees and expenses of the Indenture Trustee) connected therewith.
<PAGE>
(d) Any duplicate Note issued pursuant to this Section 2.5 in
replacement for any mutilated, destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the Issuer,
whether or not the mutilated, destroyed, lost or stolen Note shall be found
at any time or be enforced by any Person, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
(e) The provisions of this Section 2.5 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 PERSONS DEEMED NOTEHOLDERS. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in whose
name any Note is registered (as of the day of determination) as the Noteholder
for the purpose of receiving payments of principal of and interest on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the
Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.7 PAYMENT OF PRINCIPAL AND INTEREST.
(a) Interest on the Class A-1 Notes and Class A-2 Notes shall accrue
in the manner set forth in EXHIBIT B at the applicable Interest Rate for such
class, and such interest shall be payable on each Distribution Date, in
accordance with the priorities set forth in Section 8.2(c), as specified in the
form of Note set forth in EXHIBIT B. Interest on the Class A-3 Notes, Class A-4
Notes and Class B Notes shall accrue in the manner set forth in EXHIBIT C at the
applicable Interest Rate for each class, and such interest shall be payable on
each Distribution Date, in accordance with the priorities set forth in Section
8.2(c), as specified in the form of Note set forth in EXHIBIT C. Any instalment
of interest payable on any Note shall be punctually paid or duly provided for by
a deposit by or at the direction of the Issuer or the Servicer into the Note
Distribution Account before each Distribution Date for payment to Noteholders on
the related Distribution Date and shall be paid to the Person in whose name such
Note (or one or more Predecessor Notes) is registered on the applicable Record
Date, by check mailed first-class, postage prepaid to such Person's address as
it appears on the Note Register on such Record Date; PROVIDED, HOWEVER, that,
unless and until Definitive Notes have been issued pursuant to Section 2.12,
with respect to Notes registered on the applicable Record Date in the name of
the Note Depository (initially, Cede & Co.), payment shall be made by wire
transfer in immediately available funds to the account designated by the Note
Depository.
(b) Prior to the occurrence of an Event of Default and a declaration
in accordance with Section 5.2(a) that the Notes have become immediately due and
payable, the principal of each class of Notes shall be payable in full on the
Final Scheduled Distribution Date for such class and, to the extent of funds
available therefor, in instalments on the Distribution Dates (if any) preceding
the Final Scheduled Distribution Date for such class, in the amounts and in
accordance with the priorities set forth in Section 8.2(c)(ii). All principal
payments on each
<PAGE>
class of Notes shall be made pro rata to the Noteholders of such class
entitled thereto. Any instalment of principal payable on any Note shall be
punctually paid or duly provided for by a deposit by or at the direction of
the Issuer into the Note Distribution Account prior to the applicable
Distribution Date and shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the applicable Record Date,
by check mailed first-class, postage prepaid to such Person's address as it
appears on the Note Register on such Record Date; PROVIDED, HOWEVER, that,
unless and until Definitive Notes have been issued pursuant to Section 2.12,
with respect to Notes registered on the Record Date in the name of the Note
Depository, payment shall be made by wire transfer in immediately available
funds to the account designated by the Note Depository, except for: (i) the
final instalment of principal on any Note; and (ii) the Redemption Price for
the Notes redeemed pursuant to Section 10.1, which, in each case, shall be
payable as provided herein. The funds represented by any such checks in
respect of interest or principal returned undelivered shall be held in
accordance with Section 3.3.
(c) [Reserved.]
(d) From and after the occurrence of an Event of Default and a
declaration in accordance with Section 5.2(a) that the Notes have become
immediately due and payable, principal on the Notes shall be payable as
provided in Section 8.2(c)(iv).
(e) With respect to any Distribution Date on which the final
instalment of principal and interest on a class of Notes is to be paid, the
Indenture Trustee shall notify each Noteholder of such class of record as of
the Record Date for such Distribution Date of the fact that the final
instalment of principal of and interest on such Note is to be paid on such
Distribution Date. Such notice shall be sent (i) on such Record Date by
facsimile, if Book-Entry Notes are outstanding; or (ii) not later than three
Business Days after such Record Date in accordance with Section 11.5(a) if
Definitive Notes are outstanding, and shall specify that such final
instalment shall be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered
for payment of such instalment and the manner in which such payment shall be
made. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2. Within sixty days of the surrender
pursuant to this Section 2.7(e) or cancellation pursuant to Section 2.8 of
all of the Notes of a particular class, the Indenture Trustee shall provide
each of the Rating Agencies with written notice stating that all Notes of
such class have been surrendered or canceled.
SECTION 2.8 CANCELLATION OF NOTES. All Notes surrendered for
payment, redemption, exchange or registration of transfer shall, if
surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture
Trustee. The Issuer may at any time deliver to the Indenture Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Indenture Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section 2.8, except as expressly permitted by this
Indenture. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an
<PAGE>
Issuer Order that they be returned to it; PROVIDED, HOWEVER, that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee. The Indenture Trustee shall certify to the Issuer that
surrendered Notes have been duly canceled and retained or destroyed, as the
case may be.
SECTION 2.9 RELEASE OF COLLATERAL. The Indenture Trustee shall
release property from the lien of this Indenture, other than as permitted by
Sections 3.20, 8.2, 8.4 and 11.1, only upon receipt of an Issuer Request
accompanied by an Officers' Certificate, an Opinion of Counsel (to the extent
required by the TIA) and Independent Certificates in accordance with TIA
Sections 314(c) and 314(d)(1).
SECTION 2.10 BOOK-ENTRY NOTES. The Notes, upon original issuance,
shall be issued in the form of a typewritten Note or Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency by or on behalf of the Issuer. Such Note or Notes shall be
registered on the Note Register in the name of the Note Depository (initially,
Cede & Co.), and no Note Owner shall receive a Definitive Note representing such
Note Owner's interest in such Note, except as provided in Section 2.12. Unless
and until Definitive Notes have been issued to the Note Owners pursuant to
Section 2.12:
(a) the provisions of this Section 2.10 shall be in full force
and effect;
(b) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Notes
and the giving of instructions or directions hereunder) as the sole holder
of the Notes and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section 2.10
conflict with any other provisions of this Indenture, the provisions of
this Section 2.10 shall control;
(d) the rights of the Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants and unless and until Definitive Notes are
issued pursuant to Section 2.12, the initial Clearing Agency shall make
book-entry transfers between the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants, pursuant to the Note Depository Agreement;
and
(e) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing
a specified percentage of in principal Amount of such Notes then
Outstanding, the Clearing Agency
<PAGE>
shall be deemed to represent such percentage only to the extent that it
has (i) received written instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and (ii) has delivered such instructions to the Indenture Trustee.
SECTION 2.11 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing Agency and shall
have no other obligation to the Note Owners.
SECTION 2.12 DEFINITIVE NOTES. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Notes and
the Administrator is unable to locate a qualified successor; (ii) the
Administrator, at its option, advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency; or
(iii) after the occurrence of an Event of Default or an Event of Servicing
Termination, with respect to such Securities, the holders representing at least
a majority of the Outstanding Principal Amount of the related Notes advise the
Indenture Trustee and Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Note Owners, then the Clearing Agency shall notify all Note Owners and
the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Note or Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.
SECTION 2.13 SELLER AS NOTEHOLDER. The Seller in its individual or
any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Issuer or its affiliates with the same rights it would have if it
were not the Seller.
SECTION 2.14 TAX TREATMENT. The Issuer in entering into this
Indenture, and the Noteholders and the Note Owners, by acquiring any Note or
interest therein, (i) express their intention that the Notes qualify under
applicable tax law as indebtedness secured by the Collateral, and (ii) unless
otherwise required by appropriate taxing authorities, agree to treat the Notes
as indebtedness secured by the Collateral for the purpose of federal income
taxes, state and local income and franchise taxes, and any other taxes imposed
upon, measured by or based upon gross or net income.
<PAGE>
ARTICLE III
COVENANTS
SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer shall
duly and punctually pay the principal of and interest on the Notes in accordance
with the terms of the Notes and this Indenture. On each Distribution Date and
on the Redemption Date (if applicable), the Indenture Trustee shall distribute
amounts on deposit in the Note Distribution Account to the Noteholders in
accordance with Sections 2.7 and 8.2, less amounts properly withheld under the
Code by any Person from a payment to any Noteholder of interest and/or
principal. Any amounts so withheld shall be considered as having been paid by
the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2 MAINTENANCE OF AGENCY OFFICE. As long as any of the
Notes remains outstanding, the Issuer shall maintain in the Borough of
Manhattan, the City of New York, an office (the "AGENCY OFFICE"), being an
office or agency where Notes may be surrendered to the Issuer for registration
of transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. The Issuer shall give prompt written notice to the Indenture Trustee
of the location, and of any change in the location, of the Agency Office. If at
any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Indenture Trustee, and the Issuer hereby appoints the Indenture Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3 MONEY FOR PAYMENTS TO BE HELD IN TRUST.
(a) As provided in Section 8.2, all payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn
from the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Note Distribution Account for payments of Notes
shall be paid over to the Issuer except as provided in this Section 3.3.
(b) Before each Distribution Date or the Redemption Date (if
applicable), the Indenture Trustee shall deposit in the Note Distribution
Account an aggregate sum sufficient to pay the amounts then becoming due with
respect to the Notes, such sum to be held in trust for the benefit of the
Persons entitled thereto.
(c) The Issuer shall cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due with
respect to the
<PAGE>
Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay
such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has
actual knowledge in the making of any payment required to be
made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay
to the Indenture Trustee all sums so held in trust by such
Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the
standards required to be met by a Paying Agent in effect at
the time of determination; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in
connection therewith.
(d) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(e) Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid by the Indenture Trustee to the Issuer on Issuer Request; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; PROVIDED, HOWEVER,
that the Indenture Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less
<PAGE>
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining shall be paid to the Issuer. The Indenture Trustee may
also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such payment (including, but not limited to, mailing
notice of such payment to Holders whose Notes have been called but have not
been surrendered for redemption or whose right to or interest in monies due
and payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 EXISTENCE. The Issuer shall keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer shall keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and shall obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 PROTECTION OF TRUST ESTATE; ACKNOWLEDGMENT OF PLEDGE.
The Issuer shall from time to time execute and deliver all such supplements and
amendments hereto and all such financing statements, amendments thereto,
continuation statements, assignments, certificates, instruments of further
assurance and other instruments, and shall take such other action as may be
determined to be necessary or advisable in an Opinion of Counsel to the Owner
Trustee delivered to the Indenture Trustee to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof including by making the necessary filings of financing statements or
amendments thereto within sixty days after the occurrence of any of the
following: (A) any change in the Issuer's name, (B) any change in the location
of the Issuer's principal place of business and (C) any merger or consolidation
or other change in the Issuer's identity or organizational structure and by
promptly notifying the Indenture Trustee of any such filings;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce the rights of the Indenture Trustee and the Noteholders
in any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all Persons and parties,
and the Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required by the Indenture Trustee pursuant to this
Section 3.5.
<PAGE>
SECTION 3.6 OPINIONS AS TO TRUST ESTATE.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing
of this Indenture, any indentures supplemental hereto and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to perfect and make
effective the lien and security interest of this Indenture and reciting the
details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) On or before ______ in each calendar year, beginning _______,
____, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain the lien and security interest created by this Indenture. Such Opinion
of Counsel shall also describe the recording, filing, re-recording and refiling
of this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture until _______ in
the following calendar year.
SECTION 3.7 PERFORMANCE OF OBLIGATIONS; SERVICING OF RECEIVABLES.
(a) The Issuer shall not take any action and shall use its reasonable
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
otherwise expressly provided in this Indenture, the Sale and Servicing
Agreement, the Administration Agreement or any other Basic Documents.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in the Basic Documents or an
Officers' Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer and the
Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to filing or causing to be filed
<PAGE>
all UCC financing statements and continuation statements required to be filed
under the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of an Event
of Servicing Termination under the Sale and Servicing Agreement, the Issuer
shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and
shall specify in such notice the response or action, if any, the Issuer has
taken or is taking with respect of such default. If an Event of Servicing
Termination shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer and the Indenture Trustee shall take all reasonable
steps available to them pursuant to the Sale and Servicing Agreement to remedy
such failure.
(e) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees that it shall not, without the
prior written consent of the Indenture Trustee or the Holders of at least a
majority in principal amount of such then outstanding Notes, as applicable in
accordance with the terms thereof, amend, modify, waive, supplement, terminate
or surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of any Collateral or any of the Basic
Documents, or waive timely performance or observance by the Servicer or the
Seller under the Sale and Servicing Agreement, the Administrator under the
Administration Agreement; PROVIDED, HOWEVER, that, notwithstanding the
foregoing, no action specified in the PROVISO to Section 9.2 shall be taken
except in compliance with Section 9.2. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee or such
Holders, as applicable, the Issuer agrees, promptly following a request by the
Indenture Trustee to do so, to execute and deliver, in its own name and at its
own expense, such agreements, instruments, consents and other documents as the
Indenture Trustee may deem necessary or appropriate in the circumstances.
SECTION 3.8 NEGATIVE COVENANTS. So long as any Notes are
Outstanding, the Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, except the Issuer may (i) collect,
liquidate, sell or otherwise dispose of Receivables (including Purchased
Receivables and Liquidating Receivables), (ii) make cash payments out of
the Accounts and (iii) take other actions, in each case as contemplated by
the Basic Documents;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of the Notes (other than amounts properly
withheld from such payments under the Code or applicable state law) or
assert any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust Estate;
<PAGE>
(c) voluntarily commence any insolvency, readjustment of debt,
marshaling of assets and liabilities or other proceeding, or apply for an
order by a court or agency or supervisory authority for the winding-up or
liquidation of its affairs or any other event specified in Section 5.1(f);
or
(d) either (i) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby,
(ii) permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of law, in
each case on a Financed Vehicle and arising solely as a result of an action
or omission of the related Obligor), or (iii) permit the lien of this
Indenture not to constitute a valid first priority security interest in the
Trust Estate (other than with respect to any such tax, mechanics' or other
lien).
SECTION 3.9 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer shall
deliver to the Indenture Trustee, with a copy to each of the Rating Agencies, on
or before _________ of each year, beginning _________, ____, an Officer's
Certificate signed by an Authorized Officer, dated as of the immediately
preceding ________, stating that:
(a) a review of the activities of the Issuer during such fiscal year
and of performance under this Indenture has been made under such Authorized
Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has fulfilled in all material respects all of its
obligations under this Indenture throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each
such default known to such Authorized Officer and the nature and status
thereof. A copy of such certificate may be obtained by any Noteholder by a
request in writing to the Issuer addressed to the Corporate Trust Office of
the Indenture Trustee.
SECTION 3.10 CONSOLIDATION, MERGER, ETC., OF ISSUER; DISPOSITION OF
TRUST ASSETS.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
<PAGE>
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America, any State or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee, in
form satisfactory to the Indenture Trustee, the due and timely payment of
the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such merger or
consolidation, no Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction and such Person for each then outstanding
class of Notes;
(iv) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been completed; and
(v) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel addressed to the
Issuer, each stating:
(A) that such consolidation or merger and such
supplemental indenture comply with this Section 3.10;
(B) that such consolidation or merger and such supplemental
indenture shall have no material adverse tax consequence to the Issuer
or any Securityholder; and
(C) that all conditions precedent herein provided for in
this Section 3.10 have been complied with, which shall include any
filing required by the Exchange Act.
(b) Except as otherwise expressly permitted by this Indenture or the
other Basic Documents, the Issuer shall not sell, convey, exchange, transfer or
otherwise dispose of any of its properties or assets, including those included
in the Trust Estate, to any Person, unless:
(i) the Person that acquires such properties or assets of
the Issuer (A) shall be a United States citizen or a Person organized and
existing under the laws of the United States of America or any State and
(B) by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee:
(1) expressly assumes the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every
<PAGE>
agreement and covenant of this Indenture on the part of the
Issuer to be performed or observed, all as provided herein;
(2) expressly agrees that all right, title and interest so
sold, conveyed, exchanged, transferred or otherwise disposed of shall
be subject and subordinate to the rights of Noteholders;
(3) unless otherwise provided in such supplemental
indenture, expressly agrees to indemnify, defend and hold harmless the
Issuer against and from any loss, liability or expense arising under
or related to this Indenture and the Notes; and
(4) expressly agrees that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction and such Person for each then outstanding class
of Notes;
(iv) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel addressed to the Issuer,
each stating that:
(A) such sale, conveyance, exchange, transfer or
disposition and such supplemental indenture comply with this Section
3.10;
(B) such sale, conveyance, exchange, transfer or
disposition and such supplemental indenture have no material adverse
tax consequence to the Issuer or to any Noteholders or
Certificateholders; and
(C) that all conditions precedent herein provided for in
this Section 3.10 have been complied with, which shall include any
filing required by the Exchange Act.
SECTION 3.11 SUCCESSOR OR TRANSFEREE.
<PAGE>
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), the Issuer shall be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Securityholders immediately upon the delivery
of written notice to the Indenture Trustee from the Person acquiring such assets
and properties stating that the Issuer is to be so released.
SECTION 3.12 NO OTHER BUSINESS. The Issuer shall not engage in any
business or activity other than acquiring, holding and managing the Collateral
and the proceeds therefrom in the manner contemplated by the Basic Documents,
issuing the Securities, making payments on the Securities and such other
activities that are necessary, suitable, desirable or convenient to accomplish
the foregoing or are incidental thereto, as set forth in Section 2.3 of the
Trust Agreement.
SECTION 3.13 NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness for money borrowed other than indebtedness for money borrowed in
respect of the Notes or in accordance with the Basic Documents.
SECTION 3.14 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by this Indenture or the other Basic Documents, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.15 SERVICER'S OBLIGATIONS. The Issuer shall use its best
efforts to cause the Servicer to comply with its obligations under Sections 3.9,
3.10 and 3.11 of the Sale and Servicing Agreement.
SECTION 3.16 CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (whether by long-term or operating lease or otherwise) for capital
assets (either real, personal or intangible property) other than the purchase of
the Receivables and other property and rights from the Seller pursuant to the
Sale and Servicing Agreement.
SECTION 3.17 RESTRICTED PAYMENTS. Except for payments of principal
or interest on or redemption of the Notes, so long as any Notes are Outstanding,
the Issuer shall not,
<PAGE>
directly or indirectly:
(a) pay any dividend or make any distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise, in each case with respect to any ownership or equity
interest or similar security in or of the Issuer or to the Servicer;
(b) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or similar security; or
(c) set aside or otherwise segregate any amounts for any such purpose;
PROVIDED, HOWEVER, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Seller, the Indenture Trustee, the Owner Trustee and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement, the Trust Agreement or the
other Basic Documents. The Issuer shall not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with the Basic Documents.
SECTION 3.18 NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder, each Event of Servicing Termination, and each
default on the part of the Seller of its obligations under the Sale and
Servicing Agreement.
SECTION 3.19 FURTHER INSTRUMENTS AND ACTS. Upon request of the
Indenture Trustee, the Issuer shall execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
SECTION 3.20 INDENTURE TRUSTEE'S ASSIGNMENT OF PURCHASED
RECEIVABLES. Upon receipt of the Repurchase Amount with respect to a Purchased
Receivable, the Indenture Trustee shall assign, without recourse, representation
or warranty to the Servicer or the Seller, as applicable, all of the Indenture
Trustee's right, title and interest in and to such repurchased Receivable, all
monies due thereon, the security interest in the related Financed Vehicle or
Financed Vehicle, proceeds arising thereafter from any Insurance Policies with
respect to such Receivable, rights relating to the Receivables under the Dealer
Agreements and Dealer Assignments, such assignment being an assignment outright
and not for security; and the Servicer or the Seller, as applicable, shall
thereupon own such Receivable, and all such security and documents, free of any
further obligation to the Indenture Trustee or the Securityholders with respect
thereto. If in any enforcement suit or legal proceeding it is held that the
Servicer may not enforce a Receivable on the ground that it is not a real party
in interest or a holder entitled to enforce such Receivable, the Indenture
Trustee shall, at the Servicer's expense, take such steps as the Servicer deems
necessary to enforce the Receivable, including bringing suit in
<PAGE>
the Indenture Trustee's name or the names of the Securityholders.
SECTION 3.21 REPRESENTATIONS AND WARRANTIES BY THE ISSUER TO THE
INDENTURE TRUSTEE. The Issuer hereby represents and warrants to the Indenture
Trustee as follows:
(a) GOOD TITLE. No Receivable has been sold, transferred, assigned
or pledged by the Issuer to any Person other than the Indenture Trustee;
immediately prior to the conveyance of the Receivables pursuant to this
Indenture, the Issuer had good and marketable title thereto, free of any Lien;
and, upon execution and delivery of this Indenture by the Issuer, the Indenture
Trustee shall have all of the right, title and interest of the Issuer in, to and
under the Collateral, free of any Lien; and
(b) ALL FILINGS MADE. All filings necessary under the UCC in any
jurisdiction to give the Indenture Trustee a first priority perfected security
interest in the Receivables and, to the extent constituting Code Collateral, the
other Collateral shall have been made. The Receivables constitute Code
Collateral.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall cease to be of further effect with respect to the Notes except
as to: (i) rights of registration of transfer and exchange; (ii) substitution
of mutilated, destroyed, lost or stolen Notes; (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon; (iv) Sections 3.2,
3.3, 3.4, 3.5, 3.8, 3.10, 3.11, 3.12, 3.13, 3.14, 3.16, 3.18 and 3.20; (v) the
rights, obligations and immunities of the Indenture Trustee hereunder (including
the rights of the Indenture Trustee under Section 6.7 and the obligations of the
Indenture Trustee under Sections 4.2 and 4.4); and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, if:
(a) either:
(1) all Notes theretofore authenticated and delivered
(other than (A) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.5 and
(B) Notes for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 3.3) have been delivered to the Indenture Trustee for
<PAGE>
cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation:
(A) have become due and payable,
(B) will be due and payable on their respective Final
Scheduled Distribution Dates within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of (A), (B) or (C) of subsection 4.1(a)(2)
above, has irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which will
mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire
unpaid principal and accrued interest on such Notes not theretofore
delivered to the Indenture Trustee for cancellation when due on the
Final Scheduled Distribution Dates for such Notes or the Redemption
Date for such Notes (if such Notes are to be called for redemption
pursuant to Section 10.1(a)), as the case may be;
(b) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate of the Issuer, an Opinion of Counsel and (if
required by the TIA or the Indenture Trustee) an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.1(a) and each stating that
all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
SECTION 4.2 APPLICATION OF TRUST MONEY. All monies deposited with
the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied
by it in accordance with the provisions of the Notes and this Indenture to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or by applicable law.
<PAGE>
SECTION 4.3 REPAYMENT OF MONIES HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture with respect
to each class of Notes, all monies then held by any Paying Agent other than
the Indenture Trustee under the provisions of this Indenture with respect to
each such class of Notes shall, upon demand of the Issuer, be paid to the
Indenture Trustee to be held and applied according to Section 3.3 and
thereupon such Paying Agent shall be released from all further liability with
respect to such monies.
SECTION 4.4 DURATION OF POSITION OF INDENTURE TRUSTEE FOR BENEFIT
OF CERTIFICATEHOLDERS. Notwithstanding (i) the earlier payment in full of all
principal and interest due to the Noteholders under the terms of Notes of each
class, (ii) the cancellation of such Notes pursuant to Section 3.1 and (iii) the
discharge of the Indenture Trustee's duties hereunder with respect to such
Notes, the Indenture Trustee shall continue to act in the capacity as Indenture
Trustee hereunder for the benefit of the Certificateholders and the Indenture
Trustee, for the benefit of the Certificateholders, shall comply with its
obligations under Sections 4.1(a), 8.1(a)(v) and 8.2 of the Sale and Servicing
Agreement, as appropriate, until such time as all distributions in respect of
the Certificates have been paid in full.
ARTICLE V
DEFAULT AND REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. For the purposes of this
Indenture, "EVENT OF DEFAULT" wherever used herein, means any one of the
following events:
(a) failure to pay any interest on any Note as and when the same
becomes due and payable, and such default shall continue unremedied for a
period of five (5) days; or
(b) except as set forth in Section 5.1(c), failure to pay any
instalment of the principal of any Note as and when the same becomes due
and payable; or
(c) failure to pay in full the outstanding principal balance of any
class of Notes by the Final Scheduled Distribution Date for such class; or
(d) default in the observance or performance in any material respect
of any covenant or agreement of the Issuer made in this Indenture (other
than a covenant or agreement, a default in the observance or performance of
which is specifically dealt with elsewhere in this Section 5.1) which
failure materially and adversely affects the rights of the Noteholders, and
such default shall continue or not be cured for a period of thirty (30)
days after there shall have been given, by registered or certified mail, to
the Issuer and the Seller (or the Servicer, as applicable) by the Indenture
Trustee or to the Issuer and the
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Seller (or the Servicer, as applicable) and the Indenture Trustee by the
Holders of at least a majority in Principal Amount of such Notes then
outstanding, a written notice specifying such default, demanding that it
be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive days; or
(f) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Trust Estate, or the
making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance of
any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five (5) Business Days
after learning of the occurrence thereof, written notice in the form of an
Officer's Certificate of any Default under Section 5.1(d), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
(a) If an Event of Default should occur and be continuing, then and
in every such case, unless the principal amount of the Notes shall have already
become due and payable, either the Indenture Trustee or the Holders of Notes
representing not less than a majority in Principal Amount of such Notes then
outstanding may declare the principal of such Notes to be immediately due and
payable, by a notice in writing to the Issuer (and to the Indenture Trustee if
given by the Noteholders) setting forth the Event or Events of Default, and
upon any such declaration the unpaid principal amount of the Notes, together
with accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
(b) At any time after such declaration of acceleration of maturity of
the Notes has been made and before a judgment or decree for payment of the money
due thereunder has been obtained by the Indenture Trustee as hereinafter
provided in this Article V, the Holders of Notes representing not less than a
majority in Principal Amount of such Notes then outstanding, by written notice
to the Issuer and the Indenture Trustee, may rescind and annul such declaration
<PAGE>
and its consequences with respect to the Notes; PROVIDED, that no such
rescission and annulment shall extend to or affect any subsequent or other
Default or impair any right consequent thereto; and PROVIDED FURTHER, that if
the Indenture Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission and annulment or for any other reason, or such proceedings
shall have been determined adversely to the Indenture Trustee, then and in every
such case, the Indenture Trustee, the Issuer and the Noteholders, as the case
may be, shall be restored to their respective former positions and rights
hereunder, and all rights, remedies and powers of the Indenture Trustee, the
Issuer and the Noteholders, as the case may be, shall continue as though no such
proceedings had been commenced.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
(a) The Issuer covenants that if there shall occur an Event of
Default under Sections 5.1(a), (b) or (c) which has not been waived pursuant to
Section 5.12, the Issuer shall, upon demand of the Indenture Trustee, pay to the
Indenture Trustee, for the benefit of the Noteholders in accordance with their
respective outstanding principal amounts, the entire amount then due and payable
on the Notes for principal and interest, with interest through the date of such
payment on the overdue principal amount of each class of Notes, at the rate
applicable to such class of Notes, and in addition thereto such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel.
(b) If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the monies adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by
applicable law.
(d) If there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or if a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken
<PAGE>
possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section 5.3, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire
amount of the unpaid principal and interest owing in respect of the Notes
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee (including any claim
for reasonable compensation to the Indenture Trustee and each predecessor
trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, if the Indenture Trustee shall consent
to the making of payments directly to such Noteholders, to pay to the Indenture
Trustee such amounts as shall be sufficient to cover reasonable compensation to
the Indenture Trustee, each predecessor trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor trustee, except as
a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt
on behalf of any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or to authorize the Indenture Trustee to vote in respect of the claim
of any Noteholder in any such proceeding except, as aforesaid, to vote for
the election of a trustee in bankruptcy or similar Person.
<PAGE>
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture
Trustee without the possession of any of the Notes or the production thereof
in any trial or other Proceedings relative thereto, and any such Proceedings
instituted by the Indenture Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor trustee and their respective agents and attorneys,
shall be first for the ratable benefit of the Class A Noteholders until the
Class A Notes have been paid full and then for the benefit of the Class B
Noteholders.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.4 REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be continuing and
the Notes have been accelerated under Section 5.2(a), the Indenture Trustee may
do one or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then due and payable on
the Notes or under this Indenture with respect thereto, whether by
declaration of acceleration or otherwise, enforce any judgment obtained,
and collect from the Issuer and any other obligor upon such Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and such Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law or elect to have the Issuer
maintain possession of the Receivables and continue to apply collections on
such Receivables as if there had been no declaration of acceleration;
PROVIDED, HOWEVER, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default and acceleration
of the Notes, unless (A) the Holders of all such Outstanding Notes consent
to such sale, (B) the
<PAGE>
proceeds of such sale or liquidation distributable to the Noteholders
are sufficient to discharge in full the principal of and the accrued
interest on such outstanding Notes at the date of such sale or
liquidation or (C) (i) there has been an Event of Default under Section
5.1(a), (b) or (c) or otherwise arising from a failure to make a
required payment of principal on any Notes, (ii) the Indenture Trustee
determines that the proceeds of Receivables will not continue to provide
sufficient funds for the payment of principal of and interest on the
Notes as and when they would have become due if the Notes had not been
declared due and payable and (iii) the Indenture Trustee obtains the
consent of Holders of sixty-six and two-thirds percent of the aggregate
outstanding principal amount of such Notes. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C), the
Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out or deposit such money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.7; and
SECOND: to the Collection Account, for distribution.
SECTION 5.5 OPTIONAL PRESERVATION OF THE TRUST ESTATE. If the
Notes have been declared to be due and payable under Section 5.2(a) following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled in accordance with Section 5.2(b), the Indenture Trustee
may, but need not, elect to take and maintain possession of the Trust Estate.
It is the desire of the parties hereto and the Noteholders that there be at all
times sufficient funds for the payment of principal of and interest on the
Notes, and the Indenture Trustee shall take such desire into account when
determining whether or not to take and maintain possession of the Trust Estate.
In determining whether to take and maintain possession of the Trust Estate, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.6 LIMITATION OF SUITS. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than a majority in principal
amount of the Outstanding Notes have made written request to the Indenture
Trustee to institute such Proceeding in respect of such Event of Default in
its own name as Indenture Trustee
<PAGE>
hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority in principal amount of such Outstanding Notes;
it being understood and intended that no Holder or Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders of Notes or to enforce any right under this Indenture,
except in the manner herein provided and for the equal, ratable (on the basis of
the respective aggregate amount of principal and interest, respectively, due and
unpaid on the Notes held by each Noteholder) and common benefit of all
Noteholders. For the protection and enforcement of the provisions of this
Section 5.6, each and every Noteholder shall be entitled to such relief as can
be given either at law or in equity.
If the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority in principal amount of such Outstanding Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such Note
on or after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, if applicable, on or after the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
SECTION 5.8 RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally to their respective former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee and
the Noteholders shall continue as though no such
<PAGE>
Proceeding had been instituted.
SECTION 5.9 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or omission
of the Indenture Trustee or any Holder of any Note to exercise any right or
remedy accruing upon any Default shall impair any such right or remedy or
constitute a waiver of any such Default or an acquiescence therein. Every right
and remedy given by this Article V or by law to the Indenture Trustee or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11 CONTROL BY NOTEHOLDERS. The Holders of a majority in
principal amount of such Outstanding Notes shall, subject to provision being
made for indemnification against costs, expenses and liabilities in a form
satisfactory to the Indenture Trustee, have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; PROVIDED, HOWEVER, that:
(i) such direction shall not be in conflict with any rule
of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Indenture Trustee to sell or liquidate the Trust Estate
shall be by the Holders of Notes representing 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to Section 5.5, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of
the Notes to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
PROVIDED, HOWEVER, that, subject to Section 6.1, the Indenture Trustee need not
take any action
<PAGE>
that it determines might cause it to incur any liability (a) with respect to
which the Indenture Trustee shall have reasonable grounds to believe that
adequate indemnity against such liability is not assured to it and (b) which
might materially adversely affect the rights of any Noteholders not
consenting to such action.
SECTION 5.12 WAIVER OF PAST DEFAULTS.
(a) Prior to the declaration of the acceleration of the maturity of the
Notes as provided in Section 5.2(a), the Holders of not less than a majority in
principal amount of such Outstanding Notes may waive any past Default and its
consequences except a Default (i) in the payment of principal of or interest on
any of the Notes or (ii) in respect of a covenant or provision hereof which
cannot be modified or amended without the waiver or consent of the Holder of
such outstanding Notes. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Noteholders shall be restored to their respective
former positions and rights hereunder; but no such waiver shall extend to or
affect any subsequent or other Default or impair any right consequent thereto.
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture and for purposes of Section 8.1(a)(ii) of the Sale and
Servicing Agreement; but no such waiver shall extend to or affect any subsequent
or other Default or impair any right consequent thereto.
SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
Proceeding for the enforcement of any right or remedy under this Indenture, or
in any Proceeding against the Indenture Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such Proceeding
of an undertaking to pay the costs of such Proceeding, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such Proceeding, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to:
(a) any Proceeding instituted by the Indenture Trustee;
(b) any Proceeding instituted by any Noteholder, or group of Noteholders,
in each case holding in the aggregate more than 10% in principal amount of such
Outstanding Notes; or
(c) any Proceeding instituted by any Noteholder for the enforcement of the
payment of principal of or interest on any Note on or after the respective due
dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead or in
<PAGE>
any manner whatsoever, claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, that
may adversely affect the covenants or the performance of this Indenture. The
Issuer (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.15 ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.4(b).
SECTION 5.16 PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer agrees to take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by each the Seller and the Servicer of its respective obligations
to the Issuer under or in connection with the Sale and Servicing Agreement and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement to the extent and in the manner directed by the Indenture Trustee,
including the transmission of notices of default on the part of the Seller or
the Servicer thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Seller or the Servicer of
each of its respective obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of at least a majority in principal amount of such Notes then
Outstanding shall, exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller or Servicer under or in connection with the
Sale and Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by each the Seller or Servicer of its
obligations to the Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Sale and Servicing Agreement,
and any right of the Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 DUTIES OF INDENTURE TRUSTEE.
<PAGE>
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and
the Sale and Servicing Agreement and no implied covenants or obligations
shall be read into this Indenture, the Sale and Servicing Agreement or any
other Basic Document against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; PROVIDED, HOWEVER, that the Indenture
Trustee shall examine the certificates and opinions to determine whether or
not they conform to any applicable requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this Section 6.1(c) does not limit the effect of
Section 6.1(b);
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Indenture
Trustee to
<PAGE>
expend or risk its own funds or otherwise incur 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 to believe that
repayments of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(g) The Indenture Trustee shall reimburse the Seller and any
director, officer, employee or agent of the Seller for any contractual
damages, liability or expense incurred by reason of the Indenture Trustee's
willful misfeasance, bad faith or gross negligence (except errors in
judgment) in the performance of its duties under any of the Further Transfer
and Servicing Agreements, or by reason of reckless disregard of its
obligations and duties under any of the Further Transfer and Servicing
Agreements.
(h) Every provision of this Indenture relating to the Indenture
Trustee shall be subject to the provisions of this Section 6.1 and to the
provisions of the TIA.
SECTION 6.2 RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate from the Issuer or an Opinion of Counsel that
such action or omission is required or permissible hereunder. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Indenture Trustee's conduct does
not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
<PAGE>
SECTION 6.3 INDENTURE TRUSTEE MAY OWN NOTES. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer, the Servicer or any of their respective
Affiliates with the same rights it would have if it were not Indenture Trustee;
PROVIDED, HOWEVER, that the Indenture Trustee shall comply with Sections 6.10
and 6.11. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may
do the same with like rights.
SECTION 6.4 INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5 NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder notice of the Default within
60 days after it occurs. Except in the case of a Default in payment of
principal of or interest on any Note, the Indenture Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6 REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver to each Noteholder the information and documents set forth
in Article VII, and, in addition, all such information with respect to the Notes
as may be required, as specified by the Servicer, to enable such Holder to
prepare its federal and state income tax returns.
SECTION 6.7 COMPENSATION; INDEMNITY.
(a) The Issuer shall cause the Servicer pursuant to the Sale and
Servicing Agreement to pay to the Indenture Trustee from time to time such
compensation for its services as shall be agreed upon in writing. The Indenture
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall cause the Servicer pursuant to
the Sale and Servicing Agreement to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall cause the Servicer pursuant to the Sale and Servicing Agreement
to indemnify the Indenture Trustee in accordance with Section 7.2 of the Sale
and Servicing Agreement.
(b) The Issuer's obligations to the Indenture Trustee pursuant to
this Section 6.7 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.1(e) or (f) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States
<PAGE>
Code or any other applicable federal or state bankruptcy, insolvency or
similar law.
SECTION 6.8 REPLACEMENT OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may at any time give notice of its
intent to resign by so notifying the Issuer; PROVIDED, HOWEVER, that no such
resignation shall become effective and the Indenture Trustee shall not resign
prior to the time set forth in Section 6.8(c). The Holders of a majority in
principal amount of such Outstanding Notes may remove the Indenture Trustee
by so notifying the Indenture Trustee and may appoint a successor Indenture
Trustee. Such resignation or removal shall become effective in accordance
with Section 6.8(c). The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
(b) If the Indenture Trustee gives notice of its intent to resign or
is removed or if a vacancy exists in the office of the Indenture Trustee for any
reason (the Indenture Trustee in such event being referred to herein as the
retiring Indenture Trustee), the Issuer shall promptly appoint and designate a
successor Indenture Trustee.
(c) A successor Indenture Trustee shall deliver a written acceptance
of its appointment and designation to the retiring Indenture Trustee and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to Noteholders
and to each of the Rating Agencies. The retiring Indenture Trustee shall
promptly transfer all property held by it as Indenture Trustee to the successor
Indenture Trustee.
(d) If a successor Indenture Trustee does not take office within 60
days after the retiring Indenture Trustee gives notice of its intent to resign
or is removed, the retiring Trustee, the Issuer or the Holders of a majority in
principal amount of such Outstanding Notes may petition any court of competent
jurisdiction for the appointment and designation of a successor Indenture
Trustee.
(e) If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder
<PAGE>
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
(f) Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section 6.8, the Issuer's obligations under Section 6.7 and
the Servicer's corresponding obligations under the Sale and Servicing
Agreement shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9 MERGER OR CONSOLIDATION OF INDENTURE TRUSTEE.
(a) Any corporation into which the Indenture Trustee may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Indenture Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee under this Indenture; PROVIDED,
HOWEVER, that such corporation shall be eligible under the provisions of Section
6.11, without the execution or filing of any instrument or any further act on
the part of any of the parties to this Indenture, anything in this Indenture to
the contrary notwithstanding. Following such merger or consolidation, the
successor Indenture Trustee shall mail a notice of such merger or consolidation
to each of the Rating Agencies.
(b) If at the time such successor or successors by merger or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture, any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee. In all such cases such certificate of
authentication shall have the same full force as is provided anywhere in the
Notes or herein with respect to the certificate of authentication of the
Indenture Trustee.
SECTION 6.10 APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE
INDENTURE TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate or any Financed Vehicle may at the time be
located, the Indenture Trustee shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee
or co-trustees, or separate trustee or separate trustees, of all or any part
of the Trust Estate, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders and (only to the extent expressly
provided herein) the Certificateholders, such title to the Trust Estate, or
any part hereof, and, subject to the other provisions of this Section 6.10,
such powers, duties, obligations, rights and trusts as the Indenture Trustee
may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11 and no notice to Noteholders of the
<PAGE>
appointment of any co-trustee or separate trustee shall be required under
Section 6.8.
(b) Every 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 Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture 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 Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture 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 Estate 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
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee 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 Indenture
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 Indenture and
the conditions of this Article VI. 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
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture 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 Indenture 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 Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
<PAGE>
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION.
(a) The Indenture Trustee shall at all times satisfy the
requirements of TIA Section 310(a) and Section 26(a)(1) of the Investment
Company Act. The Indenture Trustee shall have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual
report of condition. The Indenture Trustee shall comply with TIA Section
310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
(b) If a Default occurs and is continuing, and the Indenture Trustee
is deemed to have a conflicting interest as a result of acting as trustee for
both the Class A Notes and the Class B Notes, the Issuer shall appoint a
successor Indenture Trustee for one or both of such classes, so that there will
be separate Indenture Trustees for the Class A Notes and the Class B Notes. No
such event shall alter the voting rights of the Class A Noteholders or Class B
Noteholders under this Indenture or any other Basic Document. However, so long
as any amounts remain unpaid with respect to the Class A Notes, only the
Indenture Trustee for the Class A Noteholders will have the right to exercise
remedies under this Indenture (but subject to the express provisions of Section
5.4 and to the right of the Class B Noteholders to receive their share of any
proceeds of enforcement, subject to the subordination of the Class B Notes to
the Class A Notes as described herein) to make deposits to and withdrawals from
the Accounts, hold Account Property and to make distributions to Noteholders
from the Note Distribution Account. Upon repayment of the Class A Notes in
full, all rights to exercise remedies under the Indenture will transfer to the
Indenture Trustee for the Class B Notes.
(c) In the case of the appointment hereunder of a successor Indenture
Trustee with respect to any class of Notes, the Issuer, the retiring Indenture
Trustee and the successor Indenture Trustee with respect to such class of Notes
shall execute and deliver an indenture supplemental hereto wherein the successor
Indenture Trustee shall accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, the successor Indenture Trustee all the rights, powers, trusts and
duties of the retiring Indenture Trustee with respect to the Notes of the class
to which the appointment of such successor Indenture Trustee relates, (ii) if
the retiring Indenture Trustee is not retiring with respect to all classes of
Notes, shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the retiring
Indenture Trustee with respect to the Notes of each class as to which the
retiring Indenture Trustee is not retiring shall continue to be vested in the
retiring Indenture Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Indenture Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Indenture Trustees co-trustees of the same trust and that each
such Indenture Trustee shall be trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any other
<PAGE>
such Indenture Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Indenture
Trustee shall become effective to the extent provided therein.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13 REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE.
The Indenture Trustee represents and warrants as of the Closing Date that:
(a) the Indenture Trustee is a [New York banking corporation] duly
organized, validly existing and in good standing under the laws of the [State of
New York] and the eligibility requirements set forth in Section 6.11 are
satisfied with respect to the Indenture Trustee;
(b) the Indenture Trustee has full power, authority and legal right
to execute, deliver and perform this Indenture, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Indenture;
(c) the execution, delivery and performance by the Indenture Trustee
of this Indenture (i) shall not violate any provision of any law or regulation
governing the banking and trust powers of the Indenture Trustee or any order,
writ, judgment or decree of any court, arbitrator, or governmental authority
applicable to the Indenture Trustee or any of its assets, (ii) shall not violate
any provision of the corporate charter or by-laws of the Indenture Trustee or
(iii) shall not violate any provision of, or constitute, with or without notice
or lapse of time, a default under, or result in the creation or imposition of
any lien on any properties included in the Trust Estate pursuant to the
provisions of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could reasonably be
expected to have a materially adverse effect on the Indenture Trustee's
performance or ability to perform its duties under this Indenture or on the
transactions contemplated in this Indenture;
(d) the execution, delivery and performance by the Indenture Trustee
of this Indenture shall not require the authorization, consent or approval of,
the giving of notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of the Indenture Trustee; and
(e) this Indenture has been duly executed and delivered by the
Indenture Trustee and constitutes the legal, valid and binding agreement of the
Indenture Trustee, enforceable in accordance with its terms.
<PAGE>
SECTION 6.14 INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF NOTES. All rights of action and claims under this Indenture or
the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name as Indenture Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee,
its agents and counsel, be for the ratable benefit of the Noteholders and
(only to the extent expressly provided herein) the Certificateholders in
respect of which such judgment has been obtained.
SECTION 6.15 SUIT FOR ENFORCEMENT. If an Event of Default shall
occur and be continuing, the Indenture Trustee in its discretion may, subject to
the provisions of Section 6.1, proceed to protect and enforce its rights and the
rights of the Noteholders under this Indenture by a Proceeding whether for the
specific performance of any covenant or agreement contained in this Indenture or
in aid of the execution of any power granted in this Indenture or for the
enforcement of any other legal, equitable or other remedy as the Indenture
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Indenture Trustee or the Noteholders.
SECTION 6.16 RIGHTS OF NOTEHOLDERS TO DIRECT INDENTURE TRUSTEE.
Holders of Notes evidencing not less than a majority in principal of the
Outstanding Notes shall have the right to direct in writing the time, method
and place of conducting any Proceeding for any remedy available to the
Indenture Trustee or exercising any trust or power conferred on the Indenture
Trustee; PROVIDED, HOWEVER, that subject to Section 6.1, the Indenture
Trustee shall have the right to decline to follow any such direction if the
Indenture Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Indenture Trustee in good faith
shall, by a Responsible Officer, determine that the proceedings so directed
would be illegal or subject it to personal liability or be unduly prejudicial
to the rights of Noteholders not parties to such direction; and PROVIDED,
FURTHER, that nothing in this Indenture shall impair the right of the
Indenture Trustee to take any action deemed proper by the Indenture Trustee
and which is not inconsistent with such direction by the Noteholders.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS. The Issuer shall furnish or cause to be furnished
by the Servicer to the Indenture Trustee (a) not more than five days before
each Distribution Date, a list, in such form as the Indenture Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
the close of business on the Record Date, and (b) at such other times as the
Indenture Trustee may request in writing, within 14 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date
not more than 10 days prior to the time such list is furnished; PROVIDED,
HOWEVER, that so long as the Indenture Trustee is the Note Registrar, no such
<PAGE>
list shall be required to be furnished.
SECTION 7.2 PRESERVATION OF INFORMATION, COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.3 REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA Section
313(c)) such summaries of any information, documents and reports required
to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.3(a) as may be required by rules and regulations prescribed from time to
time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall
<PAGE>
end on [December 31] of such year.
SECTION 7.4 REPORTS BY INDENTURE TRUSTEE.
(a) If required by TIA Section 313(a), within 60 days after each
________, beginning with _________, ____, the Indenture Trustee shall mail to
each Noteholder as required by TIA Section 313(c) a brief report dated as of
such date that complies with TIA Section 313(a). The Indenture Trustee also
shall comply with TIA Section 313(b). A copy of any report delivered pursuant
to this Section 7.4(a) shall, at the time of its mailing to Noteholders, be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
(b) On each Distribution Date, the Indenture Trustee shall include
with each payment to each Noteholder a copy of the statement for the related
Monthly Period as required pursuant to Section 4.7 of the Sale and Servicing
Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The
Indenture Trustee shall apply all such money received by it as provided in this
Indenture and the Sale and Servicing Agreement. Except as otherwise expressly
provided in this Indenture or in Article III of the Sale and Servicing
Agreement, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of the Trust Estate, the
Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim
an Event of Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.2 ACCOUNTS; PAYMENTS.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Securityholders, the Accounts as provided in Article IV of
the Sale and Servicing Agreement.
(b) On each Deposit Date, the Indenture Trustee shall cause all
withdrawals, deposits, transfers and distributions provided for in Section
4.5(b) of the Sale and Servicing Agreement to be made. On each Deposit Date,
the Indenture Trustee shall make the distributions from the Collection Account
provided for in Section 4.5(c) of the Sale and Servicing Agreement.
<PAGE>
(c) On each Distribution Date, the Indenture Trustee shall distribute
all amounts on deposit in the Note Distribution Account, to the Noteholders to
the extent of amounts due and unpaid on the Notes for principal and interest, in
the following amounts, and in the following order of priority:
(i) (A) first, to accrued and unpaid interest on the Class
A Notes; PROVIDED, HOWEVER, that if there are not sufficient funds in the
Note Distribution Account to pay the entire amount of accrued and unpaid
interest then due on the Class A Notes, the amount in the Note Distribution
Account shall be applied to the payment of such interest on each Note of
each class of the Class A Notes pro rata on the basis of the respective
aggregate amount of interest due on each such class of Class A Notes; and
(B) second, unless otherwise provided in clause (iv) below, to accrued and
unpaid interest on the Class B Notes; PROVIDED, HOWEVER, that if there are
not sufficient funds in the Note Distribution Account (after the payment of
all accrued and unpaid interest on the Class A Notes) to pay the entire
amount of accrued and unpaid interest then due on the Class B Notes, the
amount in the Note Distribution Account shall be applied to the payment of
such interest on each of the Class B Notes pro rata on the basis of the
aggregate amount of interest due on each such Class B Note;
(ii) unless otherwise provided in clause (iii) or (iv)
below, the Principal Payment Amount shall be applied on each Distribution
Date, as follows:
(A) first, 100% to principal of the Class A-1 Notes until
the Class A-1 Notes are paid in full;
(B) second, 100% of any amount remaining after application
pursuant to clause (A), to principal of the Class B Notes, until
the principal balance of the Class B Notes has been reduced to
$__________; and
(C) thereafter, ___% of the Principal Payment Amount
remaining after the application pursuant to clauses (A) and (B),
to principal of the Class A Notes (all of which shall be paid to
principal of the Class A-2 Notes until paid in full, then to
principal of the Class A-3 Notes until paid in full, and then to
principal of the Class A-4 Notes until paid in full) and ___% of
any amount remaining after the application pursuant to Clauses
(A) and (B), to principal of the Class B Notes; and
(iii) if the amount on deposit in the Reserve Account on any
Distribution Date would be, after giving effect to the distribution of the
Principal Payment Amount in accordance with the foregoing priorities, less
than ___% of the Aggregate Starting Receivables Balance, then on each
Distribution Date thereafter until
<PAGE>
either the Class A Notes are paid in full or the amount on deposit in
the Reserve Account equals or exceeds the Specified Reserve Account
Balance, 100% of the Principal Payment Amount to principal of the Class
A Notes (all of which shall be paid to principal of the Class A-1 Notes
until paid in full, then to principal of the Class A-2 Notes until paid
in full, then to principal of the Class A-3 Notes until paid in full,
and then to principal of the Class A-4 Notes until paid in full). Until
the Class A Notes are paid in full, and thereafter, 100% of the
Principal Payment Amount to principal of the Class B Notes; provided
that if principal payments on the Class B Notes resume in accordance
with the preceding sentence while Class A Notes remain outstanding, the
Principal Payment Amount for such Distribution Date shall be distributed
in accordance with Section 8.2(c)(ii)(C) hereof until the Class A-4
Notes have been paid in full, and thereafter 100% of the Principal
Payment Amount for such Distribution Date shall be paid to the Class B
Notes until the Class B Notes are paid in full;
(iv) if the Notes have been declared immediately due and
payable as provided in Section 5.2(a) following the occurrence of an Event
of Default or if any Notes remain unpaid after the applicable Final
Scheduled Payment Date, until such time as the Class A Notes have been paid
in full and this Indenture has been discharged with respect to the Class A
Notes, any amounts remaining in the Note Distribution Account on any
Distribution Date after the application described in Section 8.2(c)(i) (A)
shall be applied in the following priority: (1) to the repayment of
principal on each of the Class A Notes pro rata on the basis of the
respective unpaid principal amount of each such Class A Note; (2) to the
repayment of interest on each of the Class B Notes pro rata on the basis of
the amount of interest due and unpaid on each such Class B Note; and (3) to
the repayment of principal on each of the Class B Notes pro rata on the
basis of the unpaid principal amount of each such Class B Note.
SECTION 8.3 GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) Subject to Section 6.1(c), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.
(b) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Accounts to the Indenture Trustee by
11:00 a.m., New York City time (or such other time as may be agreed by the
Servicer and the Indenture Trustee) on any Business Day; or (ii) a Default shall
have occurred and be continuing with respect to the Notes but the Notes shall
not have been declared due and payable pursuant to Section 5.2(a), or, if such
Notes shall have been declared due and payable following an Event of Default,
but amounts collected or receivable from the Trust Estate are being applied in
accordance with Section 5.5 as if there
<PAGE>
had not been such a declaration, then the Indenture Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Accounts in one
or more Eligible Investments selected by the Indenture Trustee.
SECTION 8.4 RELEASE OF TRUST ESTATE.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.7, the Indenture Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property in the Trust
Estate from the lien of this Indenture, or convey the Indenture Trustee's
interest in the same, in a manner and under circumstances that are consistent
with the provisions of this Indenture. No party relying upon an instrument
executed by the Indenture Trustee as provided in this Article VIII shall be
bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due to the Indenture Trustee pursuant to
Section 6.7 have been paid, notify the Issuer thereof in writing and upon
receipt of an Issuer Request, release any remaining portion of the Trust
Estate that secured the Notes from the lien of this Indenture and release to
the Issuer or any other Person entitled thereto any funds then on deposit in
the Note Distribution Account. The Indenture Trustee shall (i) release any
remaining portion of the Trust Estate that secured the Certificates from the
lien of this Indenture and (ii) deposit in the Certificate Distribution
Account or pay as otherwise required by the Trust Agreement any funds then on
deposit in the Reserve Account or the Collection Account only at such time as
(y) there are no Notes Outstanding and (z) all sums due to the Indenture
Trustee pursuant to Section 6.7 have been paid.
SECTION 8.5 OPINION OF COUNSEL. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such
action shall not materially and adversely impair the security for the Notes
or the rights of the Noteholders in contravention of the provisions of this
Indenture; PROVIDED, HOWEVER, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate.
Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
<PAGE>
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the TIA as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
additional property to the lien of this Indenture;
(ii) to evidence the succession, in compliance with Section
3.10 and the applicable provisions hereof, of another Person to the Issuer,
and the assumption by any such successor of the covenants of the Issuer
contained herein and in the Notes;
(iii) to add to the covenants of the Issuer for the benefit
of the Securityholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity or to correct or supplement any
provision herein or in any supplemental indenture which may be inconsistent
with any other provision herein, in any supplemental indenture or in any
other Basic Document;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor or additional Indenture Trustee with
respect to the Notes or any class thereof and to add to or change any of
the provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant
to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as may
be expressly required by the TIA, and the Indenture Trustee is hereby
authorized to join in the execution of any such supplemental indenture and
to make any further appropriate agreements and stipulations that may be
therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Noteholders but with
prior notice to the Rating Agencies, at any time and from time to time enter
into one or more indentures supplemental hereto for the purpose of adding any
provisions to, changing in any manner, or eliminating any of
<PAGE>
the provisions of, this Indenture or modifying in any manner the rights of
the Noteholders under this Indenture; PROVIDED, HOWEVER, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
(a) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, also may, with prior notice to the Rating Agencies and with the
consent of the Holders of not less than a majority of the Outstanding Notes of
the related Series, by Act of such Holders delivered to the Issuer and the
Indenture Trustee, enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, changing in any manner, or eliminating
any of the provisions of, this Indenture or modifying in any manner the rights
of the Noteholders under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(i) change the due date of any instalment of principal of
or interest on any Note, or reduce the principal amount thereof, the
interest rate applicable thereto, or the Redemption Price with respect
thereto, change any place of payment where, or the coin or currency in
which, any Note or any interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the aggregate amount of the
Outstanding Notes of such Series, the consent of the Holders of which is
required for (a) any such supplemental indenture, (b) any waiver of
compliance with certain provisions of this Indenture, certain defaults
hereunder and their consequences as provided for in this Indenture or (c)
any action described in Sections 2.12, 3.7(e), 5.2, 5.6, 5.11, 5.12(a),
6.8, or 6.16;
(iii) modify or alter the provisions of this Indenture
regarding the voting of Notes held by the related Trust, any other obligor
on such Notes, the Seller or an affiliate of any of them;
(iv) reduce the percentage of the aggregate Outstanding
Amount of such Notes required to direct the Indenture Trustee to sell or
liquidate the Trust Estate pursuant to Section 5.4 if the proceeds of such
sale would be insufficient to pay the principal amount of and accrued but
unpaid interest on the Outstanding Notes;
(v) modify any provision of this Section 9.2 to decrease
the required
<PAGE>
minimum percentage necessary to approve any amendments to any provisions
of this Indenture or any of the Basic Documents;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date (including
the calculation of any of the individual components of such calculation),
or modify or alter the provisions of the Indenture regarding the voting of
Notes held by the Issuer, the Seller or any Affiliate of either of them; or
(vii) permit the creation of any Lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject to
the lien of this Indenture or deprive the Holder of any Note of the
security afforded by the lien of this Indenture.
(b) The Indenture Trustee may in its discretion determine whether or
not any Notes would be affected (such that the consent of each Noteholder would
be required) by any supplemental indenture proposed pursuant to this Section 9.2
and any such determination shall be conclusive and binding upon all of the
Noteholders, whether authenticated and delivered thereunder before or after the
date upon which such supplemental indenture becomes effective. The Indenture
Trustee shall not be liable for any such determination made in good faith.
(c) It shall be sufficient if an Act of Noteholders approves the
substance, but not the form, of any proposed supplemental indenture.
(d) Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section 9.2, the
Indenture Trustee shall mail to the Noteholders to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and that all conditions precedent to
such execution have been satisfied. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution
of any
<PAGE>
supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so
long as this Indenture shall then be qualified under the TIA.
SECTION 9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes of the same class.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 REDEMPTION.
(a) The Class A-4 Notes and Class B Notes are subject to redemption
in whole, but not in part, upon the exercise by the Servicer of its option to
purchase the Receivables pursuant to Section 9.2 of the Sale and Servicing
Agreement. Such redemption shall occur on any Distribution Date after all Class
A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid in full.
The purchase price for the Class A-4 Notes and Class B Notes to be redeemed
shall be equal to the applicable Redemption Price, provided the Issuer has
available funds sufficient to pay such amount. The Issuer shall furnish the
Rating Agencies notice of such redemption. If the Class A-4 Notes and Class B
Notes are to be redeemed pursuant to this Section 10.1(a), the Issuer shall
furnish notice thereof to the Indenture Trustee not later than 10 days prior to
the Redemption Date and the Issuer shall deposit into the Note Distribution
Account, before the Redemption Date, the aggregate Redemption Price of the Class
A-4 Notes and Class B Notes to be redeemed, whereupon all such Notes shall be
due and payable on the Redemption Date.
<PAGE>
(b) [Reserved.]
(c) Within sixty days after the redemption in full pursuant to this
Section 10.1 of any class of Notes, the Indenture Trustee shall provide each of
the Rating Agencies with written notice stating that all of such Notes have been
redeemed.
SECTION 10.2 FORM OF REDEMPTION NOTICE.
(a) Notice of redemption of the Class A-4 Notes and Class B Notes
under Section 10.1(a) shall be given by the Indenture Trustee by first-class
mail, postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of the Class A-4 Notes and Class B Notes of
record, respectively, at such Noteholder's address appearing in the Note
Register.
(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where Class A-4 Notes and Class B Notes are
to be surrendered for payment of the Redemption Price (which shall be the
Agency Office of the Indenture Trustee to be maintained as provided in
Section 3.2); and
(c) Notice of redemption of the Class A-4 Notes and Class B Notes
shall be given by the Indenture Trustee in the name and at the expense of the
Issuer. Failure to give notice of redemption, or any defect therein, to any
Holder of any Class A-4 Note or Class B Note to be redeemed shall not impair or
affect the validity of the redemption of any other Class A-4 Note or Class B
Note to be redeemed.
SECTION 10.3 NOTES PAYABLE ON REDEMPTION DATE. The Class A Notes or
Class B Notes to be redeemed shall, following notice of redemption as required
by Section 10.2, on the Redemption Date cease to be Outstanding for purposes of
this Indenture and shall thereafter represent only the right to receive the
applicable Redemption Price and (unless the Issuer shall default in the payment
of such Redemption Price) no interest shall accrue on such Redemption Price for
any period after the date to which accrued interest is calculated for purposes
of calculating such Redemption Price.
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee: (i) an Officer's Certificate stating
that all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the applicable
requirements of this Section 11.1, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the judgment of each such
signatory, such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit with the Indenture Trustee of any
Collateral or other property or securities that is to be made the basis for
the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.1(a) or elsewhere in this Indenture, furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
Person signing such certificate as to the fair value (within 60 days of
such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (b)(i)
above, the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to the
Issuer of the securities to be so deposited and of all other such
securities made on the basis of any
<PAGE>
such withdrawal or release since the commencement of the then current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (b)(ii), is 10% or more of
the Outstanding Amount of the Notes, but such a certificate need not be
furnished with respect to any securities so deposited if the fair value
thereof to the Issuer as set forth in the related Officer's Certificate
is less than $25,000 or less than one percent of the Outstanding Amount
of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidating Receivables, whenever any property or securities
are to be released from the lien of this Indenture, the Issuer shall also
furnish to the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of each Person signing such certificate as to the fair
value (within 60 days of such release) of the property or securities
proposed to be released and stating that in the opinion of such Person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signatory thereof as to the matters described in clause
(b)(iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than Purchased
Receivables and Liquidating Receivables, or securities released from the
lien of this Indenture since the commencement of the then current calendar
year, as set forth in the certificates required by clause (b)(iii) above
and this clause (b)(iv), equals 10% or more of the Outstanding Amount of
the Notes, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth in
the related Officer's Certificate is less than $25,000 or less than one
percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of
this Section 11.1, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Receivables as and to the extent permitted or required by the
Basic Documents, (B) make cash payments out of the Accounts as and to the
extent permitted or required by the Basic Documents and (C) take any other
action not inconsistent with the TIA.
SECTION 11.2 FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person
<PAGE>
may certify or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Servicer, the Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller, the Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders or a class of Noteholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Noteholders in
person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 11.3.
<PAGE>
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes (or any one or more
predecessor Notes) shall bind the Holder of every Note issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Indenture Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Note.
SECTION 11.4 NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with the Indenture
Trustee, the Issuer or the Rating Agencies under this Indenture shall be made
upon, given or furnished to or filed with such party as specified in Section
10.5 to the Sale and Servicing Agreement.
SECTION 11.5 NOTICES TO NOTEHOLDERS; WAIVER.
(a) Where this Indenture provides for notice to Noteholders of any
condition or event, such notice shall be given as specified in Section 10.5 of
the Sale and Servicing Agreement.
(b) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute an Event of
Default.
SECTION 11.6 ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer shall furnish to the
<PAGE>
Indenture Trustee a copy of each such agreement and the Indenture Trustee shall
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.7 CONFLICT WITH TRUST INDENTURE ACT.
(a) If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Indenture by
any of the provisions of the TIA, such required provision shall control.
(b) The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9 SUCCESSORS AND ASSIGNS.
(a) All covenants and agreements in this Indenture and the Notes by
the Issuer shall bind its successors and assigns, whether so expressed or not.
(b) All covenants and agreements of the Indenture Trustee in this
Indenture shall bind its successors and assigns, whether so expressed or not.
SECTION 11.10 SEPARABILITY. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the Noteholders and the Note Owners and
(only to the extent expressly provided herein) the Certificateholders, any other
party secured hereunder and any other Person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 LEGAL HOLIDAYS. If the date on which any payment is
due shall not be a Business Day, then (notwithstanding any other provision of
the Notes or this Indenture) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date on which nominally due, and
<PAGE>
no interest shall accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
SECTION 11.14 COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 RECORDING OF INDENTURE. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16 NO RECOURSE. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against:
(i) the Indenture Trustee or the Owner Trustee in its individual
capacity;
(ii) any owner of a beneficial interest in the Issuer; or
(iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in their
individual capacities, any holder of a beneficial interest in the Issuer,
the Owner Trustee or the Indenture Trustee or of any successor or assign of
the Indenture Trustee or the Owner Trustee in their individual capacities
(or any of their successors or assigns), except as any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacities) and
except that any such partner, owner or beneficiary shall be fully liable,
to the extent provided by applicable law, for any unpaid consideration for
stock, unpaid capital contribution or failure to pay any instalment or call
owing to such entity. For all purposes of this Indenture, in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 NO PETITION. The Indenture Trustee, by entering into
this Indenture, and each Noteholder and Note Owner, by accepting a Note (or
interest therein) issued hereunder, hereby covenant and agree that they shall
not, prior to the date which is one year and
<PAGE>
one day after the termination of this Indenture with respect to the Issuer
pursuant to Section 4.1, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 11.18 INSPECTION. The Issuer agrees that, on reasonable
prior notice, it shall permit any representative of the Indenture Trustee,
during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees and Independent certified
public accountants, all at such reasonable times and as often as may be
reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
FIRST SECURITY AUTO OWNER TRUST 19-__
By: __________________________________,
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------------
Name:
Title:
_____________________,
as Indenture Trustee
By:
- -----------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared _____________, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said First Security Auto
Owner Trust 19-__, a Delaware business trust, and that he executed the same as
the act of said business trust for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ___ day of
__________, ____.
-----------------------------------------------
Notary Public in and for the State of New York.
My commission expires:
____________________________
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ______________, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said ________________, a
_________________________, and that she executed the same as the act of said
national banking corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ___ day of
___________, ____.
_______________________________________________
Notary Public in and for the State of New York.
My commission expires:
____________________________
<PAGE>
EXHIBIT A
LOCATIONS OF
SCHEDULE OF RECEIVABLES
The SCHEDULE OF RECEIVABLES is on file at the offices of:
1. The Indenture Trustee
2. The Owner Trustee
3. First Security Bank, N.A.
<PAGE>
EXHIBIT B
REGISTERED $____________(1)
No. R-__
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. __________
Unless this Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Issuer or its agent for registration of transfer,
exchange or payment, and any Note issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRST SECURITY AUTO OWNER TRUST 19-__
CLASS ___ _____% ASSET BACKED NOTES
FIRST SECURITY AUTO OWNER TRUST 19-__,a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _______________ DOLLARS ($_________)
payable in accordance with the Indenture, prior to the occurrence of an Event of
Default and a declaration that the Notes are due and payable, on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction, the numerator of which is the initial principal amount hereof and the
denominator of which is [AGGREGATE PRINCIPAL AMOUNT FOR CLASS] by (ii) the
aggregate amount, if any, payable from the
- ------------------------
(1) Denominations of $1,000 and integral multiples thereof.
<PAGE>
Note Distribution Account in respect of principal on such class of Notes
pursuant to Sections 2.7, 3.1 and 8.2 of the Indenture; PROVIDED, HOWEVER,
that the entire unpaid principal amount of this Note shall be due and payable
on ______________ (the "FINAL SCHEDULED DISTRIBUTION DATE"). The Issuer
shall pay interest on this Note at the rate per annum shown above on each
Distribution Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date). Interest on this Note will accrue
for each Distribution Date from and including the most recent Distribution
Date on which interest has been paid to but excluding the then current
Distribution Date or, if no interest has yet been paid, from _________, ____.
Interest will be calculated on the actual number of days elapsed from the
most recent Distribution Date on which interest has been paid (or the Closing
Date, in the case of the initial Distribution Date) to but excluding the then
current Distribution Date divided by 360. Such principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America which, at the time of payment, is
legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Note shall be applied first to interest due
and payable on this Note as provided above and then to the unpaid principal
of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: FIRST SECURITY AUTO OWNER
TRUST 19-__,
By:
____________________________,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By: ______________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
__________________________, not in its
individual capacity but solely as Indenture
Trustee
By: _________________________
Name:
Title:
<PAGE>
REVERSE OF NOTE
This Note, designated as a Class ____ ____% Asset Backed Note, is
one of a duly authorized issue of Notes of the Issuer (herein called the
"NOTES"), all issued under an Indenture, dated as of ____________, ____ (such
Indenture, as supplemented or amended, is herein called the "INDENTURE"),
between the Issuer and __________________, a _____________________, as
trustee (the "INDENTURE TRUSTEE", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Notes are governed by and subject to all terms of the
Indenture (which terms are incorporated herein and made a part hereof), to
which Indenture the holder of this Note by virtue of acceptance hereof
assents and by which such holder is bound. All capitalized terms used and
not otherwise defined in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or
pursuant to the Indenture.
The Indenture secures (a) first, the payment of principal and
interest on, and any other amounts owing in respect of the Class A Notes,
equally and ratably without prejudice, priority or distinction and (b)
second, the payment of principal of and interest on, and any other amounts
owing in respect of the Class B Notes, equally and ratably without prejudice,
priority or distinction, and to secure compliance with the provisions of the
Indenture, as provided therein.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in their individual capacities, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director
or employee of the Indenture Trustee or the Owner Trustee in their individual
capacities, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in their individual capacities, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacities) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to pay
any instalment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that by accepting the benefits of the Indenture such Noteholder will not,
prior to the date which is one year and one day after the
<PAGE>
termination of this Indenture with respect to the Issuer, acquiesce, petition
or otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note
Owner, a beneficial interest in a Note, unless otherwise required by appropriate
taxing authorities, agrees to treat the Notes as indebtedness secured by the
Receivables for the purpose of federal income taxes, state and local income and
franchise taxes, and any other taxes imposed upon, measured by or based upon
gross or net income.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Holders of Notes representing a majority of the
Outstanding Notes of the related Series. The Indenture also contains provisions
permitting the Holders of Notes representing a majority of the Outstanding Notes
of the related Series, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one of more Predecessor Notes) shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Noteholders.
The term "ISSUER" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
<PAGE>
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the Indenture
Trustee nor the Owner Trustee in their respective individual capacities, any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns, shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal of or interest on, or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in this Note or the Indenture, it being expressly understood that said
covenants, obligations and indemnifications have been made by the Owner Trustee
solely as the Owner Trustee in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; PROVIDED, HOWEVER, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
_________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________________, as attorney, to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.
Dated:__________________ __________________________________(2)
Signature Guaranteed:
_________________________ __________________________________
- -----------------------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
REGISTERED $____________(1)
No. R-__
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. __________
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the
Issuer or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRST SECURITY AUTO OWNER TRUST 19-__
CLASS ___ _____% ASSET BACKED NOTES
FIRST SECURITY AUTO OWNER TRUST 19-__, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _______________ DOLLARS ($_________)
payable in accordance with the Indenture, prior to the occurrence of an Event of
Default and a declaration that the Notes are due and payable, on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction, the numerator of which is the initial principal amount hereof and the
denominator of which is [AGGREGATE PRINCIPAL AMOUNT FOR CLASS] by (ii) the
aggregate amount, if any, payable from the Note Distribution Account in respect
of principal on such class of Notes pursuant to Sections 2.7,
- ------------------------
<PAGE>
3.1 and 8.2 of the Indenture; PROVIDED, HOWEVER, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of
______________ (the "FINAL SCHEDULED DISTRIBUTION DATE") and the Redemption
Date, if any, pursuant to Section 10.1(a) of the Indenture. The Issuer shall
pay interest on this Note at the rate per annum shown above on each
Distribution Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date). Interest on this Note will accrue
for each Distribution Date from and including the most recent Distribution
Date on which interest has been paid to but excluding the then current
Distribution Date or, if no interest has yet been paid, from and including
____________, ____. Interest will be computed on the basis of a 360-day year
of twelve 30-day months (or, in the case of the initial Distribution Date,
12/30ths of a month). Such principal of and interest on this Note shall be
paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: FIRST SECURITY AUTO OWNER
TRUST 19-__,
By:
______________________________
,not in its individual
capacity but solely as Owner
Trustee under the Trust
Agreement
By: ______________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
_________________________
, not in its individual
capacity but solely as
Indenture Trustee
By: _________________________
Name:
Title:
<PAGE>
REVERSE OF NOTE
This Note, designated as a Class ____ ____% Asset Backed Note, is
one of a duly authorized issue of Notes of the Issuer (herein called the
"NOTES"), all issued under an Indenture, dated as of ____________, ____ (such
Indenture, as supplemented or amended, is herein called the "INDENTURE"),
between the Issuer and ___________________, a _____________________, as
trustee (the "INDENTURE TRUSTEE", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Notes are governed by and subject to all terms of the
Indenture (which terms are incorporated herein and made a part hereof), to
which Indenture the holder of this Note by virtue of acceptance hereof
assents and by which such holder is bound. All capitalized terms used and
not otherwise defined in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or
pursuant to the Indenture.
The Indenture secures (a) first, the payment of principal and
interest on, and any other amounts owing in respect of the Class A Notes,
equally and ratably without prejudice, priority or distinction and (b)
second, the payment of principal of and interest on, and any other amounts
owing in respect of the Class B Notes, equally and ratably without prejudice,
priority or distinction, and to secure compliance with the provisions of the
Indenture, as provided therein.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in their individual capacities, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director
or employee of the Indenture Trustee or the Owner Trustee in their individual
capacities, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in their individual capacities, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacities) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to pay
any instalment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that by accepting the benefits of the Indenture such Noteholder will not,
prior to the date which is one year and one day after the
<PAGE>
termination of this Indenture with respect to the Issuer, acquiesce, petition
or otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note
Owner, a beneficial interest in a Note, unless otherwise required by appropriate
taxing authorities, agrees to treat the Notes as indebtedness secured by the
Receivables for the purpose of federal income taxes, state and local income and
franchise taxes, and any other taxes imposed upon, measured by or based upon
gross or net income.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Holders of Notes representing a majority of the
Outstanding Notes of the related Series. The Indenture also contains provisions
permitting the Holders of Notes representing a majority of the Outstanding Notes
of the related Series, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one of more Predecessor Notes) shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Noteholders.
The term "ISSUER" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
<PAGE>
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the Indenture
Trustee nor the Owner Trustee in their respective individual capacities, any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns, shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal of or interest on, or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in this Note or the Indenture, it being expressly understood that said
covenants, obligations and indemnifications have been made by the Owner Trustee
solely as the Owner Trustee in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; PROVIDED, HOWEVER, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
_________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________________, as attorney, to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.
Dated:__________________ __________________________________(2)
Signature Guaranteed:
_________________________ __________________________________
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(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
<PAGE>
EXHIBIT D
FORM OF NOTE DEPOSITORY AGREEMENT
<PAGE>
EXHIBIT 4.4
TRUST AGREEMENT
BETWEEN
FIRST SECURITY BANK, N.A.
SELLER
AND
___________________________________ , AS
OWNER TRUSTEE
DATED AS OF ______________, ____
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 PURPOSES AND POWERS. . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 APPOINTMENT OF OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . 6
2.5 INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE . . . . . . . . 6
2.6 DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 LIABILITY OF THE CERTIFICATEHOLDERS. . . . . . . . . . . . . . . . 7
2.8 TITLE TO TRUST PROPERTY. . . . . . . . . . . . . . . . . . . . . . 7
2.9 SITUS OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . . . . . 7
ARTICLE III. THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 INITIAL CERTIFICATE OWNERSHIP. . . . . . . . . . . . . . . . . . . 9
3.2 FORM OF THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 9
3.3 EXECUTION, AUTHENTICATION AND DELIVERY . . . . . . . . . . . . . . 9
3.4 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. . . . . . . . . 11
3.6 PERSONS DEEMED CERTIFICATEHOLDERS. . . . . . . . . . . . . . . . . 12
3.7 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. . . . . 12
3.8 MAINTENANCE OF CORPORATE TRUST OFFICE. . . . . . . . . . . . . . . 12
3.9 APPOINTMENT OF PAYING AGENT. . . . . . . . . . . . . . . . . . . . 12
3.10 SELLER AS CERTIFICATEHOLDER . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV. ACTIONS BY OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . 13
4.1 PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN
MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN MATTERS . . . 14
4.3 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO BANKRUPTCY. . . . . . 14
4.4 RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. . . . . . . . . . . . . 14
4.5 MAJORITY CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V. APPLICATION OF TRUST FUNDS; CERTAIN DUTIES. . . . . . . . . . . . 15
5.1 ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT. . . . . . . . . 15
5.2 APPLICATION OF TRUST FUNDS . . . . . . . . . . . . . . . . . . . . 15
5.3 METHOD OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDERS, THE INTERNAL
REVENUE SERVICE AND OTHERS . . . . . . . . . . . . . . . . . . . . 16
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<PAGE>
5.5 SIGNATURE ON RETURNS . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI. THE OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 DUTIES OF OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . . 17
6.2 RIGHTS OF OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . . 18
6.3 ACCEPTANCE OF TRUSTS AND DUTIES. . . . . . . . . . . . . . . . . . 18
6.4 ACTION UPON INSTRUCTION BY CERTIFICATEHOLDERS. . . . . . . . . . . 20
6.5 FURNISHING OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . 21
6.6 REPRESENTATIONS AND WARRANTIES OF OWNER TRUSTEE. . . . . . . . . . 21
6.7 RELIANCE; ADVICE OF COUNSEL. . . . . . . . . . . . . . . . . . . . 21
6.8 OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES . . . . . . . . . . . 22
6.9 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . . . 22
6.10 REPLACEMENT OF OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . 23
6.11 MERGER OR CONSOLIDATION OF OWNER TRUSTEE . . . . . . . . . . . . . 24
6.12 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE . . . . . . . . . . 24
6.13 ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE . . . . . . . . . . . . 25
ARTICLE VII. TERMINATION OF TRUST AGREEMENT. . . . . . . . . . . . . . . . . 26
7.1 TERMINATION OF TRUST AGREEMENT . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 AMENDMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS OR NOTEHOLDERS. . 27
8.2 AMENDMENTS WITH CONSENT OF CERTIFICATEHOLDERS AND NOTEHOLDERS. . . 27
8.3 FORM OF AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 NO LEGAL TITLE TO OWNER TRUST ESTATE. . . . . . . . . . . . . . . 28
9.2 LIMITATIONS ON RIGHTS OF OTHERS. . . . . . . . . . . . . . . . . . 28
9.3 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.4 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.5 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.6 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . 29
9.7 NO RECOURSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.8 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.10 CERTIFICATE TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . 30
9.11 ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.12 AMENDED AND RESTATED TRUST AGREEMENT . . . . . . . . . . . . . . . 30
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<PAGE>
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
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<PAGE>
TRUST AGREEMENT, dated as of _______, ____ between First Security
Bank, N.A., a Delaware corporation, as Seller, and ______________, a
_____________, as Owner Trustee.
The Seller and the Owner Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Certain capitalized terms used in this
Agreement shall have the respective meanings assigned to them in Section 1.1
of the Sale and Servicing Agreement of even date herewith, by and among the
Seller, the Servicer and the Trust (as it may be amended and supplemented
from time to time, the "Sale and Servicing Agreement"). All references
herein to "the Agreement" or "this Agreement" are to this Trust Agreement as
it may be amended and supplemented from time to time, the Exhibits hereto and
the capitalized terms used herein which are defined in such Section 1.1, and
all references herein to Articles, Sections and subsections are to Articles,
Sections and subsections of this Agreement unless otherwise specified.
ARTICLE II
ORGANIZATION
SECTION 2.1 NAME. The Trust created hereby shall be known as
"First Security Auto Owner Trust 19-__," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued on behalf of the Trust.
SECTION 2.2 OFFICE. The office of the Trust shall be in care of
the Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the
Certificateholders and the Seller.
SECTION 2.3 PURPOSES AND POWERS. (a) The purpose of the Trust is
to engage in the following activities:
(i) to acquire, manage and hold the Receivables and the other
assets to be transferred to or held by the Trust as contemplated by the
Sale and Servicing Agreement;
(ii) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, to sell, transfer or exchange the
Notes and to transfer and exchange the Certificates;
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<PAGE>
(iii) to acquire property and assets from the Seller pursuant to
the Sale and Servicing Agreement, to make payments or distributions on the
Securities to the Securityholders, to make deposits into and withdrawals
from the Reserve Account, the Yield Supplement Account and other accounts
established pursuant to the Basic Documents and to pay the organizational,
start-up and transactional expenses of the Trust;
(iv) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the terms of the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of this
Agreement and the Sale and Servicing Agreement any portion of the Trust
Estate released from the lien of, and remitted to the Trust pursuant to,
the Indenture;
(v) to enter into and perform its obligations and exercise its
rights under the Basic Documents to which it is to be a party;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable, desirable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith;
and
(vii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Owner Trust Estate and the making of payments or distributions to the
Securityholders.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.4 APPOINTMENT OF OWNER TRUSTEE. The Seller hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5 INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE.
The Seller hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Seller, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Seller shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6 DECLARATION OF TRUST. The Owner Trustee hereby
declares that it shall hold the Owner Trust Estate in trust upon and subject
to the conditions and obligations set forth herein and in the Sale and
Servicing Agreement for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents. It is the
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<PAGE>
intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute, that this Agreement constitute the
governing instrument of such business trust and that the Certificates
represent the equity interests therein. The rights of the Certificateholders
shall be determined as set forth herein and in the Business Trust Statute and
the relationship between the parties hereto created by this Agreement shall
not constitute indebtedness for any purpose. It is the intention of the
parties hereto that, solely for purposes of federal income taxes, state and
local income and franchise taxes, and any other taxes imposed upon, measured
by, or based upon gross or net income, the Trust shall be treated as a
division or branch of the Seller. The parties agree that, unless otherwise
required by appropriate tax authorities, the Trust shall file or cause to be
filed annual or other necessary returns, reports and other forms consistent
with the characterization of the Trust as a division or branch of the Seller
for such tax purposes; [special provision for state taxes, if applicable].
Furthermore, the parties agree that for such tax purposes the Notes will be
treated as indebtedness. Effective as of the date hereof, the Owner Trustee
shall have all rights, powers and duties set forth in this Agreement, the
Sale and Servicing Agreement and the Business Trust Statute with respect to
accomplishing the purposes of the Trust.
SECTION 2.7 LIABILITY OF THE CERTIFICATEHOLDERS. No
Certificateholder shall have any personal liability for any liability or
obligation of the Trust.
SECTION 2.8 TITLE TO TRUST PROPERTY. Legal title to all the
Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title
to any part of the Owner Trust Estate to be vested in a trustee or trustees,
in which case title shall be deemed to be vested in the Owner Trustee, a
co-trustee and/or a separate trustee, as the case may be.
SECTION 2.9 SITUS OF TRUST. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of _________. The Trust shall not have any employees
in any state other than Delaware; PROVIDED, HOWEVER, that nothing herein
shall restrict or prohibit the Owner Trustee from having employees within or
without the State of Delaware. Payments shall be received by the Trust only
in Delaware or _________, and payments and distributions shall be made by the
Trust only from Delaware or ________. The only office of the Trust shall be
the Corporate Trust Office in Delaware.
SECTION 2.10 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller hereby represents and warrants to the Owner Trustee that:
(a) The Seller has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its business as
such properties are presently owned and such business is presently
conducted and had at all relevant times, and now has, power,
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<PAGE>
authority and legal right to acquire and own the Receivables.
(b) 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 in which the ownership or lease of property
or the conduct of its business requires such qualifications.
(c) The Seller has the power and authority to execute and deliver
this Agreement and to carry out its terms, the Seller has full power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Trust as part of the Trust and the Seller has duly
authorized such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement have
been duly authorized by the Seller by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms of this Agreement do not
conflict with, result in any breach of any of the terms and provisions of
or constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of the Seller, or any
indenture, agreement or other instrument to which the Seller is a party or
by which it is bound, or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic Documents),
or violate any law or, to the Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its
properties.
(e) This Agreement, when duly executed and delivered, shall
constitute a legal, valid and binding obligation of the Seller enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) There are no proceedings or, to the Seller's knowledge,
investigations pending or, to the Seller's knowledge, threatened before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (i) asserting the invalidity of this Agreement or any
Certificates issued pursuant hereto, (ii) seeking to prevent the issuance
of such Certificates or the consummation of any of the transactions
contemplated by this Agreement or (iii) 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, such
Certificates or this Agreement.
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<PAGE>
ARTICLE III
THE CERTIFICATES
SECTION 3.1 INITIAL CERTIFICATE OWNERSHIP. Upon the formation
of the Trust by the contribution by the Seller pursuant to Section 2.5 and
until the issuance of the Certificates, the Seller shall be the sole
beneficiary of the Trust.
SECTION 3.2 FORM OF THE CERTIFICATES.
(a) The Certificates shall be substantially in the form set forth
in EXHIBIT A. The Certificates shall represent the entire beneficial
interest in the Trust. The Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of a Responsible Officer of the Owner
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, when
authenticated pursuant to Section 3.3, validly issued and entitled to the
benefits of the Agreement, notwithstanding that such individuals or any of
them 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
authentication and delivery of such Certificates.
(b) The Certificates shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders) all as determined by the officers executing such
Certificates, as evidenced by their execution of such Certificates.
(c) The Certificates shall be issued in fully-registered form and
shall be in definitive form only. The terms of the Certificates set forth in
EXHIBIT A shall form part of this Agreement.
SECTION 3.3 EXECUTION, AUTHENTICATION AND DELIVERY. On the
Closing Date, concurrently with the sale of the Receivables and other assets
to the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee
shall cause the Certificates to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Seller,
signed by its chairman of the board, its president or any vice president,
without further corporate action by the Seller, in authorized denominations.
No Certificate shall entitle its holder 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 EXHIBIT A, executed by the Owner Trustee [or ______________,
as the Owner Trustee's authenticating agent], by manual signature.
Such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder.
All Certificates shall be dated the date of their authentication.
SECTION 3.4 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE
OF CERTIFICATES.
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<PAGE>
(a) The Certificate Registrar shall keep or cause to be kept, at
the office or agency maintained pursuant to Section 3.8, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as provided
herein. ______________ shall be the initial Certificate Registrar. Upon any
resignation of a Certificate Registrar, the Owner Trustee shall promptly
appoint a successor or, if it elects not to make such an appointment, assume
the duties of Certificate Registrar.
(b) The initial Certificateholders may at any time, without
consent of the Noteholders, sell, transfer, convey or assign in any manner
its rights to and interests in the Certificates, provided that the following
conditions are satisfied: (i) such action will not result in a reduction or
withdrawal of the rating of any class of Notes then outstanding, (ii) the
Certificateholders provide to the Owner Trustee and the Indenture Trustee an
opinion of independent counsel that such action will not cause the Trust to
be treated as an association (or publicly traded partnership) taxable as a
corporation for Federal income tax purposes, (iii) such transferee or
assignee agrees to take positions for tax purposes consistent with the tax
positions agreed to be taken by the Certificateholders and (iv) the
conditions set forth in Section 9.10 have been satisfied. In addition, no
transfer of a Certificate shall be registered unless the transferee shall
have provided to the Owner Trustee and the Certificate Registrar an opinion
of counsel that in connection with such transfer no registration of the
Certificates is required under the Securities Act or applicable state law or
that such transfer is otherwise being made in accordance with all applicable
federal and state securities laws.
(c) Subject to Section 3.4(b), upon surrender for registration of
transfer of any Certificate at the office or agency maintained pursuant to
Section 3.8, the Owner Trustee shall execute on behalf of the Trust,
authenticate and deliver [(or shall cause ______________ as its
authenticating agent to authenticate and deliver)], in the name of the
designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the
date of authentication by the Owner Trustee or any authenticating agent.
(d) At the option of a Holder, Certificates may be exchanged for
other Certificates of a like aggregate percentage interest upon surrender of
the Certificates to be exchanged at the Corporate Trust Office maintained
pursuant to Section 3.8. Whenever any Certificates are so surrendered for
exchange, the Owner Trustee shall execute on behalf of the Trust,
authenticate and deliver [(or shall cause ________________ as its
authenticating agent to authenticate and deliver)] one or more Certificates
dated the date of authentication by the Owner Trustee or any authenticating
agent. Such Certificates shall be delivered to the Holder making the exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing and such
other documents and instruments as may be required by Section
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<PAGE>
3.4(b) or Section 9.10. Each Certificate surrendered for registration of
transfer or exchange shall be canceled and subsequently destroyed or
otherwise disposed of by the Owner Trustee or Certificate Registrar in
accordance with its customary practice.
(f) No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Owner Trustee or the
Certificate Registrar 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.
SECTION 3.5 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
(a) If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Certificate Registrar, the Owner Trustee and the
Trust such security or indemnity as may be required by them to hold each of
them harmless, then, in the absence of notice to the Certificate Registrar or
the Owner Trustee that such Certificate has been acquired by a bona fide
purchaser, the Owner Trustee shall execute on behalf of the Trust and the
Owner Trustee shall authenticate and deliver [(or shall cause ________________
as its authenticating agent to authenticate and deliver)], in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate,
a replacement Certificate in authorized denominations of a like amount;
PROVIDED, HOWEVER, that if any such destroyed, lost or stolen Certificate,
but not a mutilated Certificate, shall have become or within seven days
shall be due and payable, then instead of issuing a replacement Certificate
the Owner Trustee may pay such destroyed, lost or stolen Certificate when so
due or payable.
(b) If, after the delivery of a replacement Certificate in respect
of a destroyed, lost or stolen Certificate pursuant to subsection 3.5(a), a
bona fide purchaser of the original Certificate in lieu of which such
replacement Certificate was issued presents for payment such original
Certificate, the Owner Trustee shall be entitled to recover such replacement
Certificate (and any distributions made with respect thereto) from the Person
to whom it was delivered or any Person taking such replacement Certificate
from such Person to whom such replacement Certificate was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of
any loss, damage, cost or expense incurred by the Owner Trustee in connection
therewith.
(c) In connection with the issuance of any replacement Certificate
under this Section 3.5, the Owner Trustee may require the payment by the
Holder of such Certificate of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Owner Trustee and
the Certificate Registrar) connected therewith.
(d) Any duplicate Certificate issued pursuant to this Section 3.5
in replacement of any mutilated, destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the Trust,
whether or not the mutilated, destroyed, lost or
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stolen Certificate shall be found at any time or be enforced by anyone, and
shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Certificates duly issued hereunder.
(e) The provisions of this Section 3.5 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
SECTION 3.6 PERSONS DEEMED CERTIFICATEHOLDERS. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee
or the Certificate Registrar may treat the Person in whose name any
Certificate shall be registered in the Certificate Register as the
Certificateholder of such Certificate for the purpose of receiving
distributions pursuant to Article V and for all other purposes whatsoever,
and neither the Owner Trustee nor the Certificate Registrar shall be bound by
any notice to the contrary.
SECTION 3.7 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Seller, within 15 days after receipt by the Owner Trustee of
a request therefor from the Servicer or the Seller in writing, a list, in
such form as the Servicer or the Seller may reasonably require, of the names
and addresses of the Certificateholders as of the most recent Record Date.
Each Holder, by receiving and holding a Certificate, shall be deemed to have
agreed not to hold any of the Servicer, the Seller or the Owner Trustee
accountable by reason of the disclosure of its name and address, regardless
of the source from which such information was derived.
SECTION 3.8 MAINTENANCE OF CORPORATE TRUST OFFICE. The Owner
Trustee shall maintain in the Borough of Manhattan, the City of New York, an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect of the Certificates and the Basic Documents
may be served. The Owner Trustee initially designates the offices of
________________________, as its principal office for such purposes. The
Owner Trustee shall give prompt written notice to the Seller and to the
Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.9 APPOINTMENT OF PAYING AGENT. Except as otherwise
provided in Section 5.2, the Paying Agent shall make distributions to
Certificateholders from the Certificate Distribution Account pursuant to
Section 5.2 and shall report the amounts of such distributions to the Owner
Trustee. The Paying Agent shall have the revocable power to withdraw funds
from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent shall
initially be _________________, and any co-paying agent chosen by
_______________, and acceptable to the Owner Trustee. The ____________ shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Owner Trustee. If ______________ shall no longer be the Paying
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Agent, the Owner Trustee shall appoint a successor to act as Paying Agent
(which shall be a bank or trust company). The Owner Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the Owner
Trustee to execute and deliver to the Owner Trustee an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with the
Owner Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent shall hold all sums, if any, held by it for distribution to the
Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders.
The Paying Agent shall return all unclaimed funds to the Owner Trustee and
upon removal of a Paying Agent such Paying Agent shall also return all funds
in its possession to the Owner Trustee. The provisions of Sections 6.3, 6.6,
6.7, 6.8 and 6.9 shall apply to the Owner Trustee also in its role as Paying
Agent, for so long as the Owner Trustee shall act as Paying Agent and, to the
extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 3.10 SELLER AS CERTIFICATEHOLDER. The Seller in its
individual or any other capacity may become the owner or pledgee of
Certificates and may otherwise deal with the Owner Trustee or its Affiliates
as if it were not the Seller.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. The Owner Trustee shall not take action with respect to the
following matters, unless (i) the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action at least 30 days before the
taking of such action, and (ii) the Certificateholders shall not have notified
the Owner Trustee in writing prior to the 30th day after such notice is given
that such Certificateholders have withheld consent or provided alternative
direction:
(a) the initiation of any claim or lawsuit by the Trust (other than
an action to collect on a Receivable or an action by the Indenture Trustee
pursuant to the Indenture) and the compromise of any action, claim or
lawsuit brought by or against the Trust (other than an action to collect on
a Receivable or an action by the Indenture Trustee pursuant to the
Indenture);
(b) the election by the Trust to file an amendment to the Certificate
of Trust, a conformed copy of which is attached hereto as EXHIBIT B;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
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(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the
Certificateholders;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner that would not materially adversely affect the
interests of the Certificateholders;
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement
of a successor Certificate Registrar, or the consent to the assignment by
the Note Registrar, Paying Agent or Indenture Trustee or Certificate
Registrar of its obligations under the Indenture or this Agreement, as
applicable; or
(g) the amendment of the Sale and Servicing Agreement in
circumstances where the consent of any Noteholder is required.
SECTION 4.2 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN
MATTERS. The Owner Trustee shall not have the power, except upon the written
direction of the Certificateholders, to (a) remove the Administrator under the
Administration Agreement pursuant to Section 10 thereof,(b) appoint a successor
Administrator pursuant to Section 10 of the Administration Agreement,(c) remove
the Servicer under the Sale and Servicing Agreement pursuant to Section 8.1
thereof or (d) except as expressly provided in the Basic Documents, sell the
Receivables or any interest therein after the termination of the Indenture. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Certificateholders.
SECTION 4.3 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO
BANKRUPTCY. The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Holders of Certificates (including the unanimous approval of the
board of directors of the Seller) unless the Owner Trustee reasonably believes
that the Trust is insolvent.
SECTION 4.4 RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
SECTION 4.5 MAJORITY CONTROL. Except as expressly provided herein,
any action that may be taken or consent that may be given or withheld by the
Certificateholders under this Agreement shall be effective if such action is
taken or such consent is given or withheld by the Holders of a majority of the
ownership interest in the Trust outstanding as of the close of the
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preceding Distribution Date. Except as expressly provided herein, any
written notice, instruction, direction or other document of the
Certificateholders delivered pursuant to this Agreement shall be effective if
signed by Holders of Certificates evidencing a majority of the ownership
interest in the Trust at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT.
(a) Except as otherwise provided in Section 5.2, the Servicer, for
the benefit of the Certificateholders, shall establish and maintain at
__________ in the name of the Owner Trustee an Eligible Deposit Account known
as the First Security Auto Owner Trust 19-__ Certificate Distribution Account
(the "Certificate Distribution Account"), bearing an additional designation
clearly indicating that the funds deposited therein are held for the benefit
of the Certificateholders.
(b) The Owner Trustee shall possess all right, title and interest
in and to all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof. Except as otherwise
provided herein or in the Sale and Servicing Agreement, the Certificate
Distribution Account shall be under the sole dominion and control of the
Owner Trustee for the benefit of the Certificateholders. If, at any time,
the Certificate Distribution 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 Certificate Distribution Account as an Eligible Deposit
Account and shall cause the Owner Trustee to transfer any cash and/or any
investments in the old Certificate Distribution Account to such new
Certificate Distribution Account.
SECTION 5.2 APPLICATION OF TRUST FUNDS.
(a) On each Distribution Date, the Owner Trustee shall (based on
the information contained in the Servicer's Certificate delivered on the
related Determination Date) distribute to the Certificateholders, on a pro
rata basis, amounts deposited in the Certificate Distribution Account
pursuant to Section 4.1(c)(v) of the Sale and Servicing Agreement.
Notwithstanding the foregoing or anything else to the contrary in this
Agreement, so long as the Certificates are held by the Seller, (i) no
Certificate Distribution Account shall be required to be established or
maintained and (ii) all distributions and payments on the Certificates
(including the final distribution as contemplated by Section 7.1(c) hereof)
required under the Sale and Servicing Agreement shall be made directly to the
Seller (whether or not the Sale and Servicing Agreement otherwise
contemplates deposit into the Certificate Distribution Account).
(b) On each Distribution Date, the Owner Trustee shall send to
each
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Certificateholder the statement described in Section 4.7(a) of the Sale and
Servicing Agreement.
(c) If any withholding tax is imposed on the Trust's distributions
(or allocations of income) to a Certificateholder, such tax shall reduce the
amount otherwise distributable to the Certificateholder in accordance with
this Section 5.2. The Owner Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to the Certificateholders
sufficient funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Owner Trustee from contesting
any such tax in appropriate proceedings and withholding payment of such tax,
if permitted by law, pending the outcome of such proceedings). The amount of
any withholding tax imposed with respect to a Certificateholder shall be
treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), the
Owner Trustee may in its sole discretion withhold such amounts in accordance
with this subsection 5.2(c). If a Certificateholder wishes to apply for a
refund of any such withholding tax, the Owner Trustee shall reasonably
cooperate with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
(d) If the Indenture Trustee holds escheated funds for payment to
the Trust pursuant to Section 3.3(e) of the Indenture, the Owner Trustee
shall, upon notice from the Indenture Trustee that such funds exist, submit
on behalf of the Trust an Issuer Order to the Indenture Trustee pursuant to
Section 3.3(e) of the Indenture instructing the Indenture Trustee to pay such
funds to or at the order of the Seller.
SECTION 5.3 METHOD OF PAYMENT. Subject to Section 5.2(a) and
Section 7.1(c), distributions required to be made to Certificateholders on
any Distribution Date shall be made to each Certificateholder of record on
the related Record Date (i) by wire transfer, in immediately available funds,
to the account of such Holder at a bank or other entity having appropriate
facilities therefor or, where possible, by intra-bank book entry credit, if
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Record Date and the distribution required to be made to such
Certificateholders exceeds $100,000 or (ii) by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register.
SECTION 5.4 ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDERS,
THE INTERNAL REVENUE SERVICE AND OTHERS. The Owner Trustee shall (a)
maintain (or cause to be maintained) the books of the Trust on the basis of a
fiscal year ending [December 31] on the accrual method of accounting,(b)
deliver to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations or otherwise, such information as may be
required to enable each Certificateholder to prepare its federal income tax
returns,(c) file such tax returns relating to the Trust and make such
elections as may from time to time be required or appropriate under any
applicable state or federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a division or branch of the Seller
for federal income tax purposes,(d) cause
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such tax returns to be signed in the manner required by law and (e) collect
or cause to be collected any withholding tax as described in and in
accordance with subsection 5.2(c) with respect to income or distributions to
Certificateholders.
SECTION 5.5 SIGNATURE ON RETURNS. The Owner Trustee shall sign
on behalf of the Trust any and all tax returns of the Trust, unless
applicable law requires a Certificateholder to sign such documents, in which
case such documents shall be signed by the Seller so long as the Seller is a
Certificateholder.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 DUTIES OF OWNER TRUSTEE.
(a) The Owner Trustee undertakes to perform such duties, and only
such duties, as are specifically set forth in this Agreement, the Sale and
Servicing Agreement and the other Basic Documents, including the
administration of the Trust in the interest of the Certificateholders,
subject to the Basic Documents and in accordance with the provisions of this
Agreement and the Sale and Servicing Agreement. No implied covenants or
obligations shall be read into this Agreement, the Sale and Servicing
Agreement or any other Basic Document against the Owner Trustee.
(b) Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and under
the Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Basic Document, and the Owner Trustee
shall not be liable for the default or failure of the Administrator to carry
out its obligations under the Administration Agreement.
(c) In the absence of bad faith on its part, the Owner Trustee may
conclusively rely upon certificates or opinions furnished to the Owner
Trustee and conforming to the requirements of this Agreement in determining
the truth of the statements and the correctness of the opinions contained
therein; PROVIDED, HOWEVER, that the Owner Trustee shall have examined such
certificates or opinions so as to determine compliance of the same with the
requirements of this Agreement.
(d) The Owner Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this subsection 6.1(d) shall not limit the effect of
subsection 6.1(a) or (b);
(ii) the Owner Trustee shall not be liable for any error of
judgment
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made in good faith by a Responsible Officer unless it is proved that
the Owner Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Owner Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 4.1, 4.2 or 6.4.
(e) Subject to Sections 5.1 and 5.2, monies received by the Owner
Trustee hereunder need not be segregated in any manner except to the extent
required by law or the Sale and Servicing Agreement and may be deposited
under such general conditions as may be prescribed by law, and the Owner
Trustee shall not be liable for any interest thereon.
(f) The Owner Trustee shall not take any action that (i) is
inconsistent with the purposes of the Trust set forth in Section 2.3 or (ii)
would, to the actual knowledge of a Responsible Officer of the Owner Trustee,
result in the Trust's becoming taxable as a corporation for federal income
tax purposes.
(g) The Certificateholders shall not direct the Owner Trustee to
take action that would violate the provisions of this Section 6.1.
SECTION 6.2 RIGHTS OF OWNER TRUSTEE. The Owner Trustee is
authorized and directed to execute and deliver the Basic Documents and each
certificate or other document attached as an exhibit to or contemplated by the
Basic Documents to which the Trust is to be a party, in such form as the Seller
shall approve as evidenced conclusively by the Owner Trustee's execution
thereof. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Administrator recommends with respect to the Basic
Documents.
SECTION 6.3 ACCEPTANCE OF TRUSTS AND DUTIES. Except as
otherwise provided in this Article VI, in accepting the trusts hereby
created, _______________ acts solely as Owner Trustee hereunder and not in
its individual capacity and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof. The Owner Trustee accepts the trusts hereby created
and agrees to perform its duties hereunder with respect to such trusts but
only upon the terms of this Agreement. The Owner Trustee also agrees to
disburse all monies actually received by it constituting part of the Owner
Trust Estate upon the terms of this Agreement. The Owner Trustee shall not be
liable or accountable hereunder or under any Basic Document under any
circumstances, except (i) for its own negligent action, its own negligent
failure to act or its own willful misconduct or (ii)in the case of the
inaccuracy of any representation or warranty contained in Section 6.6 or
expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
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(a) the Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability
of any Receivable or the perfection and priority of any security interest
created by any Receivable in any Financed Vehicle or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the distributions and
payments to be made to Certificateholders under this Agreement or to
Noteholders under the Indenture, including, without limitation: the
existence, condition and ownership of any Financed Vehicle; the existence
and enforceability of any insurance thereon; the existence and contents of
any Receivable on 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 or the Servicer with any warranty
or representation made under any Basic Document or in any related document
or the accuracy of any such warranty or representation or any action of the
Administrator, the Trustee or the Servicer or any subservicer taken in the
name of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of
the Administrator or the Certificateholders;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document, if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or any amounts payable
with respect to the Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of
and makes no representation as to the validity or sufficiency of any
provision of this Agreement or for the due execution hereof by the Seller
or for the form, character, genuineness, sufficiency, value or validity of
any of the Owner Trust Estate or for or in respect of the validity or
sufficiency of the Basic Documents, the Notes, the Certificates (other than
the certificate of authentication on the Certificates) or of any
Receivables or any related documents, and the Owner Trustee shall in no
event assume or incur any liability, duty or obligation to any Noteholder
or to any Certificateholder, other than as expressly provided for herein
and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Indenture Trustee, the Seller or the
Servicer under any of the Basic
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Documents or otherwise and the Owner Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement
or the Basic Documents that are required to be performed by the
Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture or the Servicer under the Sale and Servicing
Agreement; and
(g) the Owner 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 otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Certificateholders, unless such Certificateholders
have offered to the Owner Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the
Owner Trustee therein or thereby. The right of the Owner Trustee to
perform any discretionary act enumerated in this Agreement or in any Basic
Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of any such act.
SECTION 6.4 ACTION UPON INSTRUCTION BY CERTIFICATEHOLDERS.
(a) Subject to Section 4.4, the Certificateholders may by written
instruction direct the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Section 4.5.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be
required to take any action hereunder or under any Basic Document if the Owner
Trustee shall have reasonably determined, or shall have been advised by counsel,
that such action is likely to result in liability on the part of the Owner
Trustee or is contrary to the terms hereof or of any Basic Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, or is unsure as to the application, intent,
interpretation or meaning of any provision of this Agreement or the Basic
Documents, the Owner Trustee shall promptly give notice (in such form as shall
be appropriate under the circumstances) to the Certificateholders requesting
instruction as to the course of action to be adopted, and, to the extent the
Owner Trustee acts in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable on account of such action to any
Person. If the Owner Trustee shall not have received appropriate instructions
within ten days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action which is consistent, in its view, with this Agreement or the
Basic Documents, and as it shall deem to be in the best interests of the
Certificateholders, and the Owner Trustee shall have no liability to any Person
for any such action or inaction.
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SECTION 6.5 FURNISHING OF DOCUMENTS. The Owner Trustee shall
furnish to the Certificateholders, promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the Basic Documents.
SECTION 6.6 REPRESENTATIONS AND WARRANTIES OF OWNER TRUSTEE.
The Owner Trustee hereby represents and warrants to the Seller, for the
benefit of the Certificateholders, that:
(a) It is a banking corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation. The
eligibility requirements set forth in Section 6.13 (a) - (d) are satisfied
with respect to it.
(b) It 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.
(c) The execution, delivery and performance by it of this
Agreement (i) shall not violate any provision of any law or regulation
governing the banking and trust powers of the Owner Trustee or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority applicable to the Owner Trustee or any of its assets, (ii)
shall not violate any provision of the corporate charter or by-laws of
the Owner Trustee, or (iii) shall not violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any lien on any properties
included in the Trust pursuant to the provisions of any mortgage,
indenture, contract, agreement or other undertaking to which it is a
party, which violation, default or lien could reasonably be expected to
have a materially adverse effect on the Owner Trustee's performance or
ability to perform its duties as Owner Trustee under this Agreement or
on the transactions contemplated in this Agreement.
(d) The execution, delivery and performance by the Owner Trustee of
this Agreement shall not require the authorization, consent or approval of,
the giving of notice to, the filing or registration with, or the taking of
any other action in respect of, any governmental authority or agency
regulating the corporate trust activities of ______________.
(e) This Agreement has been duly executed and delivered by the Owner
Trustee and constitutes the legal, valid and binding agreement of the Owner
Trustee, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights in general and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
SECTION 6.7 RELIANCE; ADVICE OF COUNSEL.
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(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it
to be genuine and believed by it to be signed by the proper party or parties
and need not investigate any fact or matter in any such document. The Owner
Trustee may accept a certified copy of a resolution of the board of directors
or other governing body of any corporate party as conclusive evidence that
such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized
officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee: (i)may act directly or through its
agents, attorneys, custodians or nominees pursuant to agreements entered into
with any of them, and the Owner Trustee shall not be liable for the conduct
or misconduct of such agents, attorneys, custodians or nominees if such
agents, attorneys, custodians or nominees shall have been selected by the
Owner Trustee with reasonable care; and (ii) may consult with counsel,
accountants and other skilled professionals to be selected with reasonable
care and employed by it. The Owner Trustee shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the opinion
or advice of any such counsel, accountants or other such Persons and not
contrary to this Agreement or any Basic Document.
SECTION 6.8 OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Notes and may deal with the Seller, the
Administrator, the Indenture Trustee and the Servicer in transactions in the
same manner as it would have if it were not the Owner Trustee.
SECTION 6.9 COMPENSATION AND INDEMNITY. The Owner Trustee shall
receive as compensation for its services hereunder from the Servicer such
fees as have been separately agreed upon before the date hereof between the
Seller and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Servicer for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, custodians, nominees, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of
its rights and its duties hereunder. The Servicer shall indemnify the Owner
Trustee and its successors, assigns, agents and servants in accordance with
the provisions of Section 7.2 of the Sale and Servicing Agreement. The
compensation and indemnities described in this Section 6.9 shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. Any amounts paid to the Owner Trustee
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pursuant to this Article VI shall be deemed not to be a part of the Owner
Trust Estate immediately after such payment.
SECTION 6.10 REPLACEMENT OF OWNER TRUSTEE.
(a) The Owner Trustee may give notice of its intent to resign and
be discharged from the trusts hereby created by written notice thereof to the
Administrator; provided that no such resignation shall become effective, and
the Owner Trustee shall not resign, prior to the time set forth in Section
6.10(c). The Administrator may appoint a successor Owner Trustee by
delivering a written instrument, in duplicate, to the resigning Owner Trustee
and the successor Owner Trustee. If no successor Owner Trustee shall have
been appointed and have accepted appointment within 30 days after the giving
of such notice, the resigning Owner Trustee giving such notice may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee. The Administrator shall remove the Owner Trustee if:
(i) the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 6.13 and shall fail to resign after written
request therefor by the Administrator;
(ii) the Owner Trustee shall be adjudged bankrupt or insolvent;
(iii) a receiver or other public officer shall be appointed or
take charge or control of the Owner Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation; or
(iv) the Owner Trustee shall otherwise be incapable of acting.
(b) If the Owner Trustee gives notice of its intent to resign or
is removed or if a vacancy exists in the office of Owner Trustee for any
reason, the Administrator shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate (one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy to the
successor Owner Trustee) and shall pay all fees owed to the outgoing Owner
Trustee.
(c) Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section 6.10 shall not become effective and no such resignation shall be
deemed to have occurred until a written acceptance of appointment is
delivered by the successor Owner Trustee to the outgoing Owner Trustee and
the Administrator and all fees and expenses due to the outgoing Owner Trustee
are paid. Any successor Owner Trustee appointed pursuant to this Section
6.10 shall be eligible to act in such capacity in accordance with Section
6.13 and, following compliance with the preceding sentence, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The Administrator shall provide notice of such resignation or
removal of the Owner Trustee to each of the Rating Agencies.
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(d) The predecessor Owner Trustee shall upon payment of its fees
and expenses deliver to the successor Owner Trustee all documents and
statements and monies held by it under this Agreement. The Administrator and
the predecessor Owner Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
(e) Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section 6.10, the Administrator shall mail notice of the
successor of such Owner Trustee to all Certificateholders, the Indenture
Trustee, the Noteholders and the Rating Agencies.
SECTION 6.11 MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any Person
into which the Owner Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder,
provided such Person shall be eligible pursuant to Section 6.13, and without
the execution or filing of any instrument or any further act on the part of
any of the parties hereto; PROVIDED, HOWEVER, that the Owner Trustee shall
mail notice of such merger or consolidation to the Rating Agencies.
SECTION 6.12 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 requirement of any jurisdiction in
which any part of the Owner Trust Estate or any Financed Vehicle may at the
time be located, the Administrator and the Owner Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one
or more Persons approved by the Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or trustees, of all or any
part of the Owner Trust Estate, and to vest in such Person, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 6.12, such powers, duties, obligations, rights and
trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Owner
Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee under this Agreement shall be required to meet the terms
of eligibility as a successor trustee pursuant to Section 6.13 and no notice
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 6.10.
(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 Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate
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trustee or co-trustee is not authorized to act separately without the
Owner Trustee joining in such act), except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this Agreement
(unless such other trustee acts or fails to act at the direction of such
first trustee); and
(iii) the Administrator and the Owner 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 Owner
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Owner Trustee. Each such
instrument shall be filed with the Owner Trustee and a copy thereof given to
the Administrator.
(d) Any separate trustee or co-trustee may at any time appoint the
Owner Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.13 ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times satisfy the requirements of Section 26(a)(1) of the
Investment Company Act. The Owner Trustee shall at all times: (a) be a
corporation satisfying the provisions of Section 3807(a) of the Business Trust
Statute; (b) be authorized to exercise corporate trust powers; (c) have a
combined capital and surplus of at least $50,000,000 and; (d) be subject to
supervision or examination by federal or state 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 6.13, 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. If at any time the Owner
Trustee shall cease to be
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eligible in accordance with the provisions of this Section 6.13, the Owner
Trustee shall resign immediately in the manner and with the effect specified
in Section 6.10.
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
SECTION 7.1 TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Section 6.9) and the Trust shall
terminate and be of no further force or effect on the final distribution by
the Owner Trustee of all monies or other property or proceeds of the Owner
Trust Estate in accordance with the terms of the Indenture, the Sale and
Servicing Agreement (including the exercise by the Servicer of its option to
purchase the Receivables pursuant to Section 9.2 of the Sale and Servicing
Agreement) and Article V. The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder shall not (x) operate to terminate this
Agreement or the Trust, (y) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
the Trust or the Owner Trust Estate nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 7.1(a), neither the Seller nor
any Certificateholder shall be entitled to revoke or terminate the Trust or
this Agreement.
(c) Except as otherwise provided in Section 5.2(a), notice of any
termination of the Trust specifying the Distribution Date upon which the
Certificateholders shall surrender their Certificates to the Owner Trustee
for payment of the final distribution and cancellation, shall be given by the
Owner 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 preceding the Specified Distribution Date given pursuant to
subsection 9.1(c) of the Sale and Servicing Agreement, stating: (i) the
amount of any such final payment; and (iii) 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
Owner Trustee therein specified. Upon presentation and surrender of the
Certificates, the Owner Trustee shall cause to be distributed to the
Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.2.
(d) If all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in
the written notice specified in Section 7.1(c), the Owner 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. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Owner
Trustee 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
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remain subject to this Agreement. Subject to applicable laws with respect to
escheat of funds, any funds remaining in the Trust after exhaustion of such
remedies in the preceding sentence shall be deemed property of the Seller and
distributed by the Owner Trustee to the Seller.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 AMENDMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS OR
NOTEHOLDERS. This Agreement may be amended by the Seller and the Owner
Trustee without the consent of any of the Noteholders or the
Certificateholders to (i) cure any ambiguity, (ii) correct or supplement any
provision in this Agreement that may be defective or inconsistent with any
other provision in this Agreement or any other Basic Document, (iii) add or
supplement any credit enhancement for the benefit of the Noteholders or the
Certificateholders (PROVIDED that if any such addition shall affect any class
of Noteholders or Certificateholders differently than any other class of
Noteholders or Certificateholders, then such addition shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the
interests of any class of the Noteholders or the Certificateholders), (iv)
add to the covenants, restrictions or obligations of the Seller or the Owner
Trustee for the benefit of the Noteholders or Certificateholders, (v)
evidence and provide for the acceptance of the appointment of a successor
trustee with respect to the Owner Trust Estate and add to or change any
provisions as shall be necessary to facilitate the administration of the
trusts hereunder by more than one trustee pursuant to Article VI, or (vi)
add, change or eliminate any other provision of this Agreement in any manner
that shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of the Noteholders or the
Certificateholders.
SECTION 8.2 AMENDMENTS WITH CONSENT OF CERTIFICATEHOLDERS AND
NOTEHOLDERS. This Agreement may be amended from time to time by the Seller
and the Owner Trustee with the consent of Noteholders whose Notes evidence
not less than a majority of Outstanding Amount of Notes of the related Series
as of the close of business on the preceding Distribution Date and the
consent of the Holders of Certificates evidencing not less than a majority of
the ownership interest in the Trust as of the close of business on the
preceding Distribution Date (which consent, whether given pursuant to this
Section 8.2 or pursuant to any other provision of this Agreement, shall be
conclusive and binding on such Person and on all future holders of such Notes
or Certificates and of any Notes or Certificates issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Notes or Certificates) 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
Noteholders or the Certificateholders; PROVIDED, HOWEVER, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of,
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collections of payments on Receivables or distributions that shall be
required to be made on any Note or the Specified Reserve Account Balance, (b)
reduce the aforesaid percentage required to consent to any such amendment or
(c) amend Section 4.3, without the consent of the Holders of all of the Notes
and the Holders of all of the Certificates then outstanding.
SECTION 8.3 FORM OF AMENDMENTS.
(a) Promptly after the execution of any amendment, supplement or
consent pursuant to Section 8.1 or 8.2, the Owner Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and the Indenture Trustee.
(b) It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to
Section 8.2 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 any other
consents of Certificateholders provided for in this Agreement or in any other
Basic Document) and of evidencing the authorization of the execution thereof
by Certificateholders and Noteholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(c) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such
amendment with the Secretary of State.
(d) Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement and that all conditions
precedent to such execution have been satisfied. The Owner Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Owner Trustee's own rights, duties or immunities under this Agreement or
otherwise.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NO LEGAL TITLE TO OWNER TRUST ESTATE. The
Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and VII. No transfer, by operation of law or otherwise, of any
right, title, and interest of the Certificateholders to and in their ownership
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 9.2 LIMITATIONS ON RIGHTS OF OTHERS. Except for Section
9.7, the
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provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Seller, the Certificateholders, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 9.3 NOTICES. All demands, notices and communications
upon or to the Seller, the Servicer, the Administrator, the Indenture
Trustee, the Owner Trustee, the Rating Agencies or any Certificateholder
under this Agreement shall be delivered as specified in Section 10.5 of the
Sale and Servicing Agreement.
SECTION 9.4 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed enforceable to the fullest extent permitted, and if not so
permitted, shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or
of the Certificates or the rights of the holders thereof.
SECTION 9.5 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts (and by different parties on separate
counterparts), each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument.
SECTION 9.6 SUCCESSORS AND ASSIGNS. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit
of, the Seller, the Owner Trustee and each Certificateholder and their
respective successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by
a Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 9.7 NO RECOURSE. Each Certificateholder by accepting a
Certificate (or interest therein) acknowledges that such Person's Certificate
(or interest therein) represents beneficial interests in the Trust only and
does not represent interests in or obligations of the Seller, the Servicer,
the Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate
thereof and no recourse, either directly or indirectly, may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the Basic Documents.
Except as expressly provided in the Basic Documents, neither the Seller, the
Servicer nor the Owner Trustee in their respective individual capacities, nor
any of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the distribution of any amount with
respect to the Certificates, or the Owner Trustee's performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the
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Certificates or this Agreement, it being expressly understood that said
covenants and obligations have been made by the Owner Trustee solely in its
capacity as the Owner Trustee. Each Certificateholder by the acceptance of a
Certificate (or beneficial interest therein) shall agree that, except as
expressly provided in the Basic Documents, in the case of nonpayment of any
amounts with respect to the Certificates, it shall have no claim against any
of the foregoing for any deficiency, loss or claim therefrom.
SECTION 9.8 HEADINGS. The headings of the various Articles and
Sections herein are for purposes of reference only and shall not affect the
meaning or interpretation of any provision hereof.
SECTION 9.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.10 CERTIFICATE TRANSFER RESTRICTIONS. The Certificates
may not be acquired by or for the account of (i) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA,(ii) a plan described in Section 4975(e)(1) of the Code or (iii)
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 Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
SECTION 9.11 ADMINISTRATOR. The Administrator is authorized to
execute on behalf of the Trust all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust
to prepare, file or deliver pursuant to the Basic Documents. Upon request,
the Owner Trustee shall execute and deliver to the Administrator a power of
attorney appointing the Administrator its agent and attorney-in-fact to
execute all such documents, reports, filings, instruments, certificates and
opinions.
SECTION 9.12 AMENDED AND RESTATED TRUST AGREEMENT. This Trust
Agreement is the amended and restated trust agreement contemplated by the
Trust Agreement dated as of _____________, ____ between the Seller and the
Owner Trustee.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
________________________________________,
as Owner Trustee
By: ____________________________________
Name:
Title:
First Security Bank, N.A.,
as Seller
By: ____________________________________
Name:
Title:
Acknowledged and Accepted:
First Security Bank, N.A.,
as Servicer
By: ______________________________
Name:
Title:
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EXHIBIT A
NUMBER
R-1
OWNERSHIP INTEREST: 100%
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF (i)
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 I OF ERISA, (ii) A PLAN DESCRIBED
IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY. BY ACCEPTING
AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE CERTIFICATE
OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT
IS NOT A BENEFIT PLAN.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON _____________, ____, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
THIS CERTIFICATE IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN
THE TRUST AGREEMENT REFERENCED BELOW.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN FIRST SECURITY BANK, N.A. OR ANY OF ITS AFFILIATES.
First Security Auto Owner Trust 19-__
CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of fixed rate retail
motor vehicle installment
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sales contracts and installment loans, which contracts and loans have
been sold to the Trust by First Security Bank, N.A.
THIS CERTIFIES THAT First Security Bank, N.A. is the registered
owner of a nonassessable, fully-paid, fractional undivided interest in First
Security Auto Owner Trust 19-__ (the "Trust").
The Trust was created pursuant to a trust agreement, dated as of
____________, ____ (as amended and restated as of ______________, ____ and as
further amended, restated or supplemented from time to time, the "Trust
Agreement"), between the Seller and ___________________, as owner trustee
(the "Owner Trustee"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, the terms of which are
incorporated herein by reference and made a part hereof, to which Trust
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
The Holder of this Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as and to the extent described
in the Sale and Servicing Agreement and the Indenture.
Distributions on this Certificate shall be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer, check mailed or, where
possible, intra-bank book entry to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise
provided in the Trust Agreement and notwithstanding the above, the final
distribution on this Certificate shall be made after due notice by the Owner
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office maintained for such purpose by
the Owner Trustee in the __________________________.
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 Owner Trustee by manual signature,
this Certificate shall not entitle the Holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
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WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly
executed.
Dated: _______________, ____
FIRST SECURITY AUTO OWNER TRUST 19-__
By: ___________________________________, not in
its individual capacity but solely as Owner
Trustee
By: ___________________________________
Name:
Title:
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
_____________________________, ______________________________,
not in its individual not in its individual
capacity but solely capacity but solely
as Owner Trustee as Owner Trustee
OR by _________________________,
as Authenticating Agent
By:_________________________ By: _________________________
Authorized Officer Authorized Officer
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REVERSE OF CERTIFICATE
The Certificates do not represent an obligation of, or an interest
in, the Seller, the Servicer, the Indenture Trustee, the Owner Trustee or any
affiliates of any of them and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated herein or
in the Trust Agreement or the Basic Documents. In addition, this Certificate
is not guaranteed by any governmental agency or instrumentality and is
limited in right of payment to certain collections and recoveries with
respect to the Receivables (and certain other amounts), all as more
specifically set forth herein and in the Trust Agreement and the Sale and
Servicing Agreement. A copy of each of the Sale and Servicing Agreement and
the Trust Agreement may be examined during normal business hours at the
principal office of the Seller, and at such other places, if any, designated
by the Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Seller and the Owner Trustee with the
consent of (i) the Holders of the Notes evidencing not less than a majority
of the Outstanding Amount of the Notes, and (ii) Certificateholders whose
Certificates evidence not less than a majority of the ownership interest in
the Trust, each as of the close of the preceding Distribution Date. 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 registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent is made
upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any
of the Certificates or the Notes.
As provided in the Trust 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 offices or agencies of the Certificate
Registrar maintained by the Owner Trustee in the ______________, accompanied
by (i) a written instrument of transfer in form satisfactory to the Owner
Trustee and the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing and (ii) certain opinions
and other documents required by Section 3.4 of the Trust Agreement, 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. The initial Certificate Registrar appointed under the Trust
Agreement is ___________________________.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none
of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
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<PAGE>
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant
to the Trust Agreement and the Sale and Servicing Agreement and the
disposition of all property held as part of the Trust.
-37-
<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 type name and address, including postal zip code, of assignee)
______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_________________________________________________________ Attorney to
transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated: _____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
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<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
FIRST SECURITY AUTO OWNER TRUST 19-__
THIS Certificate of Trust of First Security Auto Owner Trust 19-__
(the "Trust"), dated as of ____________, ____ is being duly executed and
filed by ____________________, _________________________, as trustee, to form
a business trust under the Delaware Business Trust Act (12 DEL. C. Section
3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is First
Security Auto Owner Trust 19-__.
2. DELAWARE TRUSTEE. The name and business address of the
trustee of the Trust in the State of Delaware is _______________________,
_______________, ____________, _________.
3. This Certificate of Trust shall be effective on ____________,
____.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first-above
written.
______________________, not in its individual
capacity but solely as trustee of the Trust.
By: _______________________________
Name:
Title:
<PAGE>
EXHIBIT 4.5
FIRST SECURITY BANK, N.A.
AS SELLER AND SERVICER,
AND
FIRST SECURITY AUTO OWNER TRUST 19-___
SALE AND SERVICING AGREEMENT
DATED AS OF ______________
FIRST SECURITY AUTO OWNER TRUST 19__-__
<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 Securityholders . . . . . . . . . . .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. . . . . . . . . . . . . . . . . . . .24
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. . . . . . . . . . . . . . . . . .30
Section 3.3 Realization upon Receivables. . . . . . . . . . . . . . . . .31
Section 3.4 Physical Damage Insurance . . . . . . . . . . . . . . . . . .32
Section 3.5 Maintenance of Security Interests in Financed Vehicles. . . .32
Section 3.6 Covenants of the Servicer . . . . . . . . . . . . . . . . . .33
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 . . . . . .35
Section 3.12 Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . . . . . .35
Section 3.13 Reports to the Commission . . . . . . . . . . . . . . . . . .35
Section 3.14 Reports to the Rating Agencies. . . . . . . . . . . . . . . .35
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<PAGE>
ARTICLE IV. DISTRIBUTIONS; RESERVE ACCOUNT;STATEMENTS TO SECURITYHOLDERS
Section 4.1 Establishment of Accounts . . . . . . . . . . . . . . . . . .36
Section 4.2 Collections . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 4.3 Advances. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 4.4 Additional Deposits; Net Deposits . . . . . . . . . . . . . .40
Section 4.5 Distributions . . . . . . . . . . . . . . . . . . . . . . . .41
Section 4.6 Reserve Account . . . . . . . . . . . . . . . . . . . . . . .42
Section 4.7 Statements to Securityholders . . . . . . . . . . . . . . . .42
ARTICLE V. YIELD SUPPLEMENT ACCOUNT
Section 5.1 Yield Supplement Agreement. . . . . . . . . . . . . . . . . .44
Section 5.2 Yield Supplement Account. . . . . . . . . . . . . . . . . . .44
ARTICLE VI. THE SELLER
Section 6.1 Representations and Warranties of the Seller. . . . . . . . .46
Section 6.2 Liability of the Seller; Indemnities. . . . . . . . . . . . .48
Section 6.3 Merger or Consolidation of the Seller . . . . . . . . . . . .49
Section 6.4 Limitation on Liability of the Seller and Others. . . . . . .49
Section 6.5 Seller May Own Certificates . . . . . . . . . . . . . . . . .49
ARTICLE VII. THE SERVICER
Section 7.1 Representations and Warranties of the Servicer. . . . . . . .49
Section 7.2 Liability of the Servicer; Indemnities. . . . . . . . . . . .51
Section 7.3 Merger or Consolidation of the Servicer . . . . . . . . . . .52
Section 7.4 Limitation on Liability of the Servicer and Others. . . . . .52
Section 7.5 Servicer Not to Resign. . . . . . . . . . . . . . . . . . . .53
Section 7.6 Servicer May Own Certificates . . . . . . . . . . . . . . . .53
ARTICLE VIII. SERVICING TERMINATION
Section 8.1 Events of Servicing Termination . . . . . . . . . . . . . . .53
Section 8.2 Trustee to Act; Appointment of Successor Servicer . . . . . .55
Section 8.3 Effect of Servicing Transfer. . . . . . . . . . . . . . . . .56
Section 8.4 Notification to Securityholders . . . . . . . . . . . . . . .57
Section 8.5 Waiver of Past Events of Servicing Termination. . . . . . . .57
Section 8.6 Transfer of Accounts. . . . . . . . . . . . . . . . . . . . .57
ARTICLE IX. TERMINATION
Section 9.1 Termination of the Trust. . . . . . . . . . . . . . . . . . .57
Section 9.2 Optional Purchase of All Receivables. . . . . . . . . . . . .58
ARTICLE X. MISCELLANEOUS PROVISIONS
Section 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . .59
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Section 10.2 Protection of Title to Trust. . . . . . . . . . . . . . . . .60
Section 10.3 Limitation on Rights of Securityholders . . . . . . . . . . .61
Section 10.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . .62
Section 10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Section 10.6 Severability of Provisions. . . . . . . . . . . . . . . . . .62
Section 10.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . .62
Section 10.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . .62
Section 10.9 Intention of Parties. . . . . . . . . . . . . . . . . . . . .63
Section 10.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .63
Section 10.11 Limitation of Liability of the Trustees . . . . . . . . . . .63
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<PAGE>
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Receivables File Locations
EXHIBITS
Exhibit A Form of Initial Assignment
Exhibit B Form of Servicer's Certificate
Exhibit C Form of Yield Supplement Agreement
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<PAGE>
SALE AND SERVICING AGREEMENT
SALE AND SERVICING AGREEMENT, dated as of ________, 19__ (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 FIRST SECURITY AUTO OWNER TRUST 19-__-_, a Delaware
business trust (the "Trust").
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 I.1 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"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.
"ACCOUNTS" mean, collectively, the Collection Account and the Note
Distribution Account.
"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 CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the sum of the Class A
Noteholders' Interest Distributable Amounts for all classes of Class A Notes
and the Class A Noteholders' Interest Carryover Shortfall as of the preceding
Distribution Date.
"AGGREGATE NET LOSSES" means, for any Collection Period, the
aggregate amount allocable to principal of all Receivables newly designated
during such Collection Period as Liquidating Receivables minus all
Liquidation Proceeds to the extent allocable to principal collected
<PAGE>
during such Collection Period with respect to all Liquidating Receivables
(whether or not newly designated as such).
"AGGREGATE RECEIVABLES BALANCE" means, as of any date, the sum of
the Receivable Balance of all outstanding Receivables (other Liquidating
Receivables) held by the Trust on such date.
"AGGREGATE STARTING RECEIVABLES BALANCE" means, as of the Cutoff
Date, $______________.
"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 a Trustee, including any managing director, vice president,
assistant vice president, assistant treasurer, assistant secretary or any
other officer of a 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 AMOUNT" means, with respect to any Distribution Date,
the sum of Available Interest and Available Principal.
"AVAILABLE INTEREST" means, 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, 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
Repurchase 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; (iii) all related Recoveries, to the extent
allocable to principal and (iv) 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
Repurchase Amount of which has been distributed on a prior Distribution Date.
"AVERAGE DELINQUENCY RATIO" means, as of any Distribution Date, the
average of the Delinquency Ratios for the preceding three Collection Periods.
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<PAGE>
"AVERAGE NET LOSS RATIO" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust
Agreement, the Sale and Servicing Agreement, the Administration Agreement,
the Indenture and the other documents and certificates delivered in
connection therewith.
"BASIC RESERVE ACCOUNT PERCENTAGE" means ___%.
"BOOK-ENTRY NOTES" mean beneficial interests in the Notes,
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 Indenture 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
Indenture 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 one of the certificates executed by the
Owner Trustee and authenticated by or on behalf of the Owner Trustee in
substantially the form set forth in EXHIBIT A to the Trust Agreement.
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account designated as
such, established and maintained pursuant to Section 5.1(a) of the Trust
Agreement.
"CERTIFICATED SECURITY" has the meaning, as of any date, given to
such term under the applicable UCC in effect on such date.
"CERTIFICATEHOLDER" means the Person in whose name a Certificate
shall be registered pursuant to the terms of the Trust Agreement.
"CERTIFICATE REGISTER" means the register of Certificates specified
in Section 3.4 of the Trust Agreement.
"CERTIFICATE REGISTRAR" means the registrar at any time of the
Certificate Register, appointed pursuant to Section 3.4(a) of the Trust
Agreement.
"CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of
the close of any Distribution Date, the excess of the Aggregate Class A
Noteholders' Interest Distributable Amount
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<PAGE>
for such Distribution Date over the amount that was actually deposited in the
Note Distribution Account on the related Deposit Date in respect of interest
on the Class A Notes.
"CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to the Class A-1 Notes and the Class A-2 Notes and any Distribution
Date, the product of (1) the outstanding principal balance of such class of
Class A Notes on the preceding Distribution Date after giving effect to all
payments of principal in respect of such class of Class A Notes on such
preceding Distribution Date (or, in the case of the first Distribution Date,
the outstanding principal balance on the Closing Date) and (2) the product of
the Interest Rate for such class of Class A Notes and a fraction, the
numerator of which is the actual number of days elapsed from the most recent
Distribution Date on which interest has been paid (or the Closing Date, in
the case of the initial period), and the denominator of which is 360, and
with respect to the Class A-3 Notes and the Class A-4 Notes and any
Distribution Date, the product of (i) the outstanding principal balance of
such class of Class A Notes on the preceding Distribution Date after giving
effect to all payments of principal in respect of such class of Class A Notes
on such preceding Distribution Date (or, in the case of the first
Distribution Date, the outstanding principal balance on the Closing Date) and
(ii) the product of the Interest Rate for such class and 1/12 (multiplied by,
in the case of the first Distribution Date, a fraction, the numerator of
which is the number of days elapsed from the Closing Date and the denominator
of which is 30).
"CLASS A NOTES" means, collectively, the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.
"CLASS A-1 NOTES" means the Class A-1 ___% Asset Backed Notes in
the aggregate principal amount of $________.
"CLASS A-2 NOTES" means the Class A-2 ___% Asset Backed Notes in
the aggregate principal amount of $________.
"CLASS A-3 NOTES" means the Class A-3 ___% Asset Backed Notes in
the aggregate principal amount of $________.
"CLASS A-4 NOTES" means the Class A-4 ___% Asset Backed Notes in
the aggregate principal amount of $________.
"CLASS B NOTES" means the Class B ___% Asset Backed Notes in the
aggregate principal amount of $________ issued pursuant to the Indenture.
"CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as of
the close of any Distribution Date, the excess of the Class B Noteholders'
Interest Distributable Amount for such Distribution Date over the amount that
was actually deposited in the Note Distribution Account on the related
Deposit Date in respect of payment of interest on the Class B Notes.
"CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the Class B Noteholders'
Monthly Interest Distributable Amount
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<PAGE>
for such Distribution Date and (ii) the Class B Noteholders' Interest
Carryover Shortfall as of the preceding Distribution Date.
"CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the product of (i) the outstanding
principal balance of the Class B Notes on the preceding Distribution Date
after giving effect to all payments of principal in respect of the Class B
Notes on such preceding Distribution Date (or, in the case of the first
Distribution Date, the outstanding principal balance on the Closing Date) and
(ii) the product of the Interest Rate for the Class B Notes and 1/12
(multiplied by, in the case of the first Distribution Date, a fraction, the
numerator of which is the number of days elapsed from the Closing Date and
the denominator of which is 30).
"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 _____________, 19__.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 4.1 of this Agreement.
"COLLECTION PERIOD" means, during the term of this Agreement, the
period from and including the 24th day of a calendar month to and including
the 23rd 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 ______________. With respect to
any Determination Date, Deposit Date or Distribution Date, the "related
Collection Period" shall mean the Collection Period ending during the
preceding 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.
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<PAGE>
"CONTRACT RATE" means, with respect to a Receivable, the rate per
annum of interest charged on the outstanding receivable balance of such
Receivable.
"CONTROL" over a Security Entitlement shall be considered obtained
by the Indenture Trustee or the Owner Trustee, as applicable, if:
(i) the Indenture Trustee or the Owner Trustee, as applicable, is the
Securities Intermediary for the Account in which such Security
Entitlement is held, or (b) the Indenture Trustee or the Owner
Trustee, as applicable, (1) is registered on the records of the
Securities Intermediary as the person having such a Security
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 Indenture Trustee or the Owner Trustee, as
applicable, 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:
(a) with respect to the Indenture Trustee, the principal office of
the Indenture 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 ,
Attention: , or at such other
address as the Indenture Trustee may designate from time to time by notice
to the Noteholders, the Seller and the Servicer, or the principal corporate
trust office of any successor Indenture Trustee (the address of which the
successor Indenture Trustee will notify the Noteholders, the Seller and the
Servicer); or
(b) with respect to the Owner Trustee, the principal office of the
Owner Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of execution of this
Agreement is located at: ,
Attention: , or at such other address as the
Owner 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 Owner Trustee (the address of which the
successor Owner Trustee will notify the Certificateholders, the Seller and
the Servicer).
"CREDIT DEFERRAL" has the meaning specified in Section 3.2.
"CUSTODIAN" means First Security Service Company or another custodian
named from time to time.
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<PAGE>
"CUTOFF DATE" means ________________.
"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 ___%.
"DEFERRAL FEE" means the fee associated with any Optional Payment
Deferral or Credit Deferral.
"DEFINITIVE NOTES" shall mean the Notes specified in Section 2.2 of
the Indenture.
"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 Liquidating 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 (i) the Aggregate Receivables Balance as of the last day of such
Collection Period.
"DELINQUENCY TRIGGER" means ____%.
"DEPOSIT DATE" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"DETERMINATION DATE" means the tenth day of each month (or, if such
day is not a Business Day, the next succeeding Business Day).
"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
__________, 1998.
"ELECTRONIC LEDGER" means the electronic master record of the
retail installment sale contracts and retail installment loans of the Seller.
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<PAGE>
"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 either 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 Deposit Date (or, to the extent overnight investments are
permitted under Section 4.1(a)(ii), on the next 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 $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
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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 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 either Trustee, the Seller or
any of their Affiliates for which either 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) the
Indenture Trustee 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 8.1.
"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.
"FINAL SCHEDULED DISTRIBUTION DATE" means, with respect to a class
of Securities, the date set forth below opposite such Securities:
Class A-1 Notes: __________________
Class A-2 Notes: __________________
Class A-3 Notes: __________________
Class A-4 Notes: __________________
Class B Notes: __________________
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"FINANCED VEHICLE" means the Motor Vehicle, together with all
accessions thereto, securing an Obligor's indebtedness under a Receivable.
"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.
"INDENTURE" means the Indenture dated as of the dated hereof
between the Trust and ___________________________, as Indenture Trustee., as
amended and supplemented from time to time.
"INDENTURE TRUSTEE" means
_________________________________________, or any successor indenture trustee
under the Indenture.
"INITIAL RECEIVABLE BALANCE" means, with respect to a Receivable,
the aggregate amount advanced toward the purchase price of all Financed
Vehicles related to such Receivable, including insurance premiums, federal
excise taxes, sales taxes and other items customarily financed as part of
Motor Vehicle Loans and related costs, less payments received from the
Obligor prior to the related Cutoff Date allocable to principal in accordance
with the terms of the Receivable.
"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 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 Repurchase 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 Repurchase
Amount of which has been distributed on a prior Distribution Date.
"INTERESTED PARTIES" means the Trust and each other party
identified in the Transfer and Servicing Agreements as having an interest as
owner, trustee, secured party or Securityholder with respect to the Trust
Property.
"LIQUIDATING 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;
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PROVIDED, HOWEVER, that any Receivable which the Seller or the Servicer is
obligated to repurchase or purchase shall be deemed not to be a Liquidating
Receivable during a Collection Period unless the Seller or the Servicer fails
to deposit the Repurchase 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
Liquidating Receivable.
"LIQUIDATION EXPENSES" means, with respect to a Liquidating
Receivable, an amount not to exceed $________ (or such greater amount as the
Servicer determines necessary in accordance with the customary procedures to
refurbish and dispose of a repossessed Financed Vehicle) as an allowance for
amounts charged to the account of the Obligor, in keeping with the Servicer's
customary procedures for repossession, refurbishment and disposition of the
Financed Vehicle, including out-of-pocket costs related to the Liquidation.
"LIQUIDATION PROCEEDS" means, with respect to any Distribution Date
and a Receivable that became a Liquidating 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
Liquidating 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 Liquidating Receivable net of 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 Receivable 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 Aggregate Receivables Balances on each of the first
day of such Collection Period and the last day of such Collection Period.
"NOTEHOLDERS" means holders of record of the Notes pursuant to the
Indenture and, with respect to any class of Notes, holders of record of such
class of Notes pursuant to the Indenture.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, on a
Distribution Date, the excess, if any, of the Noteholders' Principal
Distributable Amount over the Principal Payment Amount on such Distribution
Date.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 4.1(a)(ii) of this Agreement.
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"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, for any
Distribution Date, the sum of (i) the Principal Distributable Amount, (ii)
the Noteholders' Principal Carryover Shortfall for the prior Distribution
Date and (iii) without duplication, on the Final Scheduled Distribution Date
for a class of Notes, the amount necessary to reduce the outstanding
principal balance of such class of Notes to zero.
"NOTES" means, collectively, the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes.
"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 Indenture Trustee
or the Owner Trustee, as applicable.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
outside counsel to the Seller or the Servicer). In addition, for purposes of
the Indenture: (i) such counsel shall be satisfactory to the Indenture
Trustee; (ii) the opinion shall be addressed to the Indenture Trustee and
(iii) the opinion shall comply with any applicable requirements of Section
11.1 of the Indenture and shall be in form and substance satisfactory to the
Indenture Trustee.
"OPTIONAL PAYMENT DEFERRAL" shall have the meaning specified in
Section 3.2(c).
"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).
"OWNER TRUSTEE" means __________________________________, or any
successor owner trustee under the Trust Agreement..
"PAYING AGENT" means, with respect to the Indenture, the Indenture
Trustee or any other Person that meets the eligibility standards for the
Indenture Trustee specified in Section 6.11 of the Indenture and is
authorized by the Trust to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Trust. With respect
to the Trust Agreement, any paying agent or co-paying agent appointed
pursuant to Section 3.9 of the Trust Agreement that meets the eligibility
standards for the Owner Trustee specified in Section 6.13 of the Trust
Agreement.
"PERSON" means a legal person, including any individual,
corporation, limited liability company, estate, partnership, joint venture,
association, joint stock company, trust, unincorporated
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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).
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, Available Principal for such Distribution Date plus
Realized Losses with respect to the related Collection Period.
"PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date, the lesser of (x) the Noteholders' Principal Distributable Amount and
(y) the Total Available Amount remaining after payment of the Total Servicing
Fee, the Aggregate Class A Noteholders' Interest Distributable Amount and the
Class B Noteholders' Interest Distributable Amount.
"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 this Agreement.
"RATING AGENCY" means at any time any nationally recognized
statistical rating agency providing a rating for the Notes at the request of
the Seller at such time.
"REALIZED LOSSES" means, with respect to any Distribution Date and
a Receivable that became a Liquidating Receivable during the related
Collection Period, the excess of (i) the Receivable 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.
"RECEIVABLE BALANCE" means, as of the last day of the related
Collection Period, with respect to any Receivable, the Initial Receivable
Balance minus the sum, in each case computed in accordance with the terms of
the Receivable, of (i) that portion of payments due on and after the Cutoff
Date and on or prior to the last day of the related Collection Period
allocated to principal, (ii) any prepayments applied by the Servicer to
reduce the Receivable Balance and (iii) that portion of the following
received and allocated to principal by the Servicer: proceeds from any
Insurance Policies covering the Financed Vehicle or Financed Vehicles,
Liquidation Proceeds and proceeds from any Dealer Agreement. The Obligor on
a Receivable secured by multiple Financed Vehicles may prepay an amount
corresponding to the outstanding principal balance for one or more of such
Financed Vehicles and the security interest in such vehicles will generally
be released.
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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 Notes 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 Liquidating Receivable
during the related Collection Period if such Collection Period follows the
Collection Period in which such Receivable became a Liquidating Receivable,
net of 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.
"REPURCHASE AMOUNT" of any Receivable means, with respect to any
Deposit Date, an amount equal to the sum of (i) the outstanding Receivable
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 Receivable 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.
"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 PROPERTY" has the meaning specified in the
Granting Clause of the Indenture.
"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, in the form in which it
has been adopted in the State of New York.
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"S&P" means Standard & Poor's Ratings Service, a Division of the
McGraw Hill Companies.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement dated as of ______________, 19__ between the Bank and the Trust, as
amended and supplemented from time to time.
"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).
"SCHEDULE OF RECEIVABLES" means the list identifying the
Receivables attached hereto as Schedule A.
"SECURITIES" means the Notes and the Certificates.
"SECURITY CERTIFICATE" has the meaning given such term in Revised
Article 8.
"SECURITY ENTITLEMENT" has the meaning given such term in Revised
Article 8.
"SECURITYHOLDER" means any of the Noteholders or Certificateholders.
"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 6.3.
"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 7.3, and each successor servicer
appointed and acting pursuant to Section 8.2.
"SERVICER'S CERTIFICATE" has the meaning specified in Section 3.9.
"SERVICING FEE" means, with respect to any Distribution Date, an
amount equal to the product of (i) one-twelfth of the Servicing Fee Rate and
(ii) the Aggregate Receivables Balance as of the first day of the preceding
Collection Period.
"SERVICING FEE RATE" shall be 1.0% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"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 Indenture Trustee and the Owner Trustee
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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 Receivable 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" means, with respect to any
Distribution Date will equal ___% of the Aggregate Receivables Balance,
except that the Specified Reserve Account Balance will never exceed the
aggregate outstanding principal amount of the Notes. The Specified Reserve
Account Balance will be calculated as ___% of the Aggregate Receivables
Balance for any Distribution Date (beginning on ________, 19__) on which the
Average Net Loss Ratio exceeds __% or the Average Delinquency Ratio exceeds
__%. The Specified Reserve Account Balance may be reduced or the definition
thereof otherwise modified without the consent of the Noteholders if the
Rating Agencies confirm in writing, after having received notice thereof,
that such reduction or modification will not result in a reduction or
withdrawal of the rating of the Notes.
"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.
"TOTAL AVAILABLE AMOUNT" means, for each Distribution Date, the sum
of the Available Amount and all cash or other immediately available funds on
deposit in the Reserve Account immediately prior to such Distribution Date
(excluding investment earnings).
"TOTAL SERVICING FEE" means, on any Distribution Date, the
Servicing Fee for the related Collection Period and any unpaid Servicing Fees
from prior Distribution Dates.
"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.
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"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 AND SERVICING AGREEMENTS" means this Agreement, the Trust
Agreement and the Indenture.
"TRUST" means the First Security Auto Owner or Trust 19__-_ created
by the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement dated as of the date
hereof between the Seller and ______________, as Owner Trustee, as amended
and supplemented from time to time.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"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 (including the right to receive payments under the circumstances
specified herein from the Reserve Account); and all proceeds (within the
meaning of the Relevant UCC) of the foregoing.
"UCC" means the Uniform Commercial Code, as amended from time to
time.
"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 C.
"YIELD SUPPLEMENT AMOUNT" shall have the meaning specified in
Section 5.l.
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"YIELD SUPPLEMENT INITIAL DEPOSIT" means cash or Eligible Investments
having a value of at least $________.
Section I.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 I.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 I.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 I.5 SECTION REFERENCES. All section references shall be
to Sections in this Agreement unless otherwise specified.
Section I.6 ACTION BY OR CONSENT OF SECURITYHOLDERS. Whenever
any provision of this Agreement refers to action to be taken, or consented
to, by Securityholders, such provision shall be deemed to refer to
Securityholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consented to by Securityholders.
ARTICLE II
THE TRUST PROPERTY
Section II.1 CONVEYANCE OF TRUST PROPERTY. (a) In consideration
of the Trust's delivery of the Securities to, or upon the written order of
the Seller, the Seller hereby sells, transfers, assigns and conveys to the
Trust, upon the terms and conditions hereof, the Trust Property, without
recourse. The sale, transfer, assignment and conveyance made hereunder shall
not constitute and is not intended to result in an assumption by any Trustee,
the Trust or any Securityholder 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
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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 Trust a security interest in the
Trust Property. This Agreement shall constitute a security agreement under
applicable law.
Section II.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 Trust shall rely in accepting the
Trust Property in trust and executing and delivering the Securities. 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 and the pledge under the Indenture.
(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 in the ordinary course of its business 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 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 Trust, (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 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) in the event of a prepayment, provides for a payment that will
fully pay the Receivable 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 Initial
Receivable Balance and the Contract Rate of the Receivable have been
accurately and correctly calculated as of the Cutoff Date.
(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
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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 2.2, but such failure
to comply with such laws shall not constitute a breach of this warranty
except for purposes of Section 2.2.
(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 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,
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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 Receivable Balance of the
Receivable exceeds $3,500 (or such other amount as the Servicer determines,
consistent with the standard of care required by Section 3.1), 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 Securities are unlawful, void, or voidable.
(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).
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(xvi) CAPACITY OF PARTIES. All parties to the
Receivable had capacity to execute the Receivable.
(xvii) CHATTEL PAPER. The Receivable is "chattel paper"
as defined in the Relevant UCC.
(xviii) ONE ORIGINAL. There is only one executed original
of each Receivable.
(xix) 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 or the Securityholders in the Receivable or the proceeds
thereof.
(xx) 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.
(xxi) 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.
(xxii) 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 II.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 Trust shall
rely in accepting the Trust Property in trust and executing and delivering the
Securities. 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 and the pledge under the
Indenture.
(i) AMOUNTS. The aggregate Initial Receivables
Balance of the Receivables are equal to the Aggregate Starting Receivables
Balance.
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(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 ___ months and not more
than ___ months; (d) each Receivable had a remaining Receivable Balance of
not less than $___ and not more than $______ as of the Cutoff Date; (e) no
Receivable was more than __ 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 Securityholders.
(iii) AGGREGATE CHARACTERISTICS. The Receivables had
the following characteristics in the aggregate as of the Cutoff Date: (a)
approximately _____% of the Aggregate Starting Receivables Balance was
attributable to loans for purchases of new Financed Vehicles, and
approximately _____% of the Aggregate Starting Receivables Balance was
attributable to loans for purchases of used Financed Vehicles; (b)
approximately _____% of the Aggregate Starting Receivables 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 Aggregate Starting Receivables Balance was
attributable to Receivables originated by the Seller; (e) approximately
_____% of the Aggregate Starting Receivables Balance was attributable to
Receivables that are Dealer Loans; and (f) approximately ____% of the
Aggregate Starting Receivables Balance was attributable to Receivables that
are subject to a repurchase obligation by the originating Dealer upon
default and repossession.
(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.
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Section II.4 REPURCHASE UPON BREACH. The Seller, the Servicer, the
Owner Trustee or the Indenture 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 (xx) 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 Owner Trustee, the Indenture 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 Owner 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 Securityholders in which is
materially and adversely affected by such breach or failure. Such purchase
shall occur as of the last day of such Collection Period. In consideration of
the repurchase of a Receivable hereunder, the Seller shall remit the Repurchase
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). 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 Securityholders. Except as provided in
Section 6.2, the sole remedy of the Trust, the Owner Trustee, the Indenture
Trustee, or the Securityholders 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 II.5 CUSTODY OF RECEIVABLE FILES. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, 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 Trust and the
Indenture Trustee which was granted a security interest pursuant to the
Indenture of the following documents or instruments, which are hereby
constructively delivered to the Trust and the Indenture Trustee with respect to
each Receivable (collectively, a "RECEIVABLE FILE"):
(i) the original of the Receivable;
(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,
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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 II.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 Trust and the
Indenture Trustee for the benefit of all present and future Securityholders,
and maintain such accurate and complete accounts, records, and computer
systems pertaining to each Receivable as shall enable the Servicer and the
Trust and the Trustees 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 Trust and the Indenture Trustee. 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 Trustees to verify,
if either such Trustee so elects, the accuracy of the record keeping of the
Servicer. The Servicer shall promptly report to the Trustees any failure on
its 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 Trustees by 30 days' prior written notice. The Servicer shall make
available to the Trustees or their Authorized Officers (or, when requested in
writing by either Trustee, to its attorneys or auditors) and to Securityholders
(only in such cases where a Securityholder is required by applicable statutes or
regulations to review such documentation) the Receivable Files and the related
accounts,
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records, and computer systems maintained by the Servicer at such times during
the normal business hours of the Servicer as the Trustees shall reasonably
instruct.
(c) RELEASE OF DOCUMENTS. Upon written instructions from the
Trust, the Servicer shall release any document in the Receivable Files to the
Trust, the Trust's agent, or the Trust's designee, as the case may be, at
such place or places as the Trust may designate, as soon thereafter as is
practicable. Any document so released shall be handled by the Trust with due
care and returned to the Servicer for safekeeping as soon as the Trust 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, subject to the lien of the
Indenture Trustee.
Section II.7 INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall
be deemed to have received proper instructions from the Trust with respect to
the Receivable Files upon its receipt of written instructions signed by an
Authorized Officer of the Trust (or, as appropriate, the Owner Trustee on
behalf of the Trust). A certified copy of excerpts of bylaws or certain
resolutions of the Board of Directors of the Trust (or, as appropriate, the
Owner Trustee on behalf of the Trust) 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.
Section II.8 CUSTODIAN'S INDEMNIFICATION. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Trust and each
Trustee, their officers, directors, employees and agents and the
Securityholders 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 Trust or either of the Trustees 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 Trust or any Trustee,
respectively. 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.
Section II.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 7.5, or if
all of the rights and obligations of the Servicer shall have been terminated
under Section 8.1, the appointment of the Servicer as custodian hereunder may
be terminated by the Trust or by any Persons to whom the Trust has assigned
its rights hereunder, in the same manner as the Trust or such Persons may
terminate the rights and obligations of the Servicer under Section 8.1. The
Trust may terminate the Servicer's appointment as a custodian hereunder at
any time with cause, or with 30
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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 Trust,
the Trust's agent or the Trust's designee at such place or places as the
Trust 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
8.1), the Trust 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
Trust or the Trust's Agent 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 III.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 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
Trustees 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 Trust to execute and deliver, on
behalf of all Interested Parties, 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; 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
Trust shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer, which assignment shall be solely for purposes of
collection. The Trust 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.
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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, Recoveries or Liquidation Proceeds received by the Servicer
shall include payments, Recoveries or Liquidation Proceeds received by a
subservicer or subcontractor, irrespective of whether such payments,
Recoveries or Liquidation Proceeds are actually deposited in the Collection
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 each 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 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 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 Trust may enforce the
provisions of this Agreement and any subservicing agreement against the
subservicer, without diminution of such obligations or liabilities by virtue of
any subservicing agreement, by virtue of any indemnification
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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, each Trustee and the
Securityholders for the servicing and administering of the Receivables and
the other Trust Property in accordance with the provisions of this Agreement
(including for the deposit of payments, Recoveries and Liquidation Proceeds
received by a subservicer or subcontractor, irrespective of whether such
payments, Recoveries or Liquidation Proceeds are actually remitted to the
Servicer or deposited in the Collection 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 Trust, 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 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 Trust under this Agreement is intended by the parties to be that of
independent contractors and not that of joint venturers, partners or agents.
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Section III.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 Initial Receivable Balance 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 for the Class B Notes; (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 Receivable 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 Receivable 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 in
accordance with Section 3.7 hereof.
(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:
(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;
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(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 Liquidating 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 Receivable Balance of the related
Receivable. If, as an inadvertent result of any extension granted pursuant to
this Section 3.2(e), 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 for the Class B Notes, then the Servicer
shall be obligated to purchase such Receivable pursuant to Section 3.7.
Section III.3 REALIZATION UPON RECEIVABLES. On behalf of the
Trust, the Servicer shall charge off a Receivable as a Liquidating Receivable
in accordance with its customary servicing procedures and shall use its best
efforts to repossess and liquidate the Financed Vehicle securing any
Liquidating 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 foregoing shall
be subject to the provision that, in any case in which a Financed Vehicle
shall have suffered damage, the Servicer shall not be obligated to 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 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). The Servicer shall be entitled to
receive Liquidation Expenses with respect to each Liquidating Receivable at
such time as the Receivable becomes a Liquidation Receivable in accordance
with subsection 4.3(c).
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 Trust 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 Trust, at
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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
Securityholders.
Section III.4 PHYSICAL DAMAGE INSURANCE. (a) The Servicer shall
require that each Financed Vehicle be insured under an Insurance Policy
naming the Seller as loss payee and in the event that an Insurance Policy
shall lapse or shall be otherwise terminated and the Receivable Balance of
the Receivable related thereto is in excess of $3,500 (or such other amount
as the Servicer determines, consistent with the standard of care required by
Section 3.1), 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 Receivable Balance or Aggregate Receivables 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 Trust, at the Servicer's expense, or the
Seller, at Servicer's expense, shall take such steps as the Servicer deems
necessary to enforce such Insurance Policy, including bringing suit in its
name or the names of the Securityholders.
Section III.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 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 8.1(a) with respect to the
Seller), upon the request of the Trust, 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 Trust, 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,
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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 III.6 COVENANTS OF THE SERVICER. The Servicer makes the
following covenants upon which the Trust relies in accepting the Trust Property
in trust and in executing and delivering the Securities:
(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 any
Interested Party 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 or any Interested Party
hereunder would be materially adversely affected.
(iii) AMENDMENTS. The Servicer will not increase or decrease
the number or amount of Scheduled Payments or the Initial Receivable
Balance or the Contract Rate 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 III.7 PURCHASES BY THE SERVICER. The Seller, the Servicer,
the Indenture Trustee or the Owner Trustee, as the case may be, shall inform the
other parties promptly, in writing, upon the discovery (which, in the case of
either Trustee, shall occur only upon the actual knowledge of an Authorized
Officer of such 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 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 Owner 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 last day of
such Collection Period; 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 last day of 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 Securityholders). 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
for the Class B Notes, the Servicer shall be obligated to purchase the
applicable Receivable on the last day of the Collection Period during which the
Servicer grants such Optional Payment Deferral. In consideration of the
purchase of a Receivable hereunder, the Servicer shall remit the Repurchase
Amount of such Receivable in the manner specified in
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Section 4.3 on the related Deposit Date. Except as provided in Section 7.2,
the sole remedy of the Trust, any Trustee, or the Securityholders 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 III.8 SERVICING COMPENSATION. On each Distribution Date,
the Servicer shall be paid the Total Servicing Fee for such Distribution
Date. In addition, the Servicer shall retain any late fees, prepayment
charges or other fees and charges (other than Deferral Fees) collected
during the Collection Period (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
either Trustee (and any custodian appointed by such Trustee) and independent
accountants, any subservicer, taxes imposed on the Servicer or any
subservicer, and expenses incurred in connection with distributions and
reports to the Trustees and the Securityholders) 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 Total 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 8.2 and all (and not a portion) of the Total Servicing Fee is
transferred to any such successor servicer.
Section III.9 SERVICER'S CERTIFICATE. On or before the
Determination Date immediately preceding each Distribution Date, the Servicer
shall deliver to each Trustee a report of a Servicing Officer substantially
in the form of EXHIBIT B 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 required to be
provided to Certificateholders and Noteholders 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 Trustees 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 Liquidating Receivable during the related
Collection Period.
Section III.10 ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Servicer
shall deliver to the Trust, the Owner Trustee and the Indenture 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 Trust, the Owner Trustee and
the Indenture 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 8.1.
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Section III.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 Trust, the Owner Trustee and the Indenture Trustee on or
before March 15 of each year, commencing March 15, ____, a report of
examination addressed to the Board of Directors of the Servicer and to the
Trust, the Owner Trustee and the Indenture 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 Trust, the Owner Trustee
and the Indenture Trustee to agree to the procedures performed by such firm,
the Servicer shall direct the Trust, the Owner Trustee and the Indenture
Trustee in writing to so agree; it being understood and agreed that the
Trust, the Owner Trustee and the Indenture Trustee will deliver such letter
of agreement in conclusive reliance upon the written direction of the
Servicer, and the Trust, the Owner Trustee and the Indenture Trustee make 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 III.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide the Trustees and the
Securityholders with access to the Receivable Files (in the case of the
Securityholders, where the Securityholder shall be required by applicable
statutes or regulations to have access to such documentation). Such access
shall be 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
Securityholder, by its acceptance of a Security, 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 III.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 III.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.
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
Section IV.1 ESTABLISHMENT OF ACCOUNTS. (a)
(i) The Servicer, for the benefit of the Securityholders, shall
establish and maintain in the name of the Indenture Trustee one or more Eligible
Deposit Accounts (the "COLLECTION ACCOUNT"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Securityholders.
(ii) The Servicer for the benefit of the Noteholders, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "NOTE DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Noteholders.
(iii) In the event the Bank is not the only Certificateholder, the
Servicer, for the benefit of the Certificateholders, shall establish and
maintain in the name of the Owner Trustee an Eligible Deposit Account (the
"CERTIFICATE DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders.
(b) (i) Funds on deposit in the Accounts shall be invested by
the Indenture in Eligible Investments selected by the Servicer (as provided
in a writing signed by it); PROVIDED, HOWEVER, it is understood and agreed
that Indenture 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 Indenture Trustee be liable for the selection of Eligible
Investments. The Indenture Trustee and the Owner 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 Indenture 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 Deposit Date preceding the following Distribution Date.
Funds deposited in an Account on a Deposit Date which immediately precedes
a Distribution Date upon the maturity of any Eligible Investments are not
required to be (but may be) invested overnight.
(ii) The Accounts shall initially be established with the
Indenture Trustee. The Indenture 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 (other than income thereon which
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shall be paid to the Seller) and all such funds, investments and
proceeds shall be part of the Trust Property. The Accounts shall be
under the sole dominion and control of the Indenture Trustee for the
benefit of all Securityholders. If, at any time, any of the Accounts
ceases to be an Eligible Deposit Account, the Indenture 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.
(iii) 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 Indenture Trustee, and the Indenture Trustee shall have
sole signature authority with respect thereto;
(B) the Indenture Trustee shall maintain Control over each
Account in which any Account Property that constitutes a Security
Entitlement, an Uncertificated Security or a Federal Book-Entry
Security is held; and
(C) 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 shall be transferred
to the Indenture Trustee or its nominee or custodian by physical
delivery to the Indenture 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.
(iv) The Servicer shall have the power, revocable by the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Accounts for the purpose of permitting the Servicer
or the Owner Trustee to carry out its respective duties hereunder or
permitting the Indenture Trustee to carry out its duties under the
Indenture.
(c) (i) The Servicer, for the benefit of the Securityholders,
shall establish and maintain in the name of an Eligible Deposit Account
(the "RESERVE ACCOUNT") to include money and other property deposited and
held therein pursuant to this Section 4.01(c)(i), Section 4.5(b)(iv) and
Section 4.6. On the Closing Date, the Seller shall deposit the Reserve
Account Initial Deposit with respect to the Closing Date into the Reserve
Account. The Reserve Account shall be the property of the Trust subject to
the rights of the Indenture Trustee in the Reserve Account Property.
(ii) Funds on deposit in the Reserve Account shall be
invested by the Indenture Trustee in Eligible Investments selected by the
Servicer (as provided in writing signed by it); PROVIDED, HOWEVER, it is
understood and agreed that the Indenture Trustee shall not be liable for
any loss arising from such investment in Eligible Investments or incurred
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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 Indenture Trustee be liable
for the selection of Eligible Investments. The Indenture 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 Indenture Trustee for the benefit of the
Securityholders; 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 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 Deposit 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 Deposit Date.
(iii) The Reserve Account shall be under the sole dominion
and control of the Indenture Trustee. 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 Indenture Trustee and the Indenture Trustee shall have
sole signature authority with respect thereto;
(B) the Indenture Trustee shall maintain Control over each
Account in which any Account Property that constitutes a Security
Entitlement, an Uncertificated Security or a Federal Book-Entry
Security is held; and
(C) 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 shall be
transferred to the Indenture Trustee or its nominee or custodian by
physical delivery to the Indenture Trustee or its nominee or custodian
endorsed to, or registered in the name of, the Indenture Trustee or
its nominee or custodian or endorsed in blank.
Section IV.2 COLLECTIONS. (a) Subject to the provisions of
subsections (b) and (c) below, the Servicer shall remit to the Collection
Account all payments by or on behalf of the Obligors on the Receivables,
including all Liquidation Proceeds and Recoveries received by the Servicer
during any Collection Period, as soon as practicable, but in no event after the
close of
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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 Collection Account all payments by or on behalf
of the Obligors received by the Servicer representing monies due or received
under the Receivables 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 Trust for the benefit of the Securityholders,
providing that the Trust 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
Trust shall have received written notice from each of the Rating Agencies
that the then outstanding rating on the Notes would not be lowered or
withdrawn as a result, the Servicer may deposit the amounts referred to in
subsection (a) above for any Collection Period into the Collection Account
not later than the close of business on the related Deposit Date, 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 8.1 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 Collection 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 Trust 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 Collection Account with
respect to a Collection Period and the Receivables originated by it any
amounts previously deposited in the Collection 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 Collection 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
subservicer (but subject to the provisions of Section 4.2 (b) and the
limitations contained in
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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 IV.3 ADVANCES. (a) On each Deposit Date, the Servicer
may make a payment with respect to each Receivable serviced by it (other than
a Liquidating Receivable) equal to the excess, if any, of (i) the product of
the Receivable 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 Collection 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 Indenture
Trustee, and the Indenture Trustee 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
Collection Account. The Servicer and the Seller shall deposit or cause to be
deposited in the Collection Account the aggregate Repurchase Amount with respect
to Purchased Receivables. All such deposits shall be made in immediately
available funds on the Deposit Date. The Owner Trustee shall deposit in the
Collection Account the aggregate of any amounts received pursuant to the Yield
Supplement Agreement on the date of receipt thereof.
(c) On each Deposit 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 and
Liquidation Expenses with respect to Receivables which became Liquidating
Receivables during the related Collection Period (and any unpaid Liquidation
Expenses from prior periods) for such related Distribution Date and, to the
extent such funds 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
Services 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 IV.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 8.1 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 Collection Account results, the Servicer shall
make a payment of the deficiency to the Collection Account, immediately upon
becoming aware, or receiving notice from the Trust, of such shortfall.
Section IV.5 DISTRIBUTIONS. (a) On or before each Determination
Date, the Servicer shall calculate, with respect to the preceding Collection
Period and the related Distribution Date, the Available Amount, the Total
Available Amount, Collected Interest, the Total Servicing Fee, the Aggregate
Class A Noteholders' Interest Distributable Amount, the Class B Noteholders'
Interest Distributable Amount and all other amounts required to be deposited
in or paid from each of the Collection Account, the Note Distribution
Account, the Certificate Distribution Account, the Reserve Account and the
Yield Supplement Account on the next succeeding Distribution Date, which
calculations shall be set forth in the Servicer's Certificate delivered to
the Trustees on or before such Determination Date.
(b) On or before the Deposit Date, the Indenture Trustee shall
cause to be made the following withdrawals, deposits, transfers and
distributions in the amounts set forth in the Servicer's Certificate for such
Distribution Date pursuant to Section 3.9:
(i) from the Reserve Account to the Collection Account,
the lesser of (A) the amount of cash or other immediately available funds
therein on the Deposit Date and (B) the amount, if any, by which (x) the
sum of the Total Servicing Fee, the Aggregate Class A Noteholders' Interest
Distributable Amount, the Class B Noteholders' Interest Distributable
Amount and the Noteholders' Principal Distributable Amount exceeds (y) the
Available Amount for such Distribution Date;
(ii) the amount to be withdrawn from the Collection Account
and paid to the Servicers in respect of reimbursement of Outstanding
Advances and payments in respect of Liquidation Expenses with respect to
Receivables which became Liquidating Receivables during the related
Collection Period (and any unpaid Liquidation Expenses from prior periods)
pursuant to Section 4.3(c);
(iii) the amount to be withdrawn from the Collection Account
and paid to the Servicer in respect of the Total Servicing Fee for such
Distribution Date;
(iv) the amount to be withdrawn from the Collection Account
in respect of the Aggregate Class A Noteholders' Interest Distributable
Amount, the Class B Noteholders' Interest Distributable Amount and the
Noteholders' Principal Distributable Amount and deposited in the Note
Distribution Account for payment to Noteholders on such Distribution Date;
(v) the amount, if any, by which the Available Amount for
such Distribution D ate exceeds the sum of the Total Servicing Fee, the
Aggregate Class A Noteholders' Distributable Amount, the Class B
Noteholders' Interest Distributable Amount and the Noteholders' Principal
Distributable Amount will be withdrawn from the Collection Account and
deposited in the Reserve Account; and
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(vi) the amount, if any, by which the amount on deposit in
the Reserve Account after all other deposits (including the deposit
pursuant to clause (v) above) and withdrawals on the Deposit Date exceeds
the Specified Reserve Account Balance for such Distribution Date will be
withdrawn from the Reserve Account and paid to the Certificateholders.
(c) Except as provided in Section 4.5(d), after making the
reimbursement to the Servicer in respect of Outstanding Advances and payments in
respect of Liquidation Expenses to the extent provided in Section 4.3(c), on
each Determination Date, the Indenture Trustee at the direction of the Servicer,
will allocate the Total Available Amount in the following order of priority:
(i) the Total Servicing Fee;
(ii) the Aggregate Class A Noteholders' Interest
Distributable Amount;
(iii) the Class B Noteholders' Interest Distributable Amount;
and
(iv) the Noteholders' Principal Distributable Amount.
(d) Notwithstanding the foregoing, at any time that the Class A Notes
have not been paid in full and the principal balance of the Notes has been
declared immediately due and payable following the occurrence of an Event of
Default pursuant to Section [5.2] of the Indenture, then until such time as the
Class A Notes have been paid in full or such declaration has been rescinded and
any continuing Events of Default have been waived pursuant to the Indenture or
if any Notes remain outstanding after the applicable Final Scheduled
Distribution Date, no amounts shall be deposited in or distributed to the Note
Distribution Account as payments on the Class B Notes. Any such amounts
otherwise distributable on the Class B Notes shall be deposited instead to the
Note Distribution Account as payments of principal on the Class A Notes.
Section IV.6 RESERVE ACCOUNT.
(a) On the Closing Date, the Seller shall deposit the Reserve Account
Initial Deposit into the Reserve Account.
(b) On each Deposit Date, an amount equal to the Available Amount
remaining
(c) The amount to be withdrawn from the Reserve Account and paid to
the Certificateholders will equal the amount, if any, by which the amount on
deposit in the Reserve Account after all other deposits (including the deposit
pursuant to clause (b) above) exceeds the Specified Reserve Account Balance for
such Distribution Date.
Section IV.7 STATEMENTS TO SECURITYHOLDERS. (a) On each
Distribution Date, the Owner Trustee shall include with each distribution to a
Certificateholder, and the Indenture Trustee
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shall include with each distribution to a Noteholder, a statement (which
statement shall also be provided to the Rating Agencies), based on
information in the Servicer's Certificate furnished pursuant to Section 3.9.
Each such statement shall set forth the following information as to the
Securities with respect to such Distribution Date or the preceding Collection
Period, as applicable:
(i) the amount of the distribution allocable to principal
with respect to each class of Notes and any distributions on the
Certificates and the derivation of such amounts;
(ii) the amount of the distribution allocable to interest on
or with respect to each class of Notes and the Certificates;
(iii) amount of the Total Servicing Fee paid or payable to
the Servicer in respect of the related Collection Period;
(iv) the aggregate Outstanding Advances (if any) as of the
last day of the preceding Collection Period and the change in such amount
from the previous Collection Period;
(v) the Aggregate Receivables Balance as of the close of
business on the last day of the preceding Collection Period;
(vi) the aggregate outstanding principal balance and the
Note Pool Factor for each class of such Notes, in each case after giving
effect to all payments reported under clause (i) above on such date;
(vii) the amount of the aggregate Realized Losses, if any,
for the preceding Collection Period;
(viii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall, if any, in each case as applicable to each class of
Securities and the change in such amounts from the preceding statement;
(ix) the aggregate Repurchase Amount with respect to
Purchased Receivables, if any, that were repurchased by the Seller or
purchased by the Servicer in such Collection Period;
(x) the balance of the Reserve Account, as of such date,
after giving effect to changes therein on such date and the Specified
Reserve Account Balance on such date; and
(xi) the balance of the Yield Supplement Account, as of such
date, after giving effect to changes therein on such date and the Yield
Supplement Amount and the calculation thereof.
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(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 Indenture Trustee and the Owner
Trustee and the Indenture Trustee or the Owner Trustee, as applicable, shall
furnish, or cause to be furnished, to each Person who at any time during such
calendar year shall have been a Securityholder, a statement based upon such
report as to the sum of the amounts determined in clauses (i), (ii), (iii),
(viii) and (x) above for such calendar year, or, in the event such Person
shall have been a Securityholder 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 Securityholders to prepare their federal income tax returns.
ARTICLE V
YIELD SUPPLEMENT ACCOUNT
Section V.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 Liquidating 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 [INSERT CALCULATION OF YIELD
SUPPLEMENT AMOUNT] (the "YIELD SUPPLEMENT AMOUNT").
Section V.2 YIELD SUPPLEMENT ACCOUNT. The Seller shall
establish and maintain in the name of the Owner Trustee an Eligible Deposit
Account to secure the Seller's obligations under the Yield Supplement
Agreement (the "YIELD SUPPLEMENT ACCOUNT"). The Yield Supplement Account
shall initially be maintained at _____________________.
(a) 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 Agr all the aforesaid
property, rights and privileges unto the Owner Trustee, its successors and
assigns, in trust for the uses and purposes, and subject to the terms and
provisions, set forth in this Section. The Owner Trustee hereby acknowledges
such transfer and accepts in trust hereunder and shall hold and distribute
the Yield Supplement Account Property in accordance with the terms and
provisions of this Section.
(b) Funds on deposit in the Yield Supplement Account shall be
invested by the Owner Trustee in Eligible Investments selected by the Seller
and designated in writing by the Seller to the Owner Trustee; PROVIDED,
HOWEVER, it is understood and agreed that the Owner 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 direction.
In no event shall the Owner Trustee be liable for the selection of Eligible
Investments. The Owner Trustee shall have no obligation to invest or
reinvest any amounts
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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.
(c) The Yield Supplement Account shall be under the sole custody
and control of the Owner Trustee. If, at any time, the Yield Supplement
Account ceases to be an Eligible Deposit Account, the Owner Trustee 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.
(d) Amounts on deposit in the Yield Supplement Account will be
released to the Certificateholders 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
Certificateholders of amounts from the Yield Supplement Account, the
Noteholders will not have any rights in, or claims to, such amounts. Amounts
properly distributed to the Certificateholders from the Yield Supplement
Account or otherwise shall not be available under any circumstances to either
Trust, Trustee, the Owner Trustee or the Noteholders and the
Certificateholders shall in no event thereafter be required to refund any
such distributed amounts.
(e) 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 Owner Trustee 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 Owner Trustee, and the Owner Trustee shall have sole signature
authority with respect thereto;
(ii) the Owner Trustee shall maintain Control over each
deposit account in which any Account Property that constitutes a Security
Entitlement, an Uncertificated Security or a Federal Book-Entry Security is
held; and
(iii) 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 shall be transferred to the Owner Trustee or its nominee or
custodian by physical delivery to the Owner Trustee or its nominee
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or custodian endorsed to, or registered in the name of, the Owner Trustee
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
Owner Trustee 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.
(f) The Seller (and any successor to the Seller in accordance with
Section 6.3) 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 6.3) 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 Owner Trustee's security interest; and
(ii) make the necessary filings of financing statements or
amendments thereto.
(g) Investment earnings attributable to the Yield Supplement
Account Property and proceeds therefrom shall be held by the Owner Trustee
for the benefit of the Seller. 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 Securityholders or the Servicer. The Owner Trustee shall cause all
investment earnings attributable to the Yield Supplement Account to be
distributed on each Distribution Date to the Seller.
ARTICLE VI
THE SELLER
Section VI.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller makes the following representations and warranties, on which the Trust
relies in accepting the Receivables and the other Trust Property in trust and
issuing the Securities. 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 and the pledge to the Indenture
Trustee pursuant to the Indenture.
(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
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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 the Transfer and Servicing
Agreements to which it is a party and to carry out the terms of such
agreements and to sell and assign the property to be sold and assigned to
and deposited with the Trust as Trust Property; and the execution,
delivery, and performance of the Transfer and Servicing Agreements to which
it is a party 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 the Transfer and Servicing Agreements to which it is a
party, 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 the Transfer and
Servicing Agreements and under ERISA.
(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 the applicable
Transfer and Servicing Agreements constitute 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 the Transfer and Servicing Agreements, the consummation of
the transactions contemplated thereby and the fulfillment of the terms
thereof 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,
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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 the Transfer and Servicing
Agreements, the Administration Agreement or the Securities, (b) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the Transfer and Servicing Agreements, (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, the Transfer and Servicing Agreements, the
Administration Agreement or the Securities, or (d) that may adversely
affect the federal or state income, excise, franchise or similar tax
attributes of the Securities.
Section VI.2 LIABILITY OF THE SELLER; INDEMNITIES. (a) The
Seller shall indemnify, defend and hold harmless the Trustees, their directors,
officers, employees and agents, the Trust and the Securityholders from and
against any taxes that may at any time be asserted against the Trustees, their
directors, officers, employees and agents, the Trust or a Securityholder 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 Securities,
including any sales, gross receipts, general corporation, tangible or intangible
personal property, privilege, or 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 Securities), and
reasonable costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the
Trustees, their directors, officers, employees and agents, the Trust and the
Securityholders 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.
(c) The Seller shall indemnify, defend and hold harmless the
Trustees, their directors, officers, employees and agents, the Trust and the
Securityholders 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 Securities.
(d) The Seller shall indemnify, defend and hold harmless the
Trustees, their directors, officers, employees and agents, the Trust and the
Securityholders from and against any loss, liability or expense imposed upon, or
incurred by, the Trustees, the Trust or the Securityholders 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.
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(e) Indemnification under this Section 6.2 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
Owner Trustee or the Indenture Trustee. If the Seller shall have made any
indemnity payments pursuant to this Section 6.2 and the recipient thereafter
shall collect any of such amounts from Persons other than the Seller, the
recipient shall immediately upon receipt thereof repay such amounts to the
Seller, without interest.
Section VI.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 Owner Trustee and the Indenture Trustee and the Rating
Agency of any such merger, conversion, consolidation or purchase and
assumption, where the Seller is not the surviving entity.
Section VI.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 VI.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 Securities 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 "Securityholder," "Noteholder" and "Certificateholder"
in Section 1.1. Securities 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 Securities.
ARTICLE VII
THE SERVICER
Section VII.1 REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The
Servicer makes the following representations and warranties on which the
Trust relies in accepting the Receivables and the other Trust Property in
trust and in issuing the Securities. 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 and the pledge to the
Indenture Trustee pursuant to the Indenture.
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(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
(iii) POWER AND AUTHORITY. The Servicer has the power,
authority and legal right to execute and deliver the Transfer and Servicing
Agreements to which it is a party and to carry out the respective terms of
such agreements; and the execution, delivery and performance of the
Transfer and Servicing Agreements to which it is a party has been duly
authorized by the Servicer by all necessary corporate action.
(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 the Transfer and Servicing Agreements to which it is a party
other than as may be required under ERISA.
(v) BINDING OBLIGATION. Each of the Transfer and Servicing
Agreements constitutes a legal, valid, and binding obligation of the
Servicer, enforceable against the Servicer in accordance with the
respective terms of such agreement 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 the Transfer and Servicing Agreements, the consummation of the
transactions contemplated thereby and the fulfillment of the terms thereof
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 the Transfer and Servicing Agreements), 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
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agency, or tribunal or other governmental instrumentality having
jurisdiction over the Servicer or its properties: (a) asserting the
invalidity of the Transfer and Servicing Agreements or the Securities,
(b) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by the Transfer and
Servicing Agreements, (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, the Transfer
and Servicing Agreements or the Securities, or (d) that may adversely
affect the federal or state income, excise, franchise or similar tax
attributes of the Securities.
Section VII.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
Trustees, their directors, officers, employees and agents, the Trust, and the
Securityholders 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
Trustees, their directors, officers, employees and agents, the Trust and the
Securityholders from and against any taxes that may at any time be asserted
against the Trustees, the Trust or the Securityholders 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 Securities, 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 Securities or any other transactions
contemplated by this Agreement or transfer taxes arising in connection with
transfers of the Securities) and reasonable costs and expenses in defending
against the same.
(d) The Servicer shall indemnify, defend and hold harmless the
Trustees, their directors, officers, employees and agents, the Trust and the
Securityholders 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 Trustees or the Securityholders 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 (other than the Indenture Trustee in its capacity
as successor Servicer pursuant to Section 8.2 hereof) shall indemnify, defend
and hold harmless the Trustees 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 (x) in the case of
the Owner
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Trustee, the Indenture Trustee's performance of its duties under
the Basic Documents, (y) in the case of the Indenture Trustee, the Owner
Trustee's performance of its duties under the Basic Documents or (z) the
acceptance, administration or performance by, or action or inaction of, the
applicable Trustee of the trusts and duties contained in this Agreement, the
Basic Documents, the Indenture (in the case of the Indenture Trustee) and the
Trust Agreement (in the case of the Owner Trustee), including the
administration of the Trust Property, except in such case to the extent that
such cost, expense, loss, claim, damage or liability: (i) is due to the
willful misfeasance, bad faith or negligence of the Person seeking to be
indemnified, (ii) to the extent otherwise payable to the Indenture Trustee,
arises from the Indenture Trustee's breach of any of its representations or
warranties in Section [6.13] of the Indenture or (iii) to the extent
otherwise payable to the Owner Trustee, arises from the Owner Trustee's
breach of any of its representations or warranties set forth in Section [6.6]
of the Trust Agreement.
(f) Indemnification under this Section 7.2 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 8.1, but only with respect to obligations
arising prior thereto, and any payment of the amount owing under, or the
Repurchase Amount with respect to, any Receivable and shall survive the
termination of the Trust or the earlier removal or resignation of the Owner
Trustee or the Indenture Trustee. If the Servicer shall have made any
indemnity payments pursuant to this Section 7.2 and the recipient thereafter
collects any of such amounts from others, the recipient shall, as soon as
practicable upon receipt thereof, repay such amounts to the Servicer, without
interest.
Section VII.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 Owner Trustee and the Indenture Trustee and the Rating
Agencies of any such merger, conversion, consolidation or purchase and
assumption where the Servicer is not the surviving entity.
Section VII.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 Securityholders under this Agreement.
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(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 VII.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 each Trustee.
No such resignation shall become effective until the Indenture Trustee or a
successor servicer shall have assumed the responsibilities and obligations of
the outgoing Servicer in accordance with Section 8.2.
Section VII.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 Securities 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 "Securityholder," "Noteholder" and
"Certificateholder" in Section 1.1. Securities 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 Securities.
ARTICLE VIII
SERVICING TERMINATION
Section VIII.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 Trustees
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 Securities 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 Transfer and Servicing Agreements, which failure shall (a)
materially and adversely affect the rights of Securityholders 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 either Trustee, or (2) to the Owner Trustee or
the Indenture Trustee and
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the Servicer by the holders of the Notes (so long as Notes are
outstanding) evidencing not less than a majority of the principal amount
of such Notes then outstanding (or, if no Notes are outstanding,
Certificates evidencing not less than a majority of the Certificate
Balance then outstanding);
(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
(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, the Indenture Trustee
or holders of Notes evidencing not less than a majority of the principal
amount of such Notes then outstanding, by notice then given in writing
to the Servicer (and to the Indenture Trustee if given by the
Noteholders), 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 Securities or the Trust
Property or otherwise, shall pass to and be vested in the Indenture
Trustee or successor servicer appointed by the Indenture Trustee
pursuant to Section 8.2; and thereupon the Indenture 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 Indenture 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 Indenture 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 Collection Account, or thereafter shall be
received with respect to a Receivable, all Receivable Files and all
information or documents that the Indenture 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
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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.
If no Notes are outstanding and the Indenture has been discharged
in accordance with its terms, and in each and every case and so long as an
Event of Servicing Termination shall not have been cured or waived, the Owner
Trustee or the holders of Certificates evidencing not less than a majority of
the Certificate Balance of such Certificates then outstanding, by notice then
given to the Servicer (and to the Owner Trustee if given by the
Certificateholders), 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 Securities or the Trust Property or
otherwise, shall pass to and be vested in the Owner Trustee or successor
servicer appointed by the Owner Trustee pursuant to Section 8.2; and
thereupon the Owner 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 Owner
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 Owner 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 Collection
Account, or thereafter shall be received with respect to a Receivable, all
Receivable Files and all information or documents that the Owner 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 Indenture Trustee shall have no obligation to notify Noteholders or any
other person and the Owner Trustee shall have no obligation to notify the
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 8.1(a).
Section VIII.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR SERVICER.
Upon the Servicer's resignation pursuant to Section 7.5, or upon the
Servicer's receipt of notice of termination as Servicer pursuant to Section
8.1, the Indenture Trustee (or if no Notes are outstanding, the Owner
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 such
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 8.1, and such 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
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therefor, the Indenture Trustee (or if no Notes are outstanding, the Owner
Trustee) shall be entitled to such compensation (whether payable out of the
Collection 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, such Trustee may, if it shall be unwilling
or legally unable so to act, 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, such 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. Such
Indenture Trustee (or if no Notes are outstanding, the Owner 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 VIII.3 EFFECT OF SERVICING TRANSFER. (a) After the transfer
of servicing hereunder, the Indenture Trustee (or, if no Notes are
outstanding, the Owner 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 7.2 and 9.6 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, 6.1 and 6.2 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, 7.1 and 7.2) 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 8.2 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
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and during normal business hours at the offices of the successor servicer.
Nothing in this Section 8.3 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 8.3.
Section VIII.4 NOTIFICATION TO SECURITYHOLDERS. 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 Indenture
Trustee (or, if no Notes are outstanding, the Owner Trustee) shall give
prompt written notice thereof to Securityholders 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 VIII.5 WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The
holders of Notes evidencing not less than a majority of the aggregate
outstanding receivable balance of the Notes (or the holders of any
Certificates evidencing not less than a majority of the Certificate Balance
then outstanding in the case of any Event of Servicing Termination that does
not adversely affect the Indenture Trustee or the Noteholders) may, on behalf
of all such holders of Notes and 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 VIII.6 TRANSFER OF ACCOUNTS. Notwithstanding the
provisions of Section 8.1, 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 Indenture Trustee and the Seller (or the
Owner Trustee with respect to the Certificate Distribution Account) of such
Event of Servicing Termination, and Indenture Trustee or the Seller (or the
Owner Trustee, if applicable), 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 IX
TERMINATION
Section IX.1 TERMINATION OF THE TRUST. (a) The Trust, and the
respective obligations and responsibilities of the Seller, the Servicer, and
each 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
9.2, of the Receivables
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(other than Liquidating Receivables) remaining in the Trust, (ii) the payment
to Securityholders of all amounts required to be paid to them pursuant to
this Agreement or (iii) 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 each Trustee of any prospective termination pursuant to this Section
9.1, which notice shall contain the information required by each Trustee to
give its notice thereunder.
(b) Notice of any termination, specifying the Distribution Date
upon which the Noteholders may surrender the Notes to the Indenture Trustee
for payment of the final distribution and cancellation, shall be given
promptly by the Indenture Trustee by letter to Noteholders 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 Notes at the office of the
Indenture Trustee therein specified. Upon presentation and surrender of the
Notes, the Indenture Trustee shall cause to be distributed to Noteholders
amounts distributable on such Distribution Date pursuant to Section 4.5.
Amounts remaining after distribution, or providing for distribution, to the
Noteholders shall be distributed to the Seller.
(c) Notice of any termination, specifying the Distribution Date
upon which the Certificateholders may surrender the Certificates to the Owner
Trustee for payment of the final distribution and cancellation, shall be
given promptly by the Owner 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 Owner Trustee therein specified. Upon presentation and
surrender of the Certificates, the Owner Trustee shall cause to be
distributed to the 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.
(d) If, within eighteen months after the first notice, all the
Securities 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 Securityholders concerning surrender of their
Securities, 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 to the
Seller and the Securityholders shall thereafter look solely to the Seller for
such payment.
Section IX.2 OPTIONAL PURCHASE OF ALL RECEIVABLES. In the event
that (i) the Aggregate Receivables Balance shall be 10% or less of the
Aggregate Starting Receivables Balance as of the last day of any Collection
Period and (ii) the aggregate Repurchase Amount for the Receivables (other
than the Liquidating Receivables) is greater than or equal to the sum of the
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outstanding principal balance of all of the Class A-4 Notes and the Class B
Notes, the Servicer shall have the option to purchase the corpus of the Trust
on any Distribution Date after the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes have been paid in full occurring in a subsequent
Collection Period. To exercise such option, the Servicer shall notify each
Trustee no later than the 10th day of the month in which such purchase is to
be effected and deposit the aggregate Repurchase Amount for the Receivables
(other than Liquidating Receivables) into the Collection 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 X
MISCELLANEOUS PROVISIONS
Section X.1 AMENDMENT. (a) This Agreement may be amended by the
Seller, the Servicer and either Trustee, without the consent of any of the
Securityholders, 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 Securityholders; PROVIDED, HOWEVER,
that if such action shall affect any class of Noteholder or Certificateholder
differently from any other class of Noteholder or Certificateholder, such
action shall not, as evidenced by an Opinion of Counsel to the Seller
delivered to each Trustee, materially and adversely affect the interests of
any Securityholder 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 each Trustee, with the consent of the holders of
Notes evidencing not less than a majority of in principal amount of their
outstanding Notes and the holders of Certificates evidencing not less than a
majority of the Certificate Balance, 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 Noteholders or
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 Note or
Certificate, without the consent of all adversely affected Noteholder's
Certificateholders or (ii) reduce the percentage of the aggregate outstanding
receivable balance of the Note or Certificates, the holders of which are
required to consent to any such amendment, without the consent of all
Noteholders and Certificateholders. Promptly after the execution of any such
amendment or consent, the Indenture Trustee or the Owner Trustee shall
furnish written notification of the substance of such amendment or consent to
each Noteholder or Certificateholder, as applicable.
(c) It shall not be necessary for the consent of Securityholders
pursuant to this Section 10.1 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
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consents and of evidencing the authorization of the execution thereof by
Securityholders shall be subject to such reasonable requirements as the
Trustees 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) Each Trustee may, but shall not be obligated to, enter into
any such amendment which affects such Trustee's own rights, duties,
indemnities or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section
10.1, each Trustee shall be entitled to receive an Opinion of Counsel to the
effect that such amendment is authorized or permitted by the Agreement.
Section X.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 Securityholders and the Trustees under this Agreement in the Trust
Property and in the proceeds thereof. The Servicer shall deliver (or cause
to be delivered) to each 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 Trustees at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give each 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
payments, Recoveries or Liquidation Proceeds on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
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
Trust, the Servicer's master computer
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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 Repurchased 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
each 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. Each
Trustee shall hold any such list and the Schedule of Receivables, as well as
a copy of this Agreement, available for inspection during normal business
hours at the Corporate Trust Office.
(h) The Servicer shall deliver to the Trustees upon the Closing
Date, upon the date which is 60 months after the initial filings required
hereunder to perfect the security interest of the Trust 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 Trust in the Financed
Vehicles, subject to certain exceptions stated therein, and (ii) the interest
of the Trust 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 X.3 LIMITATION ON RIGHTS OF SECURITYHOLDERS. (a) The
death or incapacity of any Securityholder shall not operate to terminate this
Agreement or the Trust, or entitle the Securityholder'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 Securityholder 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 Securities, be construed so as to constitute the holders as
partners or members of an association; nor shall any Securityholder be under
any liability to any third party by reason of any action taken pursuant to
any provision of this Agreement.
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(c) To the extent a specified percentage in principal amount of
the outstanding Notes must be obtained to take an action, such action shall
be valid only if the holders of such specified percentage in principal amount
of (i) all the outstanding Class A Notes and Class B Notes voting together as
a single class and (ii) the outstanding Class A Notes voting as a single
class have voted to take such action.
SECTION X.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 X.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 Trustees, 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 (b) in the case of the Owner Trustee, at the Corporate Trust
Office, Facsimile No.: _____________, and (c) in the case of the Indenture
Trustee, at the Corporate Trust Office, Facsimile No: ___________. Any
notice required or permitted to be mailed to a Securityholder 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
Securityholder shall receive such notice.
Section X.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 Securities or the rights of the
holders thereof.
Section X.7 ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Section 7.3, this Agreement
may not be assigned by the Servicer.
Section X.8 ASSIGNMENT TO INDENTURE TRUSTEE. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Trust to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders (and, to the extent expressly
provided therein, the Certificateholders) of all right, title and interest of
the Trust in, to and under the Trust Property and/or the assignment of any or
all of the Trust's rights and obligations hereunder pursuant to the Indenture.
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Section X.9 INTENTION OF PARTIES. The execution and delivery of
this Agreement shall constitute an acknowledgment by the Seller and the
Trust, on behalf of the Securityholders, 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 Securityholders to the Seller, the parties intend that the Seller
shall have granted to the Trust 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
Securities, and that this Agreement shall constitute a security agreement
under applicable law.
Section X.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.
Section X.11 LIMITATION OF LIABILITY OF THE TRUSTEES. (a)
Notwithstanding anything contained herein to the contrary (i) this Agreement
has been accepted by _______________, not in its individual capacity but
solely as the Indenture Trustee and in no event shall _____________ 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
____________ be personally liable for the payment of any indebtedness or
expenses of the Trust; PROVIDED, HOWEVER, nothing contained herein shall
relieve ______________ of its obligations contained herein in its capacity as
successor servicer.
(b) Notwithstanding anything contained herein to the contrary (i)
this Agreement has been accepted by _______________, not in its individual
capacity but solely as the Owner Trustee and in no event shall _____________
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 ____________ be personally liable for the payment of any
indebtedness or expenses of the Trust; PROVIDED, HOWEVER, nothing contained
herein shall relieve ______________ of its obligations contained herein in
its capacity as successor servicer.
* * * * *
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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
FIRST SECURITY AUTO OWNER TRUST
19__- __
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust
By: _______________________________
Name: ________________________
Title: ________________________
ACKNOWLEDGED AND ACCEPTED,
not in its individual capacity
but solely as Indenture Trustee
By: ________________________________
Name: _________________________
Title: _________________________
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EXHIBIT A
FORM OF INITIAL ASSIGNMENT
<PAGE>
EXHIBIT B
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 Sale and Servicing Agreement, dated as of ___________, by
and between the Bank, as seller and servicer, and First Security Auto Owner
Trust 19-__ (the "SALE 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 Sale 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 Sale 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 C
FORM OF YIELD SUPPLEMENT AGREEMENT
(See attached)
<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 4.6
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ADMINISTRATION AGREEMENT
AMONG
FIRST SECURITY AUTO OWNER TRUST 19__-_
ISSUER
AND
FIRST SECURITY BANK, N.A.
ADMINISTRATOR
AND
____________________
INDENTURE TRUSTEE
DATED AS OF __________, 19__
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- -------------------------------------------------------------------------------
<PAGE>
ADMINISTRATION AGREEMENT, dated as of __________, 19__ among FIRST
SECURITY AUTO OWNER TRUST 19__-_, a Delaware business trust (the "Issuer"),
FIRST SECURITY BANK, N.A., a national banking association, as administrator
(the "Administrator"), and ____________________, a
____________________________, not in its individual capacity but solely as
Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Trust is issuing Notes pursuant to an Indenture, dated
as of __________, 19__ (as amended and supplemented from time to time, the
"Indenture"), between the Issuer and the Indenture Trustee;
WHEREAS, the Issuer has entered into (or assumed) certain
agreements in connection with the issuance of the Notes and the Certificates,
including (i) the Sale and Servicing Agreement, (ii) the Note Depository
Agreement and (iii) the Indenture;
WHEREAS, pursuant to the Basic Documents, the Issuer and
_______________, as Owner Trustee, are required to perform certain duties in
connection with (a) the Notes and the collateral and (b) the Certificates;
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner
Trustee referred to in the preceding clause, and to provide such additional
services consistent with the terms of this Agreement and the Basic Documents
as the Issuer and the Owner Trustee may from time to time request;
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and
the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used but not otherwise
defined herein shall have the respective meanings assigned them in Section
1.1 to the Sale and Servicing Agreement of even date herewith among the
Issuer and First Security Bank, N.A., as Servicer (as it may be amended,
supplemented or modified from time to time, the "Sale and Servicing
Agreement"). All references herein to "the Agreement" or "this Agreement"
are to this Administration Agreement as it may be amended, supplemented or
modified from time to time, the exhibits hereto and the capitalized terms
used herein which are defined in such Section 1.1 of the Sale and Servicing
Agreement, and all references herein to Sections and subsections are to
Sections and subsections of this Agreement unless otherwise specified.
2. DUTIES OF THE ADMINISTRATOR.
(a) DUTIES WITH RESPECT TO THE DEPOSITORY AGREEMENTS AND THE
INDENTURE. (i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer
<PAGE>
and the Owner Trustee under the Indenture and the Note Depository Agreement.
In addition, the Administrator shall consult with the Owner Trustee regarding
the duties of the Issuer and the Owner Trustee under the Indenture or the
Note Depository Agreement. The Administrator shall monitor the performance
of the Issuer and shall advise the Owner Trustee when action is necessary to
comply with the duties of the Issuer or the Owner Trustee under the Indenture
or the Note Depository Agreement. The Administrator shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the preparation
by other appropriate persons of all such documents, reports, filings,
instruments, certificates, notices and opinions as it shall be the duty of
the Issuer or the Owner Trustee, as applicable, to prepare, file or deliver
pursuant to the Indenture or the Note Depository Agreement. In furtherance
of the foregoing, the Administrator shall take all appropriate action that it
is the duty of the Issuer or the Owner Trustee to take pursuant to the
Indenture including such of the foregoing as are required with respect to the
following matters under the Indenture (references are to sections of the
Indenture):
(A) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.2);
(B) causing the Note Register to be kept and giving the Indenture
Trustee notice of any appointment of a new Note Registrar and the location,
or change in location, of the Note Register (Section 2.4);
(C) the notification of Noteholders of the final principal payment on
their Notes (Section 2.7(e));
(D) the preparation, obtaining or filing of the instruments, opinions
and certificates and other documents required for the release of collateral
(Section 2.9);
(E) the preparation of Definitive Notes and arranging the delivery
thereof (Section 2.12);
(F) the maintenance of an office in the Borough of Manhattan, the
City of New York, for registration of transfer or exchange of Notes
(Section 3.2);
(G) causing newly appointed Paying Agents, if any, to deliver to the
Indenture Trustee the instrument specified in the Indenture regarding funds
held in trust (Section 3.3(c));
(H) the direction to the Indenture Trustee to deposit monies with
Paying Agents, if any, other than the Indenture Trustee (Section 3.3(b));
(I) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the
<PAGE>
validity and enforceability of the Indenture, the Notes, the Collateral
and each other instrument and agreement included in the Trust Estate
(Section 3.4);
(J) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.5 of the Indenture,
necessary to protect the Trust Property (Section 3.5);
(K) the delivery of the Opinion of Counsel on the Closing Date, in
accordance with Section 3.6(a) of the Indenture, as to the Trust Property,
and the annual delivery of the Opinion of Counsel, the Officers'
Certificate and certain other statements, in accordance with Sections
3.6(b) and 3.9 of the Indenture, as to compliance with the Indenture
(Sections 3.6 and 3.9);
(L) the identification to the Indenture Trustee in an Officers'
Certificate of a Person with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.7(b));
(M) the notification of the Indenture Trustee and the Rating Agencies
of an Event of Servicing Termination pursuant to the Sale and Servicing
Agreement and, if such Event of Servicing Termination arises from the
failure of the Servicer to perform any of its duties under the Sale and
Servicing Agreement, the taking of all reasonable steps available to remedy
such failure (Section 3.7(d));
(N) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.11(b));
(O) the delivery of notice to the Indenture Trustee of each Event of
Default under the Indenture, each Event of Servicing Termination and each
default by the Seller under the Sale and Servicing Agreement (Section
3.18);
(P) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officers'
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.1);
(Q) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Property in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.4);
(R) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.8);
(S) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or removal
of any co-trustee or separate trustee (Sections 6.8 and 6.10);
<PAGE>
(T) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.1);
(U) the preparation and, after execution by the Issuer, the filing
with the Commission, any applicable state agencies and the Indenture
Trustee of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations prescribed
by, the Commission and any applicable state agencies and the transmission
of such summaries, as necessary, to the Noteholders (Section 7.3);
(V) the preparation of an Issuer Request and Officer's Certificate
and the obtaining of an Opinion of Counsel and Independent Certificates, if
necessary, for the release of the Trust Property (Sections 8.4 and 8.5);
(W) the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to such supplemental
indentures (Sections 9.1, 9.2 and 9.3);
(X) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.6);
(Y) the notification of Noteholders and the Rating Agencies of
redemption of the Notes or the duty to cause the Indenture Trustee to
provide such notification (Sections 10.1 and 10.2);
(Z) the preparation of all Officer's Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the
Issuer to the Indenture Trustee to take any action under the Indenture
(Section 11.1(a));
(AA) the preparation and delivery of Officers' Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.1(b));
(BB) the notice or other communication to the Rating Agencies, upon
the failure of the Indenture Trustee to give such notice or other
communication pursuant to Section 11.4 (Section 11.4);
(CC) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.6); and
<PAGE>
(DD) the recording of the Indenture, if applicable (Section 11.15).
(ii) In addition, the Administrator will indemnify the Owner
Trustee and its agents for, and hold them harmless against, any losses,
liability or expense incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or administration of the
transactions contemplated by the Trust Agreement, including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
under the Trust Agreement.
(b) ADDITIONAL DUTIES.
(i) In addition to the duties of the Administrator set forth
above, the Administrator shall perform such calculations and shall prepare
for execution by the Issuer or the Owner Trustee or shall cause the
preparation by other appropriate persons of all such documents, reports,
filings, instruments, certificates, notices and opinions as it shall be the
duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant
to the Basic Documents, and at the request of the Owner Trustee shall take
all appropriate action that it is the duty of the Issuer or the Owner Trustee
to take pursuant to the Basic Documents. Subject to Section 7 of this
Agreement, and in accordance with the directions of the Owner Trustee, the
Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Collateral (including the Basic
Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee if any withholding tax is imposed on the
Trust's payments to a Certificateholder as contemplated in Section 5.2(c) of
the Trust Agreement. Any such notice shall specify the amount of any
withholding tax required to be withheld by the Owner Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Sections 5.2(d),
5.4(a), (b), (c), (d) and (e) and Section 5.5 of the Trust Agreement with
respect to, among other things, accounting and reports to Certificateholders.
(iv) The Administrator may satisfy any obligations it may have
with respect to clauses (ii) and (iii) above by retaining, at the expense of
the Trust payable by the Administrator, a firm of independent public
accountants acceptable to the Owner Trustee which shall perform the
obligations of the Administrator thereunder. If a withholding tax specified
in the previous clause (ii) is due, such accountants or the Administrator
shall provide the Owner Trustee with a letter specifying which withholding
tax specified in the preceding clause (ii) is then required and specifying
the procedures to be followed to comply with the Code (a) on or before
___________, 19__ if such withholding tax is due in connection with a payment
made on the first Distribution Date or (b) in all other instances, thirty
days before such tax is to be withheld. Such accountants or the
Administrator shall update such letter if and to the extent it shall no
longer be accurate.
<PAGE>
(v) The Administrator shall perform the duties of the
Administrator specified in Section 6.10 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner Trustee,
and any other duties expressly required to be performed by the Administrator
under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions with or otherwise deal with any of its Affiliates; PROVIDED,
HOWEVER, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than would be
available from Persons that are not Affiliates of the Administrator.
(vii) The Administrator hereby agrees to execute on behalf of
the Issuer all such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to the Basic Documents.
(c) NON-MINISTERIAL MATTERS.
(i) With respect to matters that in the reasonable judgment
of the Administrator are non-ministerial, the Administrator shall not take
any action unless, within a reasonable time before the taking of such action,
the Administrator shall have notified the Owner Trustee of the proposed
action and the Owner Trustee shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer;
(C) the amendment, change or modification of any of the Basic
Documents;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not, (x)
make any payments to the Noteholders under the Basic Documents, (y) sell the
Trust Estate pursuant to Section 5.4 of the Indenture or (z) take any other
action that the Issuer directs the Administrator not to take on its behalf.
3. SUCCESSOR SERVICER AND ADMINISTRATOR. The Issuer shall
undertake, as
<PAGE>
promptly as possible after the giving of notice of termination to the
Servicer of the Servicer's rights and powers pursuant to Section 8.1 of the
Sale and Servicing Agreement, to enforce the provisions of Sections 8.1, 8.2
and 8.4 of the Sale and Servicing Agreement with respect to the appointment
of a successor Servicer. Such successor Servicer shall, upon compliance with
Sections 10(e)(ii) and (iii), become the successor Administrator hereunder.
4. RECORDS. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books
of account and records shall be accessible for inspection by the Issuer, the
Owner Trustee and the Seller at any time during normal business hours.
5. COMPENSATION. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Servicer shall pay the Administrator a monthly
fee in the amount of $________.
6. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the collateral as the Issuer shall reasonably request.
7. INDEPENDENCE OF THE ADMINISTRATOR. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not
be subject to the supervision of the Issuer or the Owner Trustee with respect
to the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator
shall have no authority to act for or represent the Issuer or the Owner
Trustee in any way and shall not otherwise be deemed an agent of the Issuer
or the Owner Trustee.
8. NO JOINT VENTURE. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Owner
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
9. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or
entity may engage in business activities similar to those of the Issuer, the
Owner Trustee or the Indenture Trustee.
10. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR.
(a) This Agreement shall continue in force until the dissolution
of the Issuer, upon which event this Agreement shall automatically terminate.
<PAGE>
(b) Subject to Section 10(e), the Administrator may resign its
duties hereunder by providing the Issuer with at least 60 days' prior written
notice.
(c) Subject to Section 10(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice.
(d) Subject to Section 10(e), at the sole option of the Issuer,
the Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following
events shall occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice from the Issuer of such
default, shall not cure such default within ten days (or, if such default
cannot be cured in such time, shall not give within ten days such assurance
of cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Administrator
or any substantial part of its property or order the winding-up or
liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official
for the Administrator or any substantial part of its property, shall
consent to the taking of possession by any such official of any substantial
part of its property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section 10(d) shall occur, it shall give
written notice thereof to the Issuer and the Indenture Trustee within seven
days after the happening of such event.
(e) No resignation or removal of the Administrator pursuant to
this Section 10 shall be effective until (i) a successor Administrator shall
have been appointed by the Issuer, (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder, and (iii) the Rating Agency
Condition has been satisfied with respect to such proposed appointment.
11. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL. Promptly
upon the effective date of termination of this Agreement pursuant to Section
10(a) or the resignation or removal of the Administrator pursuant to Section
10(b) or (c), respectively, the Administrator shall be entitled to be paid
all fees and reimbursable expenses accruing to it to the effective date
<PAGE>
of such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to Section 10(a) deliver to the
Issuer all property and documents of or relating to the Collateral then in
the custody of the Administrator. In the event of the resignation or removal
of the Administrator pursuant to Section 10(b) or (c), respectively, the
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.
12. NOTICES. All demands, notices and communications upon or to
the Issuer, either Trustee, the Administrator or the Rating Agencies under
this Agreement shall be delivered as specified in the Sale and Servicing
Agreement.
13. AMENDMENTS.
(a) This Agreement may be amended from time to time with prior
notice to the Rating Agencies by a written amendment duly executed and
delivered by the Issuer, the Administrator and the Indenture Trustee, with
the written consent of the Owner Trustee, without the consent of the
Securityholders, for any of the following purposes:
(i) to add provisions hereof for the benefit of the
Securityholders or to surrender any right or power herein conferred upon the
Administrator;
(ii) to cure any ambiguity or to correct or supplement any
provision herein which may be inconsistent with any other provision herein or
in any other Basic Document;
(iii) to evidence and provide for the appointment of a
successor Administrator hereunder and to add to or change any of the
provisions of this Agreement as shall be necessary to facilitate such
succession; and
(iv) to add any provisions to, or change in any manner or
eliminate any of the provisions of, this Agreement, or modify in any manner
the rights of the Securityholders; PROVIDED, HOWEVER, that such amendment
under this Section 13(a)(iv) shall not, as evidenced by an Opinion of
Counsel, materially and adversely affect in any material respect the interest
of any Securityholder.
Prior to the execution of any amendment pursuant to this Section 13(a), the
Administrator shall furnish written notification of the substance of such
amendment to each of the Rating Agencies.
(b) This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with prior notice to the Rating
Agencies and with the written consent of the Owner Trustee and the holders of
Notes evidencing at least a majority in the Outstanding Amount of the Notes
as of the close of the immediately preceding Distribution Date, and the
holders of Certificates evidencing a majority of the ownership interest in
the Trust as of the close of the preceding Distribution Date for the purpose
of adding any provisions to, changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of
Securityholders; PROVIDED, HOWEVER, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required to
be made for the benefit of the
<PAGE>
Securityholders, (ii) reduce the percentage of the holders of Securities
which are required to consent to any amendment of this Agreement or (iii)
modify or alter any provision of this Section 13, except to provide that
certain additional provisions of this Agreement and the Basic Documents
cannot be modified or waived without the consent of each Securityholder
affected thereby, without, in any such case, the consent of the holders of
all the outstanding Securities.
(c) Notwithstanding Sections 13(a) and (b), the Administrator may
not amend this Agreement without the permission of the Seller, which
permission shall not be unreasonably withheld.
14. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in
writing by the Issuer and the Owner Trustee and subject to the satisfaction
of the Rating Agency Condition in respect thereof. An assignment with such
consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound
hereunder. Notwithstanding the foregoing, this Agreement may be assigned by
the Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger,
consolidation or purchase of assets) to the Administrator, provided that such
successor organization executes and delivers to the Issuer, the Owner Trustee
and the Indenture Trustee an agreement in which such corporation or other
organization agrees to be bound hereunder by the terms of such assignment in
the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
15. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT PROVISION OR
RULE (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.
16. HEADINGS. The section headings hereof have been inserted for
convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
17. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
18. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or
of the Certificates or the rights of the holders thereof.
<PAGE>
19. NOT APPLICABLE TO FIRST SECURITY BANK, N.A. IN OTHER
CAPACITIES. Nothing in this Agreement shall affect any obligation First
Security Bank, N.A. may have in any other capacity.
20. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE. (a) Notwithstanding anything contained herein to the contrary, this
instrument has been executed on behalf of the Issuer by
_____________________________, not in its individual capacity but solely as
Owner Trustee on behalf of the Trust and in no event shall
_____________________________ have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
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 Issuer. For all purposes of this Agreement, in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Article VI of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been executed by ____________________, not in its
individual capacity but solely in its capacity as Indenture Trustee and in no
event shall ____________________ have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
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 Issuer.
21. THIRD-PARTY BENEFICIARY. Each of the Seller, only to the
extent provided in Section 13(c), and the Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
22. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
FIRST SECURITY AUTO OWNER TRUST 19__-_
By: ___________________________________, not in
its individual capacity, but solely as Owner
Trustee on behalf of the Trust
By: ________________________________
Name: _____________________________
Title: __________________________
________________________, as Indenture Trustee
By: _________________________________
Name: ______________________________
Title: ___________________________
FIRST SECURITY BANK, N.A., as Administrator
By: __________________________________
Name: _______________________________
Title: ____________________________
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 4.7
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
<TABLE>
<CAPTION>
PAGE
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<S> <C>
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. . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.4 Repurchase upon Breach . . . . . . . . . . . . . . . . . . . . . . . 24
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 . . . . . . . . . . . . . . . . . . 27
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 . . . . . . . . . . . . . . . . . . . . . 30
Section 3.3 Realization upon Receivables . . . . . . . . . . . . . . . . . . . . 31
Section 3.4 Physical Damage Insurance. . . . . . . . . . . . . . . . . . . . . . 32
Section 3.5 Maintenance of Security Interests in Financed Vehicles . . . . . . . 33
Section 3.6 Covenants of the Servicer. . . . . . . . . . . . . . . . . . . . . . 33
Section 3.7 Purchases by the Servicer. . . . . . . . . . . . . . . . . . . . . . 33
Section 3.8 Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.9 Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.10 Annual Statement as to Compliance. . . . . . . . . . . . . . . . . . 35
Section 3.11 Independent Certified Public Accountants' Reports. . . . . . . . . . 35
Section 3.12 Access to Certain Documentation and Information Regarding
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.13 Reports to the Commission. . . . . . . . . . . . . . . . . . . . . . 36
Section 3.14 Reports to the Rating Agencies . . . . . . . . . . . . . . . . . . . 36
-i-
<PAGE>
ARTICLE IV DISTRIBUTIONS; RESERVE ACCOUNT;STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.1 Establishment of Accounts. . . . . . . . . . . . . . . . . . . . . . 36
Section 4.2 Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.3 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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 . . . . . . . . . . . . . . . . . . . 49
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 . . . . . . . . . . . . . . . . 54
Section 7.3 Merger or Consolidation of the Seller. . . . . . . . . . . . . . . . 55
Section 7.4 Limitation on Liability of the Seller and Others . . . . . . . . . . 55
Section 7.5 Seller May Own Certificates. . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII THE SERVICER
Section 8.1 Representations and Warranties of the Servicer . . . . . . . . . . . 55
Section 8.2 Liability of the Servicer; Indemnities . . . . . . . . . . . . . . . 57
Section 8.3 Merger or Consolidation of the Servicer. . . . . . . . . . . . . . . 58
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. . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX SERVICING TERMINATION
Section 9.1 Events of Servicing Termination. . . . . . . . . . . . . . . . . . . 59
Section 9.2 Trustee to Act; Appointment of Successor Servicer. . . . . . . . . . 60
Section 9.3 Effect of Servicing Transfer . . . . . . . . . . . . . . . . . . . . 61
-ii-
<PAGE>
Section 9.4 Notification to Certificateholders . . . . . . . . . . . . . . . . . 62
Section 9.5 Waiver of Past Events of Servicing Termination . . . . . . . . . . . 62
Section 9.6 Transfer of Accounts . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X THE TRUSTEE
Section 10.1 Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.2 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.3 Trustee's Certificate. . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.4 Trustee's Assignment of Purchased Receivables. . . . . . . . . . . . 64
Section 10.5 Certain Matters Affecting the Trustee. . . . . . . . . . . . . . . . 65
Section 10.6 Trustee Not Liable for Certificates or Receivables . . . . . . . . . 66
Section 10.7 Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . 67
Section 10.8 Trustee's and Collateral Agent's Fees and Expenses . . . . . . . . . 67
Section 10.9 Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.10 Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . 68
Section 10.11 Resignation or Removal of Trustee and Collateral Agent . . . . . . . 68
Section 10.12 Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.13 Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . 69
Section 10.14 Appointment of Co-Trustee or Separate Trustee. . . . . . . . . . . . 70
Section 10.15 Representations and Warranties of Trustee. . . . . . . . . . . . . . 71
Section 10.16 Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.17 Tax Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XI TERMINATION
Section 11.1 Termination of the Trust . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.2 Optional Purchase of All Receivables . . . . . . . . . . . . . . . . 73
ARTICLE XII MISCELLANEOUS PROVISIONS
Section 12.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 12.2 Protection of Title to Trust . . . . . . . . . . . . . . . . . . . . 74
Section 12.3 Limitation on Rights of Certificateholders . . . . . . . . . . . . . 76
Section 12.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.6 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . 77
Section 12.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.8 Certificates Nonassessable and Fully Paid. . . . . . . . . . . . . . 77
Section 12.9 Intention of Parties . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.11 Limitation of Liability of the Trustee and the Collateral
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
-iii-
<PAGE>
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
</TABLE>
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<PAGE>
POOLING AND SERVICING AGREEMENT
POOLING AND SERVICING AGREEMENT, dated as of April 23, 1998 (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; (iii)
all Recoveries, to the extent allocable to principal; and (iv) 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 ___% 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 to an Authorized Officer of the
Trustee to be an Affiliate of the Seller or the Servicer, shall not be
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<PAGE>
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 Closing 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.
"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
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<PAGE>
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.
"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
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<PAGE>
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 Closing 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 distributed to the Class B Certificateholders on such
Distribution Date and allocable to principal) to reduce the Class B
Certificate Balance to zero.
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<PAGE>
"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 24th day of a calendar month to and including the
23rd 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 ______________. With respect to any Determination
Date, Deposit Date or Distribution Date, the "related Collection Period" shall
mean the Collection Period ending during the preceding 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.
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<PAGE>
"CONTROL" over a Security Entitlement shall be considered obtained
by the Trustee or the Collateral Agent, as applicable, if:
(i) the Trustee or the Collateral Agent, as applicable, is the
Securities Intermediary for the Account in which such
Security Entitlement is held, or (b) the Trustee or the
Collateral Agent, as applicable, (1) is registered on the
records of the Securities Intermediary as the person having
such a Security 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
or the Collateral Agent, as applicable, 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.
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<PAGE>
"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 ___%.
"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 ____%.
"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).
"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
____________.
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<PAGE>
"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 Deposit Date (or, to the extent overnight investments are
permitted under Section 4.1(a)(ii), on the next 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 $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
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(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.
"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.
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"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 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.
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"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).
"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
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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.
"RECEIVABLE FILE" means, with respect to a Receivable, the
electronic entries, documents, instruments and writings specified in Section
2.5.
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"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, in the form in which it has
been adopted in the State of New York.
"S&P" means Standard & Poor's Ratings Service, a Division of the
McGraw Hill Companies.
"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).
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"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 exceeds the
Delinquency Trigger. The Specified Reserve Account Balance may be reduced to a
lesser amount as determined by the Seller; PROVIDED that the Seller gives prior
written notice of such reduction to the Rating Agencies and 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
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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.
"TRUST" means the First Security Auto Grantor Trust 1998-A 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 (including the right to
receive payments under the circumstances specified herein from the Reserve
Account); 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.
"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.
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"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.
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
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to the Trustee, on the behalf of the Trust, for the benefit of the
Certificateholders, upon the terms and conditions hereof, the Trust Property,
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
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
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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 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.
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(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 $3,500 (or such other amount as the Servicer
determines, consistent with the standard of care required by
Section 3.1), 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.
(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.
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(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) CHATTEL PAPER. The Receivables are "chattel
paper" as defined by the Relevant UCC.
(xviii) 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).
(xix) 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.
(xx) 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.
(xxi) 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.
(xxii) BULK TRANSFER LAWS. The transfer, assignment
and conveyance of the Receivable and Receivable Files by the Seller
pursuant to this Agreement
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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 6 months and
not more than __ 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 __ 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 such breach
or failure. Such purchase shall occur as of the last day of such Collection
Period. 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). 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. 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
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record keeping of the Servicer. The Servicer shall promptly report to the
Trustee any failure on its 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 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
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Receivables or to the Financed Vehicles, all in accordance with this
Agreement; 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
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and other terms and provisions of this Agreement applicable to the Servicer
hereunder shall be 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
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
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efforts to effect the orderly and efficient transfer of the subservicing
agreement to the successor 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 in accordance with Section 3.7 hereof.
(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(e), 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.
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 foregoing shall be subject to the provision that, in any
case in which a Financed Vehicle shall have suffered damage, the Servicer shall
not be obligated to expend funds in connection with the repair
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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 shall
require that each Financed Vehicle be insured under an Insurance Policy naming
the Seller as loss payee and 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 $3,500 (or such other amount as the Servicer
determines, consistent with the standard of care required by Section 3.1), 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 necessary to enforce such Insurance Policy, including bringing
suit in its name or the names of the Certificateholders.
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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 or the Contract Rate 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 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,
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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 last day of such Collection Period;
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 last day of 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 last day of
the Collection Period during which the Servicer grants such Optional Payment
Deferral. 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 on the related Deposit Date. 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 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 or other fees and
charges (other than Deferral Fees) collected during the Collection Period and
the Servicer shall be paid any interest earned during the Collection Period on
deposits in the Accounts (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 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
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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
______________, 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
______________, 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 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
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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 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
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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 Deposit Date preceding the following
Distribution Date. Funds deposited in an Account on a Deposit 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 (other than income thereon which shall be paid to
the Seller) and all such funds, investments and proceeds 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) the Trustee shall maintain Control over each
Account in which any Account Property that constitutes a Security
Entitlement, an Uncertificated Security or a Federal Book-Entry
Security is held; and
(C) 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 shall be transferred 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
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.
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(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 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 Deposit 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 Deposit 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) the Collateral Agent shall maintain Control
over each Account in which any Account Property that constitutes a
Security Entitlement, an Uncertificated Security or a Federal
Book-Entry Security is held; and
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(C) 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 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
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 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 received by the Servicer representing monies due or
received under the Receivables 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.
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(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 for any Collection
Period into the Certificate Account not later than the close of business on the
related Deposit Date, 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
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
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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 Deposit 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 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.
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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.
(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
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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 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
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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;
(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
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(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
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
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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 in 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.
(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
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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) the Collateral Agent shall maintain Control over
each deposit account in which any Account Property that constitutes a
Security Entitlement, an Uncertificated Security or a Federal Book-Entry
Security is held; and
(iii) 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 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 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:
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(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. 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.
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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 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
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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 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
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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 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
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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 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.
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(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.
(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
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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 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.
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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 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.
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(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.
(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
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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 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
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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
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.
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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.
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
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(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
(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, for so
long as Class A Certificates are outstanding, the holders of Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates or, if no Class A Certificates are
outstanding, the holders of Certificates evidencing not less than a majority of
the aggregate outstanding principal balance of the Class B Certificates, 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
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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, 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
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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.
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.
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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 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
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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 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, other than that the
Trustee, on behalf of the Trust, has not imposed any liens on the Receivables to
be repurchased, 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.
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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 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 Class A
Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates or, in the
event there are no Class A Certificates outstanding, by the holders of
Class B Certificates evidencing not less than a majority of the
outstanding principal balance of the Class B Certificates; 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
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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 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
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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 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,
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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 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
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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.
(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
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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 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.
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(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.
(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
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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.
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.
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(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 and (ii) the aggregate Purchase Amount
for the Receivables (other than the Defaulted 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
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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.
(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.
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<PAGE>
(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
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.
The Trustee shall hold any such list and the Schedule of Receivables, as well
as a copy of this Agreement, available for inspection during normal business
hours at the Corporate Trust Office.
(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
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<PAGE>
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 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
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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.
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
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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.
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.
* * * * *
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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:
-------------------------
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<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
<PAGE>
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.
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
<PAGE>
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.
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:
A-4
<PAGE>
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
BANKERS TRUST COMPANY,
as Trustee
By:
----------------------------------
Authorized Officer
A-5
<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.
A-6
<PAGE>
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; provided, however, that in
no event shall the Trust created by the Agreement continue beyond the expiration
of 21 years from the date hereof. 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, 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-7
<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
A-8
<PAGE>
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-9
<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
<PAGE>
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.
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; provided, however, that in
no event shall the Trust created by the Agreement continue beyond the expiration
of 21 years from the date hereof. The Agreement provides that the Servicer may,
at its
B-5
<PAGE>
option, purchase the Receivables remaining in the Trust (other than Defaulted
Receivables) at a price equal to the aggregate Purchase Amounts thereof, 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 11:00 a.m. New York time on
each Deposit Date. If and to the extent that such amounts shall not have been
paid by the Seller in full on the Distribution Date, 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).
<PAGE>
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 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 5.2
KIRKLAND & ELLIS
Partnerships Including Professional Corporations
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
(212) 446-4800
August 12, 1998
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 Owner Trusts
Amendment No. 2 to 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 Amendment No. 2 to 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 Notes (the "NOTES") and
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 Notes and the
Certificates will be issued by owner trusts (the "TRUSTS"). The Trusts will
be formed pursuant to a Certificate of Trust filed with the Secretary of
State of Delaware.
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
Sale and Servicing Agreement, (ii) the form of Trust Agreement (including the
form of Certificates included as an exhibit thereto), (iii) the form of
Indenture (including the form of Notes included as an exhibit thereto), (iv)
the form of Yield Supplement Agreement and (v) 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
<PAGE>
identified below have been taken, the Notes and the Certificates will have
been validly issued and will be fully paid and non-assessable.
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: (a) the Notes under each Indenture and (b) the
Certificates under each Trust Agreement and to sell the Notes and the
Certificates in accordance with the terms of the Underwriting Agreement and
to take the other actions contemplated by each Indenture, each Trust
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 Notes and 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 Notes and the Certificates
prescribed by the Underwriting Agreement.
For purposes of this letter, once the Underwriters have paid for
the Notes and the Certificates pursuant to the Underwriting Agreement, the
Notes and 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 New York. 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 8.2 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 8.2
KIRKLAND & ELLIS
Partnerships Including Professional Corporations
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
(212) 446-4800
August 12, 1998
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 Owner Trusts
Amendment No. 2 to 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 Amendment No. 2 to 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 Notes (the "NOTES") and
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 Notes
and Certificates will be issued by owner trusts (the "TRUSTS"). The Trusts
will be formed pursuant to a Certificate of Trust to be filed with the
Secretary of State of Delaware.
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 Sale and Servicing Agreement, (c) the form of Trust Agreement, (d) the
form of Indenture, (e) Yield Supplement Agreement and (f) 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 Supplement under
the heading "Certain Federal Income Tax Consequences," 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 24.4
RAY, QUINNEY & NEBEKER
Professional Corporation
Attorneys at Law
79 South Main Street
P.O. Box 4385
Salt Lake City, Utah 84145
August 12, 1998
First Security Bank, N.A.
79 South Main Street
Salt Lake City, Utah 84111
RE: Amendment No. 2 to 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 Notes and Asset Backed Certificates to be issued
by First Security-Registered Trademark- Auto Owner 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
