EXHIBIT 4.3
FORM OF POOLING AND SERVICING AGREEMENT FOR TRUSTS
OTHER THAN GRANTOR TRUSTS, INCLUDING FORM OF CERTIFICATES
BAY VIEW SECURITIZATION CORPORATION
DEPOSITOR
CALIFORNIA THRIFT AND LOAN
SERVICER
AND
BANKERS TRUST COMPANY,
TRUSTEE
POOLING AND SERVICING AGREEMENT,
DATED AS OF _______ _, 1996
$_______________
BAY VIEW 1996 RA-1 AUTO TRUST
$ _____________ ____% CLASS A-1 AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
$ _____________ ____% CLASS A-2 AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
AND
CLASS IC AUTOMOBILE RECEIVABLE BACKED CERTIFICATE
TABLE OF CONTENTS
Page
ARTICLE I Creation of Trust............................................. 1
ARTICLE II Definitions................................................... 1
SECTION 2.01. Definitions.................................... 1
SECTION 2.02. Usage of Terms................................. 17
SECTION 2.03. Cutoff Date and Record Date.................... 17
SECTION 2.04. Section References............................. 17
ARTICLE III Conveyance of Receivables..................................... 18
ARTICLE IV Acceptance by Trustee......................................... 19
ARTICLE V Information Delivered to the Rating Agency.................... 19
ARTICLE VI Agent for Service............................................. 20
ARTICLE VII The Receivables............................................... 20
SECTION 7.01. Representations and Warranties of Depositor.... 20
SECTION 7.02. Repurchase Upon Breach......................... 21
SECTION 7.03. Custody of Receivable Files.................... 21
SECTION 7.04. Duties of Servicer as Custodian................ 22
SECTION 7.05. Instructions; Authority to Act................. 22
SECTION 7.06. Custodian's Indemnification.................... 23
SECTION 7.07. Effective Period and Termination............... 23
SECTION 7.08. Liability of the holder of the Class IC
Certificate and the Certificateholders......... 23
ARTICLE VIII Administration and Servicing of Receivables................... 24
SECTION 8.01. Duties of Servicer............................. 24
SECTION 8.02. Collection of Receivable Payments.............. 24
SECTION 8.03. Realization Upon Receivables................... 25
SECTION 8.04. Physical Damage Insurance...................... 26
SECTION 8.05. Maintenance of Security Interests in
Financed Vehicles.............................. 26
SECTION 8.06. Covenants of Servicer.......................... 26
SECTION 8.07. Purchase of Receivables Upon Breach............ 26
SECTION 8.08. Servicing Fee.................................. 26
SECTION 8.09. Servicer's Certificate......................... 27
SECTION 8.10. Annual Statement as to Compliance; Notice
of Default..................................... 27
SECTION 8.11. Annual Independent Certified Public
Accountant's Report............................ 28
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SECTION 8.12. Access to Certain Documentation and
Information Regarding Receivables............... 28
SECTION 8.13. Servicer Expenses............................... 29
SECTION 8.14. Reports to Certificateholders................... 29
ARTICLE IX Distributions; Statements to Certificateholders................ 29
SECTION 9.01. Certificate Account............................. 29
SECTION 9.02. Collections..................................... 29
SECTION 9.03. Purchase Amounts................................ 31
SECTION 9.04. Distributions to Parties........................ 31
SECTION 9.05. Advances........................................ 33
SECTION 9.06. Net Deposits.................................... 33
SECTION 9.07. Statements to Certificateholders................ 34
SECTION 9.08. Intentionally Blank............................. 35
SECTION 9.09. Payahead Account................................ 35
SECTION 9.10. Calculation of Notional Principal Amount........ 35
ARTICLE X Credit Enhancement............................................. 36
SECTION 10.01. Subordination................................... 36
SECTION 10.02. Spread Account.................................. 36
ARTICLE XI The Certificates............................................... 38
SECTION 11.01. The Certificates................................ 38
SECTION 11.02. Authentication of Certificates.................. 38
SECTION 11.03. Registration of Transfer and
Exchange of Certificates........................ 38
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen
Certificates.................................... 39
SECTION 11.05. Persons Deemed Owners........................... 39
SECTION 11.06. Access to Agreement and List of
Certificateholders' Names and Addresses......... 39
SECTION 11.07. Maintenance of Office or Agency................. 40
SECTION 11.08. Book-Entry Certificates......................... 40
SECTION 11.09. Notices to Clearing Agency...................... 41
SECTION 11.10. Definitive Certificates......................... 41
SECTION 11.11. The Tax Partnership Agreement................... 41
ARTICLE XII The Depositor.................................................. 42
SECTION 12.01. Representations and Undertakings
of Depositor.................................... 42
SECTION 12.02. Liability of Depositor; Indemnities............. 44
SECTION 12.03. Merger or Consolidation of, or Assumption
of the Obligations of Depositor................. 44
SECTION 12.04. Limitation on Liability of Depositor and
Others.......................................... 45
SECTION 12.05. Depositor May Own Certificates.................. 45
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ARTICLE XIII The Servicer................................................... 45
SECTION 13.01. Representations of Servicer..................... 45
SECTION 13.02. Indemnities of Servicer......................... 47
SECTION 13.03. Merger or Consolidation of, or Assumption
of the Obligations of Servicer.................. 48
SECTION 13.04. Limitation on Liability of Servicer and
Others.......................................... 48
SECTION 13.05. Servicer Not to Resign.......................... 49
SECTION 13.06. Delegation of Duties............................ 49
ARTICLE XIV Default........................................................ 49
SECTION 14.01. Events of Default............................... 49
SECTION 14.02. Appointment of Successor........................ 51
SECTION 14.03. Notification to Certificateholders.............. 52
SECTION 14.04. Waiver of Past Defaults......................... 52
ARTICLE XV The Trustee.................................................... 52
SECTION 15.01. Duties of Trustee............................... 52
SECTION 15.02. Trustee's Certificate........................... 54
SECTION 15.03. Trustee's Assignment of Purchased
Receivables..................................... 54
SECTION 15.04. Certain Matters Affecting the Trustee........... 55
SECTION 15.05. Trustee Not Liable for Certificates or
Receivables..................................... 56
SECTION 15.06. Trustee May Own Certificates.................... 57
SECTION 15.07. Trustee's Fees and Expenses..................... 57
SECTION 15.08. Eligibility Requirements for Trustee............ 57
SECTION 15.09. Resignation or Removal of Trustee............... 58
SECTION 15.10. Successor Trustee............................... 58
SECTION 15.11. Merger or Consolidation of Trustee.............. 59
SECTION 15.12. Appointment of Co-Trustee or Separate
Trustee......................................... 59
SECTION 15.13. Representations and Warranties of Trustee....... 60
ARTICLE XVI Termination.................................................... 61
SECTION 16.01. Termination of the Trust........................ 61
SECTION 16.02. Optional Disposition of All Receivables......... 62
SECTION 16.03. Termination upon the Bankruptcy of
the Class IC Certificateholder.................. 62
ARTICLE XVII Miscellaneous Provisions....................................... 63
SECTION 17.01. Amendment....................................... 63
SECTION 17.02. Protection of Title to Trust.................... 65
SECTION 17.03. Limitation on Rights of Certificateholders...... 66
SECTION 17.04. Governing Law................................... 67
SECTION 17.05. Notices......................................... 67
SECTION 17.06. Severability of Provisions...................... 68
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SECTION 17.07. Assignment...................................... 68
SECTION 17.08. Certificates Nonassessable and Fully Paid....... 68
SECTION 17.09. Nonpetition Covenant............................ 68
SECTION 17.10. Counterparts.................................... 68
SECTION 17.11. Third Party Beneficiary......................... 68
EXHIBIT 1 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3 - Servicer's Certificate
EXHIBIT A-1 - Form of Class A-1 Automobile Receivable Backed
Certificate
EXHIBIT A-2 - Form of Class A-2 Automobile Receivable Backed
Certificate
EXHIBIT B - Form of Class I Automobile Receivable Backed
Certificate
EXHIBIT C - Form of Class IC Automobile Receivable Backed
Certificate
EXHIBIT D - Form of Depository Trust Co. Letter of Representations
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
SCHEDULE C - Planned Notional Principal Amount Schedule
ANNEX A - Tax Partnership Agreement
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THIS POOLING AND SERVICING AGREEMENT, dated as of ______ _, 1996, is made with
respect to the formation of the Bay View 1996-A Auto Trust, among BAY VIEW
SECURITIZATION CORPORATION, a Delaware corporation as depositor (the
"Depositor"), CALIFORNIA THRIFT AND LOAN, a California corporation as servicer
(the "Servicer"), and Bankers Trust Company, a New York banking corporation, as
trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the parties hereto, there is hereby
created the Bay View 1996 RA-1 Auto Trust.
The parties hereto intend that this Agreement be construed so as to create a
partnership formed to facilitate the direct investment by Certificateholders in
the assets of the Trust.
ARTICLE II
DEFINITIONS
SECTION 2.01. DEFINITIONS. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accrued Interest" means all interest accrued on the Receivables prior to the
opening of business on the day following the Cutoff Date.
"Advance" means, with respect to a Receivable and with respect to a Collection
Period, the amount that the Servicer is required to advance pursuant to Section
9.05.
"Affiliate" means any wholly-owned subsidiary of BVCC, a Delaware corporation,
excluding CTL.
"Agreement" means this Pooling and Servicing Agreement executed by the
Depositor, the Servicer and the Trustee, and all amendments and supplements
thereto.
"Amount Financed", with respect to a Receivable, means the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
"Approved Rating" means a rating of P-1 by Moody's or A-l+ by Standard &
Poor's.
"Authorized Newspaper" means a newspaper of general circulation in the Borough
of Manhattan, the City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Available Spread Amount" means, on any Distribution Date, the amount on
deposit in the Spread Account, including any income or gain from any investment
of funds in the Spread Account, net of any losses from such investment before
giving effect to deposits into or withdrawals from the Spread Account pursuant
to Article IX.
"Available Funds" means the amount defined as such in Section 9.02.
"Bank" means Bay View Federal Bank, a Federal Savings Bank.
"Book-Entry Certificates" means certificates evidencing a beneficial interest
in the Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 11.08; provided, however,
that after the occurrence of a condition whereupon book-entry registration and
transfer are no longer permitted and Definitive Certificates are to be issued to
the Certificate Owners, such Certificates shall no longer be "Book-Entry
Certificates".
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York,
(or, if the Servicer has previously provided notice to the Trustee that such day
is not a Business Day, San Francisco, California), shall be authorized or
obligated by law, executive order, or governmental decree to be closed.
"BVCC" means Bay View Capital Corporation, a Delaware corporation holding 100%
of the Depositor's outstanding Common Stock.
"Certificate" means a Class A Certificate, a Class I Certificate or a Class IC
Certificate.
"Certificateholder" or "Holder" means the Person in whose name the respective
Certificate shall be registered in the Certificate Register, except that, solely
for the purposes of giving any consent, waiver, request, or demand pursuant to
the Agreement, the interest evidenced by any Certificate registered in the name
of the Depositor, the Servicer or CTL, or any Person controlling, controlled by,
or under common control with the Depositor or the Servicer, shall not be taken
into account in determining whether the requisite percentage of Certificates
(except the Class IC Certificate) necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Certificate Account" means the account designated as such, established and
maintained pursuant to Section 9.01.
"Certificate Balance" means, at any time, the Initial Certificate Balance
minus all distributions of Monthly Principal made up to such time.
"Certificate Factor" means a seven digit decimal number computed by the
Servicer and stated in the Servicer's Certificate which is computed by dividing
the Certificate Balance (after giving effect to any prior distribution of
Monthly Principal) by the Initial Certificate Balance.
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"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" mean, respectively, the
register maintained and the registrar appointed pursuant to Section 11.03.
"Class A Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-1 or Exhibit A-2.
"Class A Certificateholder" means the Person in whose name the respective
Class A Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class A Monthly Interest" means, for any Distribution Date, the sum of Class
A-1 Monthly Interest, Class A-2 Monthly Interest and Class A-3 Monthly Interest.
"Class A-1 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-1.
"Class A-1 Certificate Balance" means, at any time, the Initial Class A-1
Certificate Balance minus all distributions of Monthly Principal to Class A-1
Certificateholders made up to such time.
"Class A-1 Certificate Factor" means a seven digit decimal number computed by
the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-1 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-1 Certificate Balance.
"Class A-1 Certificateholder" means the Person in whose name the respective
Class A-1 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-1 Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class A-1 Monthly Interest" means, (i) for the first Distribution Date, the
product of the following: (one twelfth of the Class A-1 Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
assuming a 30-day month from and including the Closing Date divided by 30)
multiplied by the Class A-1 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-1
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Pass-Through Rate and the Class A-1 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-1 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-1 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-1 Pass-Through Rate" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
"Class A-1 Stated Final Distribution Date" means _______ _, 200_.
"Class A-2 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-2.
"Class A-2 Certificate Balance" means, at any time, the Initial Class A-2
Certificate Balance minus all distributions of Monthly Principal to Class A-2
Certificateholders made up to such time.
"Class A-2 Certificate Factor" means a seven digit decimal number computed by
the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-2 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-2 Certificate Balance.
"Class A-2 Certificateholder" means the Person in whose name the respective
Class A-2 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-2 Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class A-2 Monthly Interest" means, (i) for the first Distribution Date, the
product of the following: (one twelfth of the Class A-2 Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
assuming a 30-day month from and including the Closing Date divided by 30)
multiplied by the Class A-2 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-2
Pass-Through Rate and the Class A-2 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-2 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-2 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-2 Pass-Through Rate" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
4
"Class A-2 Stated Final Distribution Date" means ________ _, 200_.
"Class I Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit B.
"Class I Certificateholder" means the Person in whose name the respective
Class I Certificate shall be registered in the Certificate Register, except that
solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Class I Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class I Monthly Interest" means (i) for the first Distribution Date, the
product of the following: (one-twelfth of the Class I Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
assuming a 30-day month from and including the Closing Date divided by 30)
multiplied by the Notional Principal Amount of the Class I Certificates at the
Closing Date, and (ii) for any subsequent Distribution Date, one-twelfth of the
product of the Class I Pass-Through Rate and the Notional Principal Amount as of
the immediately preceding Distribution Date (after giving effect to any
application of Monthly Principal on such preceding Distribution Date); provided,
however, that after the Stated Final Class I Distribution Date, the Class I
Monthly Interest shall be zero.
"Class I Pass-Through Rate" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
"Class IC Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit C.
"Class IC Certificateholder" means the Depositor or any Person in whose name
the Class IC Certificate shall be registered in the Certificate Register.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means ______ __, 1996.
"Collected Interest" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
interest relating to such Collection Period.
5
"Collected Principal" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
principal relating to such Collection Period.
"Collection Period" means (i) initially, the period from the day after the
Cutoff Date to the end of the calendar month of December, 1996 and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article 16.
"Companion Component" means, for each respective Distribution Date, the
difference between the Certificate Balance and the PAC Component.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall, at any particular time, be administered, which
office at the date of the execution of this Agreement is located at Four Xxxxxx
Xxxxxx, Xxx Xxxx, XX 00000; Attention: Corporate Trust and Agency Group;
Telecopy (000) 000-0000 or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Servicer.
"CTL" means California Thrift & Loan, a California corporation, and its
successors and assigns, other than in its capacity as Servicer.
"Cutoff Date" means _____ __, 1996.
"Dealer" means the seller of a Financed Vehicle, who originated and assigned
the related Receivable to CTL or under an existing agreement with CTL or who
arranged for a loan from CTL or to the purchaser of a Financed Vehicle under an
existing agreement with CTL.
"Defaulted Receivable" means, for any Collection Period, a Receivable as to
which any of the following has occurred: (i) any payment was delinquent 120
days or more as of the last day of such Collection Period, (ii) the Financed
Vehicle that secures the Receivable has been repossessed, or (iii) the Servicer
has determined that the Receivable is uncollectible in accordance with the
Servicer's customary practices on or before the last day of such Collection
Period; provided, however, that "Defaulted Receivable" shall not include any
Receivable that is to be repurchased pursuant to Section 7.02.
"Definitive Certificate" means a Certificate defined as such in Section 11.08.
"Depositor" means Bay View Securitization Corporation, a Delaware corporation,
in its capacity as the depositor of the Receivables under this Agreement, and
each successor to Bay View Securitization Corporation (in the same capacity)
pursuant to Section 12.03.
"Depository Agreement" means the agreement among the Depositor, the Trustee
and the initial Clearing Agency in the form attached hereto as Exhibit D.
"Determination Date" means, for each Collection Period, the fifth day of the
following month.
6
"Dissolution Distribution Date" means the Distribution Date following the
liquidation of the trust corpus pursuant to Section 16.02 or Section 16.03.
"Distribution Date" means, for each Collection Period, the 15th calendar day
of each month (or, in the event such day is not a Business Day, the next
succeeding Business Day). The first Distribution Date shall be ___________,
199_.
"Eligible Bank" means any depository institution with trust powers (including
the Trustee), organized under the laws of the United States or any State having
a net worth 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 authorities and
which (i) has a long-term unsecured debt rating of at least Baa3 from Moody's or
(ii) is approved by each Rating Agency.
"Eligible Investment" means any of the following:
(i) direct obligations of, and obligations the full and timely payment of
principal and interest on which is fully guaranteed by, the United States of
America, the Federal National Mortgage Association, or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposits of, bankers'
acceptances issued by, or federal funds sold by any depository institution or
trust company (including the Trustee or any agent of the Trustee, acting in
their respective commercial capacities) incorporated under the laws of the
United States of America, any State thereof or the District of Columbia or any
foreign depository institution with a branch or agency licensed under the laws
of the United States of America or any State, in each case subject to
supervision and examination by Federal and/or State banking authorities and
having an Approved Rating at the time of such investment or contractual
commitment providing for such investment or (B) any other demand or time deposit
or certificate of deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) repurchase obligations with respect to (A) any security described in
clause (i) above or (B) any other security issued or guaranteed by an agency or
instrumentality of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal) described
in clause (ii) (A) above;
(iv) short-term securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any State the short-term unsecured obligations of which have an Approved Rating,
or higher, at the time of such investment; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding principal amount
of securities issued by such corporation and held as part of the corpus of the
Trust to exceed 10% of amounts held in the Certificate Account;
(v) commercial paper having an Approved Rating at the time of such investment;
7
(vi) a guaranteed investment contract issued by any insurance company or other
corporation acceptable to the Rating Agency, provided that the Trustee shall
have received written notice from the Rating Agency to the effect that the
investment of funds in such a contract will not result in the reduction or
withdrawal of any rating on the Certificates;
(vii) interests in any money market fund having a rating of Aaa by
Moody's or AAAm by Standard & Poor's; and
(viii) any other investment approved in advance in writing by the Rating
Agencies and the Surety Bond Issuer.
"Event of Default" means an event specified in Section 14.01.
"Excess Yield Requirement" has the meaning specified in Section [1.01] of the
Insurance Agreement.
"Financed Vehicle" means a new or used automobile, light truck, motorcycle, or
van, together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"Holder" -- see "Certificateholder."
"Initial Certificate Balance" means $________________.
"Initial Class A-1 Certificate Balance" means $__________________.
"Initial Class A-2 Certificate Balance" means $___________________.
"Insolvency Event" with respect to a party means (i) the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee-in-bankruptcy or similar official for
such party in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation of
their respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or (ii) the consent
by such party to the appointment of a trustee-in-bankruptcy or similar official
in any insolvency, readjustment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to such party or of or relating to
substantially all of its property; or (iii) such party shall admit in writing
its inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"Interest Advance Amount" with respect to a simple interest Receivable as to
which an Advance is required to be made on the last day of a Collection Period,
shall mean an amount equal to 30 days of interest upon the Principal Balance of
such Receivable as of such date; and, with respect to a Precomputed Receivable
as to which an Advance is required to be made on the last day of a Collection
Period, shall mean an amount equal to that portion of the earliest delinquent
Scheduled Payment allocable to interest (using the actuarial or constant yield
method).
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"Insurance Agreement" means the Insurance and Reimbursement Agreement, dated
as of ___________, 1996, among the Depositor, CTL individually and as Servicer,
and the Surety Bond Issuer pursuant to which the Surety Bond Issuer issued the
Surety Bond.
"Interest Shortfall" means, as to any simple interest Receivable as of the
last day of any Collection Period, the amount, if any, by which (a) interest due
on such Receivable exceeds (b) the Collected Interest on such Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method and after giving effect to the
withdrawal of any previously received Scheduled Payments in respect of such
Receivable from the Payahead Account in accordance with Sections 8.02(b) and
9.09 hereof).
"Lien" means a security interest, lien, charge, pledge, equity, or encumbrance
of any kind other than tax liens, mechanics' liens, and any liens which attach
to the respective Receivable or related Financed Vehicle by operation of law.
"Liquidation Proceeds" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor. "Liquidation Proceeds" with
respect to a Distribution Date means such monies collected during the preceding
Collection Period.
"Monthly Interest" means the sum of Class A Monthly Interest and Class I
Monthly Interest.
"Monthly Principal" means, for any Distribution Date, an amount equal to (i)
the Pool Balance at the close of business on the last day of the second
preceding Collection Period (or, in the case of the first Distribution Date, the
Original Pool Balance), less (ii) the Pool Balance at the close of business on
the last day of the preceding Collection Period; provided, however, that: (i)
Monthly Principal will be increased by the amount, if any, which is necessary to
reduce the Class A-1 Certificate Balance to zero on the Class A-1 Stated Final
Distribution Date; and (ii) Monthly Principal will be increased by the amount,
if any, which is necessary to reduce the Class A-2 Certificate Balance to zero
on the Class A-2 Stated Final Distribution Date. Monthly Principal will not
exceed the Certificate Balance.
"Monthly Servicing Fee" means, (i) for the first Distribution Date, the
product of the following: (one-twelfth of the Servicing Rate) multiplied by
(the number of days remaining in the month of the Closing Date from and
including the Closing Date, assuming a 30-day month, divided by 30) multiplied
by the Initial Certificate Balance and (ii) for any subsequent Distribution
Date, one-twelfth of the product of (a) the Certificate Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly Principal
made on that such Distribution Date) and (b) the Servicing Rate.
"Moody's" means Xxxxx'x Investors Service, Inc.
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"Net Principal Surety Bond Amount" means the Certificate Balance as of the
first Distribution Date minus all amounts previously drawn on the Surety Bond or
from the Spread Account with respect to Monthly Principal.
"Note Rate" means, with respect to a Receivable, the contract rate of interest
on such Receivable, exclusive of prepaid finance charges.
"Notional Principal Amount" or "PAC Component" means, for the purpose of
calculating the Class I Monthly Interest at any time, the Original Notional
Principal Amount minus all allocations of Monthly Principal to the PAC Component
made up to such time pursuant to Section 9.10 of this Agreement.
"Obligor" on a Receivable means the purchaser or the co-purchasers of the
Financed Vehicle who owes payments under the Receivable. The phrase payment
made on behalf of an Obligor" shall mean all payments made with respect to a
Receivable except payments made by CTL, the Depositor or the Servicer.
"Officers' Certificate" means a certificate signed by any two of the chairman
of the board, the president, any vice chairman of the board, any vice president,
the treasurer, or the controller of CTL, the Depositor or the Servicer, as the
case may be; provided that no individual shall sign in a dual capacity.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel to
the Depositor and/or Servicer, which counsel shall be acceptable to the Trustee.
"Optional Disposition Price" means the amount specified as such in Section
16.02.
"Original Notional Principal Amount" shall be $______________.
"Original Pool Balance" means $__________________.
"Outstanding Advances" as of any date, with respect to a Receivable, means the
total amount of Advances made on such Receivable for which the Servicer has not
been reimbursed.
"PAC Component" has the meaning set forth in Section 9.10.
"Payahead" on a Precomputed Receivable means the amount, as of the close of
business on the last day of a Collection Period, computed in accordance with
Section 8.02(b) with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 9.09.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the close
of business on the last day of a Collection Period, of all Payaheads made by or
on behalf of the Obligor with respect to such Precomputed Receivable, as reduced
by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09.
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"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Planned Notional Principal Amount" means, for each respective Distribution
Date, the corresponding amount specified in the Planned Notional Principal
Amount Schedule.
"Planned Notional Principal Amount Schedule" means, the amortization Schedule
of Planned Notional Principal Amount for each respective Distribution Date,
attached hereto as Schedule C.
"Pool Balance" as of any date means the aggregate Principal Balance of the
Receivables as of such date; provided, however, that for purposes of determining
Monthly Principal, the Principal Balance of a Defaulted Receivable or a
Purchased Receivable (if actually purchased by the Servicer or repurchased by
CTL) shall be deemed to be zero on and after the close of business on the last
day of the Collection Period in which the Receivable becomes a Defaulted
Receivable or a Purchased Receivable is actually repurchased.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the related
contract as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances, the sum of
monthly balances, the rule of 78's or any equivalent method.
"Premium Side Letter Agreement" means the letter dated the Closing Date as
defined in the Insurance Agreement.
"Prepayment Charges," as used in the Agreement, shall be interpreted to
include, without limitation, in the case of a Precomputed Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance of
such Receivable computed in accordance with the method provided for in the
contract governing such Receivable, such as the rule of 78's.
"Principal Balance" of a simple interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a Precomputed Receivable, as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer, net of unearned or accrued interest reflected therein, and as of the
close of business on the last day of a Collection Period, means the Principal
Balance as of the Cutoff Date minus that portion of all Scheduled Payments
received with respect to such Receivable in respect of such Collection Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.
"Principal Distribution Sequence" means that Monthly Principal shall be
distributed among the Class A Certificateholders in the following sequence: (i)
to the Class A-1 Certificateholders until the Class A-1 Certificate Balance has
been reduced to zero; and (ii) to the Class A-2 Certificateholders until the
Class A-2 Certificate Balance has been reduced to zero.
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"Purchase Agreement" means the Purchase Agreement, dated as of __________,
1996, by and between the Depositor and CTL, as amended, supplemented or modified
from time to time.
"Purchase Amount" of any Receivable, as of the close of business on the last
day of any Collection Period, means the amount equal to the sum of the Principal
Balance of such Receivable plus any unpaid interest accrued and due during or
prior to such Collection Period on such Receivable.
"Purchased Receivable" means a Receivable purchased not later than the
Determination Date of the month immediately following the respective Collection
Period by the Servicer pursuant to Section 8.07 or repurchased not later than
the Determination Date of the month immediately following the respective
Collection Period by CTL pursuant to Section 7.02.
"Rating Agency" means each of Moody's and Standard & Poor's and their
successors and assigns.
"Rating Agency Condition" means, with respect to any action, that each Rating
Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that, within 7 days
of receipt of such notice, none of the Rating Agencies shall have notified the
Depositor, the Servicer or the Trustee in writing that such action will result
in a reduction or withdrawal of the then current ratings of the Certificates.
"Receivable" means any simple interest or pre-computed (add-on) interest
installment sales contract or installment loan and security agreement which
shall appear on Schedule A to the Agreement.
"Receivable Files" means the documents specified in Section 7.03.
"Receivables" or "Receivables Pool" means those Receivables conveyed to the
Trust by the Depositor listed as of the Cutoff Date in Schedule A.
"Record Date" means, for any Distribution Date, the last day of the preceding
Collection Period.
"Recoveries" means Liquidation Proceeds received by the Servicer during the
preceding calendar month on Defaulted Receivables.
"Recoveries of Advances" means, for any Collection Period, all payments
received by the Servicer by or on behalf of Obligors (other than Obligors with
respect to Defaulted Receivables and excluding reimbursements of Outstanding
Advances on Defaulted Receivables pursuant to Sections 9.04(a) (i) and 9.05)
during such Collection Period representing recoveries of Interest Shortfalls for
which Advances were made for prior Collection Periods.
"Required Spread Amount" means on each Distribution Date, ____% of the Initial
Certificate Balance (after giving effect to any payment of Monthly Principal on
such Distribution Date); provided, that on any Distribution Date on which (or
after the first Distribution Date on
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which) the Excess Yield Requirement is not met, the Required Spread Amount shall
be equal to _% of the Certificate Balance (after giving effect to any payment of
Monthly Principal on such Distribution Date); and provided further that upon and
during the continuance of an Event of Default or a Trigger Event, the Required
Spread Amount shall be equal to the Surety Bond Amount as of such Distribution
Date after giving effect to any draws on the Surety Bonds, draws on the Spread
Account and other distributions pursuant to Section 9.04 on such Distribution
Date.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office (or any successor group 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 the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Scheduled Payment" on a Receivable means that portion of the payment required
to be made by the Obligor during the respective Collection Period sufficient to
amortize the Principal Balance and to provide interest at the Note Rate.
"Servicer" means California Thrift & Loan, a California corporation, in its
capacity as the servicer of the Receivables and each successor to California
Thrift & Loan (in the same capacity) pursuant to Section 13.03 or 14.02.
"Servicer's Certificate" means a certificate completed and executed by an
officer of the Servicer pursuant to Section 8.09.
"Servicing Rate" means 1.00% per annum, payable monthly at one-twelfth of the
annual rate, subject to adjustment with respect to a successor Servicer pursuant
to Section 14.02.
"Spread Account" means, the account designated as such, established and
maintained pursuant to Section 10.02.
"Spread Account Facility" means any liquidity facility or similar arrangement
established pursuant to Section 10.02.
"Spread Account Surplus" means, on any Distribution Date, the excess, if any,
of the Available Spread Amount on such Distribution Date, after giving effect to
deposits into and withdrawals from the Spread Account pursuant to Article 9 on
such Distribution Date, over the Required Spread Amount on such Distribution
Date (after giving effect to any payments of Monthly Principal and Monthly
Interest and all amounts owing to the Surety Bond Issuer on such Distribution
Date).
"Standard & Poor's" means Standard & Poors Ratings Services, a division of
XxXxxx-Xxxx Companies, Inc.
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
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"Stated Final Distribution Date" means _________, 200_.
"Stated Final Class I Distribution Date" means ________, 200_.
"Surety Bond" means the irrevocable Principal/Interest Surety Bond dated
________, 1996 issued by the Surety Bond Issuer to the Trustee for the benefit
of the Class A and Class I Certificateholders and having a maximum amount
available to be drawn in respect of Class A Monthly Interest, Class I Monthly
Interest and Monthly Principal equal to the Surety Bond Amount.
"Surety Bond Amount" means with respect to any Distribution Date:
(x) the sum of (A) the lesser of (i) the Certificate Balance (after giving
effect to any distribution of Available Funds and any funds withdrawn from the
Spread Account to pay Monthly Principal on such Distribution Date) and (ii) the
Net Principal Surety Bond Amount, plus (B) Class A Monthly Interest, plus (C)
Class I Monthly Interest, plus (D) the Monthly Servicing Fee; less
(y) all amounts on deposit in the Spread Account on such Distribution
Date.
"Surety Bond Fee" means for any Distribution Date, an amount equal to the
product of (i) the Surety Bond per annum fee rate set forth in the Premium Side
Letter Agreement calculated for the actual number of days elapsed during the
Collection Period on the basis of a 360 day year and (ii) the Certificate
Balance calculated as of the Record Date to which such Distribution Date
relates, payable monthly in arrears.
"Surety Bond Issuer" means Capital Markets Assurance Corporation, a New York
domiciled monoline stock insurance company.
"Trigger Event" means any of the events identified as such in Section [6.02]
of the Insurance Agreement.
"Trust" means the trust created by the Agreement, the estate of which shall
generally comprise the Receivables (other than Purchased Receivables) and all
monies paid thereon, and all monies due thereon, including Accrued Interest, as
of and after the Cutoff Date (but excluding Accrued Interest paid on or prior to
the Closing Date); security interests in the Financed Vehicles; funds deposited
in the Certificate Account; all documents contained in the Receivable Files; any
property that shall have secured a Receivable and that shall have been acquired
by or on behalf of the Trust; any Liquidation Proceeds and any rights of the
Depositor in proceeds from claims or refunds of premiums on any physical damage,
lender's collateral protection, credit life, disability, and hospitalization
insurance policies covering Financed Vehicles or Obligors; the interest of the
Depositor in recourse to Dealers relating to certain of the Receivables; the
proceeds of the foregoing; amounts on deposit from time to time in the Spread
Account; and certain rights of the Depositor under the Purchase Agreement,
including, without limitation, Section 3.03 thereof.
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"Trustee" means Bankers Trust Company, a banking corporation organized under
the laws of the State of New York and its successors or any corporation
resulting from or surviving any merger or consolidation to which it or its
successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"Trustee's Certificate" means a certificate completed and executed by the
Trustee by a Responsible Officer pursuant to Section 15.02, substantially in the
form of, in the case of an assignment to CTL, Exhibit 1, and in the case of an
assignment to the Servicer, Exhibit 2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
SECTION 2.02. USAGE OF TERMS. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; 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 term "including"
means "including without limitation."
SECTION 2.03. CUTOFF DATE AND RECORD DATE. All references to the Record Date
prior to the first Record Date in the life of the Trust shall be to the Cutoff
Date.
SECTION 2.04. SECTION REFERENCES. All section references in this Agreement
shall be to Sections in this Agreement unless otherwise specified.
ARTICLE III
CONVEYANCE OF RECEIVABLES
In consideration of the Trustee's delivery to or upon the order of the
Depositor of Class A Certificates with a Certificate Balance equal to the
Original Pool Balance, Class I Certificates representing in the aggregate the
Original Notional Principal Amount and the Class IC Certificate the Depositor
does hereby sell, transfer, assign, and otherwise convey to the Trustee, in
trust for the benefit of the Certificateholders and the Surety Bond Issuer,
without recourse (subject to the obligations herein):
(i) all right, title, and interest of the Depositor in and to the Receivables
listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims or refunds of
premiums on any physical damage, lender's collateral protection, credit life,
disability and hospitalization insurance policies covering Financed Vehicles or
Obligors;
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(iv) funds deposited in the Certificate Account;
(v) the interest of the Depositor in any proceeds from recourse to
Dealers relating to the Receivables;
(vi) all documents contained in the Receivable Files;
(vii) all monies paid and all monies due, including Accrued Interest,
after the Cutoff Date, with respect to the Receivables held by the Servicer or
Depositor (but excluding Accrued Interest paid prior to the Closing Date);
(viii) the rights of the Depositor pursuant to the Purchase Agreement to
require CTL to repurchase any Receivables as to which there has been a breach of
the representations and warranties contained therein;
(ix) the benefits of the Surety Bond; and
(x) all proceeds of the foregoing.
The Depositor does hereby further assign, convey, pledge and grant a
security interest in (i) the funds on deposit from time to time in the Spread
Account; (ii) all Eligible Investments purchased with funds deposited in the
Spread Account; (iii) any and all other right, title and interest, including any
beneficial interest the Depositor may have in the Certificate Account, the
Spread Account and the funds deposited therein, and (iv) any proceeds of any of
the foregoing, to the Trustee and for the benefit of the Certificateholders to
secure amounts payable to Certificateholders as provided under this Agreement.
The Depositor does not convey to the Trustee any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
ARTICLE IV
ACCEPTANCE BY TRUSTEE
The Trustee does hereby accept all consideration conveyed by the Depositor
pursuant to Article III, and declares that the Trustee shall hold such
consideration upon the trusts herein set forth for the benefit of all present
and future Certificateholders and the Surety Bond Issuer, subject to the terms
and provisions of this Agreement.
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ARTICLE V
INFORMATION DELIVERED TO THE RATING AGENCY
(a) The Servicer hereby expresses its intention to deliver promptly to the
Rating Agency (i) a copy of each Servicer's Certificate that it delivers to the
Trustee and the Surety Bond Issuer pursuant to Section 8.09, (ii) a copy of each
annual Officers' Certificate as to compliance and any notice of Default that it
delivers to the Trustee pursuant to Section 8.10, (iii) a statement for each
Collection Period including delinquency and loss information for the
Receivables, the amount of any draws on the Surety Bond, (iv) written notice of
any merger, consolidation, or other succession of the Servicer, pursuant to
Section 13.03, or the Depositor, pursuant to Section 12.03, (v) a copy of each
amendment to this Agreement and (vi) any Opinion of Counsel delivered to the
Trustee pursuant to Section 17.02(i).
(b) The Trustee hereby expresses its intention to deliver promptly to
the Rating Agency (i) a copy of each statement or notification to
Certificateholders delivered pursuant to Section 9.07, 14.03 or 15.10, (ii) a
copy of each annual certified public accountant's report received by the Trustee
pursuant to Section 8.11, (iii) a copy of each amendment to this Agreement and
(iv) a copy of the notice of termination of the Trust provided to
Certificateholders pursuant to Section 16.01.
(c) For purposes of delivery pursuant to paragraphs (a) and (b) of this
Article VIII, the addresses for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx'x Investors Service, Inc.
Attention: ABS Monitoring Department
4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(d) The provisions of this Article V are included herein for convenience
of reference only and shall not be construed to be contractual undertakings or
obligations. The failure of the Servicer or the Trustee to comply with any or
all of the provisions of this Article V shall not constitute an Event of Default
or a default of any kind under this Agreement or make any remedy available to
any Person.
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ARTICLE VI
AGENT FOR SERVICE
The agent for service for the Depositor shall be Xxxxxx X. Xxxx, Secretary
of the Depositor. Any and all service on the agent for service of the Depositor
shall be sent to Bay View Securitization Corporation, 0000 Xxxxx Xx Xxxxxx Xxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000.
The agent for service for the Servicer shall be Xxxxxxx Xxxxxxxx, President
of the Servicer. Any and all service on the agent for service of the Servicer
shall be sent to California Thrift & Loan, 000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx
00000.
ARTICLE VII
THE RECEIVABLES
SECTION 7.01. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. Pursuant to
Article III, the Depositor has assigned to the Trust the benefit of, and its
rights respecting, the representations and warranties made to the Depositor in
the Purchase Agreement as to the Receivables on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. Such representations and warranties speak as of the execution and
delivery of the Purchase Agreement but shall survive the sale, transfer, and
assignment of the Receivables to the Trustee.
(a) The Depositor hereby represents and warrants to the Trustee that it
has entered into the Purchase Agreement with CTL, that CTL has made the
representations and warranties set forth therein, that such representations and
warranties run to and are for the benefit of the Depositor, and that pursuant to
Article III of this Agreement the Depositor has transferred and assigned to the
Trustee all rights of the Depositor to cause CTL under the Purchase Agreement to
repurchase Receivables in the event of a breach of such representations and
warranties.
(b) It is the intention of the Depositor that the transfer and assignment
herein contemplated, taken as a whole, constitute a sale of the Receivables from
the Depositor to the Trust and that the beneficial interest in and title to the
Receivables not be part of the receivership estate in the event of the
appointment of a receiver for the Depositor. No Receivable has been sold,
transferred, assigned, or pledged by the Depositor to any Person other than the
Trustee. Immediately prior to the transfer and assignment herein contemplated,
the Depositor had good and marketable title to each Receivable free and clear of
all liens, and, immediately upon the transfer thereof, the Trustee (for the
benefit of the Certificateholders and the Surety Bond Issuer) shall have good
and marketable title to each Receivable, free and clear of all liens and rights
of others, except for the rights of the Certificateholders and the Surety Bond
Issuer; and the transfer has been perfected under the UCC. On or prior to the
Closing Date, all filings (including, without limitation, UCC filings) necessary
in any jurisdiction to give the Trustee a first perfected ownership interest in
the Receivables shall have been made.
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SECTION 7.02. REPURCHASE UPON BREACH. The Depositor, CTL, the Servicer,
or the Trustee, as the case may be, shall inform the Surety Bond Issuer and the
other parties promptly, in writing, upon the discovery of any breach of the
representations and warranties contained in the Purchase Agreement. This
obligation shall not constitute an obligation on the part of the Trustee to
actively seek to discover any such breaches. Unless the breach shall have been
cured by the second Record Date following the discovery, CTL, pursuant to its
obligations under the Purchase Agreement, shall repurchase any Receivable
materially and adversely affected by the breach as of such Record Date (or, at
CTL's option, the first Record Date following the discovery). In consideration
of the purchase of the Receivable, CTL shall remit the Purchase Amount, in the
manner specified in Section 9.03. The sole remedy of the Trustee, the Trust, or
the Certificateholders with respect to a breach of the representations and
warranties referred to in Section 7.01 shall be to require CTL to repurchase
Receivables pursuant to the Purchase Agreement and this Section 7.02.
SECTION 7.03. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trustee, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, for the benefit of
the Trust and the Certificateholders, to act as the agent of the Trustee as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the Obligor.
(iii) The original certificate of title or such documents that the
Depositor or Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of CTL in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the Depositor
shall keep on file, in accordance with its customary procedures, relating to a
Receivable, an Obligor, or a Financed Vehicle.
SECTION 7.04. DUTIES OF SERVICER AS CUSTODIAN.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Trustee for the use and benefit of
all present and future Certificateholders, and maintain such accurate and
complete accounts, records, and computer systems pertaining to each Receivable
File as shall enable the Trustee to comply with this Agreement. In performing
its duties as custodian the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable motor vehicle receivables that the
Servicer services for itself. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under this
Agreement, and of the related accounts, records, and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the Servicer's
record keeping. 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 shall promptly take appropriate action
to
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remedy any such failure; provided, however, notwithstanding anything to the
contrary in Section 7.03 or this Section 7.04, the Servicer shall not be
required to possess the original of Receivables representing less than 2% of the
Original Pool Balance until 30 days following the Closing Date.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Trustee by prior
written notice. The Servicer shall make available to the Trustee or its duly
authorized representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Trustee shall
instruct.
(c) Release of Documents. Upon instruction from the Trustee, the
Servicer shall release any document in a Receivable File 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 as practicable.
SECTION 7.05. 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 a Responsible Officer of the
Trustee.
SECTION 7.06. CUSTODIAN'S INDEMNIFICATION. The Servicer, in its capacity
as custodian, shall indemnify the Trust and the Trustee (which shall include,
for purposes of this Section 7.06, its directors, officers, employees and
agents) for any and all liabilities, obligations, losses, compensatory damages,
payments, costs, or expenses of any kind whatsoever that may be imposed on,
incurred, or asserted against the Trust or the Trustee as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer of the Receivable Files; provided, however, that the Servicer shall
not be liable for any portion of any such amount resulting from the willful
misfeasance, bad faith, or negligence of the Trustee. This indemnity shall
survive the termination of this Agreement and the resignation or removal of the
Trustee.
SECTION 7.07. 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
7.07. If the Servicer shall resign in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 14.01, the appointment of the Servicer as
custodian may be terminated (i) by the Trustee with the consent of the Surety
Bond Issuer, which consent shall not be unreasonably withheld, (ii) by the
Holders of Certificates evidencing not less than 25% of the Certificate Balance
and 25% of the Notional Principal Amount of the Class I Certificates with the
consent of the Surety Bond Issuer, which consent shall not be unreasonably
withheld, or (iii) by the Surety Bond Issuer, without the consent of the Holders
of the Certificates (and, as to the rights of the Surety Bond Issuer under (i),
(ii) or (iii), so long as the Surety Bond Issuer is not in default of its
obligations under the Surety Bond). The Trustee may terminate the Servicer's
appointment as custodian with cause at any time upon written notification to the
Servicer. As soon as practicable after any termination of such appointment, the
Servicer shall deliver the
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Receivable Files to the Trustee or the Trustee's agent at such place or places
as the Trustee, with the consent of the Surety Bond Issuer, may reasonably
designate.
SECTION 7.08. LIABILITY OF THE HOLDER OF THE CLASS IC CERTIFICATE AND THE
CERTIFICATEHOLDERS.
(a) The holder of the Class IC Certificate shall be liable directly to
and shall indemnify any creditor of the Trust, including any injured party, for
all losses, claims, damages, liabilities and expenses of the Trust, to the
extent not paid out of the assets of the Trust, to the extent that the holder of
the IC Certificate would be liable if the Trust were a partnership under the
Uniform Limited Partnership Act in which the holder of the IC Certificate was a
general partner; provided, however, that the holder of the IC Certificate shall
not be liable for (i) any losses incurred by a Certificateholder or a
Certificate Owner in its capacity as an investor in the Certificates or (ii) any
losses, claims, damages, liabilities and expenses arising out of the imposition
by any taxing authority of any federal, state or local income or franchise taxes
or any other taxes imposed on or measured by gross or net income, gross or net
receipts, capital, net worth and similar items (including any interest,
penalties or additions with respect thereto) upon the Certificateholders, the
Certificate Owners, or the Trustee (including any liabilities, costs or expenses
with respect thereto) with respect to the Receivables not specifically
indemnified against or represented to hereunder. In addition, any third party
creditors of the Trust (other than in connection with the obligations described
in the preceding sentence for which the holder of the Class IC Certificate shall
not be liable) shall be deemed third party beneficiaries of this section
7.08(a). The obligations of the holder of the Class IC Certificate under this
Section 7.08(a) shall be evidenced by the Class IC Certificate.
(b) No Certificate Owner or Certificateholder, other than to the extent
set forth in Section 7.08(a) with respect to the Class IC Certificateholder,
shall have any personal liability for any liability or obligation of the Trust.
(c) The Depositor shall not, without the consent of the Surety Bond Issuer
(not to be unreasonably withheld), sell, assign, pledge or otherwise transfer,
in whole, or in part or in any series of related or unrelated transactions any
of its right, title or interest in or to the IC Certificate.
ARTICLE VIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 8.01. DUTIES OF SERVICER. The Servicer, for the benefit of the
Trust and the Certificateholders, shall manage, service, administer, and make
collections on the Receivables with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable motor
vehicle receivables that it services for itself. The Servicer's duties shall
include collection and posting of all payments, making Advances (in accordance
with Section 9.05), responding to inquiries of Obligors or of federal, state or
local governmental authorities with respect to the Receivables, investigating
delinquencies, sending payment coupons
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to Obligors, accounting for collections, and furnishing monthly and annual
statements to the Trustee with respect to distributions. The Servicer shall
follow its customary standards, policies, and procedures in performing its
duties as Servicer. Without limiting the generality of the foregoing, the
Servicer is authorized and empowered by the Trustee to execute and deliver, on
behalf of itself, the Trust, the Certificateholders, or the Trustee or any of
them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable or a
Defaulted Receivable, the Trustee shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. The Trustee shall execute any documents prepared by the Servicer
and delivered to the Trustee for execution that are necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder.
SECTION 8.02. COLLECTION OF RECEIVABLE PAYMENTS. (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
motor vehicle receivables that it services for itself. If payments are extended
in the ordinary course of the Servicer's collection procedures, and, as a
result, any Receivable would be outstanding at the Stated Final Distribution
Date, then the Servicer shall be obligated to purchase such Receivable pursuant
to Section 8.07 (unless such Receivable is otherwise being purchased pursuant to
Section 16.02) as of the last day of the Collection Period immediately preceding
the Stated Final Distribution Date. The Servicer may in its discretion waive any
late payment charge or any other fees that it is entitled to retain under
Section 8.08, or other fee (to the extent consistent with its credit and
collection policy on the Closing Date) that may be collected in the ordinary
course of servicing a Receivable.
Each payment on a simple interest Receivable shall be applied first to
collection fees, if any, second, to late charges, if any accrued on such
Receivable, third to the amount of interest accrued on such Receivable to the
date of receipt; fourth, to principal due on such Receivable; and last, to
reduce the remaining principal amount outstanding on such Receivable.
(b) All allocations of payments with respect to a simple-interest
Receivable to principal and interest and determinations of periodic charges and
the like shall be made using the simple interest method, based on either the
actual number of days elapsed and the actual number of days in the calendar year
or on the basis of a thirty-day month and a 360- day calendar year, as specified
in the related installment sales contract or installment loan and security
agreement. Each payment on a simple interest Receivable shall be applied first
to collection fees, if any; second, to late charges, if any, accrued on such
Receivable; third to the amount of interest accrued on such Receivable to the
date of receipt; fourth to principal due on such Receivable; and, last, to
reduce the remaining principal amount outstanding on such Receivable. Payments
made by or on behalf of an Obligor with respect to a Precomputed Receivable
shall be applied first to overdue Scheduled Payments (including reduction of
Outstanding Advances as provided in Section 9.04). Next, any excess shall be
applied to the Scheduled Payment and any remaining excess shall be added to the
Payahead Balance, and shall be applied to prepay the Precomputed Receivable, but
only if the sum of such excess and the previous Payahead Balance shall be
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sufficient to prepay the Receivable in full. Otherwise, any such remaining
excess payments shall constitute a Payahead and shall increase the Payahead
Balance.
SECTION 8.03. REALIZATION UPON RECEIVABLES. (a) On behalf of the Trust
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise convert the ownership of the Financed
Vehicle securing any Receivable as to which the Servicer shall have determined
that eventual payment in full is unlikely. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at public or private sale. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds of the related Receivable by an amount equal to or greater
than the amount of such expenses.
(b) Unless otherwise stated in this Agreement, the Servicer shall either
purchase or liquidate each Financed Vehicle that has not previously been
liquidated and that secures, or previously secured, a Defaulted Receivable
either (i) by the end of the Collection Period preceding the Stated Final
Distribution Date or (ii) if earlier, by the end of the ninth Collection Period
following the Collection Period during which such Receivable became a Defaulted
Receivable. Any purchase of a Financed Vehicle by the Servicer shall be made at
a price equal to the fair market value of the Financed Vehicle as determined by
the Servicer in accordance with the Servicer's normal servicing standards.
SECTION 8.04. PHYSICAL DAMAGE INSURANCE. The Servicer, in accordance with
its customary servicing procedures, and underwriting standards shall require
that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle.
SECTION 8.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Trust in the event of the relocation of a Financed
Vehicle or for any other reason.
SECTION 8.06. COVENANTS OF SERVICER. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholders in the Receivables, nor shall the Servicer change the
amount of the Scheduled Payment under a Receivable or change the Amount Financed
under a Receivable or reduce the Note Rate of a Receivable (except if so ordered
by a bankruptcy court in a proceeding concerning the Obligor).
SECTION 8.07. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the
Trustee shall inform the other party and the Surety Bond Issuer promptly, in
writing, upon the discovery
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of any breach by the Servicer of its obligations under Section 8.06. This
obligation shall not constitute an obligation on the part of the Trustee to
discover any such breaches. Unless the breach shall have been cured by the last
day of the Collection Period following the Collection Period during which such
breach was discovered, the Servicer shall purchase any Receivable materially and
adversely affected by such breach as of such day (or, at the Servicer's
election, as of the last day of the Collection Period during which such breach
was discovered). In consideration of the purchase of such Receivable, the
Servicer shall remit the Purchase Amount with respect to such Receivable in the
manner specified in Section 9.03. The sole remedy of the Trustee, the Trust, or
the Certificateholders with respect to a breach pursuant to Section 8.06 shall
be to require the Servicer to purchase Receivables pursuant to this Section
8.07, except as provided in Section 13.02.
SECTION 8.08. SERVICING FEE. The servicing fee for a Collection Period
shall equal the Monthly Servicing Fee (except that in the case of a successor
Servicer, the servicing fee shall equal such amount as is arranged in accordance
with Section 14.02). The Servicer shall be entitled to retain from payments of
interest on the Receivables collected during a Collection Period an amount equal
to the Monthly Servicing Fee due the Servicer in respect of such Collection
Period and need not deposit such amount in the Certificate Account. The Servicer
shall also be entitled to retain, and need not deposit in the Certificate
Account, all late fees, prepayment charges, other administrative fees or similar
charges allowed by applicable law with respect to Receivables, if any, collected
(from whatever source) on the Receivables. The Monthly Servicing Fee will be
paid only out of the funds of the Trust and not from the Trustee's own funds. So
long as California Thrift & Loan or an Affiliate is the Servicer, if the
Servicer fails to pay the Trustee's fees and expenses pursuant to Section 15.07,
the Trustee shall be entitled to receive such amount from the Monthly Servicing
Fee prior to payment thereof to the Servicer and the Servicer shall not retain
from collections that portion of the Monthly Servicing Fee equal to any fees of
the Trustee that are due and payable and any unpaid amount that the Servicer has
received notice is due the Trustee as reimbursement for expenses.
SECTION 8.09. SERVICER'S CERTIFICATE. On or before the Determination Date
following each Collection Period, the Servicer shall deliver to the Trustee and
the Surety Bond Issuer a Servicer's Certificate in substantially the form of
Exhibit 3 attached hereto containing all information necessary to make the
distributions pursuant to Section 9.04 for the Collection Period preceding the
date of such Servicer's Certificate and all information necessary for the
Trustee to send statements to Certificateholders pursuant to Section 9.07,
including (A) the amount of aggregate collections on the Receivables, (B) the
aggregate Purchase Amount of the Receivables repurchased by CTL and purchased by
the Servicer, (C) with respect to Precomputed Receivables the net deposit from
the Certificate Account to the Payahead Account or the net withdrawal from the
Payahead Account to the Certificate Account required for the Collection Period
in accordance with Section 9.09, and in the case of a net withdrawal, the
Monthly Interest and Monthly Principal reported on such Servicer's Certificate
shall reflect the portions of such withdrawal allocable to interest and
principal, respectively, in accordance with this Agreement, (D) current and
cumulative information respecting (i) delinquent Receivables that are 30, 60 and
90 days past due, and (ii) charge-offs, the number of repossessions of Financed
Vehicles during the preceding Collection Period, number of unliquidated
repossessed Financed Vehicles, gross and net losses on the Receivables, and
recoveries on charged off Receivables; and (E) each other item listed in Section
9.04 hereof reasonably requested by the Rating Agency or the Surety Bond Issuer
in
24
order to monitor the performance of the Receivables. Receivables purchased by
CTL as of the last day of such Collection Period shall be identified by the CTL
account number with respect to such Receivable (as specified in Schedule A to
this Agreement).
SECTION 8.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a)
The Servicer shall deliver to the Trustee and the Surety Bond Issuer, on or
before April 30 of each year, beginning on the first April 30 that is at least
six months after the Closing Date, an Officers' Certificate, dated as of
December 31 of the preceding year, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period (or in the case of the
initial Officer's Certificate, the period from the Closing Date to and including
the date of such Officer's Certificate) and of its performance 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, 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. A copy of such
certificate and the Report referred to in Section 8.11 may be obtained by any
Certificateholder at its own expense by a request in writing to the Trustee
addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Trustee and
the Surety Bond Issuer, promptly after having obtained knowledge thereof, but in
no event later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 14.01. The Depositor or the
Servicer shall deliver to a Responsible Officer of the Trustee and the Surety
Bond Issuer, promptly after having obtained knowledge thereof, but in no event
later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (ii) of Section 14.01.
SECTION 8.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT. The
Servicer shall cause a firm of independent certified public accountants, who may
also render other services to the Servicer, to deliver to the Trustee and the
Surety Bond Issuer on or before March 31 of each year concerning the 12-month
period ended December 31 of the preceding year (or shorter period since the date
of this Agreement), beginning on the first December 31 following the first March
31 after the Closing Date, a report addressed to the Board of Directors of the
Servicer and to the Trustee, to the effect that such firm has reviewed the
servicing of the Receivables by the Servicer and that such review (1) included
tests relating to new or used automobile, motorcycle, van and light truck loans
serviced for others in accordance with the requirements of the Uniform Single
Audit Program for Mortgage Bankers, to the extent the procedures in such program
are applicable to the servicing obligations set forth in the Agreement, and (2)
except as described in the report, disclosed no exceptions or errors in the
records relating to automobile, van or light truck loans serviced for others
that, in the firm's opinion, paragraph four of such program requires such firm
to report.
The report will also indicate that the firm is independent of the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
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SECTION 8.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Certificateholders access to the
Receivables Files in such cases where the Certificateholder shall be required by
applicable statutes or regulations to review such documentation. Access shall be
afforded without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section 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 8.12.
SECTION 8.13. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of its agents, independent accountants, taxes
imposed on the Servicer, and expenses incurred in connection with distributions
and reports to Certificateholders.
SECTION 8.14. REPORTS TO CERTIFICATEHOLDERS. The Trustee shall provide to
any Certificateholder who so requests in writing (addressed to the Corporate
Trust Office) a copy of any certificate described in Section 8.09, or the annual
statement described in Section 8.10, or the annual report described in Section
8.11. The Trustee may require the Certificateholder to pay a reasonable sum to
cover the cost of the Trustee's complying with such request.
ARTICLE IX
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
SECTION 9.01. CERTIFICATE ACCOUNT. The Servicer, on behalf of the Trust,
shall establish the Certificate Account with the Bank or an Eligible Bank as a
segregated trust account in the name of the Trust for the benefit of
Certificateholders with the Corporate Trust Office of the Trustee. The Servicer
shall direct the Trustee to invest the amounts in the Certificate Account in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date and to hold such Eligible Investments to
maturity. The Trustee (or its custodian) shall (i) maintain possession of any
negotiable instruments or securities evidencing Eligible Investments until the
time of sale or maturity and each certificated security or negotiable instrument
evidencing an Eligible Investment shall be endorsed in blank or to the Trustee
or registered in the name of the Trustee and (ii) cause any Eligible Investment
represented by an uncertificated security to be registered in the name of the
Trustee.
SECTION 9.02. COLLECTIONS. The Servicer shall remit to the Certificate
Account all payments by or on behalf of the Obligors on the Receivables and all
Liquidation Proceeds, both as collected during the Collection Period net of
Monthly Servicing Fees and administrative fees allowed to be retained by the
Servicer pursuant to Section 8.08 and net of charge backs (attributable to
errors in posting, returned checks, or rights of offset for amounts that should
not have been paid or that must be refunded as the result of a successful claim
or defense under bankruptcy or similar laws) not later than the second Business
Day following the Business Day on which such amounts are received by the
Servicer. Notwithstanding the foregoing, for so long as (a) CTL or an Affiliate
remains the Servicer, (b) no Event of Default shall have occurred and
26
be continuing and (c)(1) CTL (or an Affiliate succeeding CTL as Servicer)
maintains a short-term rating of at least A-1 by Standard & Poor's and P-l by
Moody's (and for five Business Days following a reduction in either such rating)
or (2) prior to ceasing daily remittances, the Rating Agency Condition shall
have been satisfied (and any conditions or limitations imposed by the Rating
Agencies in connection therewith are complied with) and the prior written
consent of the Surety Bond Issuer (not to be unreasonably withheld) shall have
been obtained, the Servicer may remit all such payments and Liquidation Proceeds
with respect to any Collection Period to the Certificate Account on a less
frequent basis, but in no event later than the Determination Date immediately
preceding each Distribution Date. The Servicer shall remit any Advances with
respect to a Collection Period to the Certificate Account on or before the
Determination Date.
On each Determination Date, the Servicer shall determine (a) the amount of
payments on all Receivables and all Liquidation Proceeds received during such
Collection Period, the amount of Advances for such Collection Period, and the
Purchase Amount for all Receivables purchased or repurchased with respect to
such Collection Period which have been deposited in the Certificate Account (net
of amounts required to be paid pursuant to Section 9.04(d), excluding investment
income on all such amounts, and not including amounts required to be paid
pursuant to Sections 7.02, 8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Certificate Account to the Payahead Account or from
the Payahead Account to the Certificate Account as provided in Section 9.09,
(the "Available Funds"), and (b) the amount of funds necessary to make the
distributions required pursuant to Sections 9.04(a) (i) through (vii),
inclusive, on the next Distribution Date. The Servicer shall by a Servicer's
Certificate notify the Trustee of such amounts by telecopy to the Corporate
Trust Office at the number specified in the Agreement (or such other number as
the Trustee may from time to time provide), followed promptly by mailing such
notice to the Trustee at the Corporate Trust Office and to the Surety Bond
Issuer. On each Distribution Date, the Trustee, or the Servicer on its behalf,
shall effect the net transfer between the Certificate Account and the Payahead
Account as required by Section 9.09 for such Distribution Date.
On any Distribution Date on which there are not sufficient Available Funds
to make the distributions required pursuant to Sections 9.04(a)(i) through (iii)
the Trustee, or the Servicer on its behalf, shall withdraw from the Spread
Account, to the extent of the Available Spread Amount, an amount equal to such
deficiency and promptly deposit such amount in the Certificate Account. If such
deficiency exceeds the Available Spread Amount, the Servicer shall
simultaneously and in the same manner also notify the Trustee and the Surety
Bond Issuer of the amount of such excess deficiency. The Trustee shall promptly
(and in any event not later than 1:00 p.m. New York City time on the Business
Day preceding the Distribution Date) deliver a Notice for Payment as defined in
the Surety Bond (appropriately completed) to the Surety Bond Issuer with respect
to the Surety Bond. The Surety Bond Issuer is required pursuant to Section 10.03
and the terms of the Surety Bond to pay the amount of such excess deficiency of
Class I Monthly Interest, Class A Monthly Interest and Monthly Principal, up to
the Surety Bond Amount.
The Trustee shall deposit in the Certificate Account any funds received by
the Trustee in respect of funds drawn under the Surety Bond from the Surety Bond
Issuer.
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If the Available Funds for a Distribution Date are insufficient to pay
current and past due Surety Bond Fees, or any amounts owing to the Surety Bond
Issuer pursuant to the Insurance Agreement including, without limitation,
reimbursements, indemnities, fees and expenses, plus accrued interest thereon,
to the Surety Bond Issuer, the Servicer shall notify the Trustee of such
deficiency, and the Available Spread Amount, if any, then on deposit in the
Spread Account (after giving effect to any withdrawal to satisfy a deficiency in
Monthly Interest or Monthly Principal) shall be available to cover such
deficiency.
SECTION 9.03. PURCHASE AMOUNTS. Not later than the Determination Date,
the CTL or the Servicer, as the case may be, shall remit to the Certificate
Account the aggregate Purchase Amount for such Collection Period pursuant to
Sections 7.02 and 8.07.
SECTION 9.04. DISTRIBUTIONS TO PARTIES.
(a) On each Distribution Date, the Trustee shall apply or cause to be
applied the Available Funds in the Certificate Account for the prior Collection
Period, (plus any amounts withdrawn from the Spread Account or drawn on the
Surety Bond pursuant to Section 9.02), to make the following distributions in
the listed order of priority:
(i) The aggregate amount of (y) Outstanding Advances on all Receivables
that became Defaulted Receivables during the prior Collection Period, and (z)
Outstanding Advances which the Servicer determines to be unrecoverable pursuant
to Section 9.05, to the Servicer;
(ii) To the extent not previously distributed to the Servicer, the
Monthly Servicing Fee, including any overdue Monthly Servicing Fee, to the
Servicer;
(iii) Pro rata, (in accordance with Section 9.04(b)(i)), (y) the Monthly
Principal (in accordance with the Principal Distribution Sequence) and Class A
Monthly Interest, including any overdue Monthly Principal and Class A Monthly
Interest, to the Class A Certificateholders, and (z) Class I Monthly Interest,
including any overdue Class I Monthly Interest, to the Class I
Certificateholders;
(iv) The Surety Bond Fee, including any overdue Surety Bond Fee, plus
accrued interest thereon at the rate provided in the Insurance Agreement, to the
Surety Bond Issuer;
(v) The amount of Recoveries of Advances, to the Servicer (to the
extent not applied pursuant to (i) above on or prior to such Distribution Date);
(vi) The aggregate amount of all unreimbursed draws made on the Surety
Bond in respect of Class A Monthly Interest, Class I Monthly Interest and
Monthly Principal and any other amounts payable to the Surety Bond Issuer under
the Insurance Agreement, plus accrued interest thereon at the rate provided in
the Insurance Agreement, to the Surety Bond Issuer;
(vii) The balance for deposit in the Spread Account. The rights of the
Class IC Certificateholder to receive distributions from the Spread Account are
described in Sections 10.02(e) and (f).
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(b) (i) If on any Distribution Date there are not sufficient Available
Funds (together with amounts withdrawn from the Spread Account and/or the Surety
Bond) to pay the distribution required by Section 9.04(a)(iii), the Available
Funds distributable under Section 9.04(a)(iii) shall be distributed
proportionately on the basis of the ratio of the required distribution due each
of the Class A and Class I Certificateholders, respectively, to the sum of the
distributions required by Section 9.04(a)(iii) to the Class A Certificateholders
and the Class I Certificateholders. The amount so distributed to the Class A
Certificateholders hereunder shall be allocated first to Class A Monthly
Interest, and second to Monthly Principal and shall be distributed pro rata
among the Class A Certificateholders.
(ii) Notwithstanding the foregoing, the Class I Certificateholders will
not be entitled to any distributions after the Notional Principal Amount of the
Class I Certificates has been reduced to zero.
(iii) Notwithstanding the foregoing, if either (A) the Class IC
Certificateholder exercises its option to cause a disposition of the remaining
corpus of the Trust on any Distribution Date pursuant to Section 16.02, or (B)
the Receivables are liquidated in any Collection Period after the occurrence of
an Insolvency Event with respect to the Class IC Certificateholder which causes
a termination of the Trust pursuant to Section 16.03, the following shall apply:
(a) the Available Funds and amounts withdrawn from the Spread Account or drawn
on the Surety Bond in respect only of Monthly Interest and Monthly Principal
with respect to the immediately preceding Distribution Date as determined in
accordance with Section 9.02 and 9.04 shall be distributed to Certificateholders
on such Distribution Date; (b) the Surety Bond will not be available to pay any
shortfall of Monthly Interest or Monthly Principal after a disposition of the
Receivables pursuant to Section 16.02 or after liquidation of the trust assets
pursuant to Section 16.03; and (c) the Optional Disposition Price (in the case
of clause (A) of this paragraph) and the proceeds of any liquidation of
Receivables (in the case of clause (B) of this paragraph) and any remaining
assets of the Trust (including the remaining Available Spread Amount) shall be
distributed to Certificateholders on such Distribution Date based on their
Adjusted Capital Accounts (as defined in Section 6(c)(iv) of Annex A attached
hereto) in accordance with Section 6(b)(iii) and Section 9 of Annex A attached
hereto.
(iv) In making such distributions the Trustee shall be entitled to rely
upon (without investigation, confirmation or recalculation) all information and
calculations contained in the Servicer's Certificate delivered to the Trustee
pursuant to Section 8.09 hereof.
(v) All monthly distributions shall be made by wire transfer of
immediately available funds to each Certificateholder of record on the preceding
Record Date. Notwithstanding the foregoing, the final payment on each
Certificate shall be made only against presentation and surrender of the
Certificate at the office or agency then maintained by the Trustee in accordance
with Section 11.07.
(c) On each Distribution Date, the Trustee shall remit to the Servicer
all investment income earned through the last day of the preceding Collection
Period on amounts held from time to time in the Certificate Account.
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(d) On each Distribution Date, if the Servicer has reported to the
Trustee in the Servicer's Certificate for any Collection Period that an Obligor
or an Obligor's representative or successor successfully shall have asserted a
claim or defense under bankruptcy law or similar laws for the protection of
creditors generally (including the avoidance of a preferential transfer under
bankruptcy law) that results in a liability of the Trust to such Obligor for
monies previously collected and remitted to the Trustee and not otherwise netted
against collections pursuant to Section 9.02, the Trustee shall make all
payments in respect of such claims or defenses out of the amounts on deposit in
the Certificate Account with respect to such Collection Period before making the
distributions required by paragraph (a) of this Section 9.04.
(e) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Section 9.02, the Trustee may calculate Monthly Interest
and Monthly Principal and apply funds, if any, in the Certificate Account as of
the last day of the Collection Period, to make a distribution of Monthly
Interest and Monthly Principal to the Certificateholders.
SECTION 9.05. ADVANCES. (a) As of the last day of the initial Collection
Period, the Servicer shall advance funds equal to the excess, if any, of Monthly
Interest due in respect of the initial Collection Period, over the Collected
Interest for such Collection Period; and (b) as of the last day of each
Collection Period, the Servicer shall advance funds in the amount of the
Interest Advance Amount (or such other amount as the Servicer shall reasonably
determine to cover an Interest Shortfall) with respect to each Receivable that
is delinquent for more than 30 days, in each such case, to the extent that the
Servicer, in its sole discretion, determines that the Advance will be
recoverable from payments by or on behalf of the Obligor, the Purchase Amount,
or Liquidation Proceeds. With respect to each Receivable, the Advance paid
pursuant to this Section 9.05 shall increase Outstanding Advances. Outstanding
Advances shall be reduced by subsequent payments by or on behalf of the Obligor,
collections of Liquidation Proceeds, or payments of the Purchase Amount. The
Servicer shall remit any Advances with respect to a Collection Period to the
Certificate Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with respect to
any Receivable shall not be recoverable, the Servicer shall be reimbursed from
any collections made on other Receivables in the Trust, and Outstanding Advances
with respect to such Receivable shall be reduced accordingly.
SECTION 9.06. NET DEPOSITS. For so long as CTL or an Affiliate is the
Servicer, CTL (or an Affiliate succeeding CTL as Servicer) (in whatever
capacity) may make the remittances with respect to any Distribution Date
pursuant to Section 9.02 above, net of amounts to be distributed to itself or
its delegee under Section 13.06 (also in whatever capacity) pursuant to Section
9.04, if it determines pursuant to Section 9.02 that there is no deficiency in
Available Funds for such Distribution Date. Nonetheless, the Servicer shall
account for all of the above described amounts as if such amounts were deposited
and distributed.
SECTION 9.07. STATEMENTS TO CERTIFICATEHOLDERS. On each Distribution
Date, the Trustee shall include with each distribution to the Certificateholders
and shall mail to the Rating Agency a statement, based on information in the
Servicer's Certificate furnished to the Trustee by the Servicer pursuant to
Section 8.09, setting forth for the Collection Period relating to such
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Distribution Date the following information (which in the case of items (i)
through (v), inclusive, shall be based on a Certificate in a principal amount of
$1,000):
(i) the amount of the aggregate distribution that constitutes Class A
Monthly Interest (including the amount thereof which constitutes Class A-1
Monthly Interest and Class A-2 Monthly Interest);
(ii) the amount of the aggregate distribution that constitutes Class I
Monthly Interest and the Notional Principal Amount (after giving effect to any
application of Monthly Principal required to be made on such date) on which
Class I Monthly Interest will be calculated on that next succeeding Distribution
Date;
(iii) the amount of the aggregate distribution that constitutes Monthly
Principal (including the amount thereof which constitutes Class A-1 Monthly
Principal and Class A-2 Monthly Principal);
(iv) the Certificate Balance (after giving effect to any distribution
of Monthly Principal made on such Distribution Date) and the Class A-1
Certificate Balance, and the Class A-2 Certificate Balance comprising the
Certificate Balance on which Class A-1 Monthly Interest and Class A-2 Monthly
Interest will be calculated on the next succeeding Distribution Date;
(v) the Certificate Factor (after giving effect to any distribution of
Monthly Principal made on such Distribution Date) and the Class A-1 Certificate
Factor and the Class A-2 Certificate Factor;
(vi) the amount on deposit in the Spread Account after giving effect to
distributions made on such Distribution Date;
(vii) the Monthly Servicing Fee for such Distribution Date.
(viii) the Surety Bond Fee for such Distribution Date;
(ix) the Surety Bond Amount (after giving effect to any draw on the
Surety Bond or the Spread Account on such Distribution Date).
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee shall
mail, to each Person who at any time during such calendar year shall have been a
Certificateholder, a statement containing the annual sum of the respective
amounts determined in clauses (i) through (v) for such calendar year, as
applicable to such Person, 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, unless substantially comparable information has been
provided to such Certificateholder, for the purposes of such Certificateholder's
preparation of federal income tax returns pursuant to Section 5(b) of Annex A
hereto. To the extent required by applicable law, the Servicer shall prepare or
cause to be prepared and the Class IC Certificateholder or the Trustee shall
sign the tax returns of the Trust and shall file such returns and such of the
above information with the Internal Revenue Service.
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SECTION 9.08. INTENTIONALLY BLANK.
SECTION 9.09. PAYAHEAD ACCOUNT. The Servicer shall establish the Payahead
Account in the name of the Trustee on behalf of the Obligors and the
Certificateholders as their interests may appear. The Payahead Account shall be
a segregated interest bearing trust account established with the Trustee, the
Bank or an Eligible Bank. Amounts in the Payahead Account shall be invested in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date. The Payahead Account is not property of the
Trust. Investment income or interest earned on the Payahead Account shall be
remitted to the Servicer at least monthly, or as frequently as the Servicer may
reasonably request. On or prior to each Distribution Date, the Servicer shall
transfer or the Trustee (as instructed in the Servicer's Certificate) shall
transfer (a) from the Certificate Account to the Payahead Account, in
immediately available funds, all Payaheads received by the Servicer and
previously deposited to the Certificate Account during the Collection Period as
described in Section 8.02(b); and (b) from the Payahead Account to the
Certificate Account, in immediately available funds, the aggregate amount of
previously deposited Payaheads to be applied to Scheduled Payments on
Precomputed Receivables for the related Collection Period or prepayments for the
related Collection Period, pursuant to Section 8.02(b), each in the amounts set
forth in the Servicer's Certificate delivered on the related Determination Date.
A single, net transfer between the Payahead Account and the Certificate Account
may be made. Any amount deposited in the Payahead Account shall not constitute
Available Funds under Section 9.02. Any amount deposited to the Certificate
Account from the Payahead Account pursuant to Section 9.09(b) shall be included
in Available Funds under Section 9.02.
SECTION 9.10. CALCULATION OF NOTIONAL PRINCIPAL AMOUNT.
(a) Solely for the purpose of calculating the Class I Monthly Interest,
the Certificate Balance will be divided into, and equal the sum of, two
principal components: (i) the "PAC Component" and (ii) the "Companion
Component." The PAC Component shall initially equal the Original Notional
Principal Amount.
(b) On each Distribution Date, solely for the purposes of calculating the
Notional Principal Amount, the Monthly Principal will be allocated (i) first, to
the PAC Component up to the amount necessary to reduce the PAC Component to its
Planned Notional Principal Amount for such Distribution Date, (ii) second, to
the Companion Component until the balance thereof is reduced to zero, and (iii)
third, to the PAC Component without regard to the Planned Notional Principal
Amount for such Distribution Date.
ARTICLE X
CREDIT ENHANCEMENT
SECTION 10.01. SUBORDINATION. The rights of the Class IC
Certificateholder shall be subordinated to the rights of the Class A and Class I
Certificateholders to the extent described in Section 9.04.
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SECTION 10.02. SPREAD ACCOUNT.
(a) On or prior to the Closing Date, the Trustee shall establish and
maintain a segregated trust account in the corporate trust department of either
the Bank or of an Eligible Bank referred to herein as the "Spread Account." The
Spread Account shall be maintained in the name of the Trustee. The Spread
Account and any amounts on deposit therein shall be part of the Trust and shall
be for the benefit of the Certificateholders and the Surety Bond Issuer, as
their respective interests may appear herein; provided, however, that the
interest of the Surety Bond Issuer and the Class IC Certificateholder shall be
subordinated to the interests of the other Certificateholders as provided
herein.
(b) Funds on deposit in the Spread Account shall be invested in Eligible
Investments in the same manner and subject to the same requirements and
limitations as the investment of funds in the Certificate Account pursuant to
Section 9.01, including the limitation that Eligible Investments mature not
later than the Business Day prior to the next succeeding Distribution Date;
provided, however, no such limitation on the maturity of Eligible Investments
shall apply if the Trust obtains the benefit of a liquidity facility or similar
arrangement from a commercial bank with an Approved Rating or other provider
approved in advance in writing by the Surety Bond Issuer, with respect to funds
in the Spread Account (a "Spread Account Facility") and Standard & Poor's and
Moody's confirm in writing that the rating of the Certificates will not be
lowered or withdrawn as a result of eliminating or modifying the limitation on
the maturity of Permitted Investments in respect of the Spread Account. For
purposes of determining the availability of funds or the balance in the Spread
Account for any reason under this Agreement, investment earnings on such funds
shall be deemed to be available or on deposit only to the extent that the
aggregate of such amounts, plus the funds on deposit in the Spread Account, do
not exceed the Required Spread Amount.
(c) If on any Distribution Date the amount of Available Funds is
insufficient to make the distributions required by Section 9.04(a) (iii) the
Trustee shall withdraw or cause to be withdrawn from the Spread Account and
deposited in the Certificate Account the lesser of (i) the entire Available
Spread Amount and (ii) the amount necessary to make up such deficiency to pay
any deficiency in Class I Monthly Interest, Class A Monthly Interest and Monthly
Principal (prior to making any draw on the Surety Bond), all as provided in
Sections 9.02 and 9.04 and the Surety Bond.
(d) On each Distribution Date, all distributions made pursuant to Section
9.04(a) (vii) shall be deposited into the Spread Account.
(e) If the amount on deposit in the Spread Account, after giving effect to
the distributions set forth in Section 9.04 (including, without limitation,
payment of amounts due and owing to the Surety Bond Issuer) is greater than the
Required Spread Amount on such Distribution Date, the amount of such excess
shall be distributed to the Class IC Certificateholder. Amounts properly
distributed to the Class IC Certificateholder pursuant to this Section, either
directly without deposit in the Spread Account or from excess amounts in the
Spread Account shall be deemed released from the Trust and from any security
interest of the Trustee or the Surety Bond Issuer.
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(f) Upon the termination of this Agreement, amounts remaining in the
Spread Account, after payment of any amounts due and owing to the Class A and
Class I Certificates and to the Surety Bond Issuer, shall be distributed to the
Class IC Certificateholder and such amounts shall not be subject to any claims
or rights of the other Certificateholders to the extent that such action is not
inconsistent with Section 6(b)(ii) and Section 9 of Annex A hereto.
SECTION 10.03. SURETY BOND. The Surety Bond Issuer is required under the
terms of the Surety Bond to pay Class I Monthly Interest, Class A Monthly
Interest and Monthly Principal up to the Surety Bond Amount in the event of any
deficiency of Available Funds to pay such amounts (after payment of the Monthly
Servicing Fee) not covered by amounts withdrawn from the Spread Account, as
determined pursuant to Section 9.02 to the Trustee for credit to the Certificate
Account on the later of (a) 11:00 a.m., New York City time, on the Business Day
immediately preceding a Distribution Date and (b) 11:00 a.m., New York City
time, on the Business Day immediately succeeding presentation to the Surety Bond
Issuer of the Trustee's demand therefor. Any demand for payment pursuant to
Section 9.02 to the Surety Bond Issuer received by the Surety Bond Issuer on a
Business Day after 1:00 p.m., New York City time, or on any day that is not a
Business Day, will be deemed to be received by the Surety Bond Issuer at 9:00
a.m., New York City time, on the next Business Day. Notwithstanding the
forgoing, on a Dissolution Distribution Date, the obligations of the Surety Bond
Issuer under the Surety Bond shall be limited in accordance with Section
9.04(b)(iii).
ARTICLE XI
THE CERTIFICATES
SECTION 11.01. THE CERTIFICATES. The Class A and Class I Certificates
shall be issued in denominations of $1,000 ($1,000 Notional Principal Amount in
the case of the Class I Certificates) and integral multiples thereof; provided,
however, that one Class A-1 Certificate, one Class A-2 Certificate and one Class
A-3 Certificate may be issued in a denomination that represents any residual
amount of such class and that such residual amount Certificates shall be
retained by the Depositor. The Class IC Certificate shall be issued in the form
of one or more Certificates and shall initially be issued to the Depositor. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible 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 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 such Certificates.
SECTION 11.02. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations, pursuant to this
Agreement. 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
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certificate of authentication, substantially as set forth in the forms of
Certificate attached as Exhibits to this Agreement, executed by a Responsible
Officer of the Trustee 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 11.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 11.07, 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. The Trustee shall be the initial Certificate
Registrar.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, 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 Trustee, provided, however, that registration of
transfer of the Class IC Certificate may not be effected unless (A) the Trustee
receives an Opinion of Counsel, satisfactory to it, to the effect that (i) such
transfer may be made in reliance upon an exemption from the registration
requirements of the Securities Act of 1933, as amended, and (ii) such transfer
will not adversely affect the tax treatment of the Trust or the Certificates;
and (B) the Surety Bond Issuer has consented to such transfer. At the option of
a Holder, Certificates may be exchanged for other Certificates of authorized
denominations of a like aggregate amount upon surrender of the Certificates to
be exchanged at the Corporate Trust Office.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder or his attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer and exchange shall be cancelled and subsequently
destroyed by 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.
SECTION 11.04. MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar or the Trustee such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, the
Trustee on behalf of the Trust shall execute and the Trustee shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost,
or stolen Certificate, a new Certificate of like tenor and denomination. In
connection with the issuance of any new Certificate under this Section 11.04,
the Trustee and the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection
35
therewith. Any duplicate Certificate issued pursuant to this Section 11.04
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 11.05. PERSONS DEEMED OWNERS. Prior to registration of transfer,
the Trustee or the Certificate Registrar 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 9.04 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
SECTION 11.06. ACCESS TO AGREEMENT AND 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, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Certificateholders, or one or more Holders
of Certificates aggregating not less than 25% of the Certificate Balance or not
less than 25% of the Notional Principal Amount of the Class I Certificates,
apply in writing to the Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the current list of Certificateholders. The Trustee shall also allow any
Certificateholder, upon request, to examine a copy of this Agreement at its
Corporate Trust Office during regular business hours. Each Holder, by receiving
and holding a Certificate, shall be deemed to have agreed to hold neither 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 11.07. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange 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 specified in this Agreement
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 the
Certificate Register or any such office or agency.
SECTION 11.08. BOOK-ENTRY CERTIFICATES. The Class A Certificates and
Class I Certificates, upon original issuance, shall be issued in the form of one
or more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor, except for the residual amount Certificates
described in Section 11.01. The Class A Certificates and Class I Certificates
shall initially be registered on the Certificate Register in the name of CEDE &
Co., the nominee of the Clearing Agency, and no Certificate Owner will receive a
definitive Certificate representing such Certificate Owner's interest in the
Certificates, except as provided in Section 11.10. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
Certificate Owners pursuant to Section 11.10:
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(i) the provisions of this Section 11.08 shall be in full force and
effect;
(ii) the Depositor, the Servicer and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes (including
the making of distributions on the Certificates) as the authorized
representatives of the Certificate Owners (requests and directions from, and
votes of, such representatives shall not be considered inconsistent if they are
made with respect to different Certificate Owners);
(iii) to the extent that the provisions of this Section 11.08 conflict
with any other provisions of this Agreement, the provisions of this Section
11.08 shall control; and
(iv) the rights of Certificate Owners shall be exercised only through the
Clearing Agency and the Clearing Agency Participants and shall be limited to
those established by law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 11.10, 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 such Clearing
Agency Participants.
SECTION 11.09. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Class A Certificateholders or Class I Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 11.10, the Trustee
shall give all such notices and communications specified herein to be given to
such Certificateholders to the Clearing Agency.
SECTION 11.10. DEFINITIVE CERTIFICATES. The Class IC Certificate and any
residual amount Certificates described in Section 11.01 will be issued initially
in fully registered, certificated form. If (i)(A) the Depositor advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement, and (B)
the Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Certificate Balance advise the
Trustee and the Clearing Agency in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Certificate Owners, the Trustee shall notify the Clearing Agency of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates. Neither the Depositor 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 all references herein to obligations imposed on or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
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SECTION 11.11. THE TAX PARTNERSHIP AGREEMENT. Each of the Class A and
Class I Certificateholders and the Class IC Certificateholder agrees to be bound
by the terms of the Tax Partnership Agreement attached hereto as Annex A.
ARTICLE XII
THE DEPOSITOR
SECTION 12.01. REPRESENTATIONS AND UNDERTAKINGS OF DEPOSITOR. (a) The
Depositor makes the following representations on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Depositor shall have been duly
organized and shall be 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 shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire and own the
Receivables.
(ii) Due Qualification. The Depositor shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications, except where the failure to so qualify would not materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of this Agreement or the Certificates.
(iii) Power and Authority. The Depositor shall have the power and
authority to execute and deliver this Agreement and to carry out its terms, the
Depositor shall have full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Trustee as part of the Trust and
shall have duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery, and performance of the
Agreement shall have been duly authorized by the Depositor by all necessary
corporate action.
(iv) Valid Sale; Binding Obligations. This Agreement shall evidence a
valid sale, transfer, and assignment of the Receivables, enforceable against
creditors of and purchasers from the Depositor; and shall evidence a legal,
valid, and binding obligation of the Depositor enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions contemplated by
the Agreement and the fulfillment of the terms hereof shall not conflict with,
result in any breach
38
of any of the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or by-laws of
the Depositor, or any indenture, agreement, or other instrument to which the
Depositor is a party or by which it shall be bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, or other instrument (other than this Agreement);
nor violate any law or, to the best of the Depositor's knowledge, any order,
rule, or regulation applicable to the Depositor of any court or of any federal
or State regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(vi) No Proceedings. There are no proceedings or investigations pending,
or, to the Depositor's best knowledge, threatened, before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Depositor 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 Depositor of its obligations under,
or the validity or enforceability of, this Agreement or the Certificates, or (D)
which might adversely affect the federal income tax attributes of the
Certificates.
(b) The Depositor further covenants that, prior to termination of the
Trust:
(i) It will not engage at any time in any business or business activity
other than such activities expressly set forth in its Certificate of
Incorporation delivered to the Surety Bond Issuer on or prior to the Closing
Date, and will not amend its Certificate of Incorporation without the prior
written consent of the Surety Bond Issuer.
(ii) It will not:
(A) Fail to do all things necessary to maintain its corporate existence
separate and apart from BVCC and any other Person, including, without
limitation, holding regular meetings of its stockholders and board of directors
and maintaining appropriate corporate books and records (including a current
minute book);
(B) Suffer any limitation on the authority of its own directors and
officers to conduct its business and affairs in accordance with their
independent business judgment or authorize or suffer any Person other than its
own officers and directors to customarily delegated to others under powers of
attorney) for which a corporation's own Officers and directors would customarily
be responsible;
(C) Fail to (I) maintain or cause to be maintained by an agent of the
Depositor under the Depositor's control physical possession of all its books and
records, (II) maintain capitalization adequate for the conduct of its business,
(III) account for and manage all its liabilities separately from those of any
other Person, including payment by it of all payroll, administrative expenses
and taxes, if any, from its own assets, (IV) segregate and identify separately
all of its assets from those of any other Person, (V) to the extent any such
payments
39
are made, pay its employees, officers and agents for services performed for the
Depositor or (VI) maintain a separate telephone number from those of BVCC or any
other affiliate thereof; or
(D) Except as may be provided in this Agreement, or a similar agreement
relating to other securitizations in which the Depositor has similar rights
and/or obligations, commingle its funds with those of BVCC or any affiliate
thereof or use its funds for other than the Depositor's uses.
SECTION 12.02. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement.
(i) The Depositor shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents and the Trust from and
against any taxes that may at any time be asserted against the Trustee, its
officers, directors, employees or agents or the Trust with respect to, and as of
the date of, the sale of the Receivables to the Trustee 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, in the case of the Trust, not including any taxes asserted with
respect to ownership of the Receivables or federal or other income taxes arising
out of distributions on the Certificates) and costs and expenses in defending
against the same.
(ii) The Depositor shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents and the Trust from and
against any loss, liability, or expense incurred by reason of (a) the
Depositor's willful misfeasance, bad faith, or negligence in the performance of
its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (b) the Depositor's violation of
federal or State securities laws in connection with the registration of the sale
of the Certificates.
Indemnification under this Section 12.02 shall include, without limitation,
reasonable fees and expenses of not more than one counsel and expenses of
litigation. If the Depositor shall have made any indemnity payments to the
Trustee or the Trust pursuant to this Section and the Trustee or the Trust
thereafter shall collect any of such amounts from others, the Trustee or the
Trust, as the case may be, shall repay such amounts to the Depositor, without
interest. This indemnification shall survive the termination of this Agreement
and the resignation or removal of the Trustee.
SECTION 12.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF DEPOSITOR. Any Person (a) into which the Depositor may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Depositor shall be a party, or (c) which may succeed to all or substantially all
of the properties and assets of the Depositor's business, which Person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Depositor under this Agreement, shall be the successor to the
Depositor hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached and no Event of
Default, and no event that, after notice or lapse of time, or both, would become
an
40
Event of Default shall have happened and be continuing, (ii) the Depositor shall
have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
each stating that such consolidation, merger, or succession and such agreement
of assumption comply with this Section 12.03 and that all conditions precedent,
if any, provided for in this Agreement relating to such transaction have been
complied with and (iii) the Depositor shall have delivered an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables, and reciting the details of such filings, or (B)
stating that, in the opinion of such Counsel, no such action shall be necessary
to preserve and protect such interest. Notwithstanding the forgoing, the
Depositor shall not engage in any merger or consolidation with any Person, or a
disposition of all or substantially all of its assets without the prior written
consent of the Surety Bond Issuer, not to be unreasonably withheld.
SECTION 12.04. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear
in, prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 12.05. DEPOSITOR MAY OWN CERTIFICATES. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
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 Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder", "Class A Certificateholder" and "Class I
Certificateholder." Certificates so owned by or pledged to the Depositor or such
controlling or commonly controlled Person shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority, or
distinction as among all of the Certificates.
ARTICLE XIII
THE SERVICER
SECTION 13.01. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer shall have been duly
organized and shall be validly existing as a corporation under the laws of the
State of California, with power and authority to own its properties and to
conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and shall
41
have, power, authority, and legal right to acquire, own, sell, and service the
Receivables and to hold the Receivable Files as custodian on behalf of the
Trustee.
(ii) Due Qualification. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications,
except where the failure to so qualify would not materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of this Agreement or the Certificates.
(iii) Power and Authority. The Servicer shall have the power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery, and performance of this Agreement shall have been duly
authorized by the Servicer by all necessary corporate action.
(iv) Binding Obligations. This Agreement shall constitute a legal,
valid, and binding obligation of the Servicer enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not conflict
with, result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or by-laws of the Servicer, or any indenture, agreement, or other
instrument to which the Servicer is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, or other instrument
(other than this Agreement); nor violate any law or, to the best of the
Servicer's knowledge, any order, rule, or regulation applicable to the Servicer
of any court or of any federal or State regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the Servicer or
its properties.
(vi) No Proceedings. There are no proceedings or investigations pending,
or, to the Servicer's knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Servicer or its properties: (A) asserting the invalidity of this
Agreement or the Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or the Certificates, or (D)
which might adversely affect the federal income tax attributes of the
Certificates.
SECTION 13.02. INDEMNITIES OF SERVICER. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
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(i) The Servicer shall defend, indemnify, and hold harmless the Trustee,
its officers, directors, employees and agents, the Trust and the
Certificateholders from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the use,
ownership, or operation by the Servicer or any affiliate thereof of a Financed
Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the Trustee,
its officers, directors, employees and agents and the Trust from and against any
taxes that may at any time be asserted against the Trustee, its officers,
directors, employees or agents or the Trust with respect to the transactions
contemplated herein, including, without limitation, any sales, gross receipts,
general corporation, tangible or intangible personal property, privilege, or
license taxes (but, in the case of the Trust, not including any taxes asserted
with respect to, and as of the date of, the sale of the Receivables to the Trust
or the issuance and original sale of the Certificates, or asserted with respect
to ownership of the Receivables, or federal or other income taxes arising out of
distributions on the Certificates) and costs and expenses in defending against
the same.
(iii) The Servicer shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, 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 the Trustee, the Trust or
the Certificateholders through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties under this Agreement, or
by reason of reckless disregard of its obligations and duties under this
Agreement. This indemnity shall survive the termination of this Agreement or the
Trust and the resignation or removal of the Trustee
(iv) The Servicer shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, employees and agents, and the Trust 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 trusts and
duties herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence of the Trustee; (b) relates to any tax other than the taxes
with respect to which either the Depositor or Servicer shall be required to
indemnify the Trustee; (c) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 15.13; (d) shall be one as to
which the Depositor is required to indemnify the Trustee; or (e) shall arise out
of or be incurred in connection with the acceptance or performance by the
Trustee of the duties of successor Servicer hereunder.
Indemnification under this Section 13.02 shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer shall have made
any indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest. This indemnification shall
survive the termination of this Agreement and the removal of the Servicer.
SECTION 13.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF SERVICER. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party, (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing and
receivables servicing business or (d) that is an Affiliate, which Person in any
of
43
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer hereunder, shall be the successor to the Servicer
under this Agreement without further act on the part of any of the parties to
this Agreement; provided, however, that (i) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time, or both, would become an Event of Default shall have happened and be
continuing, (ii) the Servicer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
13.03 and that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee and the Surety Bond Issuer in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such Counsel, no such action shall be necessary to preserve and
protect such interest. Notwithstanding the forgoing, the Servicer shall not
engage in any merger or consolidation in which it is not the surviving
corporation without the prior written consent of the Surety Bond Issuer, not to
be unreasonably withheld.
SECTION 13.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith, or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. 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 prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
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 (collection actions with respect to Defaulted Receivables are
understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 13.05. SERVICER NOT TO RESIGN. The Servicer shall not resign from
its obligations and duties under this Agreement except upon determination that
the performance of its duties shall no longer be permissible under applicable
law or otherwise with the consent of the Trustee and the Surety Bond Issuer. Any
determination described above permitting the resignation of the Servicer shall
be evidenced by an Opinion of Counsel 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 Servicer
in accordance with Section 14.02.
SECTION 13.06. DELEGATION OF DUTIES. Except as provided in Section 13.03
hereof, it is understood and agreed by the parties hereto that the Servicer or
the Depositor may at any time delegate any duties including duties as custodian
to any Person willing to accept such
44
delegation and to perform such duties (including any affiliate of the Servicer)
in accordance with the customary procedures of the Servicer. In connection with
such delegation, the Servicer or the Depositor may assign rights to the delegee
or direct the payment to the delegee of benefits or amounts otherwise inuring to
the benefit of, or payable to, the Depositor or the Servicer hereunder. Any
such delegation shall not relieve the Servicer or the Depositor of their
respective liability and responsibility with respect to such duties, and shall
not constitute a resignation within Section 13.05 hereof. The Servicer shall
give written notice to the Rating Agency, the Surety Bond Issuer and the Trustee
of any such delegation.
ARTICLE XIV
DEFAULT
SECTION 14.01. EVENTS OF DEFAULT. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer or CTL to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required to be so
delivered under the terms of the Certificates and this Agreement or the Purchase
Agreement or any failure by the Servicer to deliver any Servicer's Certificate
pursuant to Section 8.09 that, in either case, shall continue unremedied for a
period of two Business Days (A) after written notice from either the Trustee,
the Surety Bond Issuer (so long as the Surety Bond Issuer is not in default of
its obligations under the Surety Bonds) or the Holders of Certificates
evidencing not less than 25% of the Certificate Balance and 25% of the Notional
Principal Amount of the Class I Certificates is received by the Servicer or CTL
as specified in this Agreement or (B) after discovery by an officer of the
Servicer; or
(ii) Failure on the part of the Servicer, the Depositor or CTL duly to
observe or to perform in any material respect any other covenants or agreements
of the Servicer, the Depositor or CTL, as the case may be, set forth in the
Certificates or in this Agreement or the Purchase Agreement, which failure shall
(a) materially and adversely affect the rights of Certificateholders or the
Surety Bond Issuer and (b) continue unremedied for a period of 60 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, CTL or the Depositor, as the case may
be, by the Trustee, or (2) to the Servicer or the Depositor, as the case may be,
and to the Trustee, by the Surety Bond Issuer (so long as the Surety Bond Issuer
is not in default of its obligations under the Surety Bonds) or by the Holders
of Certificates evidencing not less than 25% of the Certificate Balance and 25%
of the Notional Principal Amount of the Class I Certificates; or
(iii) The occurrence of an Insolvency Event with respect to the Servicer;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, or the Holders of Certificates evidencing not
less than 25% of the Certificate Balance and 25% of the Notional Principal
Amount of the Class I Certificates, by notice then given in writing to the
Servicer (and to the Trustee if given by the Certificateholders) may, with the
consent of the Surety Bond Issuer (so long as the Surety Bond Issuer is not in
default of its
45
obligations under the Surety Bonds) terminate all of the rights and obligations
of the Servicer under this Agreement. In addition, if a Trigger Event (as
defined in the Insurance Agreement) shall have occurred, the Surety Bond Issuer
may (A) require that the Trustee deliver a notice of termination to the Servicer
and appoint a successor Servicer designated by the Surety Bond Issuer in such
notice pursuant to Section 14.02 (B) require that the Trustee amend certificates
of title relating to the Financed Vehicles and take other actions to identify
the Trust as the new secured party on such certificates of title; (C) as
provided in the Insurance Agreement, require that the Servicer or successor
Servicer or the Trustee instruct Obligors in respect of the Receivables to remit
payment on the Receivable directly to the Trustee or a separate account
established exclusively for the Trust; and (D) as provided in the Insurance
Agreement, compel transfer by the Servicer of all Receivables files and, if
applicable, certain rights in respect of servicing systems assets to the Surety
Bond Issuer or to the successor Servicer designated by the Surety Bond Issuer.
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 Receivables or otherwise, shall, without further action,
pass to and be vested in the Trustee (except that the Trustee may but shall not
be required to make Advances and shall not be subject to the indemnification
obligations of the Servicer under Section 13.02(i), (ii) or (iv)) or such
successor Servicer as may be appointed under Section 14.02 pursuant to and under
this Section 14.01; and, without limitation, the Trustee is hereby authorized
and empowered to execute and deliver, on behalf of the predecessor 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 Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer of electronic records related to the Receivables in such form
as the successor Servicer may reasonably request and the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall thereafter be
received with respect to a Receivable. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 14.01 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
SECTION 14.02. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 14.01 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the later of (x) the date 45 days
from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's resignation or
termination hereunder, the Trustee shall appoint a successor Servicer, which
successor Servicer shall be reasonably acceptable to the Surety Bond Issuer (so
long as the Surety Bond Issuer is not in default of its obligations under the
Surety Bond), and the successor Servicer shall accept its
46
appointment by a written assumption in form acceptable to the Trustee. In the
event that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section 14.02, the Trustee without further action shall automatically be
appointed the successor Servicer. Notwithstanding the above, the Trustee shall,
if it shall be legally unable or unwilling so to act, appoint, or petition a
court of competent jurisdiction to appoint, any established financial
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automotive receivables, as the successor
to the Servicer under this Agreement and which financial institution is, in the
case of appointment by the Trustee, reasonably acceptable to the Surety Bond
Issuer.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement. The predecessor Servicer shall be entitled to be
reimbursed for Outstanding Advances.
(c) In connection with such appointment, the Trustee may make such
arrangements for successor Servicer out of payments on Receivables it and such
successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of that permitted the original Servicer under this Agreement.
The Trustee and such successor Servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
SECTION 14.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any notice of an
Event of Default or upon any termination of, or appointment of a successor to,
the Servicer pursuant to this Article XIV, the Trustee shall give prompt written
notice thereof to Certificateholders at their respective addresses appearing in
the Certificate Register.
SECTION 14.04. WAIVER OF PAST DEFAULTS. The Holders of Certificates
evidencing not less than 51% of the Certificate Balance and 51% of the Notional
Principal Amount of the Class I Certificates, may, on behalf of all Holders of
Certificates, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Certificate Account in accordance with
this Agreement; provided, that the no waiver of any default or provision of this
Agreement shall become effective without the consent of the Surety Bond Issuer
(unless the Surety Bond Issuer is in default of its obligations under the Surety
Bond). Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
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ARTICLE XV
THE TRUSTEE
SECTION 15.01. DUTIES OF TRUSTEE. The Trustee, both prior to and after
the occurrence of an Event of Default, shall undertake to perform such duties as
are specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured and, in the case of an Event of Default
described in clause (i) of Section 14.01, the Trustee has received notice of
such Event of Default, 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 shall assume the duties of the Servicer pursuant to Section 14.02, the
Trustee in performing such duties shall use the degree of skill and attention
customarily exercised by a servicer with respect to motor vehicle receivables
that it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
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,
or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the curing
of all such Events of Default 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 shall be specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, or manifest
error, the Trustee may conclusively rely on the truth of the statements and the
correctness of the opinions expressed in 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 a Responsible Officer, unless it shall be proved that the Trustee
shall have been negligent in ascertaining the pertinent facts;
(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 this Agreement
or at the direction of the Holders of Certificates evidencing not less than 25%
of the Certificate Balance relating to the time, method, and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement;
48
(iv) The Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
clauses (i) or (ii) of Section 14.01, or of any failure by the Depositor to
comply with the obligations of the Depositor referred to in clause (ii) of
Section 14.01, unless a Responsible Officer of the Trustee receives written
notice of such failure (it being understood that knowledge of the Servicer or
the Servicer as custodian, in its capacity as agent for the Trustee, is not
attributable to the Trustee) from the Servicer or the Depositor, as the case may
be, or the Holders of Certificates evidencing not less than 25% of the
Certificate Balance; and
(v) Without limiting the generality of this Section or Section 15.04,
the Trustee shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to therein or any
financing statement evidencing a security interest in the Receivables or the
Financed Vehicles, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance of the Financed Vehicles or Obligors or to effect or
maintain any such insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any Lien or encumbrance of any kind
owing with respect to, assessed, or levied against, any part of the Trust, (D)
to confirm or verify the contents of any reports or certificates of the Servicer
delivered to the Trustee pursuant to this Agreement believed by the Trustee to
be genuine and to have been signed or presented by the proper party or parties,
or (E) to inspect the Financed Vehicles at any time or ascertain or inquire as
to the performance or observance of any of the Depositor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under this
Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably 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. 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 to impair the
value of any Receivable.
SECTION 15.02. TRUSTEE'S CERTIFICATE. On or as soon as practicable after
each Distribution Date on which Receivables shall be (i) assigned to CTL
pursuant to Section 7.02 or deemed to be assigned to the Depositor as a result
of the application of Available Funds in respect of Defaulted Receivables
pursuant to Section 9.02 or (ii) assigned to the Servicer pursuant to Section
8.07 or 16.02, the Trustee shall, at the written request of the Servicer,
execute a Trustee's Certificate, substantially in the form of, in the case of an
assignment to CTL, Exhibit 1, or, in the case of an assignment to the Servicer,
Exhibit 2, based on the information contained in the Servicer's Certificate for
the related Collection Period, amounts deposited to the Certificate Account, and
notices received pursuant to this Agreement, identifying the Receivables
repurchased or deemed to be repurchased by CTL pursuant to Section 7.02 or 9.02
or purchased by the Servicer pursuant to Section 8.07 or 16.02 during such
Collection Period, and shall deliver
49
such Trustee's Certificate, accompanied by a copy of the Servicer's Certificate
for such Collection Period to CTL or the Servicer, as the case may be. The
Trustee's Certificate shall be an assignment pursuant to Section 15.03.
SECTION 15.03. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With
respect to each Receivable repurchased by CTL pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 9.02 or purchased by the
Servicer pursuant to Section 8.07 or 16.02, the Trustee shall assign, as of the
last day of the Collection Period during which such Receivable became a
Defaulted Receivable or became subject to repurchase by CTL or purchase by the
Servicer, without recourse, representation, or warranty, to CTL or the Servicer
(as the case may be) all the Trustee's right, title, and interest in and to such
Receivables, and all security and documents relating thereto, such assignment
being an assignment outright and not for security. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a 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 Servicer's expense, take
such steps as the Trustee deems necessary to enforce the Receivable, including
bringing suit in its name or the name of the Certificateholders.
SECTION 15.04. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise
provided in Section 15.01:
(i) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, Servicer's Certificate,
certificate of auditors, or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(ii) The Trustee may consult with counsel and any written advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such written advice or Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or 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 reasonable security or indemnity reasonably satisfactory
to the Trustee 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 Default (that
shall not have been cured), 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 liable for any action taken, suffered, or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement.
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(v) Prior to the occurrence of an Event of Default and after the curing
of all Events of Default that may have occurred, the Trustee shall not be bound
to make any investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, or other paper or document, unless requested in writing
so to do by Holders of Certificates evidencing not less than 25% of the
Certificate Balance or not less than 25% of the Notional Principal Amount of the
Class I 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 such investigation shall be, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense, or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the 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.
(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
or attorneys or a custodian. The Trustee shall not be responsible for any
misconduct or negligence solely attributable to the acts or omissions of the
Servicer in its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by the Depositor to the
Trustee, the Trustee shall have no duty of independent inquiry, except as may be
required by Section 15.01, and the Trustee may rely upon the representations and
warranties and covenants of the Depositor and the Servicer contained in this
Agreement with respect to the Receivables and the Receivable Files.
SECTION 15.05. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance, lender's
collateral protection insurance, or credit life or disability and
hospitalization insurance with respect to any Receivable; 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 Depositor or the Servicer with any
warranty or representation made under this Agreement or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof; any investment of monies by the Servicer or any loss resulting
therefrom (it being
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understood that the Trustee shall remain responsible for any Trust property that
it may hold); the acts or omissions of the Depositor, the Servicer, or any
Obligor; an action of the Servicer taken in the name of the Trustee; or any
action by the Trustee taken at the instruction of the Servicer; provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a claim based
on the failure of the Trustee to perform its duties under this Agreement or
based on the Trustee's negligence or willful misconduct, no recourse shall be
had 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, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor or the Servicer in respect of
the Receivables.
SECTION 15.06. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 15.07. TRUSTEE'S FEES AND EXPENSES. The Servicer shall pay to the
Trustee, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by this Agreement and in the exercise and performance of any
of the Trustee's powers and duties under this Agreement, and the Servicer shall
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements, and advances (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) incurred or made by the Trustee in accordance with any provisions of
this Agreement, except any such expense, disbursement, or advance as may be
attributable to its willful misfeasance, negligence, or bad faith, and the
Servicer shall indemnify the Trustee (which, for purposes of this section, shall
include its directors, officers, employees, and agents) for and hold it harmless
against any loss, liability, or expense incurred without willful misfeasance,
negligence, or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under this Agreement.
Additionally, the Depositor, pursuant to Section 12.02, and the Servicer,
pursuant to Section 13.02, respectively, shall indemnify the Trustee with
respect to certain matters. This indemnity shall survive the termination of
this Agreement or the Trust and the resignation or removal of the Trustee.
SECTION 15.08. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under
this Agreement shall at all times be a corporation having an office in the same
State as the location of the Corporate Trust Office as specified in this
Agreement; and organized and doing business under the laws of such State or the
United States of America; authorized under such laws to exercise corporate trust
powers; and having a net worth of at least $50,000,000 and subject to
supervision or examination by federal or State authorities and the long-term
unsecured debt of which is rated at least Baa3 or which is approved by the
Surety Bond Issuer and each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law
52
or to the requirements of the aforesaid supervising or examining authority, then
for the purpose of this Section 15.08, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 15.08, the Trustee shall resign immediately in the manner and with the
effect specified in Section 15.09.
SECTION 15.09. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer. Upon receiving such notice of resignation, the
Servicer, with the prior written consent of the Surety Bond Issuer, 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.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 15.08 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 a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation, or liquidation, then the Servicer may remove
the Trustee. If it shall remove the Trustee 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 and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 15.09 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 15.10.
SECTION 15.10. SUCCESSOR TRUSTEE. Any successor Trustee appointed
pursuant to Section 15.09 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 the
rights, powers, duties, and obligations of its predecessor under this Agreement,
with like effect as if originally named as Trustee. The predecessor Trustee
shall deliver to the successor Trustee all documents and statements held by it
under this Agreement; and the 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.
No successor Trustee shall accept appointment as provided in this Section
15.10 unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 15.08.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 15.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all
53
Holders of Certificates at their addresses as shown in the Certificate Register.
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.
SECTION 15.11. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 15.08, 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.
SECTION 15.12. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust 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 15.12,
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 the case an Event of Default 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 15.08 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 15.10.
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 or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee
or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
54
(iii) The Servicer and the Trustee acting jointly may at any time accept
the resignation of or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XV. 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.
Any separate trustee or co-trustee may at any time appoint the Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign, or be removed, all of its estates,
properties, rights, remedies, and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 15.13. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
shall make the following representations and warranties on which the Depositor
and Certificateholders may rely:
(i) Organization and Existence. The Trustee is a New York banking
corporation duly organized and validly existing under the laws of the State of
New York and authorized to engage in a banking and trust business under such
laws.
(ii) Power and Authority. The Trustee has full power, authority, and
legal right to execute, deliver, and perform this Agreement, and shall have
taken all necessary action to authorize the execution, delivery, and performance
by it of this Agreement.
(iii) Duly Executed. This Agreement shall have been duly executed and
delivered by the Trustee and shall constitute the legal, valid, and binding
agreement of the Trustee, enforceable in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or other similar laws
now or hereinafter in effect relating to the enforcement of creditors' rights in
general, as such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting the Trustee, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) as well as concepts of reasonableness, good faith and fair
dealing.
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ARTICLE XVI
TERMINATION
SECTION 16.01. TERMINATION OF THE TRUST. The respective obligations and
responsibilities of the Depositor, the Servicer and the Trustee created hereby
and the Trust created by this Agreement shall terminate upon (i) the disposition
of the Trust corpus as of the last day of any Collection Period at the direction
of the Class IC Certificateholder, at its option, pursuant to Section 16.02,
(ii) the sale, liquidation or disposition of the Trust corpus following a
termination upon the bankruptcy of the Class IC Certificateholder as provided in
Section 16.03, or (iii) the payment to Certificateholders and the Surety Bond
Issuer of all amounts required to be paid to them pursuant to this Agreement and
the Insurance Agreement (as set forth in writing by the Surety Bond Issuer) and
the disposition of all property held as part of 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 as of which this Agreement is executed. The
Servicer shall promptly notify the Trustee of any prospective termination
pursuant to this Section 16.01.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 10th day and
not later than the 20th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. 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 9.04 and, in the
event of a termination pursuant to clause (i) or (ii) of the preceding
paragraph, the provisions of Section 9 of Annex A hereto shall govern the
remaining distributions to Certificateholders.
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. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the 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 remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall, upon notice to the Trustee, be distributed by the Trustee
to the __________ [BAY VIEW TO COMPLETE] or its successor, and upon such
distribution the Certificateholders' rights to any amounts so distributed will
be extinguished.
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SECTION 16.02. OPTIONAL DISPOSITION OF ALL RECEIVABLES. On the last day
of any Collection Period following which (i) the Notional Principal Amount has
been reduced to zero, and (ii) the Certificate Balance as of the related
Distribution Date is less than or equal to 10% of the Original Pool Balance, the
holder of the Class IC Certificate shall have the option to cause the Trustee to
sell (to the Class IC Certificateholder or any other person) the corpus of the
Trust at a price (the "Optional Disposition Price") equal to the fair market
value of the Receivables, but not less than (i) the sum of (x) 100% of the
Certificate Balance, (y) accrued and unpaid interest on such amount computed at
a rate equal to the weighted average Note Rate, and (z) all amounts due and
owing to the Surety Bond Issuer under the Agreement and the Insurance Agreement
minus any amounts representing payments received on the Receivables not yet
applied to the interest related thereto or to reduce the principal balance
thereof. The proceeds of such sale will be deposited into the Certificate
Account for distribution to the Certificateholders (and, to the extent
applicable, the Surety Bond Issuer) on the next succeeding Distribution Date. In
connection with such disposition, the Class IC Certificateholder is required to
pay any unpaid fees and expenses of the Trustee that it would otherwise have
been entitled to pursuant to this Agreement. The fair market value of the
outstanding Receivables for purposes of this Section 16.02 shall be an amount
equal to the average of the bid prices for such assets taken as a whole,
provided to the Servicer by two independent, nationally recognized dealers in
automobile loans substantially similar to the Receivables. Such price shall be
deposited to the Certificate Account in immediately available funds by 12:00
noon, New York City time, on the Distribution Date and, upon notice to the
Trustee of such deposit, the Trustee shall transfer the Receivables and the
Receivable Files to the purchaser, whereupon the Certificates shall no longer
evidence any right or interest in the Receivables or any proceeds thereof.
57
proceed to consummate the sale, liquidation or disposition of the Receivables as
provided above with the highest bidder for the Receivables. The Servicer shall
be permitted to bid for the Receivables. The Trustee may obtain a prior
determination from trustee-in-bankruptcy that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 9.04 and this Section 16.03 shall not be deemed to be
mutually exclusive. Following the sale, disposition or liquidation of the
Receivables in a commercially reasonable manner, the Trustee shall wind up the
affairs of the Trust and terminate the Trust in accordance with Section 16.01.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
SECTION 17.01. AMENDMENT. This Agreement may be amended by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, and the Trustee with the consent of the Class IC Certificateholder,
Holders of Certificates evidencing not less than 51% of the Certificate Balance
and 51% of the Notional Principal Amount of the Class I 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 Holders of Certificates; provided, however, that no such amendment shall,
without the consent of the Holders of all Certificates then outstanding, reduce
the aforesaid percentage required to consent to any such amendment. In no case
may any such amendment increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made on any Certificate.
Notwithstanding anything to the contrary in this Agreement, no Opinion of
Counsel or consent of Certificateholders shall be required in connection with
any amendment of this Agreement to provide for a Spread Account Facility;
provided that prior to the effectiveness of any such amendment S&P and Xxxxx'x
shall confirm in writing that the rating of the Certificates will not be lowered
or withdrawn as a result of such amendment.
Notwithstanding anything to the contrary to this Agreement, no amendment of
this Agreement shall be effective without the prior written consent of the
Surety Bond Issuer.
Sections 7.08 and 16.03 shall not be subject to amendment under any
circumstances; provided however that Section 7.08(a) and Section 16.03 may be
deleted by an amendment pursuant to the first paragraph of this Section 17.01 if
the Depositor shall have provided to the Trustee, at Depositor's expense, an
Opinion of Counsel to the effect that the Trustee has complied
58
with any applicable temporary or final Treasury Regulation or Notice of the
Internal Revenue Service providing for a "check-the-box" partnership
classification for federal income tax purposes; and such amendment shall further
provide that Section 1 of Annex A hereof shall be amended by adding the
following sentence immediately preceding the last sentence thereof: "If the
Treasury Department or Internal Revenue Service shall promulgate a temporary or
final regulation, notice or other rule adopting a "check-the-box" classification
system for unincorporated organizations and which shall be applicable to the
Trust, the Servicer on behalf of the Tax Partners shall elect, in such manner as
may be provided in such regulation, notice or other rule, to treat the Trust as
a partnership for federal income tax purposes, and each Tax Partner irrevocably
agrees to be bound by such election." Moreover, except as provided in the third
paragraph of this Section 17.01, no amendment to this Agreement shall be
recognized or be effective without the written consent of the Trustee and
receipt by the Trustee of an Opinion of Counsel to the effect that such
amendment will not cause the Trust to be treated as an association taxable as a
corporation or as a publicly-traded partnership.
Promptly after the execution of any amendment or consent, the Trustee shall
furnish written notification of the substance of such amendment or consent to
each Certificateholder.
It shall not be necessary for the consent of Certificateholders pursuant to
this Section 17.01 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.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section 17.02(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties, or immunities under this Agreement.
SECTION 17.02. PROTECTION OF TITLE TO TRUST.
(a) The Depositor 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 Receivables and in the proceeds thereof. The Depositor shall
deliver (or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Depositor 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 Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) of the UCC, unless it shall have given the Trustee at least 60
days' prior written notice thereof.
(c) The Depositor and the Servicer shall give the Trustee at least 60
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the
59
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement (in which case the Servicer shall file or cause to be filed such
amendment or continuation statement or new financing statement). 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 at any time the status of such Receivable, including payments 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 any back-up archives) that
refer to a Receivable shall indicate clearly with reference to the particular
trust that such Receivable is owned by the Trustee. Indication of the Trustee's
ownership of a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Receivable shall have been paid in
full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender, or other transferee,
the Servicer shall give to such prospective purchaser, lender, or other
transferee computer tapes, records, or print-outs (including any restored from
back-up 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 Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit, and make copies of and abstracts
from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of this Agreement and of
each amendment thereto, an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (b) stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest; and
60
(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cutoff
Date, an Opinion of Counsel, dated as of a date during such 90-day period,
either (a) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
SECTION 17.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided in
Section 14.04, 17.01 or 17.07) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties to this Agreement
except as expressly set forth herein, nor shall anything in this Agreement set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this Agreement
(except for the Class IC Certificateholder to the extent provided in Section
7.08).
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 also the
Holders of Certificates evidencing not less than 25% of the Certificate Balance
or not less than 25% of the Notional Principal Amount of the Class I
Certificates 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 reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee, for 30 days after its receipt of such notice, request, and
offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding and during such 30-day period no direction
inconsistent with such written request has been given to the Trustee pursuant to
Section 14.04; 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 of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under this Agreement except in the manner provided in this Agreement and for the
equal, ratable, and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 17.03, each Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
61
SECTION 17.04. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within the State of New York, and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 17.05. NOTICES. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Depositor to the agent for service as specified
in this Agreement, at the following address: Bay View Securitization
Corporation, 0000 Xxxxx Xx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, or at such
other address as shall be designated by the Depositor in a written notice to the
Servicer or Trustee; (b) in the case of the Servicer to the agent for service as
specified in this Agreement, at the following address, California Thrift & Loan,
000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000, (c) in the case of the Trustee, at
the Corporate Trust Office, (d) in the case of the Surety Bond Issuer, at
Capital Markets Assurance Corporation, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Fax
(000) 000-0000, Attention: Managing Director, Credit Enhancement. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register unless otherwise provided herein. Unless otherwise provided
herein, 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 17.06. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 17.07. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 12.03 and 13.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee, the Class IC
Certificateholder, and the Holders of Certificates evidencing not less than 66%
of the Certificate Balance and 66% of the Notional Principal Amount of the Class
I Certificates provided, that, notwithstanding the foregoing, CTL may direct or
--------
irrevocably assign payments to which it is entitled under this Agreement to the
Depositor or another wholly-owned subsidiary of BVCC, upon written notice to the
Trustee.
SECTION 17.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations of the Trust
(except to the extent provided in respect of the Class IC Certificateholder in
Section 7.08). 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
11.02, Certificates shall be deemed fully paid.
62
SECTION 17.09. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement, the Servicer, CTL and the Trustee shall not,
prior to the date which is one year and one days after the termination of this
Agreement with respect to the Trust or the Depositor, acquiesce, petition or
otherwise invoke or cause the Trust or the Depositor to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Trust or the Depositor 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 Trust or the
Depositor or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust or the Depositor.
SECTION 17.10. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 17.11. THIRD PARTY BENEFICIARY. This Agreement shall inure to the
benefit of the Surety Bond Issuer and its successors and assigns.
63
IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
BAY VIEW SECURITIZATION CORPORATION,
as Depositor
By: __________________________________________
Title: President
CALIFORNIA THRIFT & LOAN,
as Servicer
By: __________________________________________
Title:
BANKERS TRUST COMPANY
as Trustee
By: __________________________________________
Title:
64
EXHIBIT A-1
[FORM OF CLASS A-1 CERTIFICATE]
PRINCIPAL IN RESPECT OF THIS CLASS A-1 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
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
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
thereof, Cede & Co., has an interest herein.
BAY VIEW 1996 RA-1 AUTO TRUST
____% CLASS A-1 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of simple and precomputed interest
installment loan and security agreements and installment sales contracts
secured by new and used automobiles, light trucks and vans. The contracts
were sold to the Trustee by Bay View Securitization Corporation.
(This Certificate does not represent an interest in or obligation of Bay
View Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are insured
or guaranteed by any government agency).
EXA-1-1
NUMBER
CUSIP
$-------------
THIS CERTIFIES THAT ____________ is the registered owner of a _____________
dollars nonassessable, fully-paid, fractional undivided interest in the Bay View
1996 RA-1 Auto Trust (the "Trust") formed by Bay View Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of ______ , 1996 (the
"Agreement") between Bay View Securitization Corporation as Depositor,
California Thrift & Loan, as Servicer and Bankers Trust Company (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. 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 "____% Class A-1 Automobile
Receivable Backed Certificates" (the "Class A-1 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, motorcycles, vans and van conversions (the "Receivables"), all monies
paid thereon, and all monies due thereon, including Accrued Interest, after
______ __, 1996 (but excluding Accrued Interest paid or due prior to the Closing
Date), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all documents contained in the Receivable
Files, any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Trust, any Liquidation Proceeds, any rights
of the Depositor in proceeds from claims or refunds of premiums on physical
damage, lender's collateral protection, credit life, disability and
hospitalization insurance policies, if any, covering vehicles financed thereby
and the obligors thereunder, the interest of the Depositor in recourse to
dealers relating to certain of the Receivables, the proceeds of all of the
foregoing and amounts on deposit from time to time in the Spread Account for the
benefit of the Class I and Class A Certificateholders, and the Surety Bond for
the benefit of the Class I and Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the Trust.
The Class A Certificates are comprised of "Class A-1 Certificates" and
"Class A-2 Certificates". In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in
the Trust (the "Class I Certificates" and together with the Class A
Certificates, the "Certificates") and a Class IC Certificate (the "Class IC
Certificate") shall be issued pursuant to the Agreement. The Class A
Certificates and Class I Certificates are senior in right and interest to the
Class IC Certificate. In the event that the funds available are not sufficient
to pay the Class A and Class I Certificateholders in full, they shall share pro
rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
EXA-1-2
Under the Agreement, there will be distributed on the 15th calendar day of
each month (the "Distribution Date"), commencing ___________, 1997, to the
person in whose name this Class A-1 Certificate is registered at the close of
business on the last Business Day of the month immediately preceding the month
of such distribution (the "Record Date"), such Certificateholder's fractional
interest in Class A-1 Monthly Interest and Monthly Principal. Each Class A-1
Certificateholder's "fractional interest" is equal to the original principal
amount of such Class A-1 Certificateholder's Certificate, as set forth on the
face thereof, divided by the aggregate Initial Class A-1 Certificate Balance.
Distributions on this Class A-1 Certificate will be made by the Trustee by
check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-1 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Class A-1 Certificate will be made only upon presentation and surrender of this
Class A-1 Certificate at the office or agency maintained for that purpose by
the Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class A-1 Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose.
The Class A-1 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-1
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-1 Certificates,
the Trustee will draw on the Surety Bond up to the Surety Bond Amount to pay
such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-1 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-1 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-1 Certificate and of any Class
A-1 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-1
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Class A-1 Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Class A-1 Certificate is registrable in the
Certificate Register upon surrender of this Class A-1 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the
EXA-1-3
Borough of Manhattan, The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Class A-1 Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Class A-1 Certificates are issuable only as registered Class A-1
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-1 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-1
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-1 Certificates are
exchangeable for new Class A-1 Certificates of authorized denominations
evidencing the same aggregate denomination, 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 Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class A-1
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-1 Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class A-1 Certificateholders of all amounts required to be paid to
them pursuant to the Agreement and the disposition of all property held as part
of the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not to be less than the price
specified in the Agreement, and such sale of the Receivables and other property
of the Trust may effect early retirement of the Class A-1 Certificates; however,
such right is exercisable only as of a Record Date as of which the Certificate
Balance is less than or equal to 10% of the original aggregate principal balance
of the Receivables and the Notional Principal Amount has been reduced to zero.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Class A-1 Certificate summarizes certain provisions of the
Agreement, this Class A-1 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-1 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder
EXA-1-4
agrees to be bound by the foregoing provisions and the terms of the Tax
Partnership Agreement included as an annex to the Agreement.
EXA-1-5
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-1 Certificate to be duly executed.
Dated: __________, 199_ BAY VIEW 1996 RA-1 AUTO TRUST
By: Bankers Trust Company
_____________________________________
solely in its capacity as Trustee
By: _______________________________________
Responsible Officer
EXA-1-6
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A-1 CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
Bankers Trust Company as Trustee
By_______________________________
Signatory
Dated: ______ __, 1996
EXA-1-7
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 Class A-1 Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
Attorney to transfer
-----------------------------------------------------------
said Class A-1 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 Class A-1 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
XXX-0-0
XXXXXXX X-0
[FORM OF CLASS A-2 CERTIFICATE]
PRINCIPAL IN RESPECT OF THIS CLASS A-2 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
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
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
thereof, Cede & Co., has an interest herein.
BAY VIEW 1996 RA-1 AUTO TRUST
[____]% CLASS A-2 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans. The
contracts were sold to the Trustee by Bay View Securitization
Corporation.
(This Certificate does not represent an interest in or obligation
of Bay View Securitization Corporation or any of its affiliates. Neither
this Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
EXA-2-1
NUMBER
CUSIP
$--------------
THIS CERTIFIES THAT ____________ is the registered owner of a _____________
dollars nonassessable, fully-paid, fractional undivided interest in the Bay View
1996 RA-1 Auto Trust (the "Trust") formed by Bay View Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of ________, 1996 (the
"Agreement") between Bay View Securitization Corporation as Depositor,
California Thrift & Loan, as Servicer and Bankers Trust Company (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. 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 "____% Class A-2 Automobile
Receivable Backed Certificates" (the "Class A-2 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, motorcycles, vans and van conversions (the "Receivables"), all monies
paid thereon, and all monies due thereon, including Accrued Interest, after
____________, 1996 (but excluding Accrued Interest paid or due prior to the
Closing Date), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all documents contained in the Receivable
Files, any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Trust, any Liquidation Proceeds, any rights
of the Depositor in proceeds from claims or refunds of premiums on physical
damage insurance policy, lender's collateral protection, credit life, disability
and hospitalization insurance policies, if any, covering vehicles financed
thereby and the obligors thereunder, the interest of the Depositor in recourse
to dealers relating to certain of the Receivables, the proceeds of all of the
foregoing and amounts on deposit from time to time in the Spread Account for the
benefit of the Class I and Class A Certificateholders, and the Surety Bond for
the benefit of the Class I and Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the Trust.
The Class A Certificates are comprised of "Class A-1 Certificates" and "Class X-
0 Certificates." In addition to the Class A Certificates, a class of interest-
only planned amortization Certificates representing an interest in the Trust
(the "Class I Certificates" and together with the Class A Certificates, the
"Certificates") and a Class IC Certificate (the "Class IC Certificate") shall be
issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A and
Class I Certificateholders in full, they shall share pro rata in the amounts
available based upon the total amounts they are due. The Class I Certificates
will receive monthly interest payments based on their Notional Principal Amount
and will receive no distributions after the date on which the Notional Principal
Amount of the Class I Certificates has been reduced to zero. The Class IC
Certificate initially will be issued to the Depositor and it shall represent the
interest in the Receivables not represented by the Certificates.
EXA-2-2
Under the Agreement, there will be distributed on the 15th calendar day of
each month (the "Distribution Date"), commencing ___________, 1997, to the
person in whose name this Class A-2 Certificate is registered at the close of
business on the last Business Day of the month immediately preceding the month
of such distribution (the "Record Date"), such Certificateholder's fractional
interest in Class A-2 Monthly Interest and Monthly Principal. Each Class A-2
Certificateholder's "fractional interest" is equal to the original principal
amount of such Class A-2 Certificateholder's Certificate, as set forth on the
face thereof, divided by the aggregate Initial Class A-2 Certificate Balance.
Distributions on this Class A-2 Certificate will be made by the Trustee by
check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-2 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class X-
0 Certificate will be made only upon presentation and surrender of this Class X-
0 Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class A-2 Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose.
The Class A-2 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-2
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-2 Certificates,
the Trustee will draw on the Surety Bond up to the Surety Bond Amount to pay
such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-2 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-2 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-2 Certificate and of any Class
A-2 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-2
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class X-
0 Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Class A-2 Certificate is registrable in the
Certificate Register upon surrender of this Class A-2 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the
EXA-2-3
Borough of Manhattan, The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Class A-2 Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Class A-2 Certificates are issuable only as registered Class A-2
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-2 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-2
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-2 Certificates are
exchangeable for new Class A-2 Certificates of authorized denominations
evidencing the same aggregate denomination, 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 Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class A-2
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-2 Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class A-2 Certificateholders of all amounts required to be paid to
them pursuant to the Agreement and the disposition of all property held as part
of the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not to be less than the price
specified in the Agreement, and such sale of the Receivables and other property
of the Trust may effect early retirement of the Class A-2 Certificates; however,
such right is exercisable only as of a Record Date as of which the Certificate
Balance is less than or equal to 10% of the original aggregate principal balance
of the Receivables and the Notional Principal Amount has been reduced to zero.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Class A-2 Certificate summarizes certain provisions of the
Agreement, this Class A-2 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-2 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder
EXA-2-4
agrees to be bound by the foregoing provisions and the terms of the Tax
Partnership Agreement included as an annex to the Agreement.
EXA-2-5
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-2 Certificate to be duly executed.
Dated: __________, 199_ BAY VIEW 1996 RA-1 AUTO TRUST
By: Bankers Trust Company
----------------------------------
solely in its capacity as Trustee
By:
----------------------------------
Responsible Officer
EXA-2-6
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A-2 CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
Bankers Trust Company as Trustee
By:
--------------------------------
Signatory
DATED:___________________, 199_
EXA-2-7
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 Class A-2 Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________ Attorney to transfer
said Class A-2 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 Class A-2 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
EXA-2-8
EXHIBIT B
[FORM OF CLASS I CERTIFICATE]
THIS CERTIFICATE DOES NOT ENTITLE THE HOLDER TO RECEIVE ANY PRINCIPAL BUT ONLY
INTEREST ON THE NOTIONAL PRINCIPAL AMOUNT DISTRIBUTABLE MONTHLY AS SET FORTH
HEREIN. THE NOTIONAL PRINCIPAL AMOUNT WILL DECREASE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE NOTIONAL PRINCIPAL AMOUNT OF THE INTEREST EVIDENCED HEREBY AT
ANY TIME MAY BE LESS THAN THE INITIAL NOTIONAL PRINCIPAL AMOUNT SET FORTH BELOW.
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
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
thereof, Cede & Co., has an interest herein.
BAY VIEW 1996 RA-1 AUTO TRUST
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional interest in the Trust, as defined below, the property of
which includes a pool of simple and precomputed interest installment loan and
security agreements and installment sales contracts secured by new and used
automobiles, light trucks and vans. The contracts were sold to the Trustee by
Bay View Securitization Corporation.
(This Certificate does not represent an interest in or obligation of Bay View
Securitization Corporation or any of its affiliates. Neither this Certificate
nor the underlying Receivables, as defined below, are insured or guaranteed by
any government agency).
EXB-1
NUMBER
$------
THIS CERTIFIES THAT ______________ is the registered owner of a designated
initial notional principal amount of ___________ dollars nonassessable, fully-
paid interest in the Bay View 1996 RA-1 Auto Trust (the "Trust") formed by Bay
View Securitization Corporation, a Delaware corporation (the "Depositor"). The
Trust was created pursuant to a Pooling and Servicing Agreement dated as of
________, 1996 (the "Agreement") between Bay View Securitization Corporation as
Depositor, California Thrift & Loan, as Servicer and Bankers Trust Company (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. A copy of the Agreement may be examined during normal business
hours at the Corporate Trust Office of the Trustee by any Certificateholder upon
request. 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 Class I Certificates designated as "Class I Interest
Only Automobile Receivable Backed Certificates, (the "Class I Certificates").
This Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which Agreement the holder of this Class I
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes a pool of simple and precomputed
interest loan and security agreements and installment sales contracts for new
and used automobiles, motorcycles, light trucks, vans and van conversions (the
"Receivables"), generally all monies paid thereon, and all monies due thereon,
including Accrued Interest, after ____________, 1996 (but excluding Accrued
Interest paid or due prior to the Closing Date), security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof, all
documents contained in the Receivable Files, any property that shall have
secured a Receivable and that shall have been acquired by or on behalf of the
Trust, any Liquidation Proceeds, any rights of the Depositor in proceeds from
claims or refunds of premiums on physical damage, lender's collateral
protection, credit life, disability and hospitalization insurance policies, if
any, covering vehicles financed thereby and the obligors thereunder, the
interest of the Depositor in recourse to dealers relating to certain of the
Receivables, the proceeds of all of the foregoing and amounts on deposit from
time to time in the Spread Account for the benefit of the Class I and Class A
Certificateholders, and the Surety Bond for the benefit of the Class I and Class
A Certificateholders.
In addition to the Class I Certificates, a class of Certificates
representing interests in the Trust (the "Class A Certificates," (which consist
of the "Class A-1 Certificates" and the "Class A-2 Certificates") together with
the Class I Certificates, the "Certificates") and a Class IC Certificate (the
"Class IC Certificate") shall be issued pursuant to the Agreement. The Class A
Certificates will receive monthly payments of principal and interest in
accordance with the Agreement. The Class A and Class I Certificates are senior
in right and interest to the Class IC Certificates. In the event that the funds
available are not sufficient to pay the Class A and Class I Certificateholders
in full, they shall share pro rata in the amounts available based upon the total
amounts they are due. The Class IC Certificate initially will be issued to the
Depositor and it shall represent the interest in the Receivables not represented
by the Certificates.
EXB-2
Under the Agreement, there will be distributed on the 15th calendar day of
each month (the "Distribution Date"), commencing on ____________, 1997, to the
person in whose name this Certificate is registered at the close of business on
the last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"), such Class I Certificateholder's fractional
interest in Class I Monthly Interest. Each Class I Certificateholder's
"fractional interest" is equal to the original notional principal amount of such
Class I Certificateholder's Class I Certificate, as set forth on the face
thereof, divided by the aggregate original notional principal amount of all of
the Class I Certificates. The Class I Monthly Interest as of any Distribution
Date (except the first Distribution Date) will be the product of one-twelfth
(1/12) of the Class I Pass-Through Rate of ____% per annum and the Notional
Principal Amount, which shall be reduced on each Distribution Date as more fully
described in the Agreement.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto without the presentation or surrender of
this Certificate or the making of any notation hereon, except that with respect
to Class I Certificates registered in the name of CEDE & Co., the nominee
registrant for The Depository Trust Company, payments will be made in the form
of immediately available funds. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Certificate will
be made 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. The Class I Certificateholders will not be
entitled to any distributions after the Notional Principal Amount of the Class I
Certificates has been reduced to zero.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class I Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
The Certificates do not represent an obligation of, or an interest in, the
Depositor or any affiliate of the Depositor. The Certificates are limited in
right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth in the Agreement. The Agreement
provides for certain amounts to be deposited into the Spread Account. In the
event amounts available for withdrawal from the Spread Account are insufficient
to make distributions on the Class I Certificates, the Trustee will draw on the
Surety Bond to pay such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class I Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class I Certificate and of any Class I
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class I
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
EXB-3
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Class I Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class I Certificates are issuable only as registered Class I
Certificates without coupons in denominations representing a minimum of $1,000
of Original Notional Principal Amount. As provided in the Agreement and subject
to certain limitations therein set forth, Class I Certificates are exchangeable
for new Class I Certificates of authorized denominations evidencing the same
aggregate denomination, 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 Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class I
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class I Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class I Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not less than the price
specified in the Agreement; however, such right is exercisable only as of a
Record Date as of which the Pool Balance is less than or equal to 10% of the
original aggregate principal balance of the Receivables and the Notional
Principal Amount has been reduced to zero.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Certificate summarizes certain provisions of the Agreement,
this Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any inconsistency or
conflict between the terms of this Certificate and the terms of the Agreement,
the terms of the Agreement shall control. By acceptance of this Certificate, the
holder agrees to
EXB-4
be bound by the foregoing provisions and the terms of the Tax Partnership
Agreement included as an annex to the Agreement.
EXB-5
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: __________, 199_ BAY VIEW 1996 RA-1 AUTO TRUST
By: Bankers Trust Company
----------------------------------
solely in its capacity as Trustee
By:
__________________________________
Responsible Officer
EXB-6
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS I CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
Bankers Trust Company
as Trustee
DATED:__________________, 199_ BY: ________________________________
Responsible Officer
EXB-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
----------------------------------------------------------------------
(Please print or typewrite name and address, including postal
zip code, of assignee)
----------------------------------------------------------------------
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
EXB-8
EXHIBIT C
[FORM OF CLASS IC CERTIFICATE]
THIS CLASS IC CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NEITHER THIS CLASS IC CERTIFICATE NOR ANY PORTION HEREOF MAY
BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT (1)
IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND (2) IN COMPLIANCE WITH
THE RESTRICTIONS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
BAY VIEW 1996 RA-1 AUTO TRUST
CLASS IC AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing an undivided interest in the Trust, as defined below, the property of
which includes a pool of simple interest installment loan and security
agreements and installment sales contracts secured by new and used automobiles,
light trucks and vans. The contracts were sold to the Trustee by Bay View
Securitization Corporation. (This Class IC Certificate does not represent an
interest in or obligation of Bay View Securitization Corporation or any of its
affiliates. Neither this Class IC Certificate nor the underlying Receivables, as
defined below, are insured or guaranteed by any other government agency).
NUMBER
One Unit R-IC-1
THIS CERTIFIES THAT Bay View Securitization Corporation, a Delaware
corporation, is the registered owner of a nonassessable, fully-paid interest in
the Bay View 1996 RA-1 Auto Trust (the "Trust") formed by Bay View
Securitization Corporation. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of ________, 1996 (the "Agreement") between Bay
View Securitization Corporation as Depositor, California Thrift & Loan, as
Servicer and Bankers Trust Company (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee by any Certificateholder upon request. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement. This Class IC Certificate is issued under and is subject
to the terms, provisions, and conditions of the Agreement, to which Agreement
the holder of this Class IC Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust includes a
pool of simple and precomputed interest loan and security agreements and
installment sales contracts for new and used automobiles, motorcycles, light
trucks, vans and van conversions (the "Receivables"), all monies paid thereon,
and all monies due thereon, including Accrued Interest, after ____________, 1996
(but excluding Accrued Interest paid or due before the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any
EXC-1
property that shall have secured a Receivable and that shall have been acquired
by or on behalf of the Trust, any Liquidation Proceeds, proceeds from claims or
refunds of premiums on physical damage, lender's single interest, credit life,
disability and hospitalization insurance policies, if any, covering vehicles
financed thereby and the obligors thereunder, certain interests of the Depositor
in recourse to dealers relating to certain of the Receivables and amounts on
deposit from time to time in the Spread Account for the benefit of the Class I
and Class A Certificateholders and the Surety Bond for the benefit of the Class
I and Class A Certificateholders.
This Class IC Certificate represents an interest in certain assets of the
Trust, including the right to receive a portion of the Collections and other
amounts at the times and in the amounts specified in the Agreement. In addition
to the Class IC Certificates, two classes of Certificates representing undivided
interests in the Trust, the Class A Certificates (which consist of the "Class X-
0 Certificates" and the "Class A-2 Certificates") and the Class I
Certificates (collectively, the "Certificates") shall be issued pursuant to the
Agreement. The Class A and Class I Certificates are senior in right and interest
to the Class IC Certificates. In the event that the funds available are not
sufficient to pay the Class A and Class I Certificateholders in full, they shall
share pro rata in the amounts available based upon the total amounts they are
due. The Class A Certificates will receive monthly payments of principal and
interest in accordance with the Agreement. The Class I Certificates will receive
monthly interest payments based on their Notional Principal Amount and will
receive no distributions after the date on which the Notional Principal Amount
of the Class I Certificates has been reduced to zero.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class IC Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose. Registration of transfer of the Class
IC Certificate to a person may not be effected unless (a) the Surety Bond Issuer
consents to such transfer, and the Trustee receives an Opinion of Counsel,
satisfactory to it, to the effect that (i) such transfer may be made in reliance
upon an exemption from the registration requirements of the Securities Act of
1933, as amended, and (ii) such transfer will not adversely affect the tax
treatment of the Trust or the Certificates, and (b) the Surety Bond Issuer
consents to such transfer. Notwithstanding the foregoing, the Depositor shall
have no obligation to register this Class IC Certificate under the Securities
Act of 1933, as amended.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The holder of this Class
IC Certificate may at its option cause the Trustee to sell the corpus of the
Trust at a price not to be less than the price specified in the Agreement, and
such sale of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right is exercisable only as of a
Record Date as of which the Certificate Balance is less than or equal to 10% of
the original aggregate principal balance of the Receivables and the Notional
Principal Amount has been reduced to zero. The Class IC Certificateholder is
required to pay any unpaid fees and expenses of the Trustee and in connection
with such disposition and also is responsible for paying certain obligations of
the Trust, as set forth in Section 7.08(a) of the Agreement.
EXC-2
Although this Certificate summarizes certain provisions of the Agreement,
this Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any inconsistency or
conflict between the terms of this Certificate and the terms of the Agreement,
the terms of the Agreement shall control. By acceptance of this Certificate, the
holder agrees to be bound by the terms of the Tax Partnership Agreement included
as an annex to the Agreement.
EXC-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: __________, 199__ BAY VIEW 1996 RA-1 AUTO TRUST
By:
------------------------------------
solely in its capacity as Trustee
By:
------------------------------------
Responsible Officer
EXC-4
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS IC CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
[__________________________________]
as Trustee
DATED:_______________________, 199__ BY:___________________________
Responsible Officer
EXC-5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal
zip code, of assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________ Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company savings bank or other savings and loan institution.
EXC-6
EXHIBIT D
FORM OF LETTER OF REPRESENTATIONS
EXD-1
SCHEDULE A
TO THE POOLING AND
SERVICING AGREEMENT
SCHEDULE OF RECEIVABLES
Depositor Name of Amount Financed Account Number
Obligor (as of the Cutoff Date)
$
A COPY OF THE SCHEDULE OF RECEIVABLES, INCLUDING THE
ABOVE CAPTIONED INFORMATION WITH RESPECT TO EACH
RECEIVABLE, WAS DELIVERED TO THE TRUSTEE WITH A
COUNTERPART OF THE POOLING AND SERVICING AGREEMENT.
SCHEDULE B
TO THE POOLING AND
SERVICING AGREEMENT
1. Location of Receivables:
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000-0000
000 X. 00xx Xxxxxx, #000
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000
0000 Xxxxxxxxx Xxxx., #0
Xxxxxxxx, Xxxxxxxxxx 00000-0000
0000 Xxxxxxx Xxxxxx Xxxx.
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
SCHEDULE C
PLANNED NOTIONAL PRINCIPAL AMOUNT SCHEDULE
Planned Notional
Distribution Date in Principal Amount
Initial........................................................
January 1997...................................................
February 1997..................................................
March 1997.....................................................
April 1997.....................................................
May 1997.......................................................
June 1997......................................................
July 1997......................................................
August 1997....................................................
September 1997.................................................
October 1997...................................................
November 1997..................................................
December 1997..................................................
January 1998...................................................
February 1998..................................................
March 1998.....................................................
April 1998.....................................................
May 1998.......................................................
June 1998......................................................
July 1998......................................................
August 1998....................................................
September 1998.................................................
October 1998...................................................
November 1998..................................................
December 1998..................................................
January 1999...................................................
February 1999..................................................
March 1999.....................................................
April 1999.....................................................
May 1999.......................................................
June 1999......................................................
July 1999......................................................
August 1999....................................................
September 1999.................................................
October 1999...................................................
November 1999..................................................
[TO BE AMENDED]
ANNEX A
TAX PARTNERSHIP AGREEMENT
1. Characterization for Tax Purposes. For United States federal and state
income tax purposes, the Depositor's contribution of the Receivables to the
Trust in exchange for interests in the Trust, and the sale by the Depositor of
Class A Certificates (which includes Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates) and Class I Certificates and the
retention by the Depositor of the Class IC Certificate is intended to constitute
the formation of a partnership (the "Tax Partnership") whose partners are the
Class A Certificateholders, the Class I Certificateholders and the Class IC
Certificateholder (which are hereinafter collectively referred to as the "Tax
Partners"). This Tax Partnership shall continue in effect as provided in
Paragraph 3 below. The Tax Partnership shall not be a partnership to any other
extent or for any other purpose.
2. Election with Respect to Subchapter K. Notwithstanding anything to the
contrary, each Tax Partner agrees: (a) not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code, or any
comparable provisions of applicable state laws; and (b) to join in the execution
of such additional documents and elections as may be required in order to
effectuate the foregoing.
3. Term. The provisions of this Tax Partnership Agreement shall be effective
as of the effective date of the sale by the Depositor of the Class A
Certificates and Class I Certificates and the issuance to the Depositor of the
Class IC Certificate (the "Effective Date") and shall continue in full force and
effect from and after such date until the earliest of: (a) the termination of
the Agreement pursuant to its terms; or (b) the mutual agreement of all of the
Tax Partners to terminate the Trust.
4. Capital Contributions and Capital Accounts.
(a) The value of the interests contributed by the Class A
Certificateholders and the Class I Certificateholders shall equal the amount
paid by such Certificateholders, respectively, for their Certificates and such
amounts shall constitute the opening balance in their Capital Accounts (as
hereinafter defined). The value of the interests contributed by the Class IC
Certificateholder shall equal the fair market value of the Class IC
Certificate, which the Tax Partners agree shall be based on the present value
of the cash flow to the Class IC Certificateholder of the amounts to which the
Class IC Certificateholder is entitled to receive pursuant to Section 10.02(e)
at each Distribution Date using a discount rate of approximately three percent
over the weighted average pass-through rate of the Class A Certificates (based
upon the Servicer's determination of what an investor would pay for such an
interest) and a prepayment assumption of approximately 1.5 Asset Back Speed
("ABS") and such total shall be submitted to the Trustee in writing within
five (5) Business Days after the Closing Date. Such amount shall constitute
the opening balance in the Class IC Certificateholder's Capital Account.
(b) An individual capital account (a "Capital Account") shall be
maintained for each Tax Partner in compliance with Treasury Regulation
Sections 1.704-1(b)(2)(iv) and 1.704-2 and accordingly, except as otherwise
provided herein:
(i) The Capital Account of each Tax Partner shall be credited by (A) the
amount of cash and the fair market value of property other than cash contributed
(or deemed contributed pursuant to Code Section 708) by such Tax Partner to the
Tax Partnership (net of any liabilities assumed by the Tax Partnership upon such
contribution or to which such property is subject at the time of such
contribution); and (B) the amount of any item of taxable income or gain and the
amount of any item of income or gain exempt from tax allocated to such Tax
Partner.
(ii) The Capital Account of each Tax Partner shall be debited by (A) the
amount of any item of tax deduction or loss allocated to such Tax Partner; (B)
such Tax Partner's allocable share, of expenditures not deductible in computing
taxable income and not properly chargeable as capital expenditures; and (C)
the amount of cash and the fair market value of any property other than cash
(net of any liabilities assumed by such Tax Partner or to which such property is
subject at the time of distribution) distributed to such Tax Partner.
(iii) Immediately prior to any distribution of property in kind, the Tax
Partners' Capital Accounts shall be adjusted by assuming that the distributed
properties were sold for cash at their respective fair market values as of the
date of distribution and crediting or debiting each Tax Partner's Capital
Account with its respective share of the hypothetical gains or losses resulting
from such assumed sales in the same manner as gains or losses on actual sales of
such properties would be allocated under Paragraph 6 below.
(iv) Any adjustments of basis of property provided for under Code Section
734 and 733 and comparable provisions of state law (resulting from an election
under Code Section 754 or comparable provisions of state law) shall not affect
the Capital Accounts of the Tax Partners, except as provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m)(5).
5. Federal and State Income Tax Returns and Elections.
(a) The Tax Partners agree that the holder of the Class IC Certificate
shall serve as the "tax matters partner" (as such term is defined in Code
Section 6231(a)(7) (the "Tax Matters Partner") of the Tax Partnership. The Tax
Matters Partner shall (i) apply to the Internal Revenue Service for a taxpayer
identification number for the Tax Partnership, (ii) elect to adopt the accrual
method of accounting and, if permitted by applicable federal tax law, the
calendar year as the Tax Partnership's fiscal year, (iv) make such other
elections as it deems proper, including, but not limited to, making or causing
the Trust to make a proper election not to be treated as an association taxable
as a corporation pursuant to the final "check-the-box" regulations issued by the
Department of the Treasury on December 17, 1996 and effective as of January 1,
1997, by timely filing Form 8832--Entity Classification Election, with the
appropriate IRS service center, (v) prepare, execute and file the necessary
federal and state partnership income tax returns for the Tax Partnership and
(vi) keep the other Tax Partners informed of all material matters that may come
to its attention in its capacity as Tax Matters Partner. Each Tax Partner agrees
to furnish the Tax Matters Partner with all pertinent information relating to
activities under
ANNEX-2
the Agreement and this Annex A which is necessary for the Tax Matters Partner to
prepare and file federal and state partnership returns. In acting as Tax Matters
Partner, the Tax Matters Partner shall use its best efforts, but shall incur no
liability to the other Tax Partners.
(b) Within 60 days after the end of each of the Tax Partnership's taxable
years, the Tax Matters Partner shall send to each Tax Partner who has been a Tax
Partner at any time during the taxable year then ended such tax information as
shall be necessary for the preparation by such Tax Partner of its Federal income
tax return and state income and other tax returns, if any, in states where the
Tax Partnership is organized or is qualified to do business.
6. Allocations.
(a) (i) "Net Income" and "Net Loss" respectively, for any period, means
the income or losses of the Tax Partnership as determined in accordance with the
method of accounting followed by the Tax Partnership for Federal income tax
purposes, including, for all purposes, any income exempt from tax and any
expenditures of the Tax Partnership described in Code Section 705(a)(2)(B);
provided, however, (i) that any item allocated under Paragraphs 6(b)(iii) or
6(c) shall be excluded from the computation of Net Income and Net Loss and (ii)
that if, as a result of the contribution of an asset whose fair market value
differs from its adjusted basis for Federal income tax purposes or as a result
of the revaluation of the Tax Partnership's assets, the book value of any Tax
Partnership asset differs from its adjusted basis for Federal income tax
purposes, gain, loss, depreciation and amortization with respect to such asset
shall be computed using the asset's book value consistently with the
requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(ii) "Period" shall mean the calendar month; provided that as to the
month in which the Closing Date occurs, Period shall mean the period commencing
on the Closing Date and ending on the last day of that calendar month, and as to
the month in which the Tax Partnership terminates, Period shall mean the period
beginning on the first day of such month and ending on the date of the Tax
Partnership's termination.
(b) The Tax Partners agree that the Tax Partnership's Net Income and Net
Loss and each item of income, gain, loss, or deduction entering into the
computation thereof for any Fiscal Year shall be allocated by first allocating
the Tax Partnership's Net Income and Net Loss (and each item of income, gain,
loss, or deduction entering into the computation thereof) for each Period within
such Fiscal Year (as if such Period were a complete fiscal year) and then
aggregating the allocations for each Period within the Fiscal Year. In the case
of the transfer of any interest in the Tax Partnership, the items of Net Income
and Net Loss allocated for any Period with respect to the transferred interest
shall be allocated to the holder of that interest on the first business day of
the month following the end of such Period (or in the case of the Period in
which the Tax Partnership terminates, the last day of such Period). If the Tax
Matters Partner determines that this method of allocation of items of Net Income
and Net Loss is not consistent with the requirements of the Code and applicable
Treasury Regulations, it may revise such
ANNEX-3
method of allocation to conform with such requirements. The Tax Partnership's
Net Income and Net Loss for each Period within a Fiscal Year shall be allocated
as follows:
(i) Net Income for such Period shall be allocated as follows:
(A) (I) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of (1) the product of the Class A-1 Pass-Through Rate and
(2) the Class A-1 Certificate Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously allocated to the Class X-
0 Certificateholders pursuant to this Paragraph 6(b)(i)(A)(I) shall be
allocated 100% to the Class A-1 Certificateholders, in proportion to their
holdings of Class A-1 Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-1 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-1 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-1
Certificateholders pursuant to this Paragraph 6(b)(i)(A)(II) shall be
allocated 100% to the Class A-1 Certificateholders, in proportion to their
holdings of Class A-1 Certificates.
(B) (I) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of (1) the product of the Class A-2 Pass-Through Rate and
(2) the Class A-2 Certificate Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously allocated to the Class X-
0 Certificateholders pursuant to this Paragraph 6(b)(i)(B)(I) shall be
allocated 100% to the Class A-2 Certificateholders, in proportion to their
holdings of Class A-2 Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-2 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-2 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-2
Certificateholders pursuant to this Paragraph
ANNEX-4
6(b)(i)(B)(II) shall be allocated 100% to the Class A-2 Certificateholders,
in proportion to their holdings of Class A-2 Certificates.
(C) (I) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of (1) the product of the Class A-3 Pass-Through Rate and
(2) the Class A-3 Certificate Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously allocated to the Class X-
0 Certificateholders pursuant to this Paragraph 6(b)(i)(C)(I) shall be
allocated 100% to the Class A-3 Certificateholders, in proportion to their
holdings of Class A-3 Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-3 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-3 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-3
Certificateholders pursuant to this Paragraph 6(b)(i)(C)(II) shall be
allocated 100% to the Class A-3 Certificateholders, in proportion to their
holdings of Class A-3 Certificates.
(D) An amount of Net Income equal to the excess of (x) the sum for
such Period and each preceding Period up to the Period beginning with the
Closing Date, of the Periodic Allocation (as hereinafter defined) over (y)
all amounts previously allocated to the Class I Certificateholders pursuant
to this Paragraph 6(b)(i)(D), shall be allocated 100% to the Class I
Certificateholders, in proportion to their holdings of Class I
Certificates. The "Periodic Allocation" for any Period shall equal the
excess of (i) the product of (1) the Class I Pass-Through Rate and (2) the
Notional Principal Amount for such Period over (ii) the portion of the
amount distributable with respect to the Class I Certificates with respect
to such Period that would constitute a return of basis for an initial
holder if the Class I Certificates constituted an instrument described in
Code Section 860G(a)(1)(B)(ii), employing the principles of Code Section
1272(a)(6) and the constant yield method of accrual; provided that the
product of (1) and (2) in clause (i) shall be computed on the basis of a
360 day year consisting of twelve 30 days months, and that such product
shall be appropriately prorated for any Period that is not a full calendar
month in a manner consistent with the computation of cash distributions
with respect to such Periods as provided by the Agreement.
(E) Notwithstanding the foregoing Paragraphs (A) through (D), if the
actual Net Income for such Period is less than the Net Income allocable
under the sum of the amounts described in such Paragraphs (A) through (D),
the actual Net
ANNEX-5
Income for such Period shall be allocable to the Class A Certificateholders
and the Class I Certificateholders in proportion to the allocations that
would have been made to such Certificateholders with respect to such Period
under such foregoing Paragraphs (A) through (D) if sufficient Net Income
for such period had existed and the amount distributable hereunder to Class
A Certificateholders shall be distributed pro rata. For the purposes of
applying the foregoing Paragraphs (A) through (D), in such periods, any
amounts allocated pursuant to this Paragraph (E) shall be treated as
allocated pursuant to Paragraphs (A) through (D), as the case may be, to
the extent the allocation was related thereto.
(F) Any remaining Net Income shall be allocated 100% to the Class IC
Certificateholder.
(ii) Net Losses for such Periods shall be allocated as follows:
(A) 100% to the Class IC Certificateholder until the Adjusted Capital
Account (as hereinafter defined) balance of the Class IC Certificateholders
equals zero.
(B) 100% pro rata:
(I) to the Class I Certificateholders, in proportion to their
holdings of Class I Certificates, until the Adjusted Capital Account
balances of the Class I Certificateholders equal zero; and
(II) to the Class A Certificateholders, in proportion to their
holdings of Class A Certificates, until the Adjusted Capital Account
balances of the Class A Certificateholders equal zero.
(C) Any remaining Net Losses shall be allocated 100% to the Class IC
Certificateholder. (iii) Any provision of this Agreement to the contrary
notwithstanding, any payment of amounts due and owing the Surety bond
Issuer from time to time or in connection with an optional disposition of
all Receivables pursuant to Section 16.02 of the Agreement or upon a
termination of the Trust upon the bankruptcy of the Class IC
Certificateholder pursuant to Section 16.03 of the Agreement shall be
treated as a loss of the Tax Partnership and shall be allocated in the same
manner as the Net Loss would be allocated under paragraph 6(b)(ii).
(c) (i) In the taxable year in which the final redemption of the Class I
Certificates occurs, a portion of the premium and other deductions derived by
the Trust up to an amount equal to the aggregate remaining Capital Account
balances of the Class I Certificateholders shall be allocated to the Class I
Certificateholders in proportion to their respective Capital Account balances.
(ii) Any deductions not allocated pursuant to Paragraph 6(c)(i) and
attributable to (w) the amortization of premium on the Receivables, (x) payments
to the
ANNEX-6
Trustee and (y) payments to the Servicer shall be specially allocated to the
Class IC Certificateholder.
(iii) If there is a net decrease in "partnership minimum gain" (within
the meaning of Treasury Regulation Section 1.704-2(d))for a Fiscal Year, then
there shall be allocated to each Tax Partner items of income and gain for that
year equal to that Tax Partner's share of the net decrease in partnership
minimum gain (within the meaning of Treasury Regulation Section 1.704-2(g)(2)),
subject to the exceptions set forth in Treasury Regulation Sections 1.704-
2(f)(2), (3) and (5), provided, that if the Tax Partnership has any discretion
as to an exception set forth pursuant to Treasury Regulation Section 1.704-
2(f)(5), the Tax Matters Partner may exercise such discretion on behalf of the
Tax Partnership. In the event the application of the minimum gain chargeback
requirement would cause a distortion in the economic arrangement among the Tax
Partners, the Tax Matters Partner shall request the Commissioner to waive the
minimum gain chargeback requirement pursuant to Treasury Regulation Section
1.704- 2(f)(4). The foregoing is intended to be a "minimum gain chargeback"
provision as described in Treasury Regulation Section 1.704-2(f) and shall be
interpreted and applied in all respects in accordance with that Treasury
Regulation. If during a Fiscal Year there is a net decrease in partner
nonrecourse debt minimum gain (as determined in accordance with Treasury
Regulation Section 1.704-2(i)(3)), then, in addition to the amounts, if any,
allocated pursuant to the preceding paragraph, any Tax Partner with a share of
that partner nonrecourse debt minimum gain (determined in accordance with
Treasury Regulation Section 1.704-2(i)(5)) as of the beginning of the Fiscal
Year shall, subject to the exceptions set forth in Treasury Regulation Section
1.704-2(i)(4), including exceptions analogous to those provided pursuant to
Treasury Regulation Sections 1.704-2(f)(2), (3) and (5) (provided, that if the
Tax Partnership has any discretion as to an exception set forth pursuant to
Treasury Regulation Section 1.704-2(f)(5) as made applicable by Treasury
Regulation Section 1.704-2(i)(4), the Tax Matters Partner may exercise such
discretion on behalf of the Tax Partnership) be allocated items of income and
gain for the year (and, if necessary, for succeeding years) equal to that Tax
Partner's share of the net decrease in the partner nonrecourse minimum gain. In
the event the application of the minimum gain chargeback requirement would cause
a distortion in the economic arrangement among the Tax Partners, the Tax Matters
Partner shall request the Commissioner to waive the minimum gain chargeback
requirement pursuant to Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
2(f)(4). The foregoing is intended to be the "chargeback of partner nonrecourse
debt minimum gain" required by Treasury Regulation Section 1.704-2(i)(4) and
shall be interpreted and applied in all respects in accordance with that
Treasury Regulation.
(iv) If during any Fiscal Year of the Tax Partnership a Tax Partner
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes
or increases a deficit balance in the Tax Partner's Adjusted Capital Account (as
defined below), there shall be allocated to the Tax Partner items of income and
gain (consisting of a pro rata portion of each item of Tax Partnership income,
including gross income, and gain for such year) in an amount and manner
sufficient to eliminate such deficit as quickly as possible. The foregoing is
intended to be a "qualified income offset" provision as described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in
all respects
ANNEX-7
in accordance with the Treasury Regulation. A Tax Partner's "Adjusted Capital
Account", at any time, shall equal the Tax Partner's Capital Account at such
time (x) increased by the sum of (A) the amount of the Tax Partner's share of
partnership minimum gain (as defined in Treasury Regulation Section 1.704-
2(g)(1)and (3)), (B) the amount of the Tax Partner's share of partner
nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-
2(i)(5)), and (C) any amount of the deficit balance in its Capital Account and
Tax Partner is obligated to restore on liquidation of the Tax Partnership and
(y) decreased by reasonably expected adjustments, allocations and distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
(v) Notwithstanding anything to the contrary in this Paragraph 6, Tax
Partnership losses, deductions, or Code Section 705(a)(2)(B) expenditures that
are attributable to a particular partner nonrecourse liability shall be
allocated to the Tax Partner that bears the economic risk of loss for the
liability in accordance with the rules of Treasury Regulation Section 1.704-
2(i).
(vi) Notwithstanding any provision of Paragraphs 6(b) and 6(c)(ii), no
allocation of items of loss or deduction shall be made to a Tax Partner if it
would cause the Tax Partner to have a negative balance in its Adjusted Capital
Account. Allocations of items of loss or deduction that would be made to a Tax
Partner but for this Paragraph 6(c)(vi) shall instead be made first to the Class
IC Certificateholder to the extent not inconsistent with this Paragraph
6(c)(vi), and second, to the Class A and Class I Certificateholders in
proportion to the amounts distributable for the related Period pursuant to
Sections 9.04(a)(iii) of the Agreement. To the extent allocations of items of
loss or deduction cannot be made to any Tax Partner because of this Paragraph
6(c)(vi), such allocations shall be made to the Tax Partners in accordance with
Paragraphs 6(b) and 6(c)(ii) notwithstanding this Paragraph 6(c)(vi).
(vii) To the extent that any item of income, gain, loss or deduction has
been specially allocated pursuant to Paragraphs 6(c)(iv) and (vi) and such
allocation is inconsistent with the way in which the same amount otherwise would
have been allocated under Paragraphs 6(b) and 6(c)(ii), subsequent allocations
under Paragraph 6(b) and 6(c)(ii) shall be made, to the extent possible and
without duplication, in a manner consistent with Paragraphs 6(c)(iii), (iv), (v)
and (vi) which negate as rapidly as possible the effect of all such inconsistent
allocations.
(viii) Any allocations made pursuant to this Paragraph 6 shall be made in
the following order:
(i) Paragraph 6(c)(iii)
(ii) Paragraph 6(c)(iv)
(iii) Paragraph 6(c)(v)
(iv) Paragraph 6(c)(vii)
(v) Paragraph 6(c)(i)
(vi) Paragraph 6(c)(ii)
(vii) Paragraph 6(b)(iii)
(viii) Paragraph 6(b)(i) and (ii)
ANNEX-8
These provisions shall be applied as if all distributions and allocations
were made at the end of the Fiscal Year. Where any provision depends on the
Capital Account of any Partner, that Capital Account shall be determined
after the operation of all preceding provisions for the year. These
allocations shall be made consistently with the requirements of Treasury
Regulation Section 1.704-2(j).
(d) The income, gains, losses, deductions and credits of the Tax
Partnership for Federal, state and local income tax purposes shall be
allocated in the same manner as the corresponding items entering into the
computation of Net Income and Net Losses were allocated pursuant to
Paragraphs 6(b) and (c) provided that solely for Federal, local and state
income and franchise tax purposes and not for book or Capital Account
purposes, income, gain, loss and deduction with respect to property
properly carried on the Tax Partnership's books at a value other than its
tax basis shall be allocated (i) in the case of property contributed in
kind, in accordance with the requirements of Code Section 704(c) and such
Treasury Regulations as may be promulgated thereunder from time to time,
and (ii) in the case of other property, in accordance with the principles
of Code Section 704(c) and the Treasury Regulations thereunder as
incorporated among the requirements of the relevant provisions of the
Treasury Regulations under Code Section 704(b).
(e) The Tax Partnership shall comply with all withholding requirements
under Federal, state and local law and shall remit amounts withheld to and
file required forms with the applicable jurisdictions. To the extent the
Tax Partnership is required to withhold and pay over any amounts with
respect to distributions or allocations to any Tax Partner, the amount
withheld shall be treated as a distribution to that Tax Partner. In the
event of any claimed overwithholding, Tax Partners shall have no claim for
recovery against the Tax Partnership or other Tax Partners. If the amount
withheld was not withheld from actual distributions, the Tax Partnership,
may at its option, (i) require the Tax Partner to reimburse the Tax
Partnership for such withholding (and each Tax Partner agrees to reimburse
the Tax Partnership promptly following such request) or (ii) reduce any
subsequent distributions by the amount of such withholding. If there is a
possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Tax Partner), the Tax Partnership may
in its sole discretion withhold such amounts in accordance with this
Paragraph 6(e). Each Tax Partner agrees to furnish the Tax Partnership with
any representations and forms as shall reasonably be requested by the Tax
Partnership to assist it in determining the extent of, and in fulfilling,
its withholding obligations. If a Tax Partner wishes to apply for a refund
of any such withholding tax, the Trustee shall reasonably cooperate with
such Tax Partner in making such claim as long as the Tax Partner agrees to
reimburse the Tax Partnership for any out-of-pocket expenses incurred.
7. Sale of Interests. The Tax Partners agree that any sale by a Tax
Partner of any ownership interest in a Certificate shall be deemed to be a sale
of all or a portion of such Tax Partner's interest in the Tax Partnership.
8. Termination of a Tax Partner's Interest. Any distribution by the Tax
Partnership in termination of any Tax Partner's interest in the Tax Partnership
other than pursuant to Paragraph 9 below shall be in an amount of cash or
property other than cash having a net fair
ANNEX-9
market value equal to the positive Capital Account balance of such Tax Partner
at the time such interest is terminated, after such Capital Account balance has
been adjusted in accordance with Paragraphs 4 and 6 above for all operations
preceding such distribution and the applicable Treasury Regulations under Code
Section 704(b), and shall be made by the later of: (a) the end of the Tax
Partnership's taxable year in which such termination occurs; or (b) within 90
days after the date of such termination.
9. Distributions upon Termination. Upon termination of the Agreement
pursuant to its terms, the activities of the Tax Partners under this Annex A
shall be concluded and the assets subject to the Agreement and this Annex A
shall be distributed to the Tax Partners in the manner and in the order set
forth below:
(a) Debts of the Tax Partnership created pursuant to the Agreement,
other than to Tax Partners, including, except as provided in Paragraph
9(e), all amounts due and owing to the Surety Bond Issuer, shall be paid.
(b) Debts owed among the Tax Partners created pursuant to the Agreement
shall be paid.
(c) All cash on hand representing unexpended contributions by any Tax
Partner shall be returned to the contributor.
(d) The Tax Partners' Capital Accounts shall be adjusted by:
(i) assuming the sale of all remaining assets at their fair market
values as of the date of termination of the Agreement; and
(ii) debiting or crediting each Tax Partner's Capital Account with
the Tax Partner's respective share of the hypothetical gains or losses
resulting from such assumed sales in the same manner as such Tax Partner's
Capital Account would be debited or credited under Paragraph 6 above for
gains or losses on actual sales of such properties.
(e) All Tax Partnership assets shall be distributed to the Tax Partners
in accordance with their respective Capital Account balances as so adjusted
by the later of: (i) the end of the Tax Partnership's taxable year in which
the termination occurs; or (ii) within 90 days after the date of such
termination, in the following order or priority:
(i) to the Class A and Class I Certificateholders, pro rata; and
(ii) to the Class IC Certificateholder; provided, that in the event
of a termination of the Trust Fund in the event of a bankruptcy of the
Class IC Certificateholders as provided in Section 16.03 of the Agreement
or an optional termination of the Trust under Section 16.02 of the
Agreement, all amounts due and owing to the Surety Bond Issuer shall be
paid to the Surety Bond Issuer after the distribution to the Class A and
Class I Certificateholders pursuant to clause (i) of this Paragraph 9(e)
and prior to the distribution to the Class IC Certificateholder pursuant to
ANNEX-10
clause (ii) of this Paragraph 9(e). If property subject to the Agreement is
distributed pursuant to this paragraph, the amount of the distribution
shall be equal to the net fair market value of the distributed property.
ANNEX-11
